After having long conversations with both black and white St. Louis firefighters, Board of Aldermen President Lewis Reed announced a plan purportedly to decrease escalating costs of the firefighters’ pension system by $7.63 million at a press conference Friday.
The cost of funding the Firemen’s Retirement System currently totals more than 56 percent of the total firefighter’s payroll – compared to 10.3 percent in 2001, according to two bills introduced by Alderman Craig Schmid earlier this month, Board Bills 270 and 271.
Schmid pushed the bills forward on behalf of Mayor Francis G. Slay to dismantle the “unsustainable system with many unaffordable secondary benefits” and form a system that brings an estimated $9.36 million in savings for the first year. (Further actuarial work would be needed to estimate future years’ savings.)
After Slay’s proposal outraged St. Louis City firefighters, Reed – a potential candidate for mayor in 2013 – gathered firefighters together to hash out a plan that appeased the firemen and cut costs.
The main difference – and contested point – in the two politicians’ plans is who controls the system. In Slay’s plan, the city would largely control the pension system, rather than its current eight-member pension board – which mainly consists of current and retired firefighters. The mayor appoints two seats on the board.
Under Slay’s plan, the majority of the board members would be city officials rather than firemen. The Mayor’s Office did not return The St. Louis American’s request for comment on Reed’s plan.
Reed called the mayor’s plan unconstitutional because it would affect existing employees’ future retirement benefits. On Friday, Reed passed out copies of a related 2010 law opinion by the Thompson Coburn law firm regarding whether or not the Missouri Constitution would allow such changes to the pension system.
In a March 2010 opinion written for state Sen. Jason Crowell on the Missouri State Employees’ Retirement System (MOSERS), a Thompson Coburn lawyer wrote that the Missouri Supreme Court has not yet addressed whether it is legal to reduce future retirement benefits of current non-retired system members.
However, based on decisions in other Missouri cases involving changes in retirement systems, the lawyer wrote, “there is a significant probability that the Supreme Court of Missouri would rule that such a change to the MOSERS statutes violates the prohibition in article I, Section 13 of the Missouri Constitution against laws that impair the obligation of contracts.”
Reed said the opinion is important information to have before embarking on a plan that cost taxpayers $2 million or more in legal fees.
However, on Feb. 23, 2012, Board of Aldermen attorney Dave Sweeney received a memorandum from a different Thompson Coburn lawyer – contracted by the mayor’s office – that gives aldermen the go-ahead for Board Bills 270 and 271. The memo states that reducing future benefits for current employees falls within the city ordinance that governs the Firemen’s Retirement System.
The memo points to City Ordinance 49623, which states, “The City of St. Louis reserves the right to amend or repeal this ordinance at any time hereafter.”
Thompson Coburn lawyer Paul Griesemer and Deputy City Counselor Michael Garvin stated in the memo that the ordinances “contain no prohibition on the reduction of the rate of accrual for benefits that might be earned in the future.”
Last summer, Slay contracted Thompson Coburn for a $75,000 legal consultation regarding retirement pension reform. In total, their legal counsel ended up costing more than $250,000, said Tom Shepard, Reed’s chief of staff. The memorandum – which was not on Thompson Coburn letterhead – came to the board weeks after the bills were introduced and after Reed requested it from Slay.
As part of the talks, the black firefighters’ group F.I.R.E. and Firefighters Local 73 agreed to establish a special committee that would be made up of equal number of members from both organizations. The “Bridge Committee” would meet monthly to discuss issues in the fire department, including hiring and testing, said Tom Shepard, Reed’s chief of staff.
Leaders of Local 73 are also proposing to amend their by-laws to reserve two seats on every committee in the union for F.I.R.E. members who are also union members. F.I.R.E. was formed in opposition to the white-dominated union and has often struggled with the union.
A bill is already in draft form in the Missouri Legislature that would enact Reed’s plan. Reed, some aldermen and firemen will be working hard to make sure it will get passed after it is introduced into legislative session, Shepard said.
Shepard said they will get an ordinance passed before the upcoming budget year, despite the fact that the board’s session ends in April.
“There are no timing considerations that would prevent us from considering those savings,” Shepard said. “We will get it done before the budget year starts.”
