By Karen Sloan

Jun. 10, 2008 (McClatchy-Tribune Regional News delivered by Newstex) --

Omaha's problematic union contracts expired last year, but the police officers and firefighters retiring this year are still enjoying their benefits.

That's because the city and its two public safety unions are locked in a fight over new contracts. Until the new contracts are complete, the city and the unions are operating under the terms of the expired contracts, meaning 2008 retirees are leaving with the same pension and health care benefits as their colleagues who retired last year.

Omaha saw an unusually large number of police and fire retirements last year, when 176 left. Many chose to retire so they could take advantage of the expiring contracts, which offer pensions and health care benefits that are significantly more generous than what is typically found in the private sector. Some Omaha police officers and firefighters retired last year with higher pensions than their base pay on the job.

So far in 2008, 24 police and firefighters have retired, or have indicated they will retire later this year, said Finance Director Carol Ebdon.

While their pensions and benefits are now determined by the terms of the expired contracts, it's possible that the 2008 retirees could see their benefits and pensions recalculated according to the provisions of the new contracts, said Human Resources Director Tom Marfisi. That would happen only if the state's labor court rules that the new contracts should apply retroactively.

That court, the Nebraska Commission of Industrial Relations, has been called in to resolve the contract impasse between Omaha and its police and fire unions. The commission is scheduled to hear the fire contract case in July and the police case in September. Contract talks between the city and the two unions broke down earlier this year, after nearly a year of negotiations.

"We don't know what the outcome will be," Marfisi said. "One issue the (commission) will rule on is if the changes are retroactive or not."

Attorneys for the police and fire unions declined to discuss in detail the potential ramifications of new contracts because of the pending cases.

However, they did say the commission could order changes in items such as wages and pension contributions. Those changes could potentially affect police and firefighters who retired in 2008.

But the union attorneys said the commission cannot change the way the pensions are calculated.

"It can't change the structure of the pension," said attorney Tom Dowd, who is representing the Omaha Police Union.

Marfisi disagreed with that interpretation, however, and said the commission is free to make changes. He said the commission hasn't yet been asked to consider the structure of public pensions, so no precedent exists for what it might do.

The Human Resources Department sent letters about the expiring contracts late last year to retirement-eligible police officers and firefighters. It advised that the only way to ensure they would get the benefits and pension terms included in the expiring union contracts was to retire before the end of 2007.

The situation that Omaha's 2008 police and fire retirees face -- the possibility that their current pensions and benefits could change depending on the new union contracts -- is largely unheard of in private sector jobs, said local actuary Gregg Rueschhoff.

"In the private sector, you absolutely cannot change a person's pension after they retire," he said. "Whatever you've earned so far, it cannot be reduced."

There is one major exception to that rule, however. Employees of private companies that file for bankruptcy can see their pensions reduced by the federally run Pension Benefit Guaranty Corp., said spokesman Mark Hopkins.

Omaha's expired contracts have been widely criticized as being too lucrative. Under those contracts, police officers and firefighters who are at least 45 years old and have 25 years with the city get annual pensions based on 75 percent of their pay during their last years on the job. Employees can boost their pensions by working overtime and cashing in compensatory pay before they retire -- a practice known as spiking.

Nearly a third of the police and firefighters who retired in 2007 are receiving pensions that are more than their base salaries when they left their jobs.

Current employees and retirees also pay no portion of their health insurance premiums.

Mayor Mike Fahey has been saying for more than a year that he wants to eliminate spiking and make police officers and firefighters pay part of their health insurance premiums.

Both the police and fire unions submitted contract proposals they said would help save the city money, but Fahey said both proposals would have cost too much. Therefore, the matter was referred to the commission.

Marfisi said it's unlikely that there will be another wave of police and fire retirements before the commission rules on the new contracts later this year. For one thing, he said, many of the employees who were at or nearing retirement left last year.

Ebdon said 64 sworn officers and 22 firefighters are eligible to retire this year, though not all have been with the city long enough to qualify for the top pension payments.

Regardless of when the commission rules, police and firefighters could still retire under the old contracts if they don't like the terms of the new ones because the contracts most likely will kick in between a month and three months after the commission's ruling, Marfisi said.

--Contact the writer: 444-1022, karen.sloan@owh.com

Newstex ID: KRTB-0149-25877737