July 23, 2009

City, Police Union Agree on Retiree Health Care Provisions

Mayor Daley with Chicago Police Superintendent
Mayor's Press Office    312.744.3334

Mayor Richard M. Daley said today the City has reached agreement with Lodge 7 of the Fraternal Order of Police regarding retiree healthcare provisions from which the City expects to save about $12.5 million over the next three years, beginning as early as November 1.

“As the people of Chicago know, the City has always looked for ways to better manage government before turning to taxpayers for more,” Daley said in a news conference held at Police Department Headquarters, 3510 S. Michigan Av.

“That approach has never been more important than it is now, as we face a nationwide recession that has significantly slowed our revenues,” he said.

The Mayor pointed out that already this year, the City has implemented nearly $46 million in spending reductions and management improvements, but that even with those steps will face significant budget shortfalls ahead as a direct result of the recession.

“So we are always looking for ways to do more with less, and our biggest expenditure is for personnel, which represents more than 80 percent of our operating expenses,” he said.

“This is a creative, innovative solution supported by the City and the union that will benefit police officers, their families, and taxpayers,” he said.

Currently, the retirement age for police officers is 63 with an early retirement option at 60.

The agreement allows officers who retire between the ages of 55 and 59 to continue to participate in the City’s health care plan. In return, those retirees would agree that the city would spread out “final compensation” payments -- most of which is for compensatory time – over a four year period.

The agreement goes into effect only if a minimum number of police officers participate -- 160 in 2009, 130 in 2010 and 100 in 2011 and thereafter -- but the parties expects those numbers will be reached easily.

On average, the City expects to save about $32,000 for each officer who retires under the agreement and there are no “new money” incentives from the City in this agreement, such as severance packages or benefit enhancements.

The cost of the health care benefit is more than covered by the salary savings, whether or not the retiring officer is replaced with a recruit, Daley said.

The agreement also includes a commitment by the parties to form a Joint Pension Legislation Council and otherwise continue efforts to improve the financial health of the pension system, for the benefit of both retirees and taxpayers.

Daley thanked the leaders and members of the FOP for being willing to sit down with the City and agree on a plan that is in everybody’s best interest.

“During these challenging times, we all need to work together to provide the services our people need, but in a way that our taxpayers can afford,” he said.