Fire board cuts district’s sick-leave liability by $1.1 million

By MIKE ANTHONY

Executive Editor

The Mehlville Fire Protection District Board of Directors voted last week to reduce its sick-leave liability by roughly $1.1 million.

When board Chairman Aaron Hilmer and Treasurer Bonnie Stegman first took office in April 2005, the district’s sick-leave policy provided that 24-hour employees would receive 16 days of sick leave per year. If they were unused, the sick days would accrue and employees would receive a cash value for those days when they either retired or left the district.

Hilmer and Stegman cut in half the number of sick days 24-hour employees received in a year — eight instead of 16 — and also capped the amount of sick days employees could accumulate at 60.

Though the district’s sick-leave policy was radically altered by Hilmer and Stegman early on in their board tenure, the liability for those sick-leave days accrued by employees before the change remained and totaled roughly $2.3 million as of Dec. 31.

Board members voted unanimously Nov. 16 to change the district’s Employee Manual of Policies and Procedures, or EMoPP, to provide that 24-hour employees who have accumulated more than 60 sick-leave days will be paid for those days in excess of 60.

Back in 2005, the Board of Directors had limited the accrual of sick-leave to 120 days for employees who work eight hours a day. The fire board’s decision last week will pay those employees for the sick-leave days they have accumulated in excess of 120.

The EMoPP change will reduce the district’s sick-leave liability by roughly $1.1 million, according to Chief Financial Officer Brian Bond.

“… Of that $1.1 million, $800,000 will come from funds that we currently have invested to address that liability, and then the remaining amount will be used from our general fund reserves to pay out the difference,” he told the Call.

Regarding the payouts employees will receive, Bond said, “The market’s down. The employees can take it and invest it and hopefully ride some kind of incline, some increase in the market values whenever the markets turn around. So I think it’s a positive thing for the employees …”

With attrition and the $1.1 million payout, the district’s total sick-leave liability will be reduced to about $900,000.

“… Either through attrition this year or through this payout, the liability will have decreased substantially from $2.3 million down to $900,000 …,” Bond said. “It allows us going forward to do a better job of being able to invest our resources and to be able to anticipate and prepare for any employees who are taking time off or sick leave and to be able to absorb that in our operating budget as opposed to having to address our reserves down the road.

“Again, that was an opportunity to pay out these funds to the employees. It’s advantageous to them. We’re really not going to forfeit any earnings now with interest rates so low,” he continued. “There’s little benefit for us to continue to hold these funds at this time and then have to pay them out in the future when we possibly could take a better investment strategy at that time.

“So it gives us some flexibility down the road as well to be prepared and respond to what’s in the best interest of the district.”

Interim Chief Brian Hendricks told the Call that reducing the district’s sick-leave liability is a pro-active decision that will help with long-term financial planning.

“… In the process of trying to develop a three- to five-year financial plan for the district, we realized that it was going to be difficult for us — we’re basically faced with flat revenue and we’re well aware of that. And there’s no way to know when the economy is going to turn around and no one has a crystal ball to know when that possibly could be,” he said. “So what we’re doing is we’re planning that we’re going to have to go forward for the next five to seven years based on the amount of money that we have right now …

“We’re taking pro-active measures now to plan for the future and in that we realized that we had a liability there with the sick leave,” Hendricks said. “We had a situation where certain employees or any employee that could potentially be off the track long term. So what we decided to do was address the issue and it was a benefit to the employee as well. We gave them the ability to invest the money at a time when the market’s down and it also frees the liability up for us.”

The district still will have a sick-leave liability of roughly $900,000, the interim chief said.

“But it’s much more manageable liability long term … We know that we won’t potentially ever have to pay out a significant amount of money spread out over time,” he said. “So it just gives us the ability to do some forward thinking and planning ahead for the future …”

Right now, flat revenue is the long-term outlook for the district’s financial picture.

“… We’re just trying to create a five-year plan for the district and we’re planning that the amount of money we take in 2012 is the same amount that we could potentially take in 2016. We’re just trying to plan for that,” Hendricks said. “Now as everybody knows, if the economy turns around and assessments go up, then that’s one thing. But we’re taking pro-active measures now to plan that that’s not going to happen.

“I just feel really strongly the proper thing to do for the taxpayers is to be pro-active. That way, you don’t have to react when you have problems,” he added.

Hendricks emphasized that he wants to have that long-term financial plan in place for the district.

“I never want to turn around and be in a position where I have to go to the board and say: We’re going to have trouble meeting payroll. We’re going to have trouble funding the benefit packages that we currently have for our employees,” he said.

That’s why the district’s leadership needs to be pro-active, Hendricks said.

“… Just go ahead and set our budget based the fact — let’s just give a hypothetical that this is all we’re going to have. This is all we’re going to have for five years and let’s start planning now for that. The things that we have to think about — apparatus replacement, administrative vehicle replacement, the current benefit package that we have in place for the employees,” he said. “Nobody wants to ever be in the position that we have to do cuts based upon declining revenue.

“So what we’re doing is we’re going to plan for it now and still be able to fund everything we have in place now and still be able to fund everything that we have — apparatus replacement, vehicle replacement, all the things that make the fire department run …

“I just think that it’s fiscally responsible to the taxpayer to be pro-active instead of reacting to the fact of: Oops, we don’t have any money. Now you have to go back to the public and ask for a tax increase. I’m not in the business of asking for tax increases. I’m in the business of being fiscally responsible to the taxpayers and respecting their dollars …,” Hendricks said.