As reported by Cincinnati.com, there is currently a bill up for referendum tomorrow that will eliminate the public employee pension system and replace the same with a 401(k) style plan. The current situation in Cincinnati is similar to here in New Jersey, wherein the pension system is running an extremely high, unfunded liability. Therefore, a comprehensive review of this bill is appropriate given that a similar measure could eventually be proposed here in New Jersey. 

What It’s About:

The future of the $2.1 billion Cincinnati city pension system, which covers about 4,000 current city workers and another 4,350 retirees (a total of 6,300 retirees, family members, and survivors are also on the city’s retiree health care plan).

What It Would Do:

If passed, the proposed amendment to the city charter would essentially eliminate the existing system, force the city to pay off any shortfalls, and replace the old system with a new 401(k)-style plan.

How Things Are Now:

The Cincinnati pension system is running an $870 million unfunded liability, meaning that is how short the plan would be in the future to meet future claims if the hole isn’t filled. The plan is about 61 percent funded, and a pension plan is considered healthy when it is more than 80 percent funded.

Argument For:

It would get Cincinnati city leaders out of the pension business, and end the practice of underfunding the pension system. It would also eventually get the city out from under its liability, strengthening its fiscal foundation.

Argument Against:

The proposal includes a disputed requirement to pay off the $870 million liability in 10 years, which opponents and city officials argue means cuts in city services and higher taxes. Officials also argue that other proposed changes and cuts to the plan would make it healthy within 10-12 years.

Whose For It:

A group of local conservative political activists who formed Cincinnati for Pension Reform, using much of the language for the proposal from others that passed in cities such as San Jose, Calif. And San Diego. State workers in Michigan and Alaska have also seen their pensions overhauled. In addition, several are tea party groups have endorsed the measure.

Whose Against It:

Unions representing Cincinnati city workers, the pro-business Cincinnati USA Regional Chamber, all of City Council, both mayoral candidates. Unions and other groups have formed two committees: Cincinnati for Pension Responsibility and Citizens for Responsible and Accountable Government.

Please check this blog periodically to determine the outcome of this referendum as the same could have an enormous impact going forward.

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DONALD C. BARBATI, JR.

Donald C. Barbati is a shareholder of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of numerous public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues…

Donald C. Barbati is a shareholder of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of numerous public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues litigated before the courts and administrative tribunals throughout the State of New Jersey. In addition, Mr. Barbati also routinely represents individuals in various types of public pension appeals, real estate transactions, and general litigation matters. He is a frequent contributor to the New Jersey Public Safety Officers Law Blog, a free legal publication designed to keep New Jersey public safety officers up-to-date and informed about legal issues pertinent to their profession. During his years of practice, Mr. Barbati has established a reputation for achieving favorable results for his clients in a cost-efficient manner.

Mr. Barbati has also handled numerous novel legal issues while representing New Jersey Public Safety Officers. Most notably, he served as lead counsel for the Appellants in the published case In re Rodriguez, 423 N.J. Super. 440 (App. Div. 2011). In that case, Mr. Barbati successfully argued on behalf of the Appellants, thereby overturning the Attorney General’s denial of counsel to two prison guards in a civil rights suit arising from an inmate assault.  In the process, the Court clarified the standard to be utilized by the Attorney General in assessing whether a public employee is entitled to legal representation and mandated that reliance must be placed on up-to-date information.

Prior to becoming a practicing attorney, Mr. Barbati served as a judicial law clerk to the Honorable Linda R. Feinberg, Assignment Judge of the Superior Court of New Jersey, Mercer Vicinage. During his clerkship Mr. Barbati handled numerous complex and novel substantive and procedural issues arising from complaints in lieu of prerogative writs, orders to show cause, and motion practice. These include appeals from decisions by planning and zoning boards and local government bodies, bidding challenges under the Local Public Contract Law, Open Public Records Act requests, the taking of private property under the eminent domain statute, and election law disputes. In addition, Mr. Barbati, as a certified mediator, mediated many small claims disputes in the Special Civil Part.

Mr. Barbati received a Bachelor of Arts degree in history, magna cum laude, from Rider University in Lawrenceville, New Jersey. Upon graduating, Mr. Barbati attended Widener University School of Law in Wilmington, Delaware. In 2007, he received his juris doctorate, magna cum laude, graduating in the top five percent of his class. During law school, Mr. Barbati interned for the Honorable Joseph E. Irenas, Senior United States District Court Judge for the District of New Jersey in Camden, New Jersey, assisting on various constitutional, employment, and Third Circuit Court of Appeals litigation, including numerous civil rights, social security, and immigration cases.