Battle over fire pensions here mirrors larger struggle; firefighters sue to stop action
This article first appeared in the St. Louis Beacon, June 8, 2012 - The trustees of the St. Louis firefighters' pension plan went to court today to try to stop the city from taking over the firefighters' pension. They are asking for a temporary restraining order to stop the Board of Aldermen from voting on a bill on Friday to give the city control over the firefighters' pension system.
A hearing is scheduled on this petition on Thursday.
Read the Beacon's earlier story below:
In the sanctuary of the Union Methodist Church in southwest St. Louis, Mayor Francis Slay and several members of the city’s fire department squared off one recent evening over a pension debate that has consumed both sides – and much of the city -- for months.
Slay told dozens of local residents that St. Louis can’t afford to continue its current firefighters’ pension system, which has seen its annual cost skyrocket from $6.4 million in 2001 to $29.4 million for the coming year.
As it stands, pensions amount to about one-third of the city’s firefighters’ budget. Slay’s administration is proposing a new retirement system that the mayor says would save $9.1 million a year.
The firefighters countered that they have supported an alternative that cuts up to $7.6 million a year. Slay has rejected those trims as inadequate. The firefighters say the mayor’s real aim is to obtain unilateral control of the pension system and slash it further. The mayor says that untrue.
Both sides have now launched dueling TV ad campaigns, while accusing the other of spreading half-truths.
Their audience is made up of city residents like Larry Meyers, who admits some confusion while wondering why the two sides can’t reach a compromise.
Meyers, a veteran nurse, was in the audience at the Methodist Church. He is keenly interested in pensions. His own private employer, a major local hospital, is revamping – and trimming – its employee pension program, which he had hoped to rely on within a few years.
By all accounts, the pressure on pensions – public and private – is tightening. And expanding.
Pension debate goes national
Slay's allies point to this week’s news out of California, where voters in San Jose and San Diego voted overwhelmingly in favor of changes to the cities' pension plans for public employees.
In San Jose, the pension system’s annual price tag has risen in a decade from $73 million to $245 million. Right after Tuesday’s vote, the unions for police and firefighters went to court.
At the National League of Cities, research director Chris Hoene said St. Louis’ battle over public pensions reflects a problem confronting cities and states across the country.
In 2011, the league surveyed 275 cities with populations over 10,000. At least one in five had made cuts in employee pension plans, he said. And about one-third had trimmed benefits, such as health care for active employees.
Hoene said the reason was obvious. Beginning in 2008, he said, the average city has seen its income decline four years in a row. “The big problem is the economy and everything that means," the research director explained.
Initially, he said, cities made cuts in less vital services or made slight increases in taxes and fees. But by 2011, said Hoene, “more cities are faced with cuts they’d rather not make.”
That includes public-employee pensions. Many cities have had to increase their payments into the pension systems because of declines in the stock market, which have reduced the systems’ rate of return on investments, which have been relied on to cover future retiree benefits.
Increasing those pension payments means that cities must make cuts elsewhere – or change the pensions.
“Nobody wants to cut services like police and fire," Hoene said. “But cities are required by law to balance their budgets.”
He predicted that this year could see a slight improvement in cities’ bottom lines, as the stock market stabilizes and more people find jobs.
Kansas City and St. Louis County spared – so far
The Kansas City City Council is expected within days to consider a proposal to make changes in the city’s pension system covering its employees. Danny Rotert, communications director for Mayor Sly James, said the proposal reflects recommendations from a task force made up of labor, pensioners and financial experts.
A key aspect of the changes includes increasing the amount the city would pay into current and future employees’ 401K retirement plans, while reducing payments into defined-benefit pension plans. The changes would not affect current retirees, Rotert said.
Overall, he said, “there are no big fights on this side of the state on this particular issue.”
Officials in St. Louis County offer a similar observation. Tim Fischesser, executive director of the St. Louis County Municipal League, said that the county’s cities and towns haven’t complained yet of pension-funding problems.
Ditto for St. Louis County Executive Charlie Dooley. When it comes to county-employee pensions, Dooley said, “We don’t have the same problems that city has; that’s a fact.”
Dooley said county employees haven't been asked to contribute more of their salaries to pensions, though he did add that may be considered in the future.
“Right now, our pension funds are not a major problem for us,” Dooley said. “I don’t want to compare. I’m just saying St. Louis County does not have the pension problems that the city of St. Louis has.”
St. Louis County does have a large police department, but it does not employ firefighters. County residents rely on municipal fire departments or “fire districts" scattered throughout the county.
“That takes a lot of pressure off us, there’s no question about it,” Dooley said.
Bob Soutier, president of the Greater St. Louis Labor Council, sits on the board of the Pattonville Fire Protection District. He said his fire district, and others in the region, haven’t seen the pension-funding problems facing St. Louis – even though most county firefighters also receive higher pay.
“We can pass bond issues and tax increases that the city is reluctant to do," he said.
Slay, firefighters stick to their guns
Soutier supports the city's firefighters. He also had joined Civic Progress executive director Tom Irwin, a former aide to previous St. Louis mayors, in an effort to get both sides – Slay and the firefighters – to negotiate over their pension differences.
The disagreements are vast.
City firefighters, for example, say that the mayor has been misrepresenting the size of the pension that the average firefighter receives (about $35,000 a year for a private serving 30 years) and fails to mention that they aren’t covered by Social Security.
Slay acknowledges that his figure for the “average pension" includes fire department officers, but he says his point is the overall cost for the city and the public. “We can’t let their pensions take their departments down," he said in his speech to the audience at Union Methodist Church. “I’m representing the taxpayers. … You’re not an ATM machine.”
Slay said the skyrocketing firefighters pension costs are forcing cuts in the number of active firefighters, and in other city services.
Ken Mitchell, a city fire captain and first vice president of Firefighters Local 73, said the firefighters agree with Slay about the need to rein in savings and, in particular, to change the disability system.
Where they differ, he said, is on particular provisions. He pointed to a firefighters’ proposal that they believe would result in more longterm savings than Slay’s plan; the mayor's office disagrees.
“It’s not like we’re not trying," Mitchell said. “It’s about control.”
The firefighters say Slay's plan before the Board of Aldermen violates the state law governing firefighters’ benefits, because the city hasn't sought approval of the General Assembly. The firefighters pledge to go to court if the plan is passed.
Slay denies violating any laws but says the city has been unable to find receptive state lawmakers. “We tried to put up a bill in Jefferson City. It’s a well-known fact that the firefighters have an aggressive lobby," the mayor said.
The firefighters also point to their success in 2007 in winning a lawsuit over the Slay administration’s decision several years earlier to reduce how much it would put into the firefighters’ pension system for several years. The court ordered the city to restore the unpaid contributions, requiring the city to take out bonds.
If Slay's administration had made the proper contributions during those years it withheld money, the firefighters say, the city and the pension system would be on a stronger financial footing.
Slay, in turn, says the firefighters’ pension problems are exacerbated by the pension board’s $256 million in investment losses over the past 11 years. The board, added the mayor, is controlled by firefighters.
Both sides say they’re committed to continuing their TV ad campaigns until the other side ends theirs.
Soutier says that the amount of distrust on both sides is making it impossible for the two sides to negotiate. He’s advocating binding arbitration.
In the meantime, Slay already has begun pension talks with the city’s police officers. He is more optimistic that a deal will be struck.
Jason Rosenbaum of the Beacon staff contributed information for this article.