St. Louis’ unilateral changes to Fire Fighters Local 73 pension plan now before the Court of Appeals

Decision not expected for many months

LEGAL BATTLE, Round 3

By ED FINKELSTEIN
Publisher

St. Louis – Round Three in the legal battle between Fire Fighters Local 73 here and the City of St. Louis over the issue of fire fighters’ pension ended in less than 40 minutes last week at the Missouri Court of Appeals. But the decision will take months to determine.

And no matter what the outcome, the case is probably headed for the Missouri Supreme Court, where the City has already lost three cases relating to fire fighter issues.

“We feel positive about the ultimate outcome,” said Local 73 President Demetris “Al” Alfred. “When you look at the facts and the previous conclusions of law, we are comfortable with the ultimate outcome.”

BACKGROUND
Because in 2004 and 2005 the City did not contribute appropriate funding into the fire fighters’ pension plan, when the economy soured in 2008 the City found itself in a fiscal crisis for any number of reasons, including monies to continue funding the pension plan – monies that a 2007 Missouri Supreme Court ruling said the City must pay.

As a result, in 2012 Mayor Francis Slay convinced a majority at the Board of Aldermen to kill the existing fire fighters’ pension plan and create a new pension plan with substantially lower benefits and more stringent eligibility requirements.

After an arduous struggle, in a split vote, the Board approved the mayor’s plan. And thus began the court fight.

THE CENTRAL ISSUE
Fire Fighters argue that the Missouri Constitution is clear: no changes can be made to their pension plan unless the State Legislature first approves them.

The City obviously disagrees. Their position: they didn’t “change” the plan they simply “replaced” it, therefore no Legislative approval is required.

Last week’s hearing was Round Three in the continuing fight for justice:

• In Round One: Fire fighters WIN. After the City tried to implement its new plan, the fire fighters legal team headed by Pension Fund attorney Dan Tobben of Dana McKitrick, won an injunction to stop the new plan’s implementation.

• In Round Two: Split decision: City asks judge to delay implementation of his earlier injunction.

To bolster their request for the delay, the city partially concedes to the fire fighters’ arguments and offers a new plan; instead of forcing lower benefits on all fire fighters, even those already vested in the pension, they would apply the changes only to new hires and those current fire fighters with less than the 20 years needed for vesting.

Based on this revised plan that now does not penalize already retired fire fighters, retirees and spouses as well as active duty fire fighters with more than 20 years of service, the judge allows the City could implement its revised plan.

As a result every active duty fire fighter with less than 20 years of service loses out as their benefits will be calculated on the changed plan’s benefit schedule instead of the schedule they were promised, by contract, when they were hired.

This set up the current challenge to allowing the City to implement this new plan without first going to the Missouri Legislature to get approval as the pension trustees say is required by state law.

(EDITOR’S NOTE: The issue of whether or not a city or state can change pension benefits mid-career has had mixed rulings in the courts in several states. In the current Local 73 case, one of the three-panel judges asked the City’s attorney: “Do you really mean that a person who served for 19.5 years would lose their better pension benefits promised when they were first hired?” The attorney replied, “YES,” it’s less than the 20 years required for vesting. Ultimately, a final decision could have national implications if political jurisdictions are allowed to change pension benefits at will.)

“There is well-established case law that if the City wants to change the pension plan, they first have to get approval of the Legislature,” Tobben told the Labor Tribune. “We are confident in our position.”

UNION WILLING TO COMPROMISE
Early in 2012 when the funding became an issue, fire fighters offered to make changes in their disability pension plan to help with the fiscal concerns.

They went to Jefferson City and lobbied the legislature for changes that would have saved the City millions of dollars every year. To everyone’s shock and anger, the City’s representatives actually testified against the proposed changes!

When the fiscal issue first arose, the fire fighters and the pension fund trustees agreed to changes that would have saved the City over $6.7 million. The City turned them down. At the time, the City said it needed to save $7 million.

Then followed the fiasco in Jefferson City.

“Frankly, we believe the amount of savings was never the issue,” Alfred said. “The City simply wanted to get total control of our plan, period, so that they could make future changes at will.”

NO SOCIAL SECURITY
The fire fighters made the point over and over again that because they are NOT eligible for Social Security, they gave up raises over the years to ensure a solid pension that would carry them and their families in their retirement years.

While the City in 1982 offered to let the fire fighters stop paying eight percent of their pay into their pension and instead put it in their paychecks, as they had done years before for other city employees, the fire fighters opted to continue paying into the plan to ensure a solid retirement benefit.

This despite the fact that St. Louis fire fighters are among the lowest paid in the U.S. even as the St. Louis Fire Department has a national reputation of being one of the best-trained, most capable departments in the nation.

“Our guys gave up salary and other benefits to keep up a strong pension plan. Trying to change that now is a betrayal to all fire fighters who put their lives on the line every day,” Alfred stressed.

POLICE CHIEF AGREED
To lend even more credibility to the fire fighter’s argument for a strong pension plan to attract qualified candidates, during the struggle last year over the City taking control of the Police Department to contain costs, then Police Chief Dan Isom, in a Post-Dispatch interview said, “People stay here long-term because of pension benefits… It’s not because of the pay, because our pay is lower than most police agencies in St. Louis and in the region.” As is the fire fighters.

And to add insult to injury, the new plan limits the issues over which the Fund trustees can sue the City if they feel there are errors in the City’s decisions.

“The trustees have their hands tied trying to fulfill their fiduciary responsibilities,” attorney Tobben noted.

The Appeals Court could take several months to make a decision or it could decide not to make a decision and send it directly to the Missouri Supreme Court.

What’s at stake for St. Louis fire fighters?

New detrimental pension changes in Fire Fighters Local 73’s pension plan unilaterally implemented by the City of St. Louis have dire consequences for fire fighters who do not earn Social Security benefits and count on their pension for their entire retirement income.

Fire Fighters gave up pay raises over the years to improve their pension benefits, improvements that were authorized by the St. Louis Board of Aldermen, many of whom turned their backs on fire fighters by implementing Mayor Francis Slay’s pension plan changes. They include:

• Elimination of cost-of-living for current retirees and widows.

• Increased contributions from eight percent to nine percent for lower benefits.

• Eliminating the return of deferred contributions upon retirement to include all those working now who were counting on this as part of their overall retirement benefit since they do not get Social Security.

• Prohibiting current fire fighters and new hires from retiring until age 55. Under the original plan, they were eligible for retirement after 20 years of service with no minimum age. Why the original rule? Fire fighting is a younger man’s task because of the physical demands of the job.

• Elimination of some of the illness presumption laws that are in place that impact the retirement age. These presumptions are based on statistical data that shows fire fighters suffer from much higher rates of cancer, and lung and heart disease than the general population, thus making retirement after 20 years a more reasonable approach than simply forcing a fire fighter to stay on duty until 55.

• A severe reduction in the amount of disability pay to a flat amount of salary; previously it was based on years of experience.