Fire / Rescue Contract Talks Continue

The July meeting of the negotiating teams for the 2012 IAFF contract did not move the ball very much, at least as far as we could see. As the meeting wrapped up, Chief Jerauld proposed holding additional sessions prior to the scheduled one on August 17 as there is a lot to do and little time to complete it.

More observers for the public attended this session, including TAB members, a reporter for the Palm Beach Post, and a representative of the Office of Inspector General. As this was anticipated, the county moved the meeting to a larger conference room at the Pike Road Headquarters.

The meeting consisted of much discussion of several draft agreements that had been prepared, and numerous “side agreements”, referenced by page number or paragraph position. None of the observers had copies of the referenced documents so it was difficult to follow. (We have asked for copies of all the materials prior to the next meeting). Much of the 3 hours were interrupted by “caucus time” when all the participants left the room for each side to confer among themselves – one of them 45 minutes in length. When we asked, it was explained that the referenced “side agreements” were contract modifications that were negotiated since the last contract was signed. None of these (or the current contract proposals) are available on the county website, but they are public documents which we will seek.

The major proposal by the county – reducing starting salary for new employees by 22%, was not discussed. It is our understanding that a counter-offer by the IAFF consists of an agreement for no raises for the next three years (subject to renegotiation if economic conditions improve), in return for retaining the existing starting salary of about $50K.

As described in Andrew Marra’s editorial “Cut these Alarming Salaries“, the problem is the existing salaries, which are approximately 50% higher than the national average and unaffordable in the long run without significant tax hikes or reduction in staff. Cutting the starting salaries would help, as would eliminating raises. If both were done, it may at some point bring Fire / Rescue Compensation down to earth. It would take a long time to do so however. There is nothing that we have heard in these current negotiations that will solve the problem near term, and choosing between starting salaries and wage freezes is a false choice. Both are needed, at a minimum.

We will continue to report on these negotiations as they progress.

Next Fire/Rescue Contract Negotiation Scheduled

At the initial meeting between County Fire/Rescue and the IAFF on the 2011 contract, the county proposed a 22% reduction in starting salary among other changes. (See Genesis of a Collective Bargaining Agreement) The union response was deferred to the subsequent meeting which has now been scheduled for July 19.


NOTICE OF PUBLIC MEETING
PALM BEACH COUNTY FIRE RESCUE
Contract Negotiations

Please be advised that a Contract Negotiations meeting between Palm Beach County Fire Rescue and the IAFF Professional Firefighters/Paramedics of Palm Beach County will be taking place on:

July 19, 2011
9:00 a.m.

This meeting will take place at the Palm Beach County Fire Rescue, Room 101/102, 405 Pike Road, West Palm Beach, Florida 33411

(NOTE: This location has changed as of July 12 – it was to be held at the Trauma Hawk hanger on Southern Boulevard)

Palm Beach Post Takes on Fire / Rescue Pay

Fire / Rescue compensation is an issue we have been following for quite a while. A year before TAB was formed, several of us were involved in the campaign against the special sales tax to fund Fire / Rescue, and excessive compensation was a key argument against giving them their own revenue source outside of BCC control. Earlier this year, we conducted a salary survey of county employees (See How Much is Enough?) and were quite amazed to see the real data – that Fire / Rescue far exceeds the county staff and even PBSO in pay and benefits.

Jennifer Sorentrue and Adam Playford take on this issue in the Palm Beach Post this week, with their own look at the county compensation data. See More than half of county’s fire-rescue employees earn more than $90,000

TAB is quoted in the article, which mentions that the county contract with the IAFF expires this year and is currently being negotiated. Join us as we attend the next meeting on July 19 as the union responds to the county’s proposal for a 22% cut in starting salary. See Next Fire/Rescue Contract Negotiation Scheduled

Genesis of a Collective Bargaining Agreement

On June 16, at the Chief Herman W. Brice Administrative Complex on Pike Road, negotiators for County Fire / Rescue and the International Association of Fire Fighters (IAFF local 2928) met across the table to reach agreement on a new contract which will replace the current agreement expiring in September.

As it was a public meeting, advertised on the county meetings calendar, and we at TAB are interested in how public employee union contracts are negotiated, we decided to attend and observe. There has been very little public participation at these meetings in the past, and when we arrived there were no seats anywhere but at the table, but they very graciously found us some. Chief Jerauld told us later that occasionally, fireman who may not agree with the union position will attend the meetings, but public participation is rare. That was disappointing to hear. Much of the budgets of Fire / Rescue, PBSO and other county agencies are driven by personal service costs, mostly established in these multi-year collective bargaining agreements. If we as citizens want to influence the way our governments spend our money, we should be willing to attend these meetings and understand how the contracts are set.

For our part, we were impressed with the professionalism displayed on both sides of the table, and the respect the sides showed to each other. For the first hour and a half or so, the attorney for management walked through the lengthy contract, pointing out changes from previous versions. A lot of the sections at issue related to work rules and compensation arrangements that need practitioner context to fully understand. Three items that we found particularly noteworthy though were:

  • Elimination of employee performance reviews. The implication was that the current system does not achieve anything so it is better to scrap it altogether.
  • A 22% reduction in starting salary for new employees. It was said the it was an attractive enough place to work that high starting salaries are not needed to attract recruits.
  • A 3% employee contribution for insurance. This compares to 10% in the county departments.

On the latter two there was silence from the union side of the table and it is safe to say that did not mean concurrence. Several times, the phrase “unreasonable in the current times” was used to explain why a benefit was being reduced. From our limited perspective (and not having copies of the document we have not seen the new salary grid), it appears that the Fire / Rescue management is making a good faith attempt at bringing their contracts into line with economic conditions, and we find that encouraging.

When the document review was complete, management and the public (us) left the room so the union could confer privately. After about 10 minutes, word was relayed that the meeting was ending and would continue at a later date to be determined. For whatever reason, they needed more time to consider a response.

TAB is planning to follow the progress of this contract and will attend the followup meeting when it occurs. Stay tuned.

Conversation with a Firefighter / Paramedic

Throughout our analysis of the county budgets, we have been somewhat critical of Fire / Rescue. We observed that the growth of their budget (even adjusted for service area size) was significant over the last 8 years, and the firefighters in the county are compensated more than 50% above the national average from the Bureau of Labor Statistics.

How much should we be paying for a well equipped Fire and EMS service though? This and related issues formed the basis of a recent dialog between a county firefighter from south county and TAB in a comment thread attached to one of last year’s postings.

Our correspondent argued that “bringing the emergency room to the patient” is expensive, and successful outcomes require multiple vehicles and staff to respond. Fighting fires or dealing with medical emergencies is skilled and dangerous work, deserving of pay and benefit premiums. Comparisons with the private sector are unfair, given the unique nature of the work, and so much has changed in the last 8 years in both equipment and expectations, that growth in unit costs are justified.

For our part, we considered the dangers inherent in some private sector jobs and how those are compensated, aspects of the 48 hour work week versus private sector expectations, and the studies we have performed comparing PBC Fire/Rescue to peer groups.

Both points of view have compelling aspects, and we thought the TAB readers would find them interesting. The threads are reproduced here – you be the judge. Are we being unfair to PBC Fire/Rescue?


The thread begins with a response to the conclusions in “Palm Beach County Pay and Benefits – How Much is Enough?“.


May 10, 2011
2:10 pm
Split the two careers (Firefighter / Paramedic) into two separate careers. Paramedic Firefighters are what’s known as “Dual Function” positions. Across the country there are fire rescue agencies that are not Advanced Life Support – Paramedic / Transport capable services. So when doing an analysis / comparison across the country, are you comparing apples to apples?

And for the sake of argument, if your one sided / prejudiced bar graphs and charts are correct, after having digested all of the factors such as the one above: ….. When you’re comparing salaries and benefits in South Florida to the rest of the country and you’re asking “Why are we paying more?” …. Could one also interpret that to mean: “Why are we taking better care of our first responders, than the rest of the country? … They should be following our lead” ????


May 11, 2011
12:32 am
These are all good questions, but comparisons to other jurisdictions can be misleading. For example, the Town of Palm Beach just settled a contract with their firefighters. What was arguably the best pension deal in the county (3.5% accrual compared to 3% in FRS) is now one of the worst. Will that change their level of service? How important is a pension plan in retention and hiring in this economic environment? I guess we will see, but since there are few if any jurisdictions hiring at present it may take a while.

That town took this action because the current plan was not affordable. All around the country are examples of county and municipal contracts that promised more than could be delivered, even with a good economy. Now we have FRS reform, but the deal is still very much better than in the private sector. Palm Beach Gardens is about to renegotiate their Police and Fire contracts. While the outlook is not as severe as in Palm Beach, it will still mean take-aways.

How much should a firefighter be paid? Compared to what? Should it be 4 times what a teacher makes and one and a half times a Sheriff’s deputy? Why is that? Is a deputies job less dangerous or less skilled? Are teachers not contributing as much as firefighters? How do you answer questions like these?

In the private sector, the worth of a job is easier to determine. An employee contributes to the bottom line of the company in a measureable way and can be compensated directly. Salesmen earn commissions based on sales. Professionals are compensated for the intellectual property they create. If the company gets into trouble the workers are laid off. The company’s earnings depend on the performance of their employees.

In the public sector, everything and everyone is a cost center. Public sector employees create no wealth or generate profit. They use resources taken from the private sector to deliver services to the public. In the case of local government, police and fire are important, basic functions, but the proportion of available resources spent on these services are not spent on others (like teachers or bus drivers or accountants). One could argue that we need police more than we need parks or streetlights. Should all the resources be used for public safety?

The average compensation (salary and benefits) for a private sector worker in Palm Beach County is somewhere around $60K, and that worker is not likely to have a defined benefit pension. County staffers make a little more than this, teachers a little less, but both have good pension and health plans. In PBSO the average compensation is about $100K, but for Fire/Rescue it is $150K. Either special risk employee can retire at an early age on a high percentage of their salary, and then go start a different career. That private sector worker is paying some of that $60K to fund the salaries of the public sector workers who have better job security, higher pay and benefits, and likely work fewer hours. Is that an equitable arrangement? Will it last?

Public sector employees, particularly those in strong unions, have had a pretty good run in the last decade, and it is not likely that they will lose too much in the retrenchment that is coming. It took the current economic crisis to shine light on where the tax dollars are going. Perhaps now there can be an open dialog about pay and compensation. Florida is is much better shape than other states. By looking at states like California or New York (or countries like Greece or Ireland), we can get a glimpse of where this is going if we don’t come to grips with it.


May 13, 2011
1:01 am
I’m sorry, I guess I’m just having a hard time digesting the assumption that the Town of Palm Beach is in, or headed towards dire financial straights. And when you’re talking about a “Arguably best pension deal in the county” one has to remember that it was just a few short years ago that the town of Palm Beach pay and benefits for their firefighters was below that of the city of Riviera Beach firefighters. Compare the socio-economic make up, and property values between these two municipalities, and explain how this could happen?

So …… coming from that type of history, then going to what you describe as the best pension deal in the county, for s short period of time, and then they pull the rug out from under them, it’s a hard pill to swallow.

Your argument / comparison between Police, Firefighter, Teacher, and asking why aren’t the Teachers and Police making what the Firefighters make, is somewhat pitting two blue collar careers against the one. My answer to that would be that the teachers and the police should be brought up. 10 Police officers in Florida have been killed this year alone, and we’re only 1/2 way into 2011. If you can show me a private sector job in Florida that’s as dangerous, and they’re not making what Police officers and Firefighters are making with pay and benefits, then I’d have to say that that private sector employee is getting screwed. There’s a reason why the two careers – Police Officer and Paramedic Firefighter are called “High Risk” ….. Aside from the obvious high risk as far as physical injury / trauma / death, there’s the long term health – high risk, with regards to disease exposure, hazardous material exposure, and finally physical and mental stress exposure. So, think about that when you find yourself wanting to continuously compare the Private Sector – Low Risk, to the Public Sector – High Risk.

The Firefighters work a 48 hour work week. (Town of Palm Beach’s imposed contract, tacks on an additional 8 hours, forcing them to work a 56 hour work week now) …. So when you’re comparing the high risk workers to the private sector, and you’re saying that the high risk workers “Likely work fewer hours” and ask is this “Equitable” ?? ….. I believe that the private sector is still putting in a 40 hour work week, so how does one derive 56 Vs. 40 as “Fewer Hours” ?? ….. If you’re working off the assumption that Paramedic Firefighters work one day on, two days off, you’re mislead. 24 hr shifts mean that you start at 07:00 A.M. on Monday, and at 12 midnight you begin working your final 7 hours on Tuesday. So, you’re working two days on, one day off. And once again, you’re working a 48 hour work week. (8 hours more than the 40 hour worker)

The Town of Palm Beach also referred to what you describe above regarding Firefighters retiring at a young age, and can go on to work another job. I will ask you this …… Do you think that it’s fair that you ask your high risk employees to put in 30 years, and pay them a salary and benefits that are built on the premise that they should find themselves another job after they’ve retired from a 30 year career faithfully serving their community in a high risk position?

Lets talk about the job a little. Paramedic Firefighters today, are not exposed to what Firefighters were exposed to years ago. Firefighting equipment and procedures have gotten a lot safer and more advanced over the years, but the amount of firefighter fatalities has stayed steady. This is because the materials used in modern day construction, and furnishings, are not made with the “Ordinary Combustibles” of yesteryear. Buildings and furnishings today, burn hotter, faster, and give off more toxic fumes / gases, than ever before. So …. even if we’re fighting fewer fires than yesteryear, reciprocally the decrease in quantity, is made up for in the increase in quality.

The town of Palm Beach’s town manager used the 90% Vs. 10% ammunition. (90% Emergency Medical Service Vs. 10% Fires) ….. I forget what point he was trying to make, if in fact he even had a point, but if he was trying to discount the dangers / the risks, think about what I just described above. Also think about the dangers and risks that the Emergency Medical Service part of the equation entail. This is the part where most likely your private sector workers will tell you “You can’t pay me enough to do that !!”. And that includes blood, feces, urine, saliva, vomit, ect. …… Diseases with many syllables. You get the drift right? ….. We deal with this stuff in an uncontrolled / unsterile environment. It’s when we get to the Emergency room at the hospital, that’s where it gets sterile, and de-conned.

So …… 25 / 30 years of working on 2 year olds who jump up and down on their bed at night and get caught up in the window shade cord and strangle them self to death, but not right away because we pull out all the stops, and go the extra mile to try and revive them, with the distraught mother bouncing off the walls behind us. Or trying to revive them after they’ve been pulled out of the backyard pool where they were submerged for over 6 minutes and not breathing, or trying to revive someones 90 year old grandmother, pulling people out of twisted car wrecks, out of canals, lakes, ponds …. Pulling people out of landscaping shredding machines after they’ve been torn to pieces, the drug over doses, the psychologically impaired, the suicides, the domestic disputes, the false calls, and on and on and on.

Yes, 25 / 30 years of that ……. And then thank them for their service and tell them to go get another job. Nice


May 14, 2011
11:05 am
You have several main themes here, so let’s address them one at a time.

First there is risk, comparing public sector “high risk” to private sector “low risk”, and the wage and benefit premium that is “fair”. There is no doubt that being a firefighter involves risk – as a matter of fact, most analysis considers that job as the 13th most dangerous in the nation, with 7 deaths per 100,000, right behind police officers with 16 per 100K. I am not in any way minimizing the risks you mention. However, the most dangerous 11 jobs in the country are all in the private sector, from fishing (#1, 129 deaths per 100K, $30K/year), logging (#2, 116 per 100K, $31K/year), on through farmer/rancher, structural construction worker, sanitation worker, pilot, roofer, coal miner, merchant mariner, miller, and power line installer. If you check the BLS numbers you will see that most of these occupations make considerably less than firefighters in PBC. Then of course there is the military. As a veteran I can tell you that most soldiers and sailors are not in it for the money.

The special-risk class in FRS originally had a specific purpose. At inception it was intended to provide an equivalent pension at 25 years that a regular-class employee would get at 30, reflecting the physical demands of the job. This was achieved with the initial special-risk accrual of 2% / year (compared to 1.6% for regular-class). About 10 years ago, this was upped to 3% and made retroactive, and parity was replaced with significant premium. The current system, combined with 3% COLAs and the ability to spike the final earning years with overtime and bonuses allows many in that class to soon make in retirement, more than they made when working. Not a bad deal, wouldn’t you say?

From your comments, you are not painting an accurate picture of the “private sector”, where the norm now is a 401(k) plan rather than defined benefit one, if you get a pension at all. If you are one of the 21% who do have a conventional pension, typically you can retire at 65 or after 30 years with about 1/3 of your salary. If the position is salaried (also known as “exempt”), which applies to most management, professional and clerical jobs, you don’t get overtime but are expected to work more than 40 hours a week to stay competitive. Most people in high tech jobs (my experience) routinely work 60 hour + weeks under significant stress and typically need to be available 24×7. There are very few jobs in government (except at very high levels) that expect this of their employees. The private sector is also at a disadvantage in job security, health benefits, sick time, vacation, and other aspects that are routine in government jobs.

Regarding the 48 hour workweek – yes, two 24 hour shifts do add up to 48 hours, but having 5 out of every 7 days off provides flexibility that most jobs do not offer. It is not unusual for firefighters to spend their off-shift time working another job or running a business. Nationwide, I think Kelly days are the exception and most shift rotations result in 56 hour work weeks.

You raise the issue of the 90% EMS versus 10% Fire. (I think the county number is 87%). What is relevant here is not the risk involved on the call but the economics of how the call is answered. In jurisdictions with separate (and/or private) EMS, a medical call is answered with a single unit with the relevant equipment and trained staff. In the county, it appears that EMS calls are answered by both EMS and Fire equipment. I don’t know if this is policy or not, but I have observered that calls are answered with multiple vehicles. Each has a minimum 3 person crew, including a Lieutenant (EMS) and a Captain (Fire). There may be a valid reason for this, but it is not the way a private EMS company would respond.

There is a national debate over the size and scope of government, and the recession has been shining a bright light over the advantages that government employees now have over the rest of us. There was a time that lower salaries were the price of absolute job security and better than average benefits. No longer. Compensation in the public sector has made great advances over the last decade and is now considerably superior to similar work in the private economy, reaching almost double at the federal level for equivalent positions. Where salaries have not advanced, benefits – particularly pension benefits have lept ahead, placing burdens on the future cash flow of state and local governments. This is partly due to the private sector losing ground in the recession while government has stayed the course, but that is about to end, as governments are also going broke. Watch California for a glimpse of what may be the future. Florida and PBC may be in better shape than most, but it is time that these matters were discussed openly.


May 14, 2011
4:12 pm
Good information. But I’m still having a problem understanding your point. Let’s start with your first paragraph that lists occupations that you say are more dangerous than the career of a Paramedic Firefighter, and then you list their salaries, as comparatively much lower than a Paramedic Firefighter in Palm Beach County. Once again, your point? …. I’m assuming that you’re suggesting that the salaries for these “Higher Risk” jobs, are fair. That a logging company, or roofing company that turns a pretty good profit, should in turn be able to pay their employees $15.00 an hour? And out of that $15.00 and hour, that employee should be expected to carve out their own pension investment, their own medical insurance, and get small incremental raises that do not keep up with the cost of inflation? …. There is most likely a lot of statistical data that would either skew your numbers, or possibly show that there’s maybe a logical explanation why the number of fatalities in these professions are so high. Like maybe the turnover rate because these workers go on to find better / higher paying jobs, which increases the revolving door – turn over rate, which increases the lack of experienced workers who’ve been on the job longer and the safety value of this, I don’t know. I do know this … I grew up on Long Island, and there’s a Merchant Marine Academy in Kings Point, Nassau County. You make mention of Merchant Marines above, in your list of comparative occupations that are as you infer, more dangerous than that of a Paramedic Firefighter, and are making less. Before I left New York in 1982, Merchant Marines were making somewhere in the area of $90,000.00 a year. Not too shabby, wouldn’t you say? …. I also would say that FP&L linemen are making a pretty good living as well. Just to mention a couple.

I won’t even get into the amount of continuing education credits, and continuous ongoing training required for the Paramedic Firefighter, after the training and education required to get certified in both disciplines, Vs. other private sector occupations that you’re making comparisons to.

I have a high respect for veterans. Thank you very much for your service to our country. My father was Army. The Korean theater. After he was released from the service, he was able to buy a nice home for our family with his V.A. loan, and for the rest of his life there were other various benefits that my father was afforded because of his 4 year stint in the military, including V.A. health care benefits. That 4 year stint also included room, board, clothing, and food. I am in no way discounting his commitment, and his service to our country. So there is obviously a little more to a military salary than what some people leave out, when they’d like to pit the military against first responders with regards to pay and benefits. And once again, the argument that first responders should be brought down to military is somewhat backwards. Some would argue that the military should be brought up to what first responders make. And when you do a cost comparison between the two, with regards to all of the other benefit costs aside from just salary, I’d be interested to see how far off the two really are.

Your comparison between the private sector and the public sector with regards to hours worked, and that your high tech job requires you to put in 60+ hours, and is high stress. Much respect from me to you. But my question is this, what are the risks of your high stress tech job, putting in that many hours? …. What I mean by that is, what’s the worst that can happen if you fail at any given time in your high tech position because of fatigue or stress? …. (On the job) …. The profession of a Paramedic Firefighter requires getting it right 100% of the time. Failure can mean the difference between living or dying, both for the Paramedic Firefighter, and / or the customer. Surely you can agree. Once again, your reference to 48 hours, and defining that as two days, is misleading. It’s 2 days on, one day off, and a total of 48 hours = 6 – 8 hour days. A Paramedic Firefighter must stay in a government building for 24 hours, subject to an emergency call at any time during that 24 hour period. Yes, some do have side jobs, or teach on the side, or own a business on the side. Is your point that no one in the private sector works another job, or has a business above and beyond their base employment?

Your reference to the way a call is answered in Palm Beach County regarding the usage of multiple vehicles and personnel, that you compare to the private sector, as if this is a waste. What you’re failing to understand is that the level of Advanced Life Support service in Palm Beach County dictates that certain procedures are followed, and certain tools, equipment, and supplies are used to provide this advanced service. The modern day Emergency Medical Team is basically bringing the Emergency Room to the patient. This requires man power. Years ago, Paramedic Firefighters were not carrying 12-Lead EKG’s, weren’t carrying Glucometers, or using the advanced airway adjuncts, and various other tools / equipment, or performing the myriad of tests that they’re performing now. And the customer demands this level of service. If the private sector will promise you that they can do it with less, I would venture to say that they’re misleading you. A Cardiac Arrest patient who requires CPR, Electro-Shock therapy, Intraveneous lines, Airway intubation, Medication administration, and someone to document this all, with the time line, along with all other pertinent information needed for the hospital could be handled by one private sector vehicle? …. I guess that might be possible. But their shouid be at least 5 or 6 people on that vehicle, with all the necessary equipment. That would make it a pretty big vehicle. Your statement about supervisors on the different rigs (Lieutenant / EMS – Captain FIRE) ….. And how a private company doesn’t do it this way. I beg to differ. The private provider ambulance companies that operate in Palm Beach County have supervisors on most if not all of their trucks. You’re treading down a slippery slope when you compare “For Profit” against not for profit, regarding emergency services.

If you really want to get into a “Waste” discussion, lets talk about municipalities that have borders against each other, and 3 fire stations all within a mile or two of each other. Each fire station covering their municipality only. How many municipalities in Palm Beach County have their own emergency services, separate equipment, separate communications, separate maintenance and supply facilities, separate purchasing contracts with weaker purchasing power, ect ect ect …… And this wouldn’t be the fault of the Emergency Service Providers themselves. This would most likely be more of a league of cities – autonomy – what’s ours is ours – identity thing.

Ending question – What percentage of the Florida State Retirement system, is part of the over all state budget ?


May 14, 2011
5:35 pm
Comparison of dangerous job categories can be found at various places, including The Daily Beast, Forbes, and Business Insider among others. My rankings came from the first of these which lists the salary of a merchant mariner as $61,960 and a firefighter as $45,700 (which is approximately the Bureau of Labor Statistics national average, and much less than the $71,800 average of Palm Beach Fire/Rescue in 2009). BLS is the source for much of the information, including fatalities per 100K.

The point of this is not to argue which jobs carry more risk, but to suggest that risk alone does not correlate strongly to compensation. You would hope that in a free country where both employers and employees constitute a labor market and can make free choices, that compensation would correlate strongly with the perceived value of the services provided. Risk would be a part perhaps, but not the major driver.

Perhaps the PBC Fire/Rescue provides a service that is truly worth the 52% premium it gets over the national average, I don’t know. You make a good case that it is expensive to bring the emergency room to the patient, and if I was having the emergency I would be grateful for the service. In jurisdictions where the equipment and training level is less than this, (many parts of the country, presumably, given their costs), then I assume more people die before receiving treatment. It would be interesting to gather those statistics as a way of bolstering the case.

I do know that in the 8 years since 2003, the Fire/Rescue budget has grown 82% when its service population only grew 26% and staff only grew by 36%. Most of the budget growth was in personal service costs, not equipment and infrastructure. The IAFF is a very good bargaining unit and deserves the appreciation of their members. It is both appropriate and expected that the union should negotiate the best deal, that is not the problem. It is the county administration and commission who sit on the other side of the table (and are supposed to represent the taxpayers) that should explain to us why our services cost more than others. This applies to PBSO as well as Fire/Rescue. County staff spending growth has been somewhat restrained in the last few years.

The municipalities that still have their own Fire/Rescue services (37% of the county at present), have made their choices for various reasons. Cost would be one – the budget growth in the county Fire/Rescue exceeds that of the cities whose budgets we have examined.

At the state level, as at the county, the 2011 employer contributions for FRS were 9.63% of payroll (regular class) and 22.11% (special risk). This falls to 3.77% and 12.96% respectively, for 2012 if the governor signs SB2100.


May 14, 2011
10:57 pm
Your comparison of the career “Firefighter” vs. Merchant Mariner as it relates to a national average. Is your BLS data comparing “Paramedic Firefighters” … Or just Firefighters, as you’ve written above? ….. As I’ve said up above, one has to view the service provided as a “Dual Service”. And to get a true value based comparison between salaries of these occupations, you’d need more data than what these website’s you’re using, are providing.

For the last 25 years, the fire rescue budget has been run quite fiscally responsible. Everything’s been basically paid off, without the need for bond issues and the like. This would relate to your equipment and infrastructure data. I don’t know if the municipalities can lay claim to the same. I’m assuming that the municipalities that came into the county system must have come in for a fiscal savings component. The city of Boca Raton has used their fire rescue system as a marketing tool for annexation. They promised the citizens of Boca Raton big increases in level of service, with less taxes. If you’ve read the local newspapers in the last few years, I don’t think their taxes have remained stagnant.

Your right about health / life risk data not being the only analysis that should be made. Your numbers regarding population and staff growth, as it relates to this discussion prompts me to ask you, has “Demand” remained stagnant? Has the call volume gone up or down? …… In an area that has a population fluctuation that widely goes up and down as it relates to tourism and snow birds, and the population that travels through the major highway arteries of Palm Beach County, can you get a true picture of how many human beings are physically in this county and need to be protected at any given time, and does your data reflect this?

All of the occupations you use as your safety / salary comparison, how many of them require college credit training? ….. I believe the pilot, and merchant marine categories are pretty much the only ones. So yes, there’s more than just the safety factor to consider.

Have you done any studies that would show that if the municipalities that represent the 37% which have kept their own fire rescue services, would benefit as a whole by consolidating into one department? ….. Do you have any charts that would possibly show over lapping with regards to fire stations from several different agencies, that are basically on top of each other? Several agencies with their own multi-million dollar communications set ups? Their own multi-million dollar training facilities? …. You say that these municipalities have made these choices for various reasons. You’d probably be best served by examining those reasons first, before going after the lively hood of your first responders and their families. Your last statement didn’t answer my last question above. What is the FRS percentage of the total state budget?. Another question: What is the median price of a home in Palm Beach County at this time?


May 14, 2011
1:36 pm (Edit)
So many questions. I sense our world views are so divergent that any agreement on these issues would be improbable.

So here is an offer – make your case that the 52% premium is justified, or that it is misleading or incorrect. Or make the case that the extra spending saves lives and that the PBC EMS performance far exceeds the peer group. We will run your article as a feature story and distribute it to the TAB mailing list.

But be forewarned – it is a tough crowd that leans towards the view that county spending has been excessive. But we are rational people and will give it a fair hearing. You can send it to: info@pbctab.org


May 15, 2011
6:04 pm
Yes, lots of questions, and lots of factors to be considered before making informed opinions / informed decisions. As far as tough crowds go, there are a few here in Palm Beach County. One of those is a crowd that is probably the biggest demand of the Fire Rescue / E.M.S. system. That would be our elderly population here in Palm Beach County. And the odd thing about these customers, as it relates to your argument here, is that a lot of these people are “Homesteaded Out” …. Which means they pay little to no taxes, yet use the system extensively.

One can almost draw a comparison with your argument of why are we paying the Paramedic Firefighters X amount of dollars, and what are we getting for our money? … With … Why are we paying for this system, yet the people who use it the most, are not? ….. But I seriously doubt you’d wanna go up against that crowd, no matter how tough your crowd is.

And the ironic twist here? —> I would venture to say that there’s a strong possibility that a lot of these elderly residents of Palm Beach County, are parents of the tea party people who would attack the first responders as over paid.


May 16, 2011
5:50 am
Making my case is easy. Include everything I’ve talked about above, with this …….

In the past 25 years, I can personally assure you that there are at least 4 human beings, 4 tax paying citizens in Palm Beach County, that went into what’s called “Ventricular Fibrillation”, which is a cardiac condition where the heart stops beating and begins to “Fibrillate”, (Which means that the heart that normally has one dominant natural “pacemaker” of it’s own, fails to be the dominant one, and little pacemakers all over the heart begin vying / competing to take over and become the dominant one – Basically.) that the Paramedic Firefighters who immediately applied the EKG monitor and made the diagnosis of this life threatening heart problem, applied the defibrillation paddles to the patients chest, performed the defibrillation, which basically sends a large electric shock and depolarizes all of those little pacemakers in the heart at once, with the hopes that the dominant pacemaker will take back over and lead the heart into beating normally again … worked … and got the heart beating normally again, the Paramedic Firefighters were then able to quickly administer medications through an intravenous line that they initiated / established, and were able to administer medications carried in their box to sooth / relax the heart (It’s gone through a traumatic event here, and is still irritable and could quite possibly go right back into ventricular fibrillation), administer oxygen to the patient for the very same reason, and these 4 human beings regained consciousness before arriving at the Emergency Room, and were released back to their families several weeks later, with no residual, neurological deficits.

So there’s at least 4 human beings in Palm Beach County, (That I personally know of) that I would challenge you to ask they and their families: “Are Paramedic Firefighters worth what we pay them?”

Now those are just a few examples of people that have been brought back “After” crossing the thresh hold of deaths door step. (That I personally know of) ….. Let’s talk about the hundreds, if not thousands that I personally know of, who have been stopped “Before” crossing the thresh hold of deaths door step, by Paramedic Firefighters in Palm Beach County.

A few of these conditions would include, but not limited to …….

The heart conditions that are extremely dangerous, and require other intravenous medications, or electro-shock therapy, to treat the problem and either stabilize it (With Oxygen), or correct it, prior to entering the Emergency Room.

The condition known as “Congestive Heart Failure” or simply “C.H.F.” … (This is where the side of the heart that is relied upon for dispensing the oxygenated blood from the lungs, to the rest of the body, begins to slow down / fail, which then causes the blood to back up into the lungs, basically causing the patient to now drown in their own fluid.) where the Paramedic Firefighters quickly apply oxygen, initiate an intravenous line, administer a medication they carry in their box called “Lasix” which works in the kidneys to drain the fluid that is built up in the lungs, thus allowing them to breathe normally again, prior to entering the Emergency Room.

The Diabetics who are in what’s called “Insulin Shock”, this is where their blood sugar levels are dangerously low, and the Paramedic Firefighters would know this because they have equipment that immediately tests their blood sugar level, and are able to immediately establish an intravenous line, and administer a medication in their box called “Dextrose” which is a medication that is basically brings their blood sugar level back up to non life threatening levels before entering the Emergency Room.

The drug over doses (Accidental or Intentional) where Paramedic Firefighters are able to immediately establish an intravenous line to administer a medication they carry in their box called “Narcan”, which treats Narcotic over dose and brings the heart back to a normal rate / rhythm, brings the blood pressure back up, brings the patients level of consciousness back up, …. once again, before entering the Emergency Room.

Just these three examples, which are just three of many other life threatening conditions that Paramedic Firefighters are trained and equipped to handle, are examples of hundreds if not well over a thousand, that I can personally attest to, that your Paramedic Firefighters have saved from crossing over the thresh hold of deaths door step in the last 25 years. So ….. If you were to gather up all of these patients and their families, and ask them if Paramedic Firefighters are worth the money they’re paid, I would venture to say that the majority of them, if not all of them would say yes. Well worth it, and then some.

There are just a few examples.

Then, as part of your analysis / as part of your information gathering, to make an informed / balanced / non biased opinion, and advice to your elected officials, I would challenge you to ask Paramedic Firefighter peer groups (Both private and Public providers) around the country basically the same question, but slightly modified. ………. “Do you think that Paramedic Firefighters in Palm Beach County Florida, are paid a fair wage that’s equitable to the cost of living / cost of buying a home in Palm Beach County?” ……

Sorry …. A lot of questions, a lot of information. But the web page here says: “Speak your mind, tell us what you’re thinking.” ….. Please feel free to share all of this with your tough crowd. Thank you for your time. Over and out.

Pension Reform – the Final Bill

On Friday May 6, the conference committee put the final touches on FRS Reform and sent SB2100 to the Governor. Although it is not as far-reaching as the Governor wanted, it is significant, both in the precedent it sets (employees must now contribute to their pensions) and in the budget savings for both the state and the counties that participate in FRS.

The conference staff analysis summarizes the highlights of the bill as:

  • All FRS members must now contribute 3% of their earnings to the system.
  • For pension dollars accrued after July 1, 2011, the Cost of Living Allowance (COLA) of 3% is eliminated. (This is grandfathered in the bill in 2016, which leaves it up to a future legislature whether it will be restored. Sort of like the “Bush Tax Cuts”.)
  • For participants who enter DROP after July 1, interest accrues at 1.3% instead of 6.5%.

Additionally, for those who enroll in FRS after July 1, 2011:

  • “Average Final Compensation” (AFC) is the average of the highest earning 8 years (not 5).
  • Vesting occurs after 8 years (not 5).
  • Age and service requirements change to age 65 / 33 years (not 62/30) for regular class and to age 60 / 30 years (not 55/25) for special risk class.

To calculate the budget impact to the county, we must refer to the “employer contribution” section of the bill that starts on page 180 of the final conference amendment. The contributions are 3.28% of gross compensation for regular class, and 10.21% for special risk. (This compares with 9.63% and 22.11% this year).

That’s not the end of it though – the final amendment adds a section to “address the unfunded actuarial liabilities of the system” with an additional employer contribution of 0.49% and 2.75%, starting July 1 for regular and special risk, respectively. This amount then bumps up to 2.16% and 8.21% in 2012.

Taking these figures and applying them to our database of county employee compensation, finds that the county-wide savings in the first year would be $48M ($98M including the schools) and $26M in the next year. The first year savings breaks down as follows: $15.4M in county staff, $20.6M in PBSO, and $11.6M in Fire/Rescue.

The Florida Association of Counties has done a similar analysis state-wide and calculated that the savings for all counties would be $615M in the first year.

Pension Bills Ready for Conference

Much has happened to the two pension reform bills winding their way through the Legislature this week. Both Senate Bill SB2100 (replacing SB1130) and House Bill HB1405 have survived a vote (mostly along party lines) in their respective chambers. As there are differences between the bills, a conference committee will attempt to resolve them, probably starting next week. Although they do not go as far as the Governor’s original proposal (no change to special risk accrual for example), the changes are significant and it is expected that Governor Scott will support the result.

HB1405 requires an across the board 3% contribution from plan participants, increases the retirement age (for those entering the system after July) from 62 (or 30 years service) to 65 (or 33 years service), and terminates the DROP program starting in July. Special risk classes would see the retirement age go from 55 or 25 years of service, to 60 or 30 years. It does not change the 3% COLA. Employer contribution rates are set for 2012 at 6.16% for regular class and 16.95% for special risk, with a “surcharge” of .25% and 1.17% respecively to address the unfunded actuarial liability. Click HERE for the details of HB1405.

SB2100 requires an employee contribution that is tiered, starting with 2% for income under $25,000, 4% for income between $25,000 and $50,000, and 6% above that. Cost of living adjustments (COLA) are eliminated on a pro-rata basis, eliminating any COLA for accruals after July of this year. Like the house bill it ends the DROP program, but not until 2016. Retirement age is increased as in the house bill for all except the special risk class which is unchanged. The Senate bill also addresses the calculation of “Average Final Compensation” (AFC), excluding all but 300 hours of overtime from consideration, and allows only 500 hours of accumulated leave time that was earned prior to July of this year. Employer contribution rates are set for 2012 at 5.09% for regular class and 13.8% for special risk, with no “surcharge” for unfunded liabilities, although there is a section in the bill that allows for this to be added. Click HERE for details of SB2100.

From a Palm Beach County Perspective, both of these bills will result in significant savings. By using the stated employer contribution rates (compared to the current 9.63% and 22.11% special risk), we calculate savings between $23M and $40M in the county budget, and $28M to $39M to the school system.

The county is facing a significant budget hole this year with rising costs and decreasing revenue from non-ad valorem sources (including state and federal grants) and a projected 5% decline in property values. These FRS savings could go a long way to offsetting the need for a millage increase in the 2012 budget year.

For some analysis and political perspective on these bills see House Backs State Employees’ Pension Reform on Party Lines Vote and Florida Senate moderates public employee pension bill


The following table illustrates the differences between the Original Scott proposal and SB2100 / HB1405 in their current state.

Current FRS Rick Scott Proposal SB2100 HB1405
Accrual Rates 3% special risk
1.6% general
+ 3 others
2.0% special risk
1.6% all others
NO CHANGES to current plan NO CHANGES to current plan
Participant Contributions None 5% across the board Tiered
0-$25K, 2%
$25-$50K, 4%
$50K+, 6%
3% across the board
Defined Contribution Plan Offered, with few takers Only option for new hires Only option for new hires after July except special risk class NO CHANGES
COLA fixed 3% / year Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits) Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits) NO CHANGES to current plan
DROP Program Continue working for 5 years while pension accumulates, then lump sum Eliminated after July, 2011 Eliminated after July, 2016 Eliminated after July, 2011
Retirement Age age 62 / 30 years
age 55 / 25 years (special risk)
age 65 / 35 years
age 55 / 25 years (special risk)
age 65 / 35 years
age 60 / 30 years (special risk)
Copyright 2011, Palm Beach County Taxpayer Action Board

The following chart illustrates the effect the Scott proposal would have on the county budget, compareed to the Senate and House bills. Maybe it is time for the taxpayers to remind our legislators why they were elected.

Group Number of employees Average Salary Scott Proposal Savings SB2100 Savings HB1405 Savings
County Staff 5,731 $45.9K $13.2M $11.9M $8.5M
PBSO (general risk) 1,808 $53.0K $4.8M $4.4M $3.1M
Fire/Rescue (general risk) 208 $85.0K $0.9M $0.8M $0.6M
Schools 20,986 $41.3K $43.3M $39.3M $27.9M
TOTAL (contr.) 28,733 $62.2M $56.4M $40.1M
Governor 2% accrual
PBSO special risk 2111 $77.7K $20.3M $13.6M $6.5M
F/R special risk 1303 $88.6M 14.3M $9.6 $4.6M
TOTAL (accr.) 3414 $34.6M $23.2 $11.1M
TOTAL (both) 32,147 $96.8M $79.6 $51.2M
Schools Only 20,986 $43.3M $39.3M $27.9M
County Only 11,161 $53.5M $40.3M $23.3M
Copyright 2011, Palm Beach County Taxpayer Action Board

NOTE: Assumptions are: 1) contribution savings = total payroll x contribution rate, 2) special risk accrual going from 3% to 2% would drop employer contribution from 23.25% to 15.5% over time (2/3). 3. Payroll is projected from 2009 data. Employer contribution rates from bill text used if available.

Pension Reform in Tallahassee – an Update

Breaking News:

Yesterday (4/1) the Senate budget committee introduced SB2100 as a committee bill, exceeding the provisions of SB1130 for pension reform. Including a 3% across-the-board contribution (replacing the tiered system of 1130), elimination of the DROP program, closing the defined benefit plan to new hires, and stopping the COLA for accruals (all after July of this year), it comes much closer to the Governor’s proposal than the earlier bill or even HB1405. (See SB2100 )

The bill text presents the employer contribution, effective in July, as 5.09% for regular class, and 13.8% for special risk (versus 9.63%/22.11% today). From this we can calculate that the savings to the county if the bill were to become law would be $42M ($82M with schools included).

It appears that it will exceed the $58M savings of HB1405 (which this week passed out of Appropriations essentially intact, much to the chagrin of the 40 or more police and fire union folks who showed up (in uniform) to oppose the bill. See House Committee Backs ‘Modest’ Pension Reform for State Employees


When last we looked at the House and Senate bills for FRS reform (Pension Reform and Implications for Palm Beach County), the House bill had not yet been introduced and the Senate bill, though a pale shadow of what the Governor wanted, at least offered some reform in the area of employee contributions.

Senate Bill SB1130 has now been passed out of Government Oversight and into the Budget commitee, and the provisions it maintained are really of no consequence to serious reform. From what we have been told, the employee union lobbyists descended on the Senators of the Government Oversight and Accountability Committee, outnumbering pro-reform forces by a large margin. The capitulation was total. Gone is any mention of accrual changes, and the employee contribution is tiered in such a way that few will pay more than pocket change. As a matter of fact, this bill has a provision that totally eliminates any employee contribution if the system returns to 100% funding. The requirement for new hires to be eligible for only the defined contribution plan remains, but only for those positions whose starting salary exceeds $75,000. Our TAB analysis of the impact to Palm Beach County indicates that this bill could actually cost the county $1.7M MORE than the existing pension scheme. Both of our Senators Bogdanoff and Benacquisto sit on this committee and voted for this extremely disappointing bill. Click HERE for the latest commitee staff analysis of SB1130.

HB1405 started out reasonably close to the Governor’s proposal, but has been weakened also. The 5% contribution has been dropped to 3%, there are no accrual class changes, and no mention is made of COLA adjustments or plan eligibility for new hires. It does still eliminate the DROP program after July of this year, but with a few committees yet to go, can this survive? The House bill does save money though – with a 3% contribution, the county could potentially see a $58M savings ($28M for county government not counting the schools.) Click HERE for the latest committee staff analysis of HB1405.

It was our understanding that the almost $4B budget hole was to be filled (in the Governor’s plan) with a contribution of $1B in savings from FRS. With an overwhelming majority in both houses, the Republicans in Tallahassee have the opportunity to accomplish real fiscal reform. This is not a very auspicious start. Hopefully, Governor Scott will not accept this faux reform and send the legislators back to the drawing board until they get it right.


The following table illustrates the differences between the Scott proposal and SB-1130 / HB1405 in their current state.

Current FRS Rick Scott Proposal SB1130 HB1405
Accrual Rates 3% special risk
1.6% general
+ 3 others
2.0% special risk
1.6% all others
NO CHANGES to current plan NO CHANGES to current plan
Participant Contributions None 5% across the board Tiered
0-$40K, 0
$40-$70K, 2%
$70K+, 4%
3% across the board
Defined Contribution Plan Offered, with few takers Only option for new hires Only option for new hires with starting salary > $75K NO CHANGES
COLA fixed 3% / year Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits) NO CHANGES to current plan NO CHANGES to current plan
DROP Program Continue working for 5 years while pension accumulates, then lump sum Eliminated after July, 2011 NO CHANGES to current plan Eliminated after July, 2011

The following chart illustrates the effect the Scott proposal would have on the county budget, compared to the Senate and House bills. Maybe it is time for the taxpayers to remind our legislators why they were elected.

Group Number of employees Average Salary Scott Proposal Savings SB1130 Savings HB1405 Savings
County Staff 5,731 $45.9K $13.2M -$0.3M $9.1M
PBSO (general risk) 1,808 $53.0K $4.8M – $0.1M $3.3M
Fire/Rescue (general risk) 208 $85.0K $0.9M $0.0M $0.6M
Schools 20,986 $41.3K $43.3M -$1.1M $30.1M
TOTAL (contr.) 32,147 $62.2M -$1.5M $43.1M
Governor 2% accrual
PBSO special risk 2111 $77.7K $20.3M -$0.1M $8.5M
F/R special risk 1303 $88.6M 14.3M -$0.1 $6.0M
TOTAL (accr.) 3414 $34.6M -$0.2 $14.5M
TOTAL (both) $96.8M -$1.7 $57.6M

NOTE: Assumptions are: 1) contribution savings = total payroll x contribution rate, 2) special risk accrual going from 3% to 2% would drop employer contribution from 23.25% to 15.5% over time (2/3). 3. Payroll is projected from 2009 data. Employer contribution rates from bill text used if available.

Pension Reform and Implications for Palm Beach County

Highlights

  • Governor’s FRS reform worth close to $100M / year to Palm Beach County (with schools included)
  • Senate bill SB1130 implements only portions – reducing savings to about $30M
  • Any change in special risk accruals are strongly opposed by the police and fire unions
  • The legislature lacks the political courage to support the governor in these changes

With the legislative session about to open, a battle is brewing over the Governor’s budget. (See “Budget Brawl set to get under way Tuesday” in the Sun Sentinel)

Extremely piqued over Scott’s rejection of the federal rail grants, which will likely stand now that the Supreme Court has rejected the legal challenge brought by Senators Altman and Joyner, the Senate is ready to rumble. How will the Governor’s budget fare? “Dead on Arrival” is how Budget and Tax Subcommittee Chair Ellyn Bogdanoff describes it.

The state budget affects those of the cities and counties in Florida, as grant money for things like transportation infrastructure and community services is cut. The most dramatic effect for Palm Beach County though would be in the area of pension reform. Unlike the cities, which mostly have their own pension plans, county employees, including PBSO, Fire/Rescue, as well as the employees of the school system participate in FRS – the state run Florida Retirement System.

Currently, FRS enrollees pay nothing to participate, accrue benefits at a rate of 1.6% for each year worked (3% for special risk classes such as police and fire), receive 3% cost of living increases every year they are retired, and can start collecting benefits after 30 years (25 years for special risk). The Governor has proposed requiring a 5% contribution, ending the cost of living adjustments, and reducing special risk accruals to 2% / year (for benefits accrued after July of this year).

When Governor Scott rolled out his template for FRS changes, we at TAB mapped them against the Palm Beach County workforce makeup (number of special risk enrollees, size of payroll, etc.) to estimate the financial impact to the county budget. Our estimate of approximately $55M (plus another $43M in the schools) assumed a 5% contribution by all employees, and a reduction in the special risk accrual rate from 3% to 2% for the approximately 2,100 PBSO and 1,300 Fire/Rescue employees in that class. Since any county savings from FRS changes may be offset by reductions in revenue sharing, it is not clear at this time what the net effect would be, but the budgeted appropriations for personal services would be significantly reduced. (See chart below)

Let’s put that number in perspective. In the coming fiscal year 2012, property valuations are expected to decline about 5%, while personal services costs are rising and federal and state grants are declining. The county estimates that the shortfall, if the millage were held flat (4.75 for the county-wide millage), will be in the $50-60M range – approximately the size of the savings that Scott’s FRS changes would bring.

Since that time, the county folks who track this stuff told us that the changes were unlikely to happen. They predicted (accurately as it has turned out so far) that the legislature will lack the political will to stand by the governor in such a radical change.

The Senate bill taking up FRS reform, introduced on February 15 by Senator Jeremy Ring (Democrat, Broward District 32), who chairs the Governmental Oversight and Accountability Committee, is SB1130, “Retirement”. A companion bill that addresses municipal pensions not covered by FRS is SB1128, “Public Retirement Plans” The companion house bill H0303 was withdrawn prior to introduction.

It should be noted that as of today the session has not begun and there are already 8 amendments to SB1130. It will remain a moving target and could possibly be improved as it moves through the committees.

SB1130 introduces an employee contribution component, but currently does not specify the percentage. (Several media reports have listed it at 2% but the bill is silent at this time.) COLA, special risk accruals, elimination of the DROP program and other aspects of the Governor’s proposals are noticeably absent from the bill. The bill does adopt the Governor’s proposal to close the defined benefit plan to new participants (in favor of a 401(a) type plan) after July of this year. The Sun Sentinel reported it thus: “Public employee unions, especially politically powerful police and firefighter groups, have strongly protested — and lawmakers seem to be listening”.

This table illustrates the differences between the Scott proposal and SB-1130

Current FRS Rick Scott Proposal SB-1130
Accrual Rates 1.6% general
3% special risk
1.6% general
2% special risk
NO CHANGES to current plan
Participant Contributions None 5% across the board 2% across the board
Defined Contribution Plan Offered, with few takers Only option for new hires Only option for new hires
COLA fixed 3% / year Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits) NO CHANGES to current plan
DROP Program Continue working for 5 years while pension accumulates, then lump sum Eliminated after July, 2011 NO CHANGES to current plan

On Saturday, Senate President Mike Haridopolis visited a meeting of the grassroots group “DC Works for Us” in Coral Springs. During the Q&A, we asked him about this seemingly tepid response to the Governor’s reform proposals. In response, he said that the legislature does intend to pass FRS reform this year, with an employee contribution of “maybe 2-3%”, but when asked about the special risk accrual he replied that it was “not fair to cut back on something that was promised to our employees”.

We feel this answer is disingenuous, since the proposal is not a takeaway of existing benefits that have accrued, only a change to future accruals. Furthermore, since the original intent of special risk class was to allow employees in physically demanding jobs to retire at 25 years with equivalent pensions to 30 year normal retirees, a 2% accrual already exceeds that measure.

Since special risk applies mostly to police and fire, both of which have strong unions who operate very effectively in Tallahassee, it is clear that Florida is not Wisconsin – at least as far as the Senate is concerned. Since Senator Haridopolis has announced a bid for the US Senate, I guess it is not surprising that he doesn’t want to take on the PBA and IAFF.

The following chart illustrates the effect the Scott proposal would have on the county budget, and how very little of those savings have made it into the Senate bill. Maybe it is time for the taxpayers to remind our legislators why they were elected.

NOTE: Assumptions are: 1) contribution savings = total payroll x contribution rate, 2) special risk accrual going from 3% to 2% would drop employer contribution from 23.25% to 15.5% over time (2/3). 3. Payroll is projected from 2009 data.

Group Number of employees Average Salary Governor 5% contribution SB1130 2% contribution
County Staff 5,731 $45.9K $13.2M $5.3M
PBSO 3,919 $66.3K $13.0M $5.2M
Fire/Rescue 1,511 $88.1K $6.7M $2.7M
Schools 20,986 $41.3K $43M $17.3M
TOTAL (contr.) 32,147 $75.9M $30.5M
Governor 2% accrual SB1130 no change
PBSO special risk 2111 $77.7K $12.6M 0
F/R special risk 1303 $88.6M 8.9M 0
TOTAL (accr.) 3414 $21.5M 0
TOTAL (both) $97.4M $30.5

Public Sector Compensation – Some Perspective

With the conflict over public employee compensation raging in Wisconsin and likely to spread across the country, there are still misconceptions about how public employees are compensated (and how well), the role of unions in setting the levels of compensation, and the political aspects that typically are more significant than the economic aspects.

We at TAB believe that setting equitable compensation for public employees is as important to budget reform as finding and eliminating programs that have outlived their usefulness. Just as entitlements are the major challenge to the federal budget, state and local budgets are defined by their personal service costs.

The following is a list of facts (and some opinions) that we think will structure the debate in the coming months, both in faraway states like Wisconsin and Ohio, as well as in Tallahassee and at the county and municipal level all over the state.

  • Salaries and other compensation are the largest government expense at the local level.
  • Compensation dynamics are considerably different than the private sector. Providing government services is a monopoly where spending restraints (where they exist) are political not economic. Salaries are driven less by market forces than by what the taxpayers will accept.
  • Conventional wisdom that “public sector = lower pay and better benefits” is no longer true. Flush with cash from the mid-decade runup in property valuations, municipal and county governments have allowed their personal services expense to far outpace inflation.
  • Public sector unions have made a convincing case to local officials that they should share in the property tax windfall – both in salary today and in pensions to be paid in tomorrow’s dollars, and as long as the public wasn’t looking too closely, they didn’t feel ripped off.
  • With both their employees and their unions making the case that they should “share the wealth”, and no organized advocates for the citizens, local officials have often been tempted to take the path of least resistance.
  • Officials are further incented by the contributions and manpower that the employee unions can bring to their re-election campaigns.
  • When local pressure is not enough, public sector unions have been very successful on the state level to get statutes enacted that constrain local governments from resisting upward pressure on personal service costs.
  • It is only the current prolonged economic downturn that has shed light on how this whole system has gotten out of hand – when looking at ways to constrain spending, many are appalled and surprised at how their personal services costs have exploded, and how little they can do about it.
  • State level resistance to unbounded growth in public sector compensation, initially led by Chris Christie, and followed by many more of the Republican governors and legislatures elected in 2010 (including Rick Scott) is a potential game-changer.
  • Those municipal and county officials who would really like to restore sanity to public employee compensation have a small window of opportunity to get on the train before all this comes to a head this year.
  • They could start by supporting FRS reform as outlined by the governor, which if enacted would save around $60M at the county level.
  • Once established, FRS reform could be used as a blueprint for local pension plans.
  • FRS reform is not “draconian” and would still provide better benefits than the private sector.
  • For example, reduction in special risk accruals from 3% to 2% would return to the original concept – to provide an equivalent pension at 25 years for those in high stress jobs that other employees would get at 30 years.
  • Another area for reform is longevity raises – this is a public sector phenomenon that provides a rapid escalation in salary, irrespective of merit or performance. During economic downturn, local governments should have the flexibility to freeze or even reduce salaries as an alternative to layoffs, just like in the private sector.
  • As framed by the Wisconsin debate, the collective bargaining process by public employee unions is at the core of the problem. Pension and health care concessions in that state may fix this year’s budget, but next year (or when the economy improves) they will be back to the table to restore it. Once a mulit-year contract is in place (such as the PBC situation with PBSO and Fire/Rescue), necessary actions that would void the terms of the contract (such as a delay in raises) are not possible without justifiable economic distress – and maybe not even then.
  • A similar conundrum is about to play out in Tallahassee as the legislative committees to take up the Governor’s FRS reforms are already talking about “restoring” the status quo as soon as FRS is back to 100% funding. These same legislators, many of them Republicans, have already proposed that 5% is too much, the COLA must remain, and we can’t possibly mess with the special risk accruals. We can only hope that Rick Scott stands his ground.

Only by having an honest dialog on these subjects with all parties at the table – including the taxpayer, can we avoid the train wreck that is coming in public sector finance. Luckily, many have taken up the subject and it is being discussed in the media at all levels. If Scott Walker can round up his missing Senators and pass his collective bargaining reform, many states will initiate changes in their situations that would have been unthinkable only a year ago. Even if some compromise is made in Wisconsin, a line has been crossed and the battle has been joined.

Nothing less than the economic survival of the American Experiment is at stake.

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