published Wednesday, March 5th, 2014

East Ridge scraps early retirement incentive after confusion

Jim Bethune
Jim Bethune
Photo by Tim Barber /Chattanooga Times Free Press.

An attempt to encourage city employees with 25 or more years of service to retire early to save the city money has gone awry in East Ridge.

The initial resolution, proposed in January by Vice Mayor Jim Bethune, would have provided 100 percent medical insurance coverage to city employees retiring during a specific time frame -- Feb. 1 to May 1, 2014, according to the resolution -- with 25 or more years of service with the city. The proposal also offered 50 percent medical insurance coverage to retiring employees' spouses.

The proposed retirement benefits would have targeted 13 city employees, and the savings to the city would come from positions that did not need to be refilled, or could be replaced with lower-paid employees.

But the resolution that was originally passed by a majority of the council didn't specify whether the term for receiving benefits was limited to retirees under the age of 65 or would be granted for life, which caused confusion during a recent council meeting.

"The motion that was adopted is ambiguous about the term," said City Attorney Hal North.

Bethune said that Councilman Marc Gravitt, who had passed on the initial vote in January's meeting and then voted in favor of the resolution after the window of opportunity was later determined, should have known what Bethune had intended with his proposal.

"I'm not a mind reader," said Gravitt. "Unless you say 65 -- I mean, unless you say life, how can I assume you mean life?"

North told the council that they would have to decide what they passed in January before they could move forward, and that they should be clear about what they'd like to accomplish to prevent confusion in the future.

The council debated what to do with the resolution for well over an hour, with suggestions to scrap it altogether, limit it to retirees under the age of 65, or keep it in place for lifetime with a much shorter window of opportunity for the benefit.

Complicating matters was the fact that two qualifying city employees had already turned in notices of retirement with the understanding that they would be eligible for the benefits for life: the office manager and the city services director.

The two retirements will save more than $104,000 annually in salaries alone, in addition to savings on payroll taxes, workers' comp and unemployment insurance, said City Manager Andrew Hyatt.

North said whatever the council decides to do with the current resolution, they also would have to decide how that would affect the two recent retirees.

Gravitt said council members needed to find a "happy medium" to help dispel the confusion.

Concerns were also voiced by citizens that benefits previously granted to all retirees -- such as life insurance -- were not included in the special benefit plan passed by the council as a result of the confusion.

Additionally, a representative from the city's insurance broker, JMD Group, told council members that they had not received a response from the city's carrier, BlueCross BlueShield, as to whether the carrier would allow an exception to continue coverage for life for these retirees, and the insurance company could decide to drop their coverage.

If the carrier decides to drop coverage, the city would then be liable for the retirees' medical costs and would have to find the retirees a new policy, or self-insure them, North said.

Mayor Brent Lambert eventually called for a 10-minute break to draft an amendment, and upon returning made a motion to adopt Resolution 2370 and amend it to close the window for retirement immediately, allowing only the two who have already submitted retirement letters to be eligible, with their specific benefit details to be determined later.

"The two who are in, are in," Lambert said.

The motion passed unanimously, but council members also said that a new window for early retirement benefits could be opened at a later time.

Contact staff writer Alex Harris at aharris@timesfreepress.com or 423-757-6592.

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