The stand-off continues in Wisconsin this morning between public employee unions and the Republican governor and legislature. At issue: a proposed roll-back in union bargaining rights for state employees, combined with higher worker contributions for health care and pensions. Even if they DO end up making bigger contributions, the Wisconsin public employees can still look forward to receiving their pensions . . . at least for now. Not so the employees in one Southern town, who are being told: DON'T COUNT ON IT. Our Cover Story is reported by Martha Teichner:
At 66, Alfred Arnold considers himself lucky, in a way. In September 2009, when the city of Prichard, Alabama, suddenly stopped paying pension checks to its retirees, at least he was able to work, as a security guard at a mall in Mobile.
And this past Christmas, instead of exchanging gifts, mall employees gave all the money they would have spent on each other to Alfred and his wife Jackie.
"They knew we didn't have a pension, we wasn't getting paid," said Alfred.
"How did you feel?" Teichner asked about the gift.
"Oh, man, that was devastating. I almost cried."
Alfred Arnold was Prichard's first black firefighter. He retired after 35 years, as a captain.
"If I didn't retire, I might not make it to the next day, going in the fire. You know, it gets too strenuous, you know? So I had to retire because I had heart problems."
Jackie worked for the Prichard Police Department for 40 years, and was the city's first female officer.
"I retired in June 2009," Jackie said. "I received two pension checks, and nothing after that. I said, 'Well, they'll come up with something.' But nothing ever happened."
"Had it not been for my job at the mall as a security officer, we probably couldn't even eat," Alfred said.
After 17 months, it's come to this: The Arnolds and Prichard's other retirees want to know what's wrong with this picture. Why handouts? Why not the pensions they contributed to? The pensions state law says Prichard has to pay?
"You can't draw blood from a turnip," said attorney Scott Williams, who represents the city of Prichard. "All the colloquialisms you want to come up with, if the money's not there, we can't pay it.
"If we took all the city's money and paid it to the pensioners, we won't have money to pay for the fire department or to keep the street lights on."
Prichard is small: 144 retirees, 27,000 residents. But what happens in Prichard is being watched by much larger cities - Chicago . . . Philadelphia . . . San Diego, to name a few - and by many states.
They all would like nothing better than to dump their staggeringly underfunded pension plans.
"Across the United States there is a difference of $3 trillion between the amount of money that we have promised public employees and the amount that has been set aside," said Joshua Rauh, who teaches finance at Northwestern University's Kellogg School of Management.
He's tracked the pension crisis: "Politicians are often trying to make it look like we can have our cake and eat it, too. And that's created a situation where we just push the problem down the road. And now we or our kids are going to have to pay for it."
Prichard has reached the end of that road. During the 1960s and '70s it was thriving - the fastest growing city in Alabama. Its population: 45,000 at its peak. Then, businesses began to leave, and hard times set in for good.
In 1999, its finances in shambles, the city declared bankruptcy. The pension fund was in trouble then. The city ignored a court order to replenish it.
A letter dated 2008 was sent to members of the city council and the mayor saying, essentially, that the pension fund would run out of money in July 2009.
"The math was pretty simple," said city councilman Troy Ephriam, chairman of the pension board. "I think the letter was basically saying something needs to be done. And it needs to be done immediately. Unfortunately, there were no real efforts.
"I don't feel we've done everything in our power to prevent the inevitable from happening."
Woulda, coulda, shoulda. Famous last words being heard all over the country these days. When its pension fund did run out of money - right on schedule - what did Prichard do? It filed for bankruptcy, again, this time hoping to be rid of its pension.
"Was the attempt to file for bankruptcy a deliberate attempt to stall, to not solve that problem?" asked Teichner.
"Yes, yes, absolutely," said Ephriam.
The petition was eventually thrown out of court.
The city now owes its pensioners more than $2.5 million in back payments.
Robert Hedge represents retirees in a class action suit against the city of Prichard. He tells of their sad stories, such as Nettie Banks, a former police dispatcher who ended up having to file for bankruptcy.
"This breaks my heart," he said of another case. "Hugh Dawsett has some serious arthritis issues, unable to work. His 73-year-old wife had to go back to work.
"We're talking about, on average, $1,000 a month per person," said Hedge. "That's the difference between buying your medications and buying food."
And then there are current employees, like Police Captain Charles Kennedy. He's 67, has had a serious heart attack and open heart surgery, but can't afford to retire.
"Because if I was to leave now, I'd be like the rest of the retirees - I'd have nothing," he said.
Kennedy is the most decorated officer on the Prichard police force.
"I dedicated myself to the city. I did my part," he said.
And that's what gets him about how the city has acted.
"I did an honorable job for them," Kennedy said. "I think they owe me the same kind of respect."
Retired Fire Captain Alfred Arnold agrees.
"It's one thing to lose one check, but to lose two? That's devastating, you know what I mean?" he said. "You're not giving us something that we didn't earn. You're not giving us no welfare. You're giving us our money that we put in, see? Where's it? How we supposed to live?"
On Thursday nights at city council meetings, local reporters ambush Prichard Mayor Ron Davis: "These people haven't been paid in 17 months. What can you say?"
"I'm concerned about them not getting paid," Davis replied. "I would like to see them get some payment."
Expressions of sympathy don't amount to much among the retirees who show up every week, like Nettie Banks, the fire dispatcher who had to declare bankruptcy. Alfred Arnold is here. Jackie Arnold is, too. Capt. Charles Kennedy attends (when he's not working).
"Fourteen benefit recipients have died," said retiree Mary Berg. "All of the retirees' mental and physical health has been impacted by not receiving the monies that we are entitled to under the law."
As she does every week, Wanda Spradlin struggles up from her wheelchair, and lets loose: "If the retirees are not getting anything, I don't think any of you should get a dime, either. And then it wouldn't be long."
The mayor, with his back to the crowd, and the city council sit in stony silence.
"I will ask you to stand for a moment of silence as I read the names of the pensioners and retirees that have died since this happened," said Bill Williams.
In fact, both sides have now met with a mediator.
The lawyers are trying to draft a compromise: retirees would be paid some of the pension money they're owed, not all - that is, if they agree to what's being offered. The city knows time is not on their side.