Broad Unfunded Disability Allowance Would Disrupt County Systems

MACo Research Director Robin Eilenberg testified in opposition to House Bill 971, Local Pension Systems – Special Disability Retirement Allowance”, before the House Appropriations Committee on March 6, 2018. The bill would mandate and establish a new structure of pension benefits in county and local governments for special classes of public safety employees.

Counties that already negotiate benefits for these special classes would potentially have current systems undermined. Additionally, participating counties generally already engage in practices regarding finding other work for public safety employees who has an on-the-job injury who can no longer perform their duties. Counties also generally ensure retirement benefits at 60% of final compensation for injuries that are severe enough that the individual can no long work at all.

As an unfunded mandate that also applies retroactively to individuals that would be eligible for this allowance, the disruption of current systems and the costs to counties could be significant.

From MACo Testimony:

In the case of a public safety employee who suffers an on-the-job injury, county governments seek to get that employee back to work as quickly as possible. When the injury will not allow for a return to a duty post, the county’s first objective is to find another position for that employee. When an injury is so severe that work is not an option, the county governments MACo consulted generally ensure that a former employee is provided with retirement benefits and other income that equal 60% or more of the employee’s average final compensation. In some counties, the benefits may be greater than that amount (and greater than the amounts provided in the legislation), subject to union negotiations.

Under this legislation, those provisions might be inadequate. For example, finding an injured employee a new county government position and providing appropriate training and re-training would not be sufficient, unless the new position includes substantially similar pay, benefits, and advancement opportunities as the employee’s former post. Even in counties with large public safety departments, fulfilling these standards while seeking to place an employee in a vacant post would pose challenges, and in smaller departments, it may not be possible.

If it is not possible, then the county would be required to provide an injured employee with a permanent retirement allowance equal to 100% of his or her final pay, or an annuity of the employee’s retirement contributions and a permanent retirement allowance equal to 2/3 of his or her final pay. A former employee in such a scenario would likely find employment elsewhere, while still earning a level of retirement benefit typically reserved for employees who are unable to work at all.

In addition to these issues, the bill’s provisions would also apply retroactively – to anyone injured on the job in a law enforcement, public safety, or emergency response position since July 1, 2015. Opening the door to new benefits for cases already settled creates administrative and cost concerns, in addition to creating fiscal unpredictability in a county’s debt profile.

As an unfunded mandate that interferes with the local ability to provide coverage for special circumstances while sustaining retirement support for a broad spectrum of county government employees, MACo requests an UNFAVORABLE report on HB 971.”

Follow MACo’s advocacy efforts during the 2018 legislative session here.