Fire budget woes pinned on pensions

Fire budget woes pinned on pensions

Staffing changes could improve service, chief says

Clarkston News Staff Writer

Increasing pension costs are close to crashing the Independence Township Fire Department’s budget, warns township Supervisor Pat Kittle and Independence Township Fire Chief Mitch Petterson.
The fire department operates on a $6 million yearly budget, and its 2019 labor expenses are projected at about $5.1 million.
“Because of this uncapped pension liability that we have, we were caught in a trick bag with a model that is not sustainable,” Kittle said. “Legacy costs for pensions and health care was a big factor with the auto industry nearly going bankrupt. I have no intention of letting that happen to Independence.”
“With pension costs drastically going up, we have to figure it out,” Petterson added.
A recent third-party arbitration determined the township can absorb the increased pension cost without detriment to the department or the community, according to a statement by the Independence Township firefighters’ union, International Association of Fire Fighters Local 2629.
“The firefighters of Independence have a defined-benefit plan to which the employees and the township contribute,” the union statement read. “The plan is structured to support and receive contributions from 33 firefighters/paramedics, roughly 10 employees per shift. However, there has been lack of hiring and replacement of full-time personnel. The employee contributions have been increasing substantially as a result.”
The candidate pool has been thin, Petterson said.
“We advertised over an extended period of time, and the posting is currently open on the township website,” he said. “We’ve had a shockingly low number of applicants, and some we did receive don’t meet the required qualifications. We’re not alone – it’s an industry-wide problem. We’ve also been engaged in a really long bargaining process with the union that makes it pretty scary to do much labor movement until you can really understand the long-term financial impact of what’s been awarded.”
Twenty years ago, Kittle said, the township placed all firefighters on a defined benefit pension plan that is through MERS (Municipal Employees Retirement System) where they would get 80 percent of their base salary for the rest of their life once 25 years of service is complete and they reach 55 years of age. When that began, the township was contributing 10 percent, which was consistent with every other employee in terms of what the township contributes to their retirement savings plans.
“They were only paying a couple percentage points,” said Kittle. “As rates of return have not met forecasts by the pension provider, that people are living longer – 80 or 90 years old is not that uncommon anymore, and on top of that, MERS decided to change the maturity of these plans. They changed their funding model, kind of like moving from a 30-year mortgage to a 15-year mortgage. So guess what happens? Your payments skyrocket north. It was the movie ‘The Perfect Storm.’ And you know how that one turned out.”
The pension contribution percentage rate is now 27.9 percent, he said.
“The supervisor and I are in 100 percent agreement the fire department needs to be managed with a long-term management strategy,” said Petterson. “We could pay these guys a million dollars some days when our capital accounts swell just before a big purchase. Our guys do a fantastic job for the community. There’s no doubt about it. But the reality is that we have to operate not only for today, but also so that we can survive in the future.”
The management process requires they look way down the road, he said.
“It’s hard when you’re on that side of the building as a front-line firefighter, and I get it, you see the money in the capital accounts, and you want a slice of it,” Petterson said. “But when you’re over here in management and you’re looking at these labor and pension expenses continuing to grow, it’s important our long-term projections are able to be met by current cash flow.”
Having the money to fund the capital plan saves money in the long run as they don’t have to finance purchases and pay interest, he said.
“We also get cash pre-payment discounts as we buy new fire apparatus. It all adds up to a lot of money saved,” he said. “Then throw in an arbitration settlement that will cost the fire department well over an incremental million dollars in expense, and all of the planning just went out the window.”
Over the past several years, Petterson has participated with the other local fire chiefs to put a program in place that focuses on mutual aid. Now, mutual aid from neighboring departments is completely automatic for structure fire calls or when multiple incidents occur at the same time. For example, if all the Independence Township fire trucks or ambulances are on calls, a Brandon Township or Waterford Township ambulance or fire truck is put on stand-by and may respond to a call in Independence Township. In return, Independence provides the same aid to those departments when needed.
This mutual aid plan has benefited everyone in North Oakland County with better services while keeping costs from going through the roof, Petterson said.
“People want to say that we’re understaffed, but in my 26 years here, we’ve never not responded to a call – never,” he said, noting the township gets an average of 3,200 calls per year. “I see a lot of the Facebook posts talking about staffing, and I hear about many more of them, but many appear to be misinformed. We meet the demand for calls with our current staffing structure. When we need help, we get it through our mutual aid agreements. I’ve been around a long time and I’m unaware of any EMS agency that doesn’t need mutual aid to meet the surges in service demand. Sometimes we have multiple runs all happening around the same time, then we’ll go hours without any of our trucks turning a wheel.”
One solution to boost the applicant pool is to change the staffing model for the ambulances by utilizing an EMT, emergency medical technician, instead of a paramedic as the driver of the ambulance, Petterson said.
“For many years, Oakland County was one of the very few areas that required two paramedics to staff an Advanced Life Support unit,” said the fire chief, noting the county has recently changed the rules and now follows the State of Michigan staffing protocol. “With this recent change, Oakland County is just like every other county in the state, and EMS agencies may now utilize an EMT to drive the ambulance while the paramedic provides the care in the back. For our higher-acuity emergency runs, the paramedic has plenty of help aside from the EMT driver as on those types of runs, we send a fire engine staffed by a paramedic, and every command officer is a paramedic as well.”
The paramedic-EMT staffing model is effective and it’s used across the country, but the union contract doesn’t allow it, he said.
“It just boils down to who is in the driver’s seat on the way to the hospital,” Petterson said. “It’s a more cost-effective service model, the data and experience show that it maintains the service level, and it would almost certainly improve our recruiting.”
According to IAFF Local 2629, additional personnel would enable Station 3 on Maybee Road to be staffed by three firefighters/paramedics rather than one, which would provide the community with an additional paramedic unit.
“It could also ensure that an operation captain is available on-scene to provide additional support and expertise rather than performing the routine tasks of a firefighter/paramedic. The changes will also help to retain the firefighters/paramedics who currently support and care for the township, whose knowledge of the area and commitment to the safety and well-being of the community are exemplified each day,” the union statement read.
The arbitration ruling increased the township’s responsibility to fund the program.
“The department will be able to offer future employees a competitive salary and affordable benefits package allowing the department to attract qualified and experienced employees. This will allow the department to raise staffing levels to what was promised to the residents in the 2012 millage increase,” the statement read.
One solution for paying more in pensions, raising taxes, wouldn’t be a popular idea, Kittle said.
“I don’t think that would go over very well,” he said. “I think what’s important that people understand, is there is no ulterior motive for not hiring additional full-time first responders right now. We just got punched in the gut with an arbitration ruling in favor of the fire union that will increase our pension expenses by over 40 percent in a year or two. That is over $1.5 million over the next 10 years. We have to reprioritize a lot of plans in a very short time frame to work through this.”
“Like I said, I’ve been here 26 years and I have no desire or intent to see this place collapse – that’s not how this works,” added Petterson. “The issue is when you’re faced with huge increases in labor costs and then figuring out a way to still deliver critical services.”

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