New IAFF contract cuts pension benefits for new Lansing firefighters

December 6, 2014




Did you know that a new contract between the City of Lansing and the firefighters union (International Association of Firefighters Local 421) was signed on April 29? I didn't either until I heard it mentioned at the November 18 meeting of the Police and Fire Retirement Board.


I requested a copy of the new contract under the Freedom of Information Act, but all I got was a 2-page "tentative agreement." Must be the changes have not yet been incorporated into the contract. Here is the old contract, which expired June 30, 2010.


Some of the changes are in regard to retirement, and we can see them reflected in proposed changes to the Police and Fire Retirement System ordinance. Those changes are included in the packet for the November 24 city council meeting, starting on the 28th page (pages are not numbered).


Some of the changes apply only to "new" firefighters, those hired after the April 29, 2014 contract ratification. We will start with the changes that apply equally to old and new firefighters.





Signing bonus: Each member gets an extra $1,000 in the first pay period following ratification. However, it is not counted as part of base pay and therefore will not affect the pension amount.


Base pay was increased by 2% on July 1, 2014 and will increase by another 2% on July 1, 2016.






The pension is limited to 110% of base wage at the time of separation. "Base wage" is undefined. (The current ordinance defines base wage as "base wage.") I can only guess that they mean "base salary," which I would calculate as hourly wage times number of hours per week times 52. Number of hours per week for firefighters in the "fire suppression division" is not the standard 40, and is not clear to me, as I said here.


The new limit seems to be higher than the old limit, which was 80% of final average compensation (FAC). The old limit was a cynical joke because, by definition, the limit can never be exceeded. The pension is calculated as FAC times 25 years times 3.2%. 3.2% of 25 is 0.8, or 80%. In other words, the pension is 80% of FAC.


I've attempted to compare old and new limits for a few retirees here.




Health Insurance


The following is exactly what the tentative agreement says; since I don't understand it, I won't attempt to explain:


Base Plan: 100% City paid up to the state mandated hard cap + $400 cash bonus incentive

Option 1: 100% City paid up to the state mandated hard cap

Option 2 (IAFF Current Plan): employees may buy up to Option 2 by paying the difference between what the City will pay for Option 1 and the cost of Option 2.



  Minimum Staffing  

Minimum daily staffing: 41

Minimum unit staffing:  



Stations with less than 2 firefighting apparatus: 4

Stations with 2 or more firefighting apparatus: Will staff at least one fire company (engine, ladder, quint) with 4 personnel; additional in-service (engine, ladder, quint) will be staffed with no less than 3 personnel in dual company stations.



Now for the changes that are not the same for both groups:



New firefighters


Old firefighters



7% employee contribution rate.



Must have 25 years of service, but can't retire before age 50. (Nobody gets credit for service over 25 years.)


Pension multiplier is 2.5%.



Employee contribution rate increases to 10% from the current 9.08%.


No change: Can retire at any age with 25 years of service.



Pension multiplier remains 3.2%.


Retiree Healthcare

Employee-only coverage (no spouses or dependents) with establishment of voluntary employee-funded health savings account.


Spouse and dependents continue to be covered.



It appears that the only hit the old firefighters take with this new contract is an increase in the employee contribution to the retirement system from 9.08% to 10%. It is the new firefighters who are shouldering the burden of reducing Lansing's underfunded retirement systems. A December 1 story on WILX says that former mayor David Hollister, chairman of the city's Financial Health Team, "estimates the city owes $600 million in pensions and benefits for retirees -- the equivalent of doubling property taxes for the next 20 years".


It is the new firefighters who can't retire before age 50.


It is the new firefighters whose pension multiplier is 2.5% rather than the 3.2% enjoyed by the old firefighters.


And it is the new firefighters whose families won't get health coverage after retirement.


They do get one break: Their contribution to the retirement system is only 7%, while old firefighters will have to pay 10%.


As I said at the top, I became aware of this new contract - which was signed April 29 - in November. Since then, my Google searches have revealed no news stories about it. I would search the Lansing State Journal's archives, as I have done in the past, but can't find them in their new online edition.


Of course, the media would not likely have known about the new contract unless the City made an announcement. What goes on in collective bargaining sessions is kept out of the public's view, even though it often affects the city's financial situation. In this case, it will result in changes to a city ordinance, and neither the public nor the city council have any say about it. Not to accept the changes would be considered "failure to bargain in good faith" - an unfair labor practice.


In the public sector, collective bargaining rights trump democracy.


There will be a public hearing on the retirement ordinance changes at the Monday, December 8 city council meeting. Thinking of speaking on the issue? Don't waste your breath.


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