New Orleans Firefighter Pension Fund Reform Overview

The resolution of the long-running dispute between the city of New Orleans and its firefighters over management and solvency of the New Orleans Firefighters Pension & Relief Fund (“Fund”) and decades of back-pay is a noteworthy accomplishment.   After a year of research and deliberation among a broad set of interested parties, a comprehensive solution was crafted to resolve two of the city’s greatest open-ended financial burdens – a severely underfunded and distressed pension fund and an unsatisfied judgment for back-pay estimated at approximately $200 million.

At the urging of the Business Council, Mayor Landrieu established a ten-person Firefighters Pension Reform Working Group (“Working Group”) tasked with conducting a systematic and broad scale review of the Fund’s policies, practices, and financial performance in hopes of arresting the ballooning pension liabilities that threatened the city’s long-term fiscal stability.  Membership included city officials, firefighters’ representatives and citizen representatives with expertise in relevant business fields such as finance, accounting, and risk management.  

The Working Group’s mandate was to make recommendations to the mayor, the New Orleans City Council, the Louisiana Legislature, and the Fund’s Board of Trustees regarding pension plan design alternatives, including changes to structure, benefits, contributions and policies to ensure that the Fund is sustainable and affordable for retirees, active firefighters, the city, and taxpayers.  Vijay Kapoor of the Kapoor Company, and Segal Consulting were retained to serve as a mediator and provide technical analysis and actuarial analysis of the Fund and plan design alternatives.

The city and firefighters reached a settlement that accomplished each of the goals championed by the Business Council at the outset of our involvement in the dispute: (i) ensures the Fund’s long-term financial health; (ii) enhances the city’s ability to recruit and retain firefighters; (iii) protects taxpayers; and (iv) strengthens the city’s fiscal health and services.  The settlement is expected to provide cost savings of $275 million over the next thirty (30) years.  Shortly after the agreement was reached Moody’s Investors Service called the deal “a credit positive for the city.”

While we have made great progress, the work is not yet done.  We must make certain that the agreement is fully and completely implemented; the city’s future financial and operational stability depends on it.
 

FIREFIGHTER PENSION FUND REFORM

The resolution of the long-running dispute between the city of New Orleans and its firefighters over management and solvency of the New Orleans Firefighters Pension & Relief Fund (“Fund”) and decades of back-pay is a noteworthy accomplishment.   After a year of research and deliberation among a broad set of interested parties, a comprehensive solution was crafted to resolve two of the city’s greatest open-ended financial burdens – a severely underfunded and distressed pension fund and an unsatisfied judgment for back-pay estimated at approximately $200 million.

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