Firefighters propose cuts

Discussion in 'Local Government and Groups' started by Bob Wells, Apr 22, 2011.

  1. beachFool

    beachFool Beach Fanatic

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    I like to take the easy shots first.

    Both you and Henry are misrepresenting numbers from the actuary's report.

    As I said before, the report does not evaluate the plan based on all participants living to age 109.

    You are wrong also if you believe the plan is offiicially underfunded by 37%.

    Yes the plan is 63% funded but experts place adequate funding for DB plans between 80% and 90%.

    All parties are guilty if they expect 8% net of expenses as the discount rate.

    Plus the plan, based on the 12/31/2010 statement, had ZERO allocation to small cap stocks.

    For the record, over the last 24 months, Vanguard's small cap ETF has returned roughly 75% cumulatively.


    Based on the same statement, the plan was using share classes with annual 12B-1 (.5%) fees instead of share classes that did not charge 12B-1 fees, costing 20K-25K annually.

    I could go on but I have to take a shower.
     
  2. idlewind

    idlewind Beach Fanatic

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    Maybe this has already been answered or is common knowledge to insiders but why is SWFD not a part of the Florida Retirement System? Wouldn't that be the smart way for the district to go? After you pay your contributions all the liability would transfer to the state and the district would not be on the hook for unfunded liabilities.
     
  3. Diane

    Diane Beach Comber

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    In answer to your question, here are my opinionsregarding the layoff options and cost saving measures. I am not attacking anyone by any means; I amsimply stating what I believe to be true. By the way, I am honest and I do tell the truth as I know it. No one has to agree with me, I’m just“tellin’ it like it is” and I don’t really know what your remark about “court”means, but it doesn’t really matter. Also, no, I can't find over $2 million to avert the shortfall; if I could, people would be knocking my door down. Most of what I mention was addressed at the May Board meeting and followed up by an article in the DeFuniak Herald.

    To address options for the former Deputy Chief and I, followingare some options that I feel could have been considered.

    To retain Sean as an employee, a “push down” could havebeen put into place. This means that youeliminate his position, you make Sean a District Chief, a District Chiefbecomes a Lieutenant, a Lieutenant becomes a Sergeant and a Sergeant becomes aFirefighter. Would everyone have beenoverjoyed, probably not; but, considering that everyone at the Fire District isupset and disgusted over his layoff, I believe his brothers and sisters at the Districtwould rather everyone have a job than no job at all.

    Personally, if given the chance, I would have elected tosemi-retire (which I have now done and also have a great part-time job) andoffered to continue to work for the District and the people I love in apart-time capacity with no benefits. That would have meant that I would have been willing to work 20-30 hoursa week for a salary of $15,000 per year (there is a cap on social securityregarding what you can make without penalty). My salary was $42,734.90 before taxes. In my opinion, this would havebeen an absolute deal for the District and I could have continued to serve thecommunity in a capacity that I truly loved. My evaluations are public record. I quote from the Chief’s comments in my last evaluation: “Diane, thank you again for your dedicatedcommitment and support over the last year. Our District continues to grow professionally and your experience andteam oriented approach is a key ingredient to our success. We will continue to face the same economicchallenges in 2011 and it will require hard work, adaptability, sacrifice aswell as resourcefulness. I lookforward to your hard work contributing to our success.” I received a score of 4.48 out of a possible5. If I was the asset that my evaluationstates I was, I think I would be worth $15,000 to at least keep me workingthere and utilize my experience, knowledge and abilities. Trust me, there have been others employed bythe District in the past who received huge salaries and they were not assets byany stretch of the imagination. I willnot speak to that in this forum, but if you want to discuss waste of taxpayermoney, I can let you know.

    Another option would have been for the fire commissionersto give up their $500 a month stipend, which was a suggested cost savingmeasure. As I have said before, thisalso includes two of their spouses receiving health insurance which theDistrict pays half of. With the Districtpaying $500 a month to seven commissioners, plus health insurance for twospouses, it is equal to and I believe more than my salary was. I realize this would have been a big sacrificefor them; but, I have sacrificed my job. I would think that elected officials, paid by the taxpayers, would haveat least considered that option to save an 11.5 year employee of theDistrict. It’s not a full time job forthem and if they need it to support themselves, then things are worse than Ithought. Also, when Les Hallman was theFire Chief, the commissioners were not receiving any type of stipend. This was voted on and approved shortly afterChief Hallman left and prior to the new Fire Chief coming on board. The truth is that to date, they will not evendiscuss giving up their stipends. Somecommissioners do not attend meetings for months at a time because they are onvacation in another state, another one has missed a multitude of meetings andsometimes that persons whereabouts cannot even be accounted for. They still received their stipend each month(taxpayer money). I understand they don’t want to give up their money and/ortheir health insurance, but I had to and I had served the District longer thanmost of them and I showed up for work every day for almost 12 years and waspresent and accounted for! If it wasn’tso sad, it would be laughable.

    Also, both our salaries were funded through September 30,2011. At the very least, as longstanding employees we could have been given until then to re-establish ourlives and seek other employment. Everyone else is “waiting to see” what happens with negotiations, so wecould have been afforded that opportunity also. Just possibly another option.

    Approximately a year and a half ago, the District hired apart-time Fire Inspector. Because thisperson was part-time, healthcare benefits became an issue for him because thisperson had none. When the Districtbecame aware of this, they opted to make this person a full time employeeworking 32 hours so that the position would be eligible for benefits. After the District paid benefits for thisperson and family for several months, the person resigned and took a jobelsewhere. While this was a nice thing forthe District to do, it was not cost saving. The point is that there was someonewho was not a long term employee, who the District helped (and they knew tougheconomic times were upon us); but no options for Sean or I, who were two longterm dedicated employees.

    There was a multitude of cost saving measures given tothe Fire Commissioners and then given to staff at the February 2011 Board andstaff meetings. Unfortunately, I do nothave my copy; however, I distinctly remember that staff was informed that inorder to save jobs we should expect 5% to 15% pay cuts. At 15%, I believe the savings would have beenwell over $100,000 and at 10% pretty close to $100,000. We were also informed that there would be achange in health insurance benefits and I know that several meetings werescheduled with our insurance broker to look into cost saving plans. Someone mentioned to me that one plan wouldsave the District approximately $200,000 (I cannot confirm this); but let’sface it, if staff had to pay a portion of their health insurance on a lessexpensive plan, there is going to be a substantial savings. To this day, this has not happened. No one thought that layoffs in administrativepersonnel would occur, since reduction in pay and benefits were offered as analternative to people losing their jobs. I believe (and again I could be wrong, but this is my perception) thatpay reductions have not taken place because leadership is waiting to see whathappens with the new pension plan. If itis approved, I have “heard” that the contribution percentage for allindividuals in the plan will increase. Someone actually mentioned to me that this would be a payreduction. No it isn’t. If I decided to contribute more to myDeferred Compensation plan (which I did), yes, I have less money in my paycheckbecause I am contributing to something that will benefit my future. This doesn’t make sense to me and I will admitit could be totally a rumor, which I hope it is. It does seem strange to me that payreductions and change in health plan benefits have not occurred and theDistrict is over $2 million “in the hole”.

    The other cost saving measures were to research the saleof SWFD owned property (I know that’s a tough one in this economy, but at leastresearch it), use more of the $6 million in the reserve fund and increase themillage rate to 1.0. Also included werethe items I have already mentioned (salary reductions and change in healthinsurance plan and commissioners stipends).

    At a Board meeting more than several months ago, theBoard Chairman advised the Board and staff that he was placing immediaterestrictions on several items due to the economic crisis the District wasfacing. I recall that he placed a freezeon hiring and also placed a freeze on District travel (cost saving measures). To me, no traveling means just that; however,to this day, traveling out of town and around town is still occurring. Where are the cost savings here and what exactlywas meant by no traveling? I guess it’spossible that I could have misunderstood this directive. I believe it would have been recorded in theminutes.

    At the May Board meeting I distributed an excerpt from“Weathering the Economic Storm-Fiscal Challenges in Fire and EMS Services”,developed by a task force for the International Association of Fire Chiefs(IAFC). All staff members were required (directivefrom the Chief) to read this in preparation for our Strategic Focus meetingsthat were supposed to take place in December and were again reminded to readthis prior to strategic focus meeting which finally happened in March. The FireChief told staff it was an excellent guide to the economic times we were facingand felt it contained excellent information. In part, it provided pitfalls forfire chiefs to avoid during difficult economic times. PRIMARILY NOTED IN THIS GUIDE AS A PITFALL TOBE AVOIDED DURING TOUGH ECONOMIC TIMES IS THE FIRING OF SUPPORT OR OFFICE STAFFAS AN IMMEDIATE REACTION TO PROPOSED STAFF REDUCTIONS. Well, I read it, for all thegood it did. I guess the IAFC doesn’t knowwhat they are talking about.

    At this same meeting I also asked what cost savingmeasures were put in place since the layoffs. That question was not answered. The only thing I heard at the meeting regarding cost savings was thatthe fire commissioners meeting packets were now going to be sent to themelectronically in order to save postage. Wow, that would be approximately $10-$14 a month. I was the one who organized the packets andplaced the postage on them and it was rarely ever more than $2.00 a packet inpostage. You might as well throw that cost saving measure in with the savingson plastic utensils that were discontinued; on the other hand, it is a savings.

    There are also other cost saving measures that could beaddressed by the District, but they are continually referred to as “pastpractices”. This means that althoughthey are not stipulated in the Union contract, they have been going on for aconsiderable length of time and cannot be changed. I always thought that wasridiculous. Leadership is afraid thatthe Union will file a grievance. Forheaven’s sake, get tough, the District is in financial trouble, and weren’t ourjobs past practices?

    I truly wish I could recall some of the other cost savingmeasures, but these are the ones that stand out in my recollection. I’m sure a copy would be available for youfrom the District through a public records request. I hope this answers some of your questionsand if you have any further questions, please let me now.

    Another day at the beach and another great day in SouthWalton!


































     
  4. Bob Hudson

    Bob Hudson Beach Fanatic

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    A review of operational expenses is not conducted to save anyone. It is conducted to see if the structure can be altered to more cost effectively operate. In this case the review was done and found that from an operational standpoint two positions could be eliminated and operations would not be adversely affected. People would more than likely have to have position descriptions redrawn, but the study showed that those two positions were not "mission critical".

    A "push down" would have had limited savings IMO based on what you have described but I admit I have limited knowledge of the process, but here once again it appears that the "family member" at the end of that chain would be "out in the cold" as well. So much for the family theory.

    The two positions were "budgeted" through September 30, 2011, but were not funded as the district is running a deficit for the year. A lot of business do not survive by spending a "budget" rather than spending the actual revenues they have.

    A 10-15% across the board is a cost saver. I believe the savings would far exceed your $100,000 figure, but across the board are a moral buster for organizations.

    A sale of property is not a cost saving measure - it is a one time revenue producer. You never fund recurring expenses with one time revenue sources is a golden rule. The district is projecting deficits for multiple years without making substantial changes in operational practices.

    The part-time Fire Inspector is a non cost saver. Hopefully a lesson was learned, but doesn't help solve the problem today.

    The Fire Commissioners receive a stipend. Your savings by eliminating that stipend basically says "give up your $500.00 per month" Why was it not to ask them to give up the same 10-15% you say the employees would have accepted. Seems like a double standard. It would appear that you feel that they are not contributing to the district and do not deserve any compensation for their time and efforts as well as the fiduciary responsibility that they bear. But I agree that it is a cost saving idea.

    An increase in the millage rate to 1.0 mil is definitely not a cost saver. It is a tax increase that would set the District rate at the cap. They cannot go any higher. I'm not sure that the millage rate increase being proposed is appropriate. They would max out their credit card - they would have reached their limit. They would be forced to TRY to get the voters in South Walton to increase that cap. Good luck !

    Using reserves for long term revenue reductions are a disaster waiting to happen. Another perfect storm on the horizon. Those reserves are being depleted at an alarming rate with no replacement on the horizon. I personally feel that they are using reserves to avoid facing the inevitable need to match their revenues to expenses on an annual basis. They are simply "kicking the problem down the road" for another year. My way of saying "get tough" on all expenses.

    It appears once again that you have some information that you want to share, but do not want to share publicly. This is your chance.
     
    Last edited: May 23, 2011
  5. 30ashopper

    30ashopper SoWal Insider

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    All the more reason to make the actuarial studies public so that taxpayers can assess their liability for themselves. Currently it seems the state of the fund is being kept in a black box so that no one but a few privileged individuals know what's really going on.
     
  6. Diane

    Diane Beach Comber

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    Bob,

    Thanks for your input and opinions. In regards to the "push down", it was my understanding that there was a firefighter vacancy available and a firefighter would not have been terminated; nor would I want anyone to be terminated from a family or otherwise.

    I just want to make it clear that the cost savings measures that I mentioned and you have addressed were submitted by the leadership of the District; so if there are problems with them, someone should let them know.

    On the subject of the commissioners stipend, I believe also that they were asked to take a cut or give up their stipend entirely. This was suggested to them because of the 5%-15% paycuts that were being presented to staff. When I use the word "staff" I am referring to the administrative personnel, not the firefighting personnel. Yes the commissioners are elected officials who probably deserve some type of compensation; but, times have changed and they need to make a contribution to saving the District. They attend meetings once a month, some go to the District to sign checks every two weeks (they rotate) and some serve on the negotiations team and occasionally other District committees. Truthfully, it's always the same ones who contribute any "extra" time. If everyone at the District is giving up something and the commissioners consider themselves "employees", why wouldn't they want to monetarily contribute?

    I am with you on the millage rate, but leadership presented it as a cost saving measure. I thought the Board already discussed using some of the reserve money to balance the budget, I'd have to check the minutes or contact someone. I know there was some discussion in that regard and again, leadership proposed this as a cost saving measure.

    What study are you referring to when you say the job descriptions would have to be redrawn and the study showed that the two positions were not mission critical?

    You are correct in saying that there is much I do not want to publicly share.

    Diane
     
  7. Bob Hudson

    Bob Hudson Beach Fanatic

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    Thanks for the emailed response.
     
  8. Bob Hudson

    Bob Hudson Beach Fanatic

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    No black box - here is the 35 page report.

    View attachment South Walton Fire District 2010 Valuation.pdf
     
  9. Diane

    Diane Beach Comber

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    No problem!

    Always tell the truth. That way you don't have to remember what you said.--Mark Twain
     
  10. Henry Apfelbach

    Henry Apfelbach Beach Lover

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    Buz, I will point out again. The age of 109 is what is being told to me by the fire boards appointee to the pension board. The chairman of the pension board agrees with your assesment and I will say again that number seems to be unbelieveable.

    As far as the 8% goes, I will ask you this, how has the plan preformed in the past? Has this number been way off? Also, who sets that number? How do they get that number? Also how well is the plan funded for the beneifts that have been earned? I was also told that at the next valuation because of some changes to the assumptions the unfunded liability will move up to around 70-73%. Thoughts?
     
  11. Bob Hudson

    Bob Hudson Beach Fanatic

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    Have you read the Actuarial Study posted ? Mr. Livingstons statements are all covered in the study dated Feb 2011.

    The assumed rate of return for the study is 8.0% - the actual rate of return on the plan since 2008 has been -3.0%. The plan lost 19.0% of its value in 2008.

    The unfunded portion of the plans needs - if all current employee's work until normal retirement the plan would require either investment returns or contributions of $24.43 million. The study gives numbers of contributions/returns on investments needed each year to meet that requirement

    The plan participants have earned (based on the assumptions) $9,304,046. That is what the plan owes them today based on their years of service today not when they retire. The plan forecasts what would be needed to pay all of the benefits to all of the current employees if they retired and live until the actuarially determined dates used in the study (from mortality table). The plan will need that additional 24.43 million in contributions and investment returns to meet those obligations in the future.

    The difference between the "earned" benefit and the plan market value of $13,701,158 is not a surplus of funds needed in the future to meet plan obligations to its members. The plan defines years of service required to receive the defined benefit.

    The earned benefit will climb each year as members complete more years of service.
     
    Last edited: May 23, 2011
  12. Henry Apfelbach

    Henry Apfelbach Beach Lover

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    Bob, I did not see where that was posted. Was that in a different thread? Either way I have some idea of those numbers. Does the return on investments only go back to 2008 in that report? I have been trying to figure out what the rate of return has been for the life of the plan I believe that it started in 1998 or 1999. Obviously 2008 was a bad year. That was one of the major contributors to the District having to pay a lot more to fund the plan. I gathered from the meetings that I attended when Buzz was still on the board he has a problem with the assumption of a 8% return. Who makes that reccomendation? That I am not clear on. I know the pension board has to approve it but I think they take advice from professionals right? If you know let me know.
     
  13. Bob Hudson

    Bob Hudson Beach Fanatic

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    Look 4 posts above your last post.

    I will let Buzz speak for himself.
     
  14. 30ashopper

    30ashopper SoWal Insider

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    We don't have enough information on this from this particular study. 2008 was an anomaly, as was 2010. We really need the return values stretching back to 1998 to get solid feel for how the fund has performed. It would also be good to know if the same fund manager at MS has been managing it all that time.

    As far as growth assumptions go, I believe the legislature just passed a law stating that these funds must match FRS net return assumptions going forward.

    I'm still digging through all this, might have some comments later.

    A couple things that popped out at me - annual salary increases are averaging 9% a year (with a peak in 2008 of 13.2%), and the average salary is currently 62K a year? Did anybody else notice that? Payroll is also growing at an average annual rate of 17.2% (387% since 2000). At those growth rates there is trouble on the horizon. A majority of enrollees are still active, of which around 41% will hit 55 within the next fifteen years.
     
    Last edited: May 24, 2011
  15. 30ashopper

    30ashopper SoWal Insider

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    If would great if you could dig up all the actuarial studies going back to 1999 and post them here so we can figure that out. That's an important number.
     
  16. idlewind

    idlewind Beach Fanatic

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    Could somebody answer my question: Why doesn't the Fire Dept belong to the FRS? Seems that would be the best way to go in the long run.
     
  17. Bob Wells

    Bob Wells Beach Fanatic

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    The main reason as I remember was that the legislature had to much control over FRS. It was a negotiated item between labor and management. As for what it is best, I am not sure on whose opinion that is based.
     
  18. 30ashopper

    30ashopper SoWal Insider

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    Not for the firefighters, their benefits package negotiated down here at the county level is far more lucrative than anything FRS offers. They also have more control over contract negotiations as well.
     
  19. Bob Wells

    Bob Wells Beach Fanatic

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    How is that? Up til this year, FRS receive a COLA, 175 participants don't unless its negotiated, FRS employees until the change this year, receive a insurance stipend 175 doesn't unless its negotiated. As for negotiations there are 2 sides, if you do not feel you are being fairly represented then maybe you should run and change your representation. Just saying.
     
    Last edited by a moderator: May 25, 2011
  20. 30ashopper

    30ashopper SoWal Insider

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    25 years of service (only?) yields 75% of annual pay in benefits under FRS. Firefighters in the district are making respectable six figure salaries when you add it up.. so I'm a little flabbergasted by your complaints about how bad you supposedly have it. What's the median houshold income in Walton County these days? 35K a year I think?

    Maybe we do need put some new people in place to negotiate.
     
    Last edited: May 25, 2011

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