Alabama Retirees Battle City For Pensions Payouts
MICHEL MARTIN, host:
I'm Michel Martin, and this is TELL ME MORE from NPR News.
We're going to wrap up our Oscar week series of In Your Ear segments with another Academy Award winner. Find out who it is in just a couple of minutes.
But first, we're going to continue our look at the effects of how state and local governments are dealing with red ink. And we're turning to the city of Prichard, Alabama. It's a city of 27,000 people, but it hasn't sent pension checks to government retirees in more than a year. That's 150 people who thought they were retiring with city pensions. But now, they're not receiving anything because city officials say they don't have any money to spare.
We wanted to know more about this story, so we've called Scott Williams. He has been hired as the lead attorney for the city of Prichard on this issue. He joins us from member station WBHM in Birmingham. Also with us, Alfred Arnold. He's retired after 35 years on the job as a firefighter in Prichard. He actually was the city's first African-American firefighter and his wife, Jackie, was the city's first female police officer. And he's now working as a mall security guard and he's with us from Mobile. Thank you both so much for joining us.
Mr. ALFRED ARNOLD (Security Guard, Retired Firefighter): Thank you.
Mr. SCOTT WILLIAMS (Attorney): Hello, Michel, good to be with you.
MARTIN: Now, Mr. Williams, I don't want to make you the bad guy, but you have acknowledged that the city does owe people like Mr. Arnold the money. What happened?
Mr. WILLIAMS: The city ran out of the money that had been set aside for pensioners.
MARTIN: You're saying that they didn't put enough in, or what happened?
Mr. WILLIAMS: You can say that they didn't put enough in or they paid too much or when - the problems were exacerbated when the economic downturn of a couple years ago that really hit the stock market, investment markets took a hit as well. So it's a combination of factors that have all driven the insolvency of that pension fund.
MARTIN: Mr. Arnold, how did you find out or how long had you been retired before the pension checks stopped?
Mr. ARNOLD: I was retired about three years. I retired in 2008. I was receiving my monthly pension checks every month. All of a sudden we just - we got a letter saying we would not be getting more pension checks. This last one will be the last one.
MARTIN: How did you react when you heard?
Mr. ARNOLD: It was devastating because my wife was getting ready to retire and we were depending on both of those checks to live on. And after she retired, she got two checks and that was it.
MARTIN: How have you been making it since then?
Mr. ARNOLD: We've been living on the money that we saved in our savings account, but that's just about gone now. I work at the mall as a security officer just to put food on the table. But that doesn't pay the mortgage, that doesn't pay the car note, other necessities that we have.
MARTIN: Now, Mr. Arnold also told us earlier, Mr. Williams, that it was his belief that the city had filed for bankruptcy, in part, to avoid paying these pension obligations. From your understanding, do you think that that's true?
Mr. WILLIAMS: As with many things, there are some parts that are true and some parts are not. Let me see if I can explain that. The pension fund that had been set aside by the city dwindled down to the point where there was not enough money to make a full distribution to every retiree that the city was obligated to pay under.
The city filed for bankruptcy, seeking to reorganize itself and reorganize its finances to figure out ways where both the city can increase what it contributes to that fund on a monthly basis, but also seek to reduce what the retirees will receive on a monthly basis, simply because the city has to have some minimal operating monies to pay the current police officers and firefighters and to pick up the garbage.
MARTIN: Mr. Arnold, can you just talk a little bit about why you decided to go to work for the city to begin with? I just, I'm wondering just, as we mentioned, you were the first African-American firefighter, which we are told, was not the easiest thing to do back in the day when you started. And I wondered why you wanted to join the department and were you thinking, in part, about pension benefits when you did join? Was that part of the calculation in doing that job?
Mr. ARNOLD: At that time, back in 1970, it was a good job. It wasn't about the money, it's about one day I could retire and live fairly easy because I thought that was a good job.
MARTIN: It's also true, isn't it, that the population of the town, or the city, rather, has shrunk considerably in recent years. At one point, as I understand it, the population was about 45,000, now it's down to about 27,000 today. And that has an effect on the number of workers who can pay into the fund, right?
Mr. ARNOLD: It has shrunk considerably, but we were still paying into the pension. But my thing is this, the city at one point quit putting money in the pension totally, altogether.
MARTIN: What about that, Mr. Williams, why is that?
Mr. WILLIAMS: It's not correct. There is a dedicated pension fund still in place. The city is obligated on a monthly basis to put roughly 12 percent of its employee expense into that fund. The city continues to do that and has done that every month for the last year and a half since pension checks have been stopped. The problem is that there's not enough money in what the city puts in on a monthly basis versus what's owed to all the retirees. The city is in a terrible situation. How do we give money, partial checks to retirees?
There are also people that have other rights to those monies including current employees as well as there are some people who had paid into the pension fund over the years, but who left before their pensions vested, who are owed monies out of that same pot of money. And the city is caught because if we pay one, then that's taking money away from another and it's really in the courts to try and figure out.
MARTIN: Mr. Arnold, I think that what Mr. Williams is saying is that you can't get blood from a turnip. What do you say to that?
Mr. ARNOLD: I disagree with that altogether because I was at 35 years and we was not asked, do you want to join this pension? We were automatically a part of the pension. Everybody worked on a personnel board paid into their pension.
Now, later years, the city or the mayor, started hiring people that was not under the pension board, they were not paying to the city. Naturally there was no money going into the pension because these people, they had to pay into the pension.
MARTIN: But why would he want to manipulate a way of avoiding paying you what you're owed?
Mr. ARNOLD: I don't think the city really cares about the pensioners and the pension because the city can't control it, couldn't borrow money from it. They refuse to even talk to us at the council meetings. People on the pension board tried to talk with the mayor about trying to fix this pain before it got out of hand. Nobody did anything about it.
MARTIN: What do you think should happen now going forward?
Mr. WILLIAMS: There's a framework of a settlement that we're going to hopefully be taking to the courts here in the next couple of months that will make for initial check distribution to these retirees as well as restart the flow of money. That's the best we can do.
MARTIN: Mr. Arnold, what else would you like us to know? Any final thought you have for us, I'm interested to hear it.
Mr. ARNOLD: The city owes us a third of our retirement. We had no choice but to join this pension. All we want is our money. I don't think the city is being fair to the pensioners about giving us a measly third of our pension. It's hard to trust the city now after we've been betrayed like we have all these years. And we didn't get a statement from the city about how much was in that pension or how much we were putting in, we didn't get anything. And all of a sudden, it's all gone and we knew nothing about it.
MARTIN: Mr. Williams, is there anything you think that others can learn from this experience?
Mr. WILLIAMS: I make the observation that the city for entirely different reasons had to declare bankruptcy 12 years ago. It should have been a big signal to the retirees that there was a lot of financial problems going on in the city. Just like other cities, other states even, and private companies, you have to be aware of who controls your money and how it's being controlled. That's really the very hard lesson to come out of this.
MARTIN: Mr. Arnold, what do you think? Is there anything you could have done differently?
Mr. ARNOLD: No. We were just employees. All they were doing was taking it out our checks. We were looking to them to take care of this money, they would look for them to run the city right.
MARTIN: Alfred Arnold is a retired firefighter for the city of Prichard, Alabama. He was kind enough to join us from Mobile. Scott Williams is the lead lawyer addressing the bankruptcy issues facing the city of Prichard. He joined us from NPR member station WBHM in Birmingham, Alabama. Gentlemen, I thank you both so much for speaking with us today and good luck to you both.
Mr. ARNOLD: Thank you.
Mr. WILLIAMS: Thank you very much.
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