fire service pension costs
Received from Joe Meeske
Dec. 16 2009
At the heart of most opinion pieces I read referencing the fire service is pension costs. Cities navigating the financial crisis use pension costs as their reason for cutting firefighter jobs or reducing services city-wide. Firefighter’s pensions have become the perfect scapegoat for cities to use to justify budget shortfalls. It is true, pension costs have spiraled upward in Port Orange and elsewhere but before you can figure out how to fix it you first have to know how it is that we got to this point. Why have pension costs and unfunded liabilities in Port Orange become so high!
Let me point out some staggering numbers. In fiscal year ending in 2008 the Florida Retirement System (FRS) lost $27.2 Billion. That’s right, Billion with a “B”. What is even more amazing is that after suffering such a large loss to the pension the plan was only reduced to a level of 93% funded. So after taking a huge hit in the fiscal year the plan still remains 93% funded. By the way that was down from previously being 106% funded. So before the financial crisis the FRS had $1.06 for every dollar of liability. How did they pull this off?
If a city wants their firefighters to be in the FRS they would have to contribute 23% of payroll into the plan. At some point in history someone very smart in Tallahassee figured out that in order for a state retirement plan to remain very healthy a requirement of 23% of payroll to fund the plan was necessary. So for at least the last 20 years that contribution rate was in place and in the end kept the plan protected during the worst financial meltdown since the Great Depression.
The 23% of payroll contribution is an important number because this year Port Orange decided they would like to “mirror” the state and get payroll contributions down to the 23% area. The city thinks cutting benefits will accomplish this and the firefighters think increasing their own contributions is the better idea. Yes Mr Young the firefighters are the ones that are proposing an increase in contributions to help with pension costs. The two sides are at impasse declared by the city and at that time the city’s proposal was to keep the firefighters contribution at 0.5% of pay. The firefighter’s proposal when the city declared impasse was for an 8.6% contribution. We not only recognize the problem we want more then anything to make sure it is fixed. We believe you have to look at the last 20 years to understand why costs are so high.
From 1989 to 2003 the firefighters contributed 8% of their pay into the pension to pay for benefits. By comparison the City paid and average of 4.5% of payroll. In some of those years the City paid less than 1% into the pension. The pension board went to the city on numerous occasions over those years and advised the city to pre fund the pension but the city was content to pay the bare minimum to achieve stability and missed a 20 year bull market to help compound the investment. In 2003 the city reduced police officers contributions to 0.5% and in the interest of parity gave the firefighters the same reduction in contribution. We didn’t ask for or negotiate the reduction. What the city did for 20 years would be the equivalent of buying a house and paying only the interest for 20 years then a balloon payment is due. Its Finance 101, dollar cost averaging and buy low sell high. Port Orange was content to sit on their hands and not invest wisely and got caught. Now they want the firefighters who paid 8% of their pay for 20 years, double the city’s average for the same period, to provide their bailout.
In conclusion Id like to provide you with a few more interesting numbers. The city set a benchmark of paying 23% of payroll into the pension to “mirror” the state plan. Had the city paid 23% each year for the last 20 years rather than contributing only 4% on average there would be $10.5 million more in the pension investment today. That additional money would have lowered the unfunded liability from $14.3 million to $3.7 million. Those numbers are based on calculations made in early March of this year which was the market lows. The numbers as of today would be significantly higher since the market has gone up around 50% since March.
Mr. Young…..the firefighters want the same thing you want. We want to get pension costs under control but we need to understand how we got here in order to figure out how to fix things. We have studied pensions from all over the state and some have much better benefits and much lower unfunded liabilities. When you review all the data only one number is consistently different and that is the other city’s pre funded their pensions during the good times and it helped weather this storm.
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skyrocketing pay and benefits for unionized firefighters
Comments by POI Hank
I come from a police department which had been severely underpaid
in comparison to other police agencies doing the same kind of work.
In the beginning, 1948, the L.I. State Park Police was formed by
a wheeler dealer politician by the name of Robert Moses.
Mr. Moses had general manager responsibilities over the L. I. State
Parks and the L.I. State Parkways. Mr. Moses became dissatisfied
when the the State Troopers who patrolled his L.I. State Parkways
did not cater to his every wish. And so, the political wheeler dealer
had the New York State Police removed from the L.I State Parkways
and replaced with an expanding L.I. State Park Police.
From 1948 until 1980 the L. I State Park Police, later to become
known as the L.I. State Parkway Police, never received salaries
commensurate to the troopers who had done traffic enforcement
on the L. I. State Parkways, or doing traffic work, even in
quiet rural areas of New York State.
About 80 percent to 85 percent of our police duties throughout
the year were assigned to traffic duties on the parkways
as opposed to patrol in the State Parks from Memorial Day to Labor Day.
I started as a patrolman with the L.I. State Parkway Police in 1961.
My starting salary was $4,800 a year, Nassau County Police Department was
about $5000 a year, and New York City PD was about $5,200.
On Dec. 31, 1979 my yearly salary as the executive officer
of the 213 man L.I. State Parkway Police was $26,000. On Jan. 1, 1980
due to legislation which enabled me to transfer to the New York State Police
as a Technical Sgt., I started work with the New York State Police, Troop L,
at a salary of $25,600. I had less responsibility and worked in the same
area, with the same traffic enforcement duties on the same L. I. State roadways.
So here is my point. Parity matters, and union leaders need to take account
of such matters.
During the years after the second world war, leading into the 50's and
60's, many people who choose civilian jobs were making far more money
than police and fire men, and were enjoying the good economy of this nation.
It seems to me, that in most civil service fields, elected officials decided
to give unions more somewhat hidden benefits, like better pensions,
sick days, vacation days, etc. , rather than higher income salaries.
During those years, although young families
like mine were secure with health coverage and the extras provided in
our contracts, we nevertheless had little take home pay, and many of us
worked another job to buy better clothes for our children, prepare for Christmas
presents for our kids, and to put some money aside for our kids to go to college.
Sick days, vacation days, pensions, did not help us pay for those items I just
mentioned.
In my case, I transferred a 25 year retirement plan with the L.I. State Parkway Police
to a 20 year retirement plan with the New York State Police.
To help pay for college for my kids, I left the State Police
with a 20 year retirement plan,after 2 years
of working for them, and took a federal job.
It seems to me, that through good economic times, city elected officials
and county officials, in many cases decided to negotiate with the police
and fire unions and to give them less pay compensation which others
in the civilian world were enjoying, but instead gave them more sick time,
vacation time, and pension benefits, etc. There was a time when
I worked for the L.I. State Parkway Police, that I did not receive over time
pay when I went to court on my day off. If I spent 2 hours at a court trial
in Mineola, L.I., I got two hours added onto my vacation which usually
I had to take in the cold month of February, so that I would be
available to be working on duty during the summer months when
the 14 L.I. State Parks opened up.
I can't tell you how many Saturdays and Sundays I worked, as well
as Easters, Christmas, New Years, but you know that story.
Pay for police and firemen I guess are pretty good now a days.
But the police and firemen of today do not work in the same environment
and conditions that existed in the 50's or even the 60's when I started.
It is more dangerous out there today, than I perceived in the 60's
and I am thinking of City and County police. I do not limit my observations
to traffic work, but injuries and deaths do account for a lot of police traffic
work.
As the executive officer for the L.I. State Parkway police,
I was sued for 1.3 million dollars because of an incident during
an arrest affected by two of my officers.. Today, I would suspect,
any officer might find himself the object of an expensive suit,
for just doing his job. The professional training is intense,
and in the criminal field, comes close to what a lawyer needs to know.
But a lawyer, usually does not have to contend with physical danger.
He has court officers around him to protect him in the court room.
The police officer during the darkness of 3 am in the morning, does
not have a lawyer with him to help make the right decision, under
stressful circumstances.
Fire men and gals, have an awful lot of physical stress, which is
hard to compare with any other employment. Just wearing all that
safety fire gear is a physical task, and encountering smoke,
heat, even if it is only the florida heat, and going into places
where conditions might change at any moment, either with fire, flames,
smoke or an explosion, or a collapse of a building, deserves proper pay
and compensation. Could you get a firemen to work for nothing?
You probably could, and there are such volunteers. But should you
take advantage that some people are born to protect and serve,
like the warrior bees of a bee hive, and not pay them well,
would not be fair nor wise. I am arrogant enough to use the
word immoral, when the public is not prepared to compensate
its protectors, while the public is safe and sound sleeping in
their homes, with their families, and the protectors are out in
the dark streets of the graveyard tours, away from their own
families and protecting the families of some,
who during the day time are looking forward to making a bundle
with a construction business that is doing well,
or as a broker for wall street or real estate.
Times are hard now, and I would expect some look at
the pay police and firemen make, and are resentful
or perhaps envious. If one thinks the pay and the pension benefits
are too high for police and firemen, I urge them to understand
how this came about, and what has been involved.
I cannot blame the unions for trying to get the best for its workers.
Did we resent the Teamsters and other unions which fought for their
workers. That unionizing some of us understood , but in ignorance, wondered
why police and firemen, who weren't expected to do very much
until we needed them, should have unions trying to make things
better for them. The world has changed, and the police field
and fire safety field, need hard working professionals, who know their
jobs, and keep up with changing problems and situations.
The training, and on going training in itself is demanding.
I personally believe that police and fire unions should realize
that their contract demands need to be reasonable in these
tight financial times. I do not think, any police or fire union
should have to give back what they have earned in past contracts,
just so that tax payers will find it easier to help bail out wall
street, the bankers, and the various health insurance greedy
wants as not publicly expressed by their lobbyists,
and their auxiliary lobbyists, --- congress.
If I am wrong, let me know. --- Hank
Dec. 7, 2009 at 1159 pm
--- AND ----
Received from Craig E. Young
Port Orange,Fl.
Dec 7 2009
Posted on Thu, Sep. 24, 2009
Cash-strapped Miami goes after firefighters' compensation
llebowitz@MiamiHerald.com
He's nowhere near the top of Miami's vast fire department hierarchy, but Capt. Raul Fernandez, who leads a crew of paramedics in the Brickell area, ranks among the costliest employees city taxpayers will support this year.
The 24-year veteran's estimated total compensation package of $349,279 places him third among 3,500 city employees, trailing only City Attorney Julie Bru and Fire Chief Maurice Kemp.
Fernandez, who earned more than $152,000 in base pay and another $96,000 by working more than 500 hours of overtime, said he was forced to moonlight as a tile installer during the first decade of his firefighting career.
``Now here's this pot of gold in front of you and you just want to stick your hand in it. Do the numbers look bad? Yeah, they look bad. But I worked the hours.''
As Miami struggles through its most contentious budget fight in a decade, Mayor Manny Diaz has his sights squarely focused on the skyrocketing pay and benefits for unionized firefighters like Fernandez.
More than any other department, the fire rescue payroll is responsible for pushing the city's annual pension payment past the $100 million threshold in 2010. That's a 48 percent increase over this year's pension obligation. Next year, one of every five operating dollars the city spends will cover the pension obligations of cops, firefighters and general employees.
Consider:
• Of the approximately 630 sworn firefighters, 19 are costing taxpayers more than $300,000 a year in compensation and benefits; another 161 are over $200,000.
• Eight firefighters receive salaries and benefit packages worth more than the city's top boss, Pete Hernandez, who costs taxpayers $329,447.
• But that pales in comparison to the 47 firefighters whose pay and benefits exceed the $265,117 in annual compensation the city doles out for Mayor Manny Diaz.
``We are well compensated,'' said Miami firefighters union president Robert Suarez. ``I'm not going to argue that we aren't.''
In addition to base pay and overtime, the city's total compensation estimates include the department's share of pension, healthcare, worker's comp and specialty pay bonuses.
After years of lagging their Sunshine State counterparts, Suarez said, Miami firefighters have consistently ranked among the top 3 statewide since 2007, when the last collective-bargaining agreement bestowed huge raises and incentives.
While comparisons with Miami are difficult because contracts vary widely among municipalities, Suarez said Miami Beach and Miami-Dade are the only two departments with equal or higher pay in Florida.
Like Fernandez, Capt. Jon E. Hart also works as an Advanced Life Support supervisor out of the Brickell Station.
A 29-year fire rescue veteran, Hart technically retired in 2006 but continues to be one of the department's top earners under the city's deferred-compensation retirement plan.
Hart collected more than $157,000 in base salary and grossed more than $101,000 in overtime in 2009, as part of an estimated compensation package that cost the city $311,000.
That doesn't include the $118,000 annual pension he started collecting in 2007.
Hart did not return a request for comment left with his union leader.
Miami Commissioner Marc Sarnoff captured the growing citywide sentiment to the skyrocketing firefighter salaries:
``I could kill my high school guidance counselor for not telling me to be a firefighter,'' said Sarnoff, who possesses a law degree from Loyola University.
Sarnoff points at national compensation data for doctors and surgeons to drive home his point about firefighters, who only need a high school equivalency degree.
According to U.S. Department of Labor statistics, dozens of Miami firefighters are grossing more than general surgeons ($228,000), obstetricians ($203,000) and pediatricians ($132,000) new to their respective specialties.
As the final city budget hearing nears, Suarez said the fire union leadership is sensitive to the criticism about excessive pay, especially while others struggle to pay bills in a city where nearly a quarter of the population lives below the poverty line.
BUDGET HOLE
He is trying to sell his rank-and-file on salary and other benefit cuts that would save Miami $15 million next year -- more than the $10 million Diaz was originally seeking from the fire union to help fill a $118 million hole in the 2010 budget.
Unlike the Miami Fraternal Order of Police chapter, which has refused to budge, the firefighters have been willing to negotiate across-the-board salary cuts: ``We know if we squeeze too much, the city's going to choke,'' Suarez said.
But the fight over lucrative public-employee salaries and pensions has become increasingly common across the U.S. as cities have been forced to tighten belts and slash budgets.
In Orlando, where firefighter salaries and pensions are similarly strangling city finances, Mayor Buddy Dyer threatened to lay off 46 of the 470 firefighters before the union struck a last-minute concession on supplemental pay that delayed the layoffs by at least five months.
Similar fights over base pay, benefits and work rules are still being waged in cities as diverse as Los Angeles and Oakland.
The fight over Miami firefighter pay and benefits is steeped in decades of bare-knuckle negotiations between the fire union and an array of ever-changing city administrators.
A well-organized political force, the firefighters have been entrenched in Miami's power circles since the mid-1980s, when city leaders were forced to admit that they had been stealing from the union's pension fund for years.
The jobs are highly coveted: In February, more than 1,000 people stood in line -- some camping overnight -- for a shot at 35 open firefighter slots in Miami.
Though desirable, they come with long hours -- one of the reasons overtime costs have soared the past few years.
Suarez blames the overtime issue on the administration, saying it failed to promote and hire entry-level firefighters in a timely fashion, which forced the department to pay loads of overtime to higher-paid supervisors.
The mayor counters that staffing rules buried in the union contract for years have created a top-heavy force with too many supervisors overseeing too few firefighters.
The current union contract, ratified in 2007, is laden with more than two dozen salary sweeteners, covering everything from anniversary and longevity bonuses to tuition and safety-shoe reimbursements. Firefighters receive annual salary supplements for earning degrees -- after taxpayers help pay their tuition costs.
They also receive supplements that boost their base pay for joining the dive, hazardous materials and SWAT teams, and for earning an array of various state certifications.
Every firefighter receives $3,429 in revenue-sharing each year from funds the city collects from insurers for delivering patients to hospitals.
They also receive more than $2,000 a year in ``fire prevention pay'' -- a practice that started in 1993, when the city couldn't afford pay raises, and continues to this day.
Turnover is rare. Suarez said the average fire department tenure is 28 to 32 years. And with good reason. If a firefighter works 30 years, he or she can retire with a pension equal to 100 percent of the highest paid year of his or her career -- which includes many salary sweeteners but not overtime.
The mayor argues that when the city hires a new firefighter in his 20s, the city will wind up paying him for the rest of his life.
Others, like Hart, the ``retired'' Advanced Life Support captain, scoop up copious quantities of overtime because of shortages in specific supervisory jobs.
Like many public employees, firefighters are allowed to ``bank'' up to a year's worth of unused sick days and cash them out at career's end.
The biggest boost in salaries came after the 2007 contract was ratified. Firefighters were guaranteed 5 percent across-the-board raises each of the three years of the contract.
But that doesn't tell the whole story.
In addition to the annual raises, all union members receive at least a 2.5 percent raise every six months until they reach the top of the scale, plus salary supplements like the 14 percent increase for all state certified paramedics.
Former City Manager Joe Arriola said ``the main reason'' he quit in 2006 was Diaz's refusal to back him in hardball negotiations with the three main unions.
Arriola said he wanted to force the unions to declare an impasse. ``They would have fought,'' Arriola said. ``It would have gone to the courts, and the courts would have seen the numbers.''
THE FINAL STRAW
Arriola was on the sidelines when his successor, Pete Hernandez, and employee relations director Hector Mirabile negotiated the lucrative three-year deal that is now forcing the city to cry poor-mouth.
``It gave away the store,'' Arriola said of the 2007 contract, ``everything I worked for. That was my last fight with Manny Diaz, I wanted to take the unions to an impasse. . . . But in the end, Manny didn't have the stomach for it.''
Fire union president Suarez is stunned by the mayor's sudden change of heart that has led to what Suarez characterizes as demonizing his rank-and-file.
``It's a bitter pill for me,'' Suarez said. ``Because [Diaz] was a champion of how we won these salaries in the first place. All of a sudden, there's a flip of the switch and he's pounding us.''
Suarez took an extra swipe, calling the mayor a ``hypocrite'' for suddenly taking a hard line on the city's pension crisis.
In addition to demanding cuts in police and fire pension costs, Diaz is asking commissioners to end the practice of providing pensions for elected officials. If that proposal passes, Suarez noted, it won't go into effect until after Diaz leaves office -- his pension bolstered by a controversial $53,000 raise he received in December 2005.
Diaz brushed off the attacks as a petty smoke screen intended to divert attention away from the larger financial issues the city is facing.
``You have to fundamentally change the way you do business,'' Diaz said. ``You have to change the entire compensation scheme. We can't afford to keep doing business this way. It isn't sustainable.''
Miami Herald staff writer Jennifer Lebovich contributed to this report.
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The following article has been referred to us by
Craig E. Young
Port Orange, Fl.
L.A. police union pressuring newspaper to fire journalists
May 25th, 2009 · 25 Comments
By Carlos Miller
At a time when newspapers are slashing budgets and ousting reporters, and finding it impossible to find investors, the San Diego Union-Tribune has recently been purchased by high-end investment firm based out of Beverly Hills.
The only problem is that the company, Platinum Equity, is funded heavily by the pension plans of Los Angeles police officers and firefighters, essentially giving the police officers an owners of the Southern California newspaper.
And now they want to fire the paper’s editorial board because they perceive them to be “anti-cop”.
Seems like there is a lot of that perception going around lately.
According to The Los Angeles Times:
Platinum relies on a $30-million investment from the pension fund of Los Angeles police officers and fire fighters, along with large sums from other public-employee pension systems around the state, to help fund its acquisitions of companies. As League President Paul M. Weber views it, that makes the League part owner in the flagging Tribune and League officials are none to happy with the paper’s consistent position that San Diego lawmakers should cut back on salaries and benefits for public employees in order to help close gaping budget deficits.
“Since the very public employees they continually criticize are now their owners, we strongly believe that those who currently run the editorial pages should be replaced,” Weber wrote in a March 26 letter to Platinum CEO Tom Gores.
Also hoping a change in the paper’s editorial stance is most likely San Diego Mayor Jerry Sanders, a former police chief, who in 2005, promised he would not collect his police pension if elected.
He was elected and now he is collecting $92,400 a year through his pension – in addition to the $100,000 a year he makes as mayor. And this at a time when he is asking other city employees to take pay cuts and unpaid furloughs to help the city reduce a $60 million budget deficit.