By MIKE ANTHONY
The president of Local 1889 of the International Association of Fire Fighters believes the union membership will back an appeal of a ruling upholding the Mehlville Fire Protection District Board of Directors’ authority to make changes to the district’s pension plan.
“… From what I’m hearing, I mean I think we’ll have the backing of the membership to move forward with an appeal,” Local 1889 President Bob Strinni told the Call.
Union employees’ request for a permanent injunction prohibiting the Board of Directors from changing the fire district’s pension plan to a defined-contribution plan from a defined-benefit plan was denied Aug. 27 by St. Louis County Circuit Court Judge Thea A. Sherry.
On Dec. 24, Sherry denied union employees’ motion for a new trial, but granted their motion for an injunction pending appeal that prohibits the board from making any changes to the pension plan. Four days later, Local 1889 attorney John Goffstein filed a notice of appeal with the Eastern District of the Missouri Court of Appeals.
During a recent interview with the Call, Strinni and Doug Weck, a member of Local 1889’s Executive Board, discussed at length the union’s relationship with the Board of Directors, which changed dramatically in April 2005 when reform candidates Aaron Hilmer and Bonnie Stegman defeated two union-endorsed incumbents to gain election to the board. During their campaign, Hilmer and Stegman ran as a team, vowing to roll back a 33-cent tax-rate hike approved in November 2004 and cut what they termed fiscal waste.
As Hilmer and Stegman began making good on their campaign promises to trim costs, including employee benefit packages that previously included 100-percent dependent coverage for medical, dental and vision insurance and numerous vacation and sick-leave days with full pay, the relationship with Local 1889 quickly began to sour. By June 2005, Goffstein warned board members in a letter that changing the district’s existing defined-benefit plan for retirement to a defined-contribution plan for new employees could result in a lawsuit in which board members could be held individually liable.
Before the month ended, Local 1889 had filed a lawsuit that sought to prohibit the board from implementing a disability-benefit contract with Standard Insurance and eliminating current disability benefits from the district’s existing pension plan.
On Feb. 24, 2006, the board’s motion for summary judgment was granted, dissolving a preliminary injunction and dismissing the suit. In January 2007, a three-judge panel of the Eastern District of the Missouri Court of Appeals issued an order affirming the dismissal. In May, the Missouri Supreme Court declined to hear the lawsuit.
In March 2006, the union filed a lawsuit just days after the Board of Directors voted on March 16, 2006, to adopt an amendment and two resolutions changing the district’s pension plan from a defined-benefit plan to a defined-contribution plan. Shortly after Sherry denied the union’s motion for a new trial in late December, Goffstein encouraged union leadership and board members to work toward a settlement.
The defined-benefit plan has an unfunded actuarial accrued liability of more than $5.8 million and the Board of Directors voted unanimously during a closed session last month to issue an offer to union employees to settle ongoing litigation involving the pension plan, including contributions to the defined-contribution plan as follows:
For 2008, employees with 15 years of service would receive 22.5 percent; 15 to 19 years, 24.5 percent; 20 to 24 years, 26.5 percent; and 25 or more years, 30 percent. For 2009 and future years, employees with less than 15 years of service will receive 8 percent; 15 to 19 years, 9 percent; 20 to 24 years, 10 percent; and 25 or more years, 11 percent.
Among the union’s proposals to settle the pending litigation was a 3-percent increase in the contribution rates for the defined-contribution plan, effective Jan. 1, 2009.
As requested, those rates would range from employees with less than 15 years of service receiving 11 percent; 15 to 19 years, 12 percent; 20 to 24 years, 13 percent; and 25 or more years, 14 percent.
Strinni and Weck told the Call that 11 percent to 14 percent for pension contributions is the norm throughout the county and the board’s proposal unfairly penalizes those firefighters who are nearing retirement.
“… I did a survey of the county, (which) said 11 to 14 percent is the norm,” Strinni said. “And if you’re going to retain and attract employees, we can’t have the worst benefit of everybody, and if you look since they’ve been in, we have the worst sick leave. We have the worst vacation.
“We have the worst — one of the worst pension funds with this proposed 8, 9, 10, 11 percent, and what do you tell all the guys that are losing $200,000 five years, four years before they retire? That makes them have to stay two to three to four years longer …”
Weck said, “With the numbers that they’ve proposed — the 8, 9, 10, 11 percent — that’s much less than what the pension levy brings in each year …”
Strinni said, “This year, the pension will bring in $1.933 million. If you take 8, 9, 10, 11 percent and you average it with a $10 million overtime and payroll — it’s about $10 million. So if you just do the average, it’s about $975,000 that he has offered everybody as their pension contribution and there’s still $900,000 to $1 million left.”
“After he makes the contributions for this year,” Weck interjected. “And there is a shortfall. That’s why we suggested increasing the percentage that they’ll contribute … to help take care of the shortfall because there’s like extra money from ’06, ’07, this year, and once they pay that off, then at that point we would like to see the percentages increase. But I know they have that shortfall … That’s their big concern and we understand that. And it has to go away. If they take care of that, then we’d like to see more sharing …”
Given what other fire protection districts offer for pension contributions, the local’s request is not unreasonable, Strinni said.
“I mean there’s departments getting 14 percent a couple of years after you walk into the door, and that’s why it ranges from 11 to 14 percent,” he said. “Some of them get 22 percent, but they’re like the smaller municipalities that probably don’t make the money, so they get a higher (pension) percentage …”
Weck said, “And the other thing with ours is you start at 8 percent, but you’re there 15 years. That’s a long time to be at the low end. Most of the departments if they start anywhere close to that, they step up much sooner.”
Strinni said, “… In a defined-contribution (plan), you know that the more money you have faster the more time it works for you. To get the highest contribution, you have to be there 25 years. You know, 25 years, you’re almost at the end of your career. So what is the highest contribution rate going to do for you a few years before you retire?”
Weck said, “I know some people look at the numbers and say: ‘Oh, my gosh. Other industries don’t make those kind of percentages.’ It’s a unique situation that we’re in in the fire service in that we can’t work until we’re 70 years old or 65 years old like most people who work in careers and earn money in pension contributions for those last five or 10 years. When we’re 60, it’s hard to work on a fire truck.
“So we have to stop working at that job and stop getting pension contributions and start living off of our pension five or 10 years before other people do. And they’re still getting contributions. Theirs are still growing and ours are dwindling down. So that’s one of the reasons that in this field, our contribution rate is higher than it is if you’re working in a different (profession).”
As for those employees nearing retirement, Strinni said, “Those guys are never ever going to come close to making up what they’re going to lose here. I mean they’re that close to their retirement and we feel there’s no reason for this to happen. Now Bonnie made the statement to me: ‘Oh, well, a couple of years ago, we might have worked with you or this or that.’ Well, why can’t we do that now?”
Asked if the acrimony created by lawsuits the union has filed against the board is a factor, Weck said, “Oh, I’m sure it is … It happened. I can’t take that away now. I mean at the time when it came up, the numbers we had that said: Look, here’s how your pension really is funded and here’s the amount of money that is brought in. It’s not a problem and if you change, here’s the estimates on what these guys who are 53 to 58 are going to get — huge shortfalls.
“And it came up so fast it was — yeah, we filed a lawsuit to stop it to see if we could work things out and once the lawsuit was filed, then the acrimony started and ‘pfff,’ you know, everything was lost,” he added.
Despite the acrimony that exists, Weck said, “At some point, you move forward and we need it to be now … Yeah, I know all that happened and in order for anything at the department to move forward, that issue has to be settled, too. And we need just to move forward … When they tell us: Well, two years ago, we would have worked with you on this, but then all the lawsuits so that time has passed.
“It’s like: Right, it’s passed. So is that forever? I mean are you going to let go of that? Let’s move forward now. Let’s work on this and figure it out. They knew two years ago there was enough money there and they would have probably been willing to work on that and make it better two years ago, but now they’re not.
“So it’s not a funding issue. It’s a personal issue. It’s like holding a grudge and sorry that happened, but it did be-cause we were acting what we thought was in the best interest of our members, and it wasn’t just us, it was a vote that was taken (by the membership).”
Next week: Strinni and Weck discuss how reforms en-acted by the Board of Directors have impacted employee morale and the fire protection district.