6 min read
Posted on 07.07.10
  • 6 min read
  • Posted on 07.07.10

Yesterday, the Public Employees Committee of the St. Louis Board of Aldermen voted to recommend the new pay bill, Board Bill 121, to the full Board of Aldermen for passage. The vote was unanimous. Committee members also voted (again, unanimously) to recommend Committee Substitute for Board Bill 122 to the full Board of Aldermen for passage.

As the City of St. Louis prepared for FY11, we had a $46 million "hole" in the City's general revenue budget. We spent months in consultation with residents, employees, employee groups, department heads, supervisors, and experts. Based upon their suggestions, we opted to address this hole using a variety of techniques to balance the budget rather than balancing it on a single sector. Think scalpel, not sledgehammer.

These techniques included new revenue sources like the new "solid waste services fee", new revenue from Emergency Medical Service billing, and new revenues from a variety of fee increases. Techniques also included cuts in all but three departmental budgets (including approximately 80 layoffs and the elimination of an additional 100 vacant positions), and temporary "redeployment" of revenues that would ordinarily have been spent on improvements to our capital facilities. Our scalpel also included adjustments in compensation intended to offset increases in pension costs and expiring compensation concessions that helped make the FY10 budget work.

As we quantified the budget challenge, we found the following: for the 2,700 non-firefighters in the Civil Service pay plan, increases in pension payments and expiring furloughs made up approximately $3.3 million of the $46 million budget gap. For the 631 firefighters, increases in pension payments accounted for $5.8 million of the $46 million gap.

We worked closely with the 11 unions representing Civil Dervice employees on changes to the pay plan that would achieve the necessary savings. We reached agreement with ten of the eleven unions'”all non-firefighter unions'”on pay plan changes that will save approximately $2.4 million. The non-firefighter pension system also recalculated the City's FY11 contribution to save an additional $400,000. We are very grateful to these ten unions for working with the City to achieve these badly needed savings that are helping us balance the budget in a time of fiscal crisis.

City employees who are not firefighters agreed to five 8-hour "furlough" days. (On these furlough days employees will not work and will not get paid.) Management and professional employees will take an additional five 8-hour "furlough" days without pay'”a total of 10. This concession will save the City approximately $2.2 million in FY11. This concession will cost most employees approximately 1.9% of their annual pay, and will cost managers 3.8% of their annual pay. In addition, the ten non-firefighter unions agreed to adjustments in the way eligibility for overtime pay is determined, and a variety of other concessions that we expect will save the City an additional $200,000 in FY11.

Most importantly for the City's and the Employees Retirement System's (ERS) long-term fiscal health, these ten unions agreed that the City can eliminate "sick leave buyback" going forward. (This feature of the City's pension systems has raised eyebrows for a long time'”if employees retire at the time when they separate from City service, they can receive a check for 50% of their unused sick leave balance, and apply the remaining 50% to "creditable service" and "final average compensation" to increase the amount of their pension payments.) The new bill will "freeze" sick leave balances for existing employees at the time the bill becomes law, and new employees will not receive sick leave. Existing employees can use their "frozen" sick leave balance, less any part of this balance used for sick leave between the time the bill passes and the time they separate and retire, as they have in the past. In the future, employees will receive "medical leave" at the same rate as they now accrue sick leave, but, per the new pay bill, employees can use medical leave when they are not able to perform their duties due to illness, and not for either cash payments or pension enhancements at time of separation and retirement. This change in how pensions are calculated will result in savings to the ERS pension system and reduction in the City's contribution to the ERS system over time.

If you own and watch your television set, you know that the City did not reach full agreement with the firefighters. The firefighter portion of the pay plan includes modifications that are estimated to save approximately $2.6 million, or 45% of the $5.8 million portion of the "gap" attributable to firefighter pension cost increases.

Key elements of the pay plan on which the firefighters did not agree are the following:

First, the pay plan includes elimination of "shift differential" for firefighters who work 24-hour shifts for one year, saving approximately $1 million in FY11. Since the majority of firefighters receive shift differential, this elimination will reduce the amount firefighters receive in pay by approximately $1,600 per firefighter. The average firefighter salary is $57,700 per year (compared to an average salary of $42,675 for other city workers). Thus, the loss of shift differential will mean an approximately 2.8% reduction in take-home pay. In FY10, firefighters received no reduction in pay, and all firefighters received pay increases ranging from .2% to 6%, while other city employees had their pay reduced by 1.9% or 3.8%.

In addition, the new pay plan eliminates 3 of 8 24-hour "O" days. ("O" days are paid time off, in addition to vacation leave and holiday leave.) This means that instead of receiving 192 extra hours of paid time off, firefighters will receive only 120 extra hours of paid time off. And firefighters will have their "vacation compensatory time" reduced from 112 hours to 72 or 32 hours, depending on whether the firefighter is a "manager" or not. Neither of these pay plan elements will cost firefighters any reduction in pay. These elements will mean, however, that firefighters will be required to work more hours for the pay they receive, increasing firefighter availability. The City will realize savings from these elements as firefighters retire: it will not be necessary to hire replacements for a while since the remaining firefighters will work more hours than is now the case. FY11 savings from attrition made possible by these pay plan elements are estimated at $1.4 million.

Pay plan elements on which we did reach agreement with the firefighters are expected to save an additional $200,000.

Finally, for firefighters, the City seeks the same "freezing" of sick leave for "sick leave buyback" on which the City received agreement from the other ten unions'”the $5.8 million increase in Firemen's Pension System payment in FY11--37% more than in FY10'”is, we think, a strong indication that this pension system needs adjustment in order to be sustainable. Local 73, the firefighters union, is opposed to the elimination of this feature of their pension system. Part of this "freezing" was advanced yesterday with the Public Employees Committee's approval of Board Bill 121; additional steps towards this "freezing" are expected to be taken today, when the Committee considers Board Bills 123 and 124, because other previous ordinances also affect this change with respect to firefighters.

Despite the incomplete agreement, there are some signs that next year's budget negotiations might not be as contentious.

Even though we failed to reach agreement, representatives of Local 73 invested a significant amount of time this year in meeting with the City and listening to us. They have accepted our invitation to send financial and public safety experts from the IAFF to study the situation.

Local 73 has also agreed to entertain a proposal from the City for changes to their pension system that will address its sustainability. We plan to present this proposal to them in mid-July. And we also plan to work with them and Chief Dennis Jenkerson on a modern scheduling system that will reduce future overtime costs.

I look forward to working with them in the coming months on changes in their pension system and on other initiatives that can save money for the City and its taxpayers in the future with minimal impact on the excellent quality of service that our fire department and our firefighters now provide.