Seven months after demanding an estimated $100,000 audit of the pension, firefighter pension board Chairman Keith Tanner finally got his wish.
The board, which at the last two meetings staved off Tanner’s demand, agreed to his request at its Aug. 25 quarterly meeting.
Firefighter/paramedic Frank Stoudt produced a list of 28 signatures at the meeting — more than 90% of the department’s employees — from pension members who want the study to be performed.
A combination of underfunded pension liabilities combined with contract negotiation tension has frustrated and upset the firefighters, Stoudt said.
“In order to find out what problems we have had in the past, we would like a forensic investigation of the pension from day one until now,” Stoudt said. “This is more than a request we are making.”
In February, Key resident and pension board trustee Arnold Malasky answered a list of questions presented by a union consultant who questioned the board’s unfunded liability.
The union and the consultant never challenged Malasky’s answers, and the matter appeared resolved.
But Stoudt told the board the firefighters need the study to be performed to put the matter to rest.
“All we hear around town is how our pension is causing the town problems,” Stoudt said. “We feel it’s constantly hung over our heads, and we’re sick and tired of it.”
At the meeting, Malasky reiterated that he had answered the union consultant’s questions.
“It seems silly to throw even $100 away on a study when no one will articulate why it needs to be done,” Malasky said.
But Stoudt stayed firm in his request.
“We want an outside agency to find out what happened to our pension and why it’s $10 million underfunded,” Stoudt said.
Pension board members and firefighters Tanner and Michael Murphy backed Stoudt from the dais.
“That question (about why the plan is underfunded) has never been answered,” Murphy said.
Malasky took offense to the comments.
“A general investigation is throwing away money,” Malasky said. “If you’re having an issue with the town over this in negotiations, then that’s something you should take up with the town.”
The back-and-forth exchange prompted pension board attorney Bob Sugarman to comment.
Sugarman noted that the pension is audited once a year by an outside agency and is reviewed by the state actuary, the pension board’s actuary, the state’s Division of Retirement, the attorneys hired by the board and the board’s investment manager.
“If you want to blame somebody, blame whoever turned the stock market upside down,” Sugarman said. “Our investments didn’t pan out. But your plan is sound as long as the employer — the town — makes its contribution every year, which it has always done without fail.”
And Malasky noted that even if the market hadn’t gone down, the pension would be $8 million underfunded instead of the current $10 million.
“The main reason the unfunded liability is so high is that the funding method was changed in 2003 to help the town financially,” Malasky said. “Now we are paying more later to make up for that change.”
But Tanner disagreed.
“There is a huge, huge, huge attack on our pensions, not just here but across the country,” Tanner said.
“We have one person saying it’s this and another saying this. We are getting blamed for this as trustees, and if I’m going to be blamed for something, I want to know what the problem is. I, as a trustee, am not going to sit on my butt and listen to other people. I want someone else to tell me what’s wrong with my pension. If it costs $50,000 to $100,000 — fine. We have a fiduciary responsibility to make sure this pension will be here for all our members.”
Pension board member and union Vice President Brandon Desch agreed.
“More than 90% of members are requesting this,” Desch said. “I feel like we have to do it.”
Malasky asked those in attendance to imagine what would happen if the pension were to take a $100,000 hit for a study that shows benefits need to be cut.
“We don’t care,” Stoudt said. “This is what we want to see done.”
The comments forced Sugarman to reverse course.
“I am extremely sensitive to the fears and discontent of members because pensions are major assets,” Sugarman said. “We can’t have scared members.”
The board unanimously accepted Sugarman’s proposal, which was a motion to set up a subcommittee to review proposals from both local and national consultants who can perform a forensic actuarial audit of the pension.
Town Finance Director Tom Kelley, however, expressed concern with the suggestion.
“It seems to me they are worried about their pension being cut and are demanding this as part of contract negotiations,” Kelley said. “Who is going to pay for this study? As a representative of the town, I can’t see wasting the town’s money to do this.”
Kelley explained that although the cost of the money will come out of the firefighter pension, the town’s taxpayers will ultimately have to put more money into the plan next year to keep the plan viable.
But Sugarman told Kelley and the board that they must listen to the members at this point.
“I was hired to make suggestions and make my clients feel comfortable,” Sugarman said. “Apparently my clients aren’t comfortable, and someone else needs to tell them how we have gotten here.”
Desch made the motion to form a subcommittee and obtain proposals from five companies by Sept. 15, with the intent to receive the finished analysis from the selected company no later than Nov. 10 so it can be reviewed at a Nov. 16 special meeting.
Contact Kurt Schulthies at firstname.lastname@example.org.
The town of Longboat Key’s firefighter pension board of trustees will form a subcommittee in two weeks to review proposals from five companies capable of performing a forensic analysis of the pension.
The questions the company that is selected must answer include:
• How did the pension plan reach its current status of unfunded liability?
• Why is the unfunded liability at the level it is?
• What decisions made caused the unfunded liability to be at the level it is?
• Were any decisions made improper or imprudent?
• What was the impact of each decision made?
The Longboat Key’s Fire Rescue Department and the town also can’t agree on health care.
In a meeting last week with Human Resources Manager Lisa Silvertooth, the firefighters requested that the town not change its co-payments and deductibles for two years and agree not to increase employee contribution rates by more than 10% per year for two years.
Town Manager Bruce St. Denis, who has already raised rates for town employees in the coming fiscal year, did not agree to the offer.
The town’s total insurance premium increase beginning Oct. 1 will be $38,425. Town employees will pay $9,698 of that increase, and the town will pay for the rest of the cost.
Currently 1 Response
- Regarding the defined benefit pension plan in question, it is time to terminate it. Establish a defined contribution plan and be done with long term liabilities. In this era of the Great Recession, the firefighters and police have not suffered in the economic pain that the population at large has suffered. It's time that changed. This represents a unique opportunity for the Town to negotiate hard and end the undeserved largesse these employees receive.
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