Fire Services: Borenstein Doesn’t Know Best

Same old Daniel Borenstein over there at the Contra Costa Times as he continues to use bad rhetoric as he put out another hit piece against the Contra Costa County Firefighters claiming they make too much in salary while their pensions are too high. He continues to use the word “meaningful” without explaining what it means.

One should ask Mr. Borenstein point blank how much a firefighter at each level should make and give a pension figure.  Only then, can real discussion occur.

• He thinks he knows more than a County administrator ($170k salary)
• He thinks he knows more than Fire Chief ($170-200k)
• He thinks he knows more than Legal counsel ($160k)
• He thinks he knows more than 5 Supervisors ($500k)

What does Mr. Borenstein make as a Contra Costa Times columnist? In other words, how much is he paid to put out an opinion?   Let’s go through his latest reckless piece attacking public safety with his article in “bold” with my comments immediately following.

Borenstein: Must meaningfully deal with pension to avoid service cuts

By Daniel Borenstein Contra Costa Times/Oakland Tribune staff columnist

Posted:   12/08/2012 02:00:00 PM PST
Updated:   12/09/2012 05:01:50 AM PST

As Contra Costa County supervisors prepare to close four fire stations, many question why they haven’t curbed firefighter pension costs.

On Tuesday, Supervisor Karen Mitchoff declared that supervisors “have done everything we can on pensions.”

It’s an argument she repeats to address concerns from critics, including this editorial page, about supervisors’ management of the Contra Costa County Fire Protection District, which serves much of Central County and Antioch, Pittsburg and San Pablo.

“There are no other legal methods for us to deal with pension issues,” Mitchoff said.

She’s wrong. First, supervisors have attempted only minimal pension change for firefighters. Second, they can do much more through collective bargaining.

First off, Supervisor Mitchoff is correct, they have done everything within the law and I would love to see the Board of Supervisors issue a response highlighting what they have done and why an IRS ruling (as Supervisor Gioia explained in July) won’t allow them to go further. What Mr. Borenstein is suggesting, but what state,  is that the law should be broken in order to fix pensions.

Here is dialogue from July’s meeting:

Gioia: We need to be 100% accurate here. There is 1 of 2 ways for change.

1. Negotiate with union and union agrees to having prospective service under lower pension tier. All it takes is 1 or 2 members who disagree and they can sue and it falls apart. Means union cant bargain change.

2. In case of those members who want to change going forward (volunteer), we are prevented from doing that from IRS.

Gioia: Vince can correct me, but I would bet firefighters would agree to that. But Federal Law prevents us from that. So its really important for the public to realize this is a change under State and Federal Law. We are trying to get the most we can get by working together.

Anderson: Explained again how she has been exploring this with the IRS and a decision is coming that may address this problem

Piepho:  We have been waiting for that same IRS decision for 5 years. We keep waiting and waiting.

For the record, what is this claim by Borenstein that only minimal changes have occurred? Why does he get to decide what is minimal and what is not? The changes have actually been huge considering firefighters technically did not have to accept a reduction in pay or a second tier for new hires.

I would challenge folks to request Mr. Borenstein to explain what changes have been minimal while requesting he further explain what changes should have been done–ensure he sticks to specifics instead of his same vague talking points as his Sunday piece.

Following recent voter rejection of a $75 annual parcel tax, supervisors must reduce pension expenses and more cost-effectively provide fire protection. If they start with the false premise that nothing can be done, they will never dig out of their financial hole.

Again, reduce pension expenses and cost-effectively provide fire services is code for elimination or pensions and changing the service models. It’s vague talking points and it’s time to nail down Borenstein to specifics.  Only then, will people who read his column realize how outside of reality he really is.

Consider the numbers: A firefighter with paramedic training earns about $114,000 a year after six years on the job. That’s before overtime. After 26 years of work, he can retire with a pension of $100,000 a year, which increases annually for cost of living. For a 31-year veteran, the starting pension is about $121,000.

A captain, who leads a three-person engine crew, earns $139,000 annually, and can receive a starting pension of $122,000 after 26 years’ employment, or $148,000 after 31 years. That’s right: Starting pensions are more than the salary.

First off, until their is a name next to the examples, it’s unclear if these figures are actually accurate. Also ignored is the fact that these positions are not straight 40-hour a week jobs. Some work 50-60 hours or more and on 24-hr plus shifts.  Also ignored by the Times is 26% of a firefighters salary is immediately put into their pension out of each paycheck.  Then you have to remove the taxes taken out.

Just to prove how off these figures are, I pulled Vince Wells (Captain)  off the Times 2011 Salary list. It shows his base pay at $103k with $20k of overtime.  It’s showing his total cost of employment is nearly $200k.   Using logic, Mr. Wells is not going to get more pension than salary.

I suggest Mr. Borenstein go take a math class because at 31 years of service (less than 1% reach this), a firefighter would only get 90% of their pay.  90% of $114k is not $121k as he suggests.

Lets say 25 years of service at 50 since the firefighter started when he/she was 25 years of age.   3@50 then is (3×25=75 percent). 75 percent of 114k equals $85.5 K.

Here is another explanation:

A fire captain earning $5,000 per month and hired at the age 28 (the average age at which public safety employees earning 3@50 are hired, according to a study by CalPERS, the state’s largest public employee retirement organization) and retiring at 50 would receive a pension of $3,300 per month, or $39,600 per year. The benefit also provides a maximum 3-percent annual cost-of-living adjustment (COLA).

By working until age 58, the same captain could retire after 30 years of employment, earning as much as 90 percent of his final year’s salary. According to CalPERS, about 34 percent of all public safety employees, including police and prison guards, reach 30 years of service. One percent reach 30 years of service by age 50.

It’s a costly system. For each dollar of salary, the county contributes another 84 cents toward pensions. Firefighters kick in another 25 percent. It’s in both sides’ interest to find solutions. Here are places to start:

Implement meaningfully cheaper pensions for new hires. Current firefighters retire as early as age 50 with pensions equal to 3 percent of top salary multiplied by the number of years worked. Thus a 30-year employee receives 90 percent.

Enough with the rhetoric, we get it, the Times hates 3@50. It’s time to nail down Borenstein to a number he would be happy with.  He’s never given a number, instead, he’s simply used the term “meaningful and cheaper pensions”. Someone needs to request an explanation of what that means.

The county and firefighters last summer negotiated a slight reduction for new hires, but they did it in such a way that it required new state legislation, which never happened.

Really, why did he not give specifics of this agreement? Is it because it would hurt his argument? This is a perfect case of Borenstein ignoring facts to make his argument look stronger than it really is.

Instead, California lawmakers passed reductions statewide for new hires that change the multiplier for the maximum pension to 2.7 percent at age 57. But they provided an option for the county and firefighters to negotiate meaningful reduction of the multiplier to 2 percent. They should do so.

I disagree, public safety deserve 3@50.  With the average age of a hire now pushing 28-years of age. Instead of thirty year careers, one is looking closer to 20-25 years. A 25-year career nets a pension at just 72% of instead of 90%. Over time, the problem will solve itself as more education is required to become a firefighter.

End pension spiking for all employees. Policies of the county and independent pension board policies enable some of the state’s worst spiking, allowing employees to boost the salary on which their pensions are based.

This we can agree on, pension spiking should not be allowed. However, one cannot blame firefighters for taking advantage of it. Blame the lawmakers who created the rules. We all know if it was an option for us, most people would do the same thing.  For the record, this mostly is abused by administration, not the guys in the field–the Times should clarify this.

The biggest problem is counting of unused vacation time as income. New state pension law ends that practice starting Jan. 1. But Contra Costa firefighters have joined a lawsuit against the pension board claiming they have an inviolable right to spike.

I don’t like it, but the Contra Costa firefighters are right in this situation.  This rule change should technically be applied to new hires.

But there is no such protected right to the county’s underlying generous vacation of up to seven weeks’ annually, and accrual policies that allow employees to bank two years’ vacation (one of which can be used for pension spiking). The county should end the spiking by replacing the vacation accrual with a “use it or lose it” policy.

Again, I somewhat agree with him on this, but this should be done through Collective Bargaining, not because the County says so.  There is a reason why vacation is banked due to the dangerous nature of the job. If they want to change it, again, new hires only.

Reduce future pension accrual rates for current employees. Conventional legal wisdom says the pension formula for existing employees can never be changed. Once a firefighter is granted the 3 percent multiplier, he is entitled to it his entire career.

Conventional wisdom says one thing, the law says another. If he suggests a pension accrual rate change, then he should start with everyone who does not fall under public safety.

To get around “vested rights,” some public agencies have considered offering employees the option to a reduced future accrual rate in exchange for lower paycheck pension deductions. But the IRS has blocked such voluntary plans and attempts at congressional change have gone nowhere.

There’s another option. Harvey Leiderman, attorney for Contra Costa’s pension system, and others across the state argue that unions, on behalf of an entire bargaining unit, could give up vested rights in collective bargaining and agree to changes for future years.

Go for it, if 1,000 firefighters take a vote to try and change the rules, it only takes 1 firefighter to say “no” and it kills the proposal. There is a reason why the IRS rule is in place which Borenstein failed to explain in greater detail.

Currently, firefighters’ pensions are unaffordable and overly generous, and failure to act will mean more service cuts ahead. Those three changes could substantially reduce employer and employee pension costs. Something must be done.

Same old Borenstein, rambles on without actually stating what the actions would be with specifics.  Instead we get salary, pensions and service models are bad. Maybe next week Mr. Borenstein can move away from talking points and provide a hypothetical plan with specifics. At leas then we can have an honest conversation.

Until Borenstein gives us real figures on what he believes firefighters should make and how much their pensions should pay out, we will continue to go around in circles.

Article Link:
http://www.contracostatimes.com/news/ci_22147383/daniel-borenstein-must-meaningfully-deal-pension-avoid-service

By Michael Burkholder