UPDATE 3: Legal Battle
Coming on the heels of a court ruling in July that the City of St. Louis cannot prevent the Fireman’s Retirement System (FRS) from suing the City in order to defend the fire fighters pension system, a trial on a new eight-count lawsuit against the City went to trial last week on Aug. 21.
While St. Louis Fire Fighters Local 73 has been willing to make changes to its pension plan in order to save millions for the City, offers that were ignored by the Slay Administration, the Board of Aldermen passed several ordinances to destroy the current pension plan and replace it with one of their own making.
Because of the Board’s action, and previous rulings by the Missouri Supreme Court that the City does not have the legal right to make changes to the pension system under Missouri law without first obtaining enabling legislation from the Missouri Legislature, the current lawsuit was filed to protect the pension plan and its retired and future beneficiaries, the fire fighter members and retirees of Local 73.
“It’s unfortunate that the pension trustees had to sue the city in order to win fairness for our fire fighters and retirees,” said Chris Molitor, Local 73’s president.
“We made it publicly known that we were ready to negotiate changes in our pension plan; that we would work with the City to take those to Jefferson City to get enabling legislation passed so that the aldermen could then make a final decision. We made several attempts to meet with the city to negotiate the issues, but they refused to do so.”
CHARGES AGAINST CITY
The new lawsuit contends:
• City lacks the authority to repeal the existing plan and enact a new plan that is in conflict with state law. The only authority the City has to enact and maintain a firemen’s retirement system derives from the Missouri Constitution.
• City lacks the authority to repeal or change the FRS directly, unless it first obtains state enabling legislation for specific changes. Once it has this legislation, the City is free to make, or reject, whatever changes are authorized in the enabling legislation.
• The two Board Bills passed by the Board of Aldermen (Board Bills 11 and 12) violate the Missouri Constitution that specifically says “no city may enact a public retirement or pension system without authorization from the Missouri General Assembly… The only authority the City has to enact a firemen’s retirement system is that which flows from the Missouri Constitution to the General Assembly and from the General Assembly to the City.”
• City’s efforts to prevent fund trustees from suing the City for any wrongdoing illegally prevents the fund’s trustees from protecting the pension system.
• City’s actions violate the federal Uniform Trust Act by preventing trustees from acting in the best interest of FPS beneficiaries.
• The proposed “emergency provision” is illegal in that it’s not for the “immediate preservation of the public peace, health or safety.”
• It’s illegal to impose a liability on plan’s trustees for simply doing their job.
• Violates the Open Courts provision of the Missouri Constitution.
• The city is illegally using its “home rule charter provisions” to try and enact a new pension plan.
• An arbitrary change by the City of actuarial accounting methods is illegal.
BIG $$ AT STAKE
Pivotal in this lawsuit is the amount of money that’s at stake.
By changing the actuarial methods of accounting on the pension plan, “and abandoning the City’s promise to guarantee the benefits…together create a huge unfunded liability of $117,692,565 for which the City is responsible,” the lawsuit contends.
Should the City win this lawsuit and gain control of the pension fund, the City would be still be liable for the $117,692,565 to guarantee retiree’s benefits and “grandfathered” benefits, the lawsuit contends.
“The real tragedy is that the city could already be saving millions of dollars for the taxpayers,” Molitor stressed. “On top of that lost money, they will be spending hundreds of thousands more on the lawyers instead of using those funds to meet their obligations to fire fighters who put their lives on the line every day.
“Every taxpayer should be angry that the City has taken this approach.”
‘LOCAL CONTROL’ NEVER BEFORE AN ISSUE
Concludes the lawsuit:
For more than half a century, this process has been in force and followed by the City… “until the City created this ‘local control’ scenario (which) means the City’s effort to violate the Missouri Constitution, Missouri statutes and perhaps Missouri Supreme Court decision, by asserting it is not governed by them, since it is a charter city.”
The lawsuit points out that the FRS trustees have challenged City legislation or actions on three occasions, each time winning in the Missouri Supreme Court. Most recently and significantly, the trustees sued and won a $49 million judgment against the City for underfunding the fire fighters’ pension plan for many years.
‘WHAT ARE THEY THINKING?’
Dan Tobben, attorney with Danna McKitrick, the FRS attorney, noted in a recent blog:
“I turned on the local St. Louis news to find a story about a 20+ car pile-up on a local highway. The news crew reported that the St. Louis City fire fighters rushed to the scene, rescued over 20 people from their cars, and handled the catastrophe quickly and efficiently. After seeing (this), it makes me think that people should not rush to judgment regarding public safety pensions until they know all of the facts.
“…It makes you wonder what are these City officials thinking or are they thinking at all?” Tobben added that based on past decisions in the courts involving these parties, he was “optimistic” about the outcome.
The Firemen’s Retirement System of St. Louis currently provides retirement, disability, death and survivor benefits to nearly 2,000 active and retired participants and their beneficiaries.