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Pension Debate: Are We Out of Touch?

Organizations, like people, have personalities. As city manager, I was asked to meet with each of our employee unions in an attempt to gain financial concessions to balance the budget. Meeting with five labor groups over several days really highlighted for me how different the personality of each group is—and how differently they approach the current situation.

The nation continues to suffer as we experience one of the worst economic challenges in decades. All of us have heard public complaints about public employee compensation benefits—especially pensions.

Typical in the fire and emergency service is a defined benefit pension plan, where you earn X% of your final salary for each year of service. For example, after 20 years of service many plans provide a 60% pension benefit. However, especially when the pension is negotiated locally, the benefit for firefighters and cost to the employer can increase dramatically.

When preparing the budget, the main number the manager cares about is the required city contribution—expressed as a percentage of the total payroll. Since the economic downturn, these costs have exploded. In many communities, they're simply out of control and significant changes are needed.

In Florida, I'm seeing many local fire-department pension plans costing the city budget a 70% or more contribution rate. That means for every $100 of salary a firefighter is paid, the city must contribute $70. One plan I've seen is over 90%! And that brings us to today's problem—for both firefighters and city/county managers.

Firefighters will often argue the risks they take, serving the community, justify the level of benefits they receive after retirement. I understand that position—but can the argument survive public scrutiny? For example, military personnel are equally—or more so—at risk. Yet military personnel aren't eligible for a pension (vested) until after 20 years of service. Most fire plans require between 5–10 years for vesting. With a multiplier of 2.5% per year, military pensions often have less value than fire pension plans.

For years, local government managers have complained about overly generous benefits some firefighters negotiated. Today, that complaint is coming from the public as well. I've heard some fire and emergency service leaders (labor and otherwise) respond indignantly about these increasingly frequent citizen complaints. To those I say, "You're out of touch with the community you serve!"

I strongly support fair retirement benefits for fire and emergency personnel. I recognize and acknowledge the risks inherent in firefighting. Yet these facts alone don't justify the extraordinary costs some communities are being forced to pay today.

And this brings me back to where I started—the personality of organizations. Specifically, the difference I saw in various labor groups when asked to recognize the community's budget problems. Some came to the table with a sense of entitlement.

They made good arguments on why they deserve what they have—and perhaps even deserve more. But their arguments failed to grasp the harsh fiscal reality of a community unable to live within its means.

Then my final employee group came in to meet. Unlike the others, they came forward with some fresh ideas, agreed to open an existing contract and provided meaningful cost savings to help close the budget gap. They were clearly in touch with the community sentiment—they had no sense of entitlement.

Thank goodness for the firefighters!

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