Local 1889 of the International Association of Fire Fighters and the Mehlville Fire Protection District Board of Directors have settled a nearly 3-year-old legal dispute over changes to the district’s pension plan.

During a closed session last week, the Board of Directors voted unanimously to approve a settlement agreement with Local 1889 that ends litigation initiated by union employees in March 2006.

Local 1889 filed the lawsuit just days after the Board of Directors voted on March 16, 2006, to adopt an amendment and two resolutions changing the pension plan from a defined-benefit plan to a defined-contribution plan.

The board’s Dec. 30 vote to approve the settlement agreement came two weeks after the Eastern District of the Missouri Court of Appeals affirmed an August 2007 ruling by St. Louis County Circuit Court Judge Thea A. Sherry that dismissed the lawsuit filed against the board by Local 1889.

Newly elected Local 1889 President Nick Fahs told the Call the decision by the union membership to settle the dispute was not an easy one, noting that he represents employees who see “tragedy and people at their worst all the time.”

“… When you tell someone that their loved one passed away or you put a sheet over somebody at 2 in the morning, it really helps you keep a perspective. This pension thing reached a point where we had to go home and tell our families: Look, things are changing and I might not be able to retire when I wanted to retire because of this decision. But ultimately, it had to be made,” he said.

“So in my opinion, I don’t think anybody really won … We’re good at keeping things in perspective and we know that it wasn’t in the best interest of our members necessarily, but it was what it was,” Fahs said. “There were some hard decisions that needed to be made and we made them and we’re ready to move on and we’re ready to make this place better because ultimately it isn’t about me … It’s about keeping our taxpayers safe and doing the right thing. I’m glad it’s over and I am anxiously looking forward to moving on to better situations.”

Regarding the settlement, board Chairman Aaron Hilmer told the Call, “We were pleased, but not so much at the settlement part — at the fact that after 31⁄2 years of lawsuits filed by (Local) 1889 that we have delivered the reforms we told people we would four years ago. And I’m not here to talk about the path about how to get to this point, but that we never let up or backed down. We told people we would clean up the pension plan and we cleaned it up.”

The board chairman also praised Fahs’ professionalism.

“I met Mr. Fahs nine days before this vote happened. I was in contact with him almost every day. I found him to be professional, his questions to be intelligent, his conversation very succinct and to the point and at least on this issue, Mr. Fahs got more accomplished in eight days than his predecessors did in 31⁄2 years,” Hilmer said.

Under the terms of the settlement agreement:

• The district will make contributions to the defined-contribution plan for the period from April 1, 2006, to Dec. 31, 2008. Years of service will be calculated with an effective date of Dec. 31, 2008.

• All employees hired before March 31, 2006, will receive contributions for 2008 based upon gross wages. Those with less than 15 years of service will 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.

• Standard Insurance disability benefits will be upgraded to a higher payout level. Primary Social Security benefits are offset as deductible income while dependent benefits are not. Benefits will be non-taxable.

• Local 1889 agrees to dismiss the suit involving the pension plan and take no action with the state Supreme Court.

Regarding the contributions for 2008, Hilmer said, “… When the residents or taxpayers read: Oh my gosh, you’re giving someone a 30-percent pension contribution for ’08, that’s because they did not receive one for the last nine months of ’06, for all of ’07 and all of ’08 until now. Those numbers are no more than that 8 to 11 percent extrapolated out over those 33 months.”

For 2009 and future years under the defined-contribution plan, employees with less than 15 years of service will receive contributions of 8 percent; 15 to 19 years, 9 percent; 20 to 24 years, 10 percent; and 25 or more years, 11 percent.

The board next will have to address shortfalls in the old pension plan, Hilmer said.

“On 3/31 of ’06, pursuant to Amendment 5, the defined-benefit pension plan was frozen and terminated. We still haven’t addressed the shortfalls of the old plan. That’s the next step …,” he said. “We will be addressing that and at some time, I would say in the next four to six months, we’ll be able to start publishing some numbers on how big was the shortfall? …”

Hilmer did not have an estimate of how much the shortfall will be because the amount will depend on interest rates and actuarial factors, but said, “It could conceivably be up to $6 million or more.”

“But until litigation was over, we never could begin to peg a number because we didn’t know the outcome. We always felt confident that the law would prevail, but just the ongoing litigation adds to the toll of the cost … As we get into the first half of this year, we’ll be able to get a handle on the cost,” Hilmer said.

Fahs said the decision to settle the litigation was approved by “a pretty significant margin” of employees.

“… The tenor at the (union) meetings once again was it was hard for people to vote the way they did. But in reality, I think everybody knew where we were at through the court process, what our options that were left and at the end of the day, I think everybody thought it’s just time to move on,” he said. “It’s like I told the board when we took the package to them: It just needs to end. This needs to go away … They reciprocated the same: Let’s just move on. There was no gloating … They didn’t parade the settlement agreement around. I was very appreciative of the fact that he (Hilmer) did it in closed session and was very professional about let’s just sign this and get this over with.”

Fahs added, “… We didn’t feel like we won and I would think if you would ask Mr. Hilmer, I think he might even say the same thing. No one won … Nobody won, but it’s time to move forward. So it was hard. We said what we had to say at our meetings. The vote was taken. At the end of the day, we’re turning the page.”

Hilmer said he would like to see the board have an improved relationship with employees.

“Always wanted to from day one. But we also had to deliver on the reforms for the reasons we got elected there …,” he said. “Their future actions will decide the tone of the relationship.”