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City of Cincinnati retirees ask judge to hold city in contempt for not funding healthcare

Posted: 12:26 PM, Jan 28, 2019
Updated: 2019-01-28 13:30:17-05

CINCINNATI — Retired city of Cincinnati workers want a federal judge to hold the city in contempt for violating a 2015 agreement and not funding a trust for retiree health benefits.

In a motion filed on Jan. 25, retirees asked U.S. District Judge Michael Barrett to “order the city to show cause why it should not be held in contempt for violating the consent decree.”

Retirees also want the city to pay $35,307 for their attorneys’ fees.

“The retiree plaintiffs are alarmed that the city would refuse to adhere to its obligations under the agreement. The city’s neglect of its obligations was the cause of the pension financial crisis in the first place,” attorney James McCarthy wrote in the motion.

Mayor John Cranley touted the pension deal as “historic” when city leaders finalized an agreement with unions representing city employees in April 2015, ending nearly 15 months of negotiation.

“We are following the consent decree. We look forward to discussing this matter with the retirees. They are our partner in this," according to a statement from a city spokesman.

The compromise was supposed to end a $862 million unfunded liability, ensure pension benefits for current and future retirees and shore up the city’s finances for years to come.

As part of the agreement, retirees agreed to allow the city to reduce retiree health care benefits and take $200 million from the city's retiree health care fund and move it to the pension fund in 2016.

Although city officials and the Cincinnati Retirement System have talked about how to fund the healthcare trust, no agreement has been reached, according to the motion.

“More alarming, the city has made no budgeting commitment to fund even $1 to the (healthcare trust fund) since the adoption of the agreement and issuance of the consent decree,” according to the retirees’ motion.

To make up for the shortfall, retirees want the city to make a double contribution to the fund in 2019.

The Cincinnati Retirement System Board of Trustees recommend the city make an annual contribution of at least $2 million for the next 28 years, according to meeting minutes attached to the court motion.

The motion also accuses the city of not maintaining the cost of retiree healthcare benefits.

The state auditor noted the city’s noncompliance with the pension deal in its 2016 and 2017 audits of the city.

“Failure to present and implement a funding policy as required could lead to the city’s accumulating an unfunded liability … and/or could lead to possible litigation for the city not being able to meet healthcare requirements per the agreement,” former State Auditor Dave Yost wrote in a Dec. 28, 2017 letter to the city.