BRADENTON, Fla. — Atlanta unions are considering an appeal following a Fulton County Superior Court ruling Nov. 10 that tossed their lawsuit challenging the city's landmark pension reform package.
City officials, however, hailed the decision as a victory for Atlanta and other municipalities needing to adjust pensions when the economy sours or liabilities exceed their ability to pay for benefits.
"Thanks to pension reform, we were able preserve the financial sustainability of our pension system without layoffs, service reductions, or tax increases," Mayor Kasim Reed said Nov. 12. "The city of Atlanta is now in strong financial health, which will allow us to make the necessary investments to maintain Atlanta's position as the dominant city in the southeast."
Police, fire, and employee unions filed the class-action suit a year ago arguing that a portion of the 2011 reform plan is unconstitutional because it increases employee pension contributions by 5%, and provides for that rate to increase if the city's required contribution exceeds 35% of total payroll.
While it was initially claimed that unions supported the reform, Stephen Borders, president of the Atlanta Professional Firefighters union told WABE public broadcasting that union leaders went along with the restructuring because the city threatened to freeze and eventually abolish pensions.
Atlanta instituted pension reform to improve lagging finances in a process sponsored by Reed's administration.
The measures included establishing a defined contribution plan for all future employees. Current employees could keep their existing defined benefit plan but increase their annual contributions by 5%, or they could join the newly created defined-contribution plan.
City officials said the pension changes are designed to eventually eliminate an unfunded pension liability that was more than $2 billion before the reform.
The benefit restructuring was a major reason that Moody's Investors Service and Standard & Poor's revised their outlooks on the Atlanta's Aa2 and A general obligation ratings to stable from negative in 2012.
Shortly after the lawsuit was filed, Moody's said it was a credit negative because of the uncertainty it created.
Dismissal of the suit affects local governments throughout Georgia that are addressing fiscal stability, according to City Attorney Cathy Hampton.
"This isn't our victory, it's a victory for the people who have contributed to their pension plans and now know that when they retire, the money promised to them will be there," Hampton said.
"The court's affirmation offers other cities the opportunity to emulate the efforts of Mayor Kasim Reed and the Atlanta City Council in developing fair and fiscally responsible pension reform," she added.