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Judge Halts Erie County Nursing Home Workers' Pension Changes

December 29, 2011

BY LISA THOMPSON, Erie Times-News
lisa.thompson@timesnews.com

The new year won't bring big changes to the pension plans of workers at Erie County's two nursing homes, after all.

The union representing Pleasant Ridge Manor workers -- American Federation of State, County and Municipal Employees District Council 85 -- went to court Thursday to stop changes in the pension plan that were to take effect Sunday.

Alaine S. Williams, an AFSCME lawyer from Philadelphia, filed paperwork in Erie County Court asking a judge immediately to halt the changes so that the union can dispute the changes before the Pennsylvania Labor Relations Board and also challenge the constitutionality of the pension plan changes.

AFSCME charges that under long-standing state law, County Council needed to negotiate the pension changes with the employees. Instead, it says, union leaders who are negotiating a new contract with the county learned of the plan to change pension benefits via media reports.

The union also says county government's plan to create a 401(k) plan for nursing home workers is illegal. Such plans must be created under section 457(b) of the tax code, instead, the union argues.

Rather than a guaranteed monthly benefit, "the 401(k) plan will provide an uncertain benefit depending on the rise and fall of investment markets," the complaint states.

President Judge Ernest J. DiSantis Jr. entered an order Thursday enjoining the county from implementing the new plan until the Pennsylvania Labor Relations Board or he authorizes the changes.

DiSantis gave the county until Jan. 13 to file written arguments on the issue. He will then either rule or hold a hearing.

George Joseph, attorney for Erie County, could not immediately be reached for comment.

Among documents filed Thursday is a letter in which he disputes the union's position that pension benefits must be bargained.

"The pension plan reserves exclusively to the Board of Trustees the right to amend or terminate the plan," Joseph wrote.

The union's request for an injunction came after Erie County Council, acting as Pleasant Ridge's board of trustees, voted 4-3 on Nov. 17 to approve a "hybrid" pension change that allows half of the nursing homes' roughly 360 employees who participate in the pension plan to continue accruing pension benefits.

For the other roughly 180 employees, pension accrual would cease. Those employees and others hired after Jan. 1 would instead be able to opt into a new 401(k) plan in which Pleasant Ridge would match, dollar-for-dollar, the first 3 percent of an employee's contributions.

The hybrid plan is expected to cut Pleasant Manor's pension contribution by a little more than $112,000. It was chosen over a hard pension freeze, which would have stopped the accrual of pension benefits for employees at the 312-bed Pleasant Ridge Manor-West, 8300 West Ridge Road in Fairview Township, and the 76-bed Pleasant Ridge Manor-East, 4728 Lake Pleasant Road in Millcreek Township. That option would have shaved nearly $800,000 off Pleasant Ridge's yearly required contribution to employee pensions, budgeted at $2.2 million for 2012.

In conjunction with the action filed in Erie County Court, AFSCME also filed a formal complaint of unfair labor practices with the Pennsylvania Labor Relations Board charging that the adoption of the new pension plan "unlawfully coerces the employees' exercise of their rights."

The outcome of the dispute over the pension plans may affect more than retirement plans.

The Pleasant Ridge Manor pension, which is underfunded by about $6 million, has been a key component of discussions about whether the county can afford to replace the county's two aging nursing homes with a new multimillion-dollar facility.

   
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