‘Local control’ of fire fighters pension plan is smokescreen for killing the plan

Part 8 – The deception unveiled

Four sections hidden in 17,011-word, 51-page ordinance reveal secret goal

By ED FINKELSTEIN

Publisher

St. Louis – Under the plan being considered by the City of St. Louis to supposedly modify the fire fighters’ pension plan, buried in the legislation – Board Bill 12 – are four sections that reveal the City’s real intentions: to eliminate the pension program by forcing it to run out of money.

“Not modify it, but COMPLETELY eliminate it!” charges Fire Fighters Local 73 President Chris Molitor.

“The issue of ‘local control’ was obviously a smokescreen to mask the mayor’s real intentions: destroy the pension plan entirely,” Molitor said with disgust.

You have to wade through the 17,011 words in the 51-page bill to find, on Pages 37, 44, 49 and 50, the following killer sections that do indeed reveal the authorization for four ways to destroy the fire fighters pension plan:

• Total destruction, Part 1: Section 4.19.160, titled “Amendment and Termination” buried on Page 49 of 51 pages, gives the City the right to:

(a) Pass an ordinance to “terminate the plan in its entirety…”

(b) Terminate any portion of the plan.

(c) Ensures that the City has no “contractual obligation” to pay any pension benefits once the plan is amended or terminated.

The fact that the Board of Aldermen has authorized pension payments and changes to the plan for decades, and that the mayor signed them into law, is totally ignored, Molitor stressed.

• Total destruction, Part 2: Section 4.19.120 (A) buried on Page 37 of 51 pages, is an even more “insidious scheme” to kill the plan, noted on pension expert who has reviewed the City’s proposed ordinance. This section allows the City to fund the pension plan based on an ambiguous term, “actuarial soundness.” That could be interpreted to mean less than the FULL funding city ordinances and a ruling from the Missouri Supreme Court (Neske vs City of St. Louis) now requires.

Noted the expert, should the City decide to provide less than full funding over time, which the “actuarial soundness” could permit, less money goes into the plan. Then, at some point, the plan is killed. As the ordinance also eliminates all contractual rights, meaning the fire fighters could not sue, and the Trustees are also prohibited from suing (see Effective castration, Part 2 below), the plan dies and benefits have to be paid from whatever is in the pension plan until they run out (see next bullet point).

“Insidious scheme” is not too strong a phrase to describe this scenario, the Labor Tribune was told.

• Effective castration, Part 1: Section 4.19.170,titled “Miscellaneous,” on Page 50 of 51, effectively castrates the plan by eliminating any further City contributions into the plan and forcing benefits to be paid out of the existing fund. “What’s not said,” Molitor pointed out, “is that once the funds are depleted, there is no longer a pension plan. Sure it would take a few years to dry up the $440 million now in the plan, but at some point, there would be nothing left and thus no ‘reward’ for a fire fighter putting his/her life on the line every day they report to work!”

• Effective castration, Part 2: Section 4.19.140 titled “Administration – Duties of Trustees on Page 44 of 51 pages, prohibits the fund’s trustees from suing the City should they feel it’s their fiduciary responsibility to protest an unfair or even illegal action by the City! “The Board of Trustees shall have no duty or authority to challenge actions taken by the City…” And to further cower the trustees, the proposal says that should they try to sue the City, the Trustee(s) who voted to sue would be personally liable for the costs.

TURNING ITS BACK?

“I cannot believe that the majority of members on the Board of Aldermen would want to turn their backs on the residents of our City by turning their backs on the fire fighters who protect their lives and property,” Molitor said. “I wonder how each one of them would feel if something they worked for all their lives, something they had in writing from their employer, was suddenly pulled out from under them?”

PROOF OF MAYOR’S INTENT

“Fire fighters realize the City’s fiscal problems, and we’ve tried hard to do our part, but at every turn the City has upped the ante. Why? It should now be clear to everyone, and especially the Board of Aldermen, that the mayor has decided to save the City money all on the backs of the fire fighters,” Molitor stressed.

“It’s clear now that the mayor doesn’t want savings, he doesn’t want ‘control,’ he really wants to kill the entire pension program.

“ A promise is a promise. Pensions are contractual benefits that the City agreed to. Fire fighters are simply not going to walk away.

“If the Board of Aldermen feel they want to destroy our pension, we feel we have a good case to take into the courts,” Molitor said. Pension plan trustees have already authorized a lawsuit against St. Louis if they proceed to pass the legislation to destroy the fire fighters pension plan.

‘SCRATCHING THEIR HEADS’

“The fire fighters are scratching their heads wondering why the significant changes the fire fighters have agreed too aren’t enough,” said retired fire fighter Bruce Williams, a former Local 73 president and a veteran member of the Fireman’s Retirement System Board of Trustees.

“Local 73 has agreed to major concessions that they would rather not have had to make; they agreed to a two-tiered pension system, agreed to major changes in the disability pensions the City says it needs to have, have not sought any new benefits for nearly 10 years, and made other concessions that amount to over $5.1 million in savings a year to the City,” Williams said.

He added, “The agreed to savings would bring the City’s yearly contribution to the System close to what the City has been asking for, but the mayor is still seeking givebacks from active firefighters, including vested members, and other changes that could even alter existing retiree and beneficiary benefits.

EXACT ORDINANCE WORDING

• Section 4.19.160- Amendment and Termination.

A. Amendment. The City reserves the right at any time, and from time to time, to modify or amend the Plan in whole or in part by duly adopting an Ordinance.

B. Termination. The City reserves the right at any time to terminate the Plan in its entirety, or only with respect to a portion of the Trust Fund, by duly adopting an Ordinance.

C. No Contractual Right. The continuance of this Plan is not assumed as a contractual obligation of the City; and no Employee shall have a contractual right to any benefits relating to, or based upon, services rendered or compensation paid after the effective date of any amendment or termination of the Plan.

• 4.19.170 – Miscellaneous.

B. Source of Benefits. All benefits to be paid to a Participant or his beneficiary under this Plan shall be paid solely out of the Trust Fund, and the City assumes no liability or responsibility therefor.

• 4.19.140 – Administration- Duties of Trustees.

“… In particular, the Board of Trustees shall have no duty or authority to challenge actions take by the City with respect to the establishment, design, amendment or termination of the Plan, or any other action take by the City in its capacity as settlor of the Plan or employer of Plan Participants; and shall not authorize the expenditure of any assets of the Plan to fund such a challenge or objection…A Trustee shall be liable to the City for any damages to, or expense incurred by, the City as a result of any action by the Board of Trustees in contravention to this paragraph if such Trustee voted in favor of such action.”

• 4.19.120 – Funding.

A. Pension Fund. The City shall establish a Trust Fund into which it shall make contributions at such times and in such amounts as the Actuary shall determine to keep the Trust Fund actuarially sound with respect to the obligation to pay the benefits under the Plan….”