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City gives State Journal incorrect pension amounts

December 21, 2017

When I read the Lansing State Journal's August 10 story, "Overtime spikes pensions for dozens of Lansing police, fire retirees," I suspected that the pension amounts provided by the City of Lansing were not the full amounts. Pensions are calculated as service times final average compensation (FAC) times a multiplier - in this case, 3.2%. For example, if a firefighter has 25 years of service (the minimum required) and his average pay for the last 2 years was $80,000, his pension would be $64,000 (25 x 80,000 x .032). This amount is called the "full retirement allowance," and is not necessarily the same as the pension. The pension payment amount may be less depending on the survivor option chosen by the retiree. One option allows the surviving spouse to receive 75% of the pension, and to pay for it, the pension received by the retiree is reduced to 93% of the full allowance. Another allows the surviving spouse to receive 86% of the pension and the pension received by the retiree is reduced to 86%. The full text of that part of the city ordinance is here.

I doubted that the pension amounts provided the LSJ were the full amounts. The City charged only $338 for 160 retirees. While pension payment amounts were readily available, the full amounts were less so, and the City would have charged more to get them. 

In the LSJ story, reporter Beth LeBlanc said

Thirteen Lansing police officers and firefighters who retired between 2010 and 2016 make more in pension than the base wage they received in their final year employed by the city.

 

Another 57 of the nearly 160 police and fire retirees during those years receive a pension of between 90% and 100% of what their base pay was in their final year.

If the City had given her the full retirement allowances rather than pension payment amounts, those figures would have been higher.

I set about getting the full retirement allowances. I sent a Freedom of Information Act request asking for the same information provided to the LSJ, but with straight life pension amounts. By "straight life" I meant full retirement allowance, not realizing at that time that the term used in the ordinance was full retirement allowance. The City wanted well over $1000, so I withdrew that request and asked for the same information provided to the LSJ. They sent me that document for free. It is a 168 page PDF document. The first 4 pages are a list of retirees and amounts. Here's a portion of the first page:

Each of the remaining 164 pages contained a document that showed - among other information - the employee's base pay amount. Here's an example:

Still determined to get the full retirement allowance, I sent a new request, this time for the straight life pension amounts for 20 employees who retired in 2015 and 2016. The City responded with a one-page list. I was not charged.

Up until then, I hadn't actually read the section in the ordinance about survivor options, and when I did, I realized that the term "straight life pension" is not used. I sent a new FOIA request:

I have to apologize. In my previous FOIA requests, I asked for the "straight life" pension amounts for certain Police & Fire retirees. I now realize that this term is not used in the Police & Fire Retirement System. It does not appear in the ordinance. The term for what I want is "full retirement allowance." I would like the full retirement allowance for [the 20 Police & Fire Retirement System retirees].

This time, there was a charge: $125.88. There was no charge for the straight life pension amounts I'd received earlier. Did that mean that the straight life pension and the full retirement allowance were different?

I paid the $125.88. On December 1, I got another one-page list:

The next day, I sent another another request:

I realize that in my original FOIA request I did not specify that I wanted the source documents that showed the full retirement allowance for the 20 retirees listed in that request. However, the source documents are what I need, and the $125.88 I paid should get me more than the single-page list of retirees and amounts identified only as "monthly" that was provided . . . As an example of what I mean, I have attached a "Retirement System Computation Sheet" for a 2011 retiree. That particular form may no longer be used, but I would expect that something similar is used that details the computation of the pension.

My request was denied:

Public Act 347 of 2012 is the bill I've been complaining about since December 2012, when Governor Snyder signed it into law:

12/21/2012	New law denies access to public pension information
5/2/2013	Sorry, you have NO right to know
3/16/2015	A cloud over Sunshine Week
8/29/2015	Legislators: Please fix this!

I appealed the denial to the city council president Patricia Spitzley on December 11:

Dear Councilwoman Spitzley,

 

I would like to appeal the denial of a FOIA request.

 

On October 17, I requested the "full retirement allowance" for a list of 20 police and firefighters who retired in 2015 and 2016. The full retirement allowance is the calculated pension before any reductions for survivor options. It has also been known as the straight life pension.

 

On December 1, after receiving my payment of $125.88, the Office of City Attorney sent me a one-page document (attached) listing the 20 retirees along with amounts identified only as "Monthly." Since the "full retirement allowance" is normally an annual amount rather than a monthly amount and since no supporting documents were provided, I suspected that the amounts provided were monthly pension payment amounts rather than the full retirement allowance.

	On December 2, I submitted a new request asking for the source documents for the retirement allowances and I attached a "Retirement System Computation Sheet" for a 2011 retiree ("Halverson," attached) as an example of what I wanted.   On December 11, my request was denied ("Denial Letter," attached) because "information regarding the calculation of actual or estimated retirement benefits . . . are exempt from disclosure.   I accept that this is the law. However, the information regarding the calculation of the benefit could be redacted. That would consist of the final average compensation (FAC), which is of no interest to me. My only interest is the "full retirement allowance" or "straight life amount." I already have retirement date, retirement age and service amount, all of which are provided in Retirement Board meeting minutes.    Please ask the Retirement Office/City Attorney to provide the 20 computation sheets with the FAC redacted.
		Patricia Spitzley

The City has had no problem with redacting documents in the past.

I received her response December 20. She upheld the denial of my request.

Problems with the LSJ story

If the pension amounts the City gave the LSJ were payment amounts rather than full retirement allowances, the story understated the number of pensions that exceeded 90% of base pay. And I do have evidence that the LSJ did not get full retirement allowances.

Back before April 2013, when the law prohibiting release of pension details went into effect, I got pension calculation sheets for dozens of City retirees, including 42 of the police and firefighters whose pensions and base pay was obtained by the LSJ. Those calculation sheets included the full retirement allowance. This chart compares the pension and base pay amounts provided by the City to the full retirement allowance. For 29 of the 42 - 69% - the full retirement allowance is more than 90% of the base pay. In the LSJ story, 70 of 160 of pensions exceeded 90% of base pay. That is only 44%.

Not using the full retirement allowance was one error. The other was giving the wrong multiplier - twice. Here's the first:

For most Lansing police and fire retirees, pensions are equal to 2.5% of the final average compensation multiplied by a maximum of 25 years of employment. The formula changes slightly depending on which contract a police or firefighter retires under.

Here's the second:

The multiplier for both departments for non-supervisor roles has decreased to 2.5%.

The ordinance says that a police officer hired before August 1, 2014 and a firefighter hired before May 20, 2014 shall have a 3.2% multiplier. Those hired after those dates get a 2.5% multiplier. So anybody who retires before 2039 is going to have a 3.2% multiplier. Nowhere in the LSJ article is the 3.2% multiplier mentioned.

Everybody makes mistakes, but when a news organization makes a mistake, it is expected to issue a correction. It is expected to value accuracy. On August 11, I sent Beth LeBlanc an email that said:

Beth, great story about Lansing police and firefighter pensions. But I think that except for new hires, the pension multiplier is 3.2% rather than 2.5%.

She replied:

From what I could glean from the police and fire contracts, the 2.5% -- depending on which contract you’re looking at – largely applies to those hired after 2014. We included a line in the story saying the changes depend on when an employee was hired or retired to acknowledge that difference.

I emailed her again on September 17:

It appears that about half the Police & Fire pension amounts you were given by the City are incorrect. Through a FOIA request, I got the same information you got.

 

It appears that we were given the monthly pension payment amount. If the retiree chose the straight life retirement option, the payment amount reflects the actual pension. However, if a beneficiary option is chosen, the payment amount is reduced in order to offset payments to the beneficiary after the retiree's death, so the payment amount does not reflect the full value of the pension. The straight life amount is FAC times .032 times service, and service is always 25 unless the retiree is age 55 or older or has reciprocal service from another employer.

 

I suspected early on that you were given payment amounts rather than the straight life pension, and that is why my first FOIA asked for the same info you got, but with straight life pension amounts. For that, they wanted to charge me $1710.85. So I settled for the same info you got, realizing that for several 2010, 2011 and 2012 retirees, I had the straight life pension amounts, which I got from the actual pension calculation sheets. The attached document lists 43 of them. For only about half of them does the straight life amount equal the amount calculated from the amounts provided by the City. Where the straight life amount exceeds the calculated amount - 13 out of 43 - I assume the retiree chose a beneficiary option. Where the calculated amount exceeds the straight life amount, I have no idea what's going on.

 

What this means is that there may be a lot more cases in which pension exceeds base pay than you thought. It is troubling that no one at the City cautioned you about using monthly payment amounts. . .

I got no response. On September 27, I forwarded the above email to LSJ publisher Rebecca Poynter and executive editor Stephanie Angel with this note:

They did not respond.

Defending the high pensions

In addition to the misleading information in the LSJ article, some of the people quoted made questionable statements:

1. Mark Alley, Lansing's former chief of police, retired in March of 2010 to take a job as senior director of risk management for Emergent BioSolutions Inc. in Lansing. His title now is Vice President of Global Protective Services and Public Affairs. We don't know his new salary, but we do know that his pension from the City is $90,356. Alley retired at age 48. He had only 24 years and one month of service, so he purchased another 11 months at a cost of $107,812.

2. Police Lieutenant Bruce Ferguson retired in 2010 at age 50 with a $66,507 pension. In January 2013, he became chief of police for the City of DeWitt at a salary of $65,000. (Lansing State Journal, 1/26/2013)

3. David Ford and Walter Holden retired from the Fire Department in June 2010 to run First Due Fire Supply in Mason - established April 2007. Ford's pension is $70,356 and Holden's is $62,288. Employees also include Lansing firefighter Chris Wheeler and duty disability retiree Dan Hamel (retired 7/20/2010, pension $45,560). Ford and Holden later sold the company to Hamel and are "working on some other ventures."

4. State Rep. Tom Cochran, D-Mason, retired as Lansing's fire chief in January, 2012 at age 58. He receives a pension of approximately $77,000 from the City to supplement his $71,685 salary as a state representative.

5. Lansing police captain Ray Hall retired in February 2012 at age 49 to take a job with University of Michigan-Flint as chief of police. According to this response to my FOIA request, his new salary is $103,000. His City of Lansing pension is $73,178. He was 16 months shy of the 25 years needed to qualify for a pension, so he purchased 16 months.

6. In July 2013, former Lansing police chief Teresa Szymanski landed a job as the Lansing School District's chief operations officer. She retired from the Lansing police force on April 19, 2013 at age 50, with 26 years of service. Her salary on her new job is $120,000. Her annual pension from Lansing's Police and Fire Retirement System is about $90,000, based on what her predecessor Mark Alley got when he retired in March 2010.

7. In February 2014, Lieutenant Noel Garcia retired from the Lansing Police Department after 24 years (LSJ, 2/28/2014). He immediately took a job as law enforcement instructor for the Lansing Area School District at a salary of $62,631. His pension is approximately $60,000.

8. In November 2014, at age 45, assistant fire chief Trent Atkins accepted the new position of Emergency Operations Manager at the Board of Water and Light. His salary was $130,000. He was 9 months short of the 25 years needed to qualify for a City of Lansing pension, so he purchased them. His pension will be "around $70,000." (LSJ, 11/25/14) He resigned from the BWL just recently, saying "he has offers to do consulting work and wants to spend more time with his family." (LSJ, 5/20/17)

9. Daniel Oberst was chief of training for the Fire Department when retired on April 18, 2015. His pension is about $79,000. He is now fire chief for Bath Township, where his salary is $61,675.

10. Detective Teresa Eisfelder retired 3/20/2012 at age 46 with a duty disability. She now works for the U.S. Marshalls in Georgia as a federal court security officer. Her pension is $64,936 (LSJ, 8/10/17).

• From the LSJ article:

What's often overlooked, [IAFF president Eric] Weber said, is the fact that police and fire retirees in Michigan do not receive Social Security. As a result, pensions for public safety employees are often higher than others.

Not getting Social Security at age 66 or 67 does not justify a generous pension at 50. Currently, the full benefit age is 66 for people born in 1943-1954. It will gradually rise to 67 for those born in 1960 or later. And Weber fails to mention that while Lansing police and firefighters don't get Social Security, neither do they pay in to Social Security.

 

And by the way, Eaton County sheriff employees do participate in social security. And still get a 3.2% pension multiplier.

In reference to an abandoned state-level proposal to exclude overtime from final average compensation, Thomas Krug, head of the union that represents Lansing police officers, is quoted as saying "I do not think it’s fair to cut overtime out when [overtime is mandatory]". It is not that officers will not get paid time-and-a-half for overtime; they just wouldn't get paid twice by using it to boost their pensions. And whether it was intentional or not, the contract requirement assigning overtime to those with most seniority ensures that police in their last 2 years get that extra income included in their FAC. Send comments, questions, and tips to stevenrharry@gmail.com, or call or text me at 517-505-2696. If you'd like to be notified by email when I post a new story, let me know.   Previous stories

Tom Krug