Stuart Rosenberg, the long-time chairman of the Board of Fire Commissioners, has resigned in a dispute involving the city’s proposed changes to the retirement benefits of city firefighters. James Morley has also resigned as treasurer and a trustee of the Pension Plan B. Morley issued his letter of resignation to Rosenberg who issued his resignation to Mayor Bill Finch on Friday. Rosenberg and Morley also sent letters to participants of Bridgeport Firefighters Pension Plan B. A number of active and retired firefighters read OIB. Would appreciate their input on this issue and what it means. Rosenberg’s letter to Finch follows:
It has been my honor to serve as the chairman of the Board of Fire Commissioners and as the chairman of the board of trustees of the City of Bridgeport Fire Fighters Pension Plans A and B. As a trustee, I have always been mindful of my fiduciary responsibilities to the participants in the plans, and my duty to act prudently and solely in the interests of plan participants.
When the City of Bridgeport and the Fire Fighters Union agreed to transfer the retirement benefits of active firefighters to the Connecticut Municipal Employees Retirement Fund while retaining the retirement benefits for retired, terminated and disabled firefighters in Pension Plan B, we became obligated to implement this agreement in a manner that is consistent with our fiduciary responsibilities and duties as trustees. Therefore, the trustees retained their own counsel, actuary and investment advisor to evaluate the situation. Moreover, although Pension Plan B is not technically subject to ERISA, the trustees looked to the ERISA procedure for spinning off plan assets to determine a prudent methodology for the division of Pension Plan B’s assets between MERF and Pension Plan B. Based on the advice of these independent advisors, the trustees voted to retain $50.915 million in Pension Plan B to provide the benefits payable to retired, terminated and disabled firefighters, and to transfer the remaining funds (approximately $22.509 million) to MERF.
Despite the careful procedure which the trustees used to determine the division of Pension Plan B’s assets, your City administrators have sought to have the trustees transfer additional funds to MERF, primarily to reduce the City’s future payment obligations to MERF. Such an action, in my judgment, violates the trustees’ responsibility to act solely in the interests of plan participants. As a trustee with personal liability for any violation of my responsibilities and duties, I have counseled my fellow trustees against taking such an action.
It is my understanding that a majority of the trustees may vote to send additional funds to MERF, without having any basis for taking such an action other than the desire to accommodate the request of your City administrators. As a result, I cannot remain a member of the board of trustees and become a party to the implementation of this imprudent decision. Therefore, I hereby resign as a member of the Board of Fire Commissioners and as a trustee of the City of Bridgeport Fire Fighters Pension Plans A and B, effective immediately.
Happy to see some people on Boards and Commissions understand the idea of fiduciary responsibility. Now if they were willing to practice OPEN, ACCOUNTABLE and TRANSPARENT governance, it would add to public understanding of the situation that has come to a boil with the resignations.
This is a HOT story. Flaming HOT! Connect: people serving expired terms on Boards and Commissions
+ Commissioners having trustee duties and understanding that burden
+ reforming of Plan B Fire (and soon police) assets where $22 Million was sent to the State earlier this fiscal year
+ the State wanting $20 Million more???
+ where do Plan B current retirees look for benefits long term? (i.e. will they become like the nearly 874 Plan A retirees and survivors at some point and become a pay-as-you-go line item?)
= Another Finch plan that is being done in the dark? What is the importance of any of this to the taxpayer? Time will tell.
How much more of the remaining 50 million dollars is the administration looking to transfer? If it was okay to transfer 22 million dollars, what’s the potential downside to transferring a few million more?
Joel: First off the city sent $22 million to the state pension fund. The trustees wanted to keep $50 million to pay for the retirees from pension plan B plus the disabled firefighters. This fund would be used instead of city funds to pay these retirees. The problem is sending the remaining $50 million or a good portion of it would put pension plan B on a pay as you go system the same as pension plan A. Right now pension plan B costs the taxpayers very little.
Me knows Andy. Let’s keep Ray Fusci employed by creating something for him to correct. Pay as you go? The problem is the City doesn’t pay at times or pays less than they have to. How did the City do last year as far as contribution to Plan A?
Thank you to Stuart Rosenberg and James Morley for being stand-up guys and speaking up on this looming disaster.
I have to wonder where the leadership of the fire union is on this matter. Was there a deal cut that covers active firefighters and screws those already retired under plan B?
Sure this administration wants to send the remaining $50 million to the state to lower its present-day costs. Do they care what happens 10 years down the road? NO they don’t because they won’t be here when it hits the fan. The taxpayers will be here and will get screwed. It’s time the people speak up and protect themselves from these robber barons.
Andy, who handles or negotiates these agreements involving Bridgeport’s pension plans? Is there a Bond Counsel somewhere in the negotiations?
To my knowledge it’s the fire commission and two employee representatives.
As a former Assistant Secretary of Labor for Pension and Welfare Benefit Programs and top ERISA official, this is a serious matter that needs to be looked into. City and state plans are not subject to ERISA but they are subject to fiduciary responsibility, prohibited transaction/disqualified person and other rules.
Who advised the Commission to look into ERISA as part of their decision process? Walker maintains city and state plans are not subject to ERISA. While Rosenberg maintains, “Moreover, although Pension Plan B is not technically subject to ERISA …”
Mr. Walker, what could Mr. Rosenberg mean by “technically? It either is or isn’t applicable.
The people managing this fund( fire commission) hired an independent actuary firm to guide them.
The plan is not subject to ERISA but many times trustees will use ERISA as a guide for discharging their fiduciary responsibilities.
For more information on ERISA, click on the link and read, read, read:
en.wikipedia.org/wiki/ERISA
First let me say this about Stuart Rosenberg, the long-time chairman of the Board of Fire Commissioners, he has ALWAYS been the point man for whatever any mayor wanted, David Dunn and the City Attorney’s office, he was never on the side of the firefighters, he was NEVER fair and balanced.
I must applaud Mr. Rosenberg for his action and his reason to resigned because he had a fiduciary responsibility. As for James Morley who also resigned as treasurer and a trustee of the Pension Plan B I would expect nothing less than what he has done. Jim has done a good job and he was always open to guide and answer any questions firefighters or their families had.
Andrew C Fardy made a great point that needs to be addressed when he said about any mayor, “Do they care what happens 10 years down the road? NO they don’t because they won’t be here when it hits the fan. The taxpayers will be here and will get screwed.” How does the fire union negotiate their wages, benefits and pension when the City DOES NOT negotiate in “good faith?”
Ron: The union can file an unfair labor practice against the city. The union can resort to a work book system for working and the least desirable is binding arbitration.
The union {I am not saying they have not} has to go into arbitration with realistic demands and justification for what they want. I personally think the fire department has done more than any other union has during the last 5 years. They went from 14 houses to 7 or 8 and lost over 100 firefighter positions.
OIB readers,
You probably know Andy Fardy and Ron Mackey are former Bridgeport employees of the Fire Department. They are pensioners under Plan A, a different plan than we focus on today.
One important point that has been brought into focus by this subject is UNIONS REPRESENT ACTIVE EMPLOYEES ONLY. That means NO ONE REPRESENTS RETIRED PENSIONERS. Think about that if you have already retired, given something away (your working years, or many of them) in exchange for a promise of future funding perhaps of a disability benefit, a retirement income or a continuation of healthcare benefits. It is only your voice speaking up for yourself.
At the moment I am feeling the City taxpayer is in much the same position. Who represents us? Who gets enough good, trustworthy info and studies it well enough to understand it? Listening to Stu Rosenberg earlier, his Trustees secured outside independent legal counsel and independent actuarial advice to find a range of options that could be termed fair. From that they selected one. We need to see that info and let it become public. How many members of the City Council understand an issue like this? But they, by our Charter, are the watchdogs, the overseers and the ultimate decision makers on issues like this. Do they use their OTHER EXPENSE budgets to secure independent advice? Time will tell.
To the current Firefighters of Bridgeport, Connecticut … ZIP UP YOUR POCKETS, THEY’RE ABOUT TO BE PICKED!!!
The people of Bridgeport look to the fire and police department to protect them.
The fire department is there to protect life and property. I spent 23 years on the fire department and saw 8 of my coworkers killed in the line of duty. Since I retired I saw 2 firefighters and a lieutenant killed in the line of duty. There were many firefighters who have suffered serious injuries they live with long after they retire.
The firefighters under pension plan A paid 8% of their salaries into the pension system and plan B I believe pays 5%.
Pension plan A has been bonded for by two mayors, Paoletta and Ganim. The administrations that followed this bonding pissed away the money and now are blaming police and fire retirees for their financial problems.
You never hear how the mayors and appointees get vested pension rights after 10 years of service, you never see what they cost the city. You never hear talk of taking away their pensions.
I paid for my pension with blood, sweat and tears; yes tears for every child I put in a body bag, for every kid we did CPR on, for every person and their family who lost someone to fire.
This latest move by the Finch administration to steal the money from Pension plan B is a disgrace and should be stopped NOW.
Government pension plans are not insured by the Pension Benefit Guaranty Corporation (PBGC). I was head of the PBGC in the 1980s.
I applaud all of you with personal knowledge because, obviously, you were on the front lines. I don’t have the personal experience or the expertise to comment on the details but let me return to the obvious. This appears to be yet another attempt by the Finch administration to punt fiscal responsibility to someone other than them. It is absolutely outrageous in this context and every other. We need an administration that is honest. We need an administration that is transparent. Most importantly, we need an administration that actually does the work–no punting, no lying, no moving of funds from one account to another and claiming victory. Just go line by line and know what you are doing. It is not that hard, it just takes work. This latest news is unacceptable. Period. Show up at City Hall Monday night and let the Mayor and City Council know this bullshit is unacceptable. Unacceptable. Go do the work and come back with a real budget. Go back and don’t try to fool us with this musical chairs nonsense. Enough–you people are morons.
I don’t know all the facts regarding the Firefighters’ plan. I do know the Finch Administration is not a model of transparency, integrity and accountability. They also haven’t demonstrated the ability to lead by example and make transformational changes.
I probably missed it, but is OIB the first and only organ detailing this red-hot story? If so, kudos.
It should be pointed out union membership comprises about 12% of the total working population, and public-sector unions are about 35% of that, with local (as opposed to state and federal) employees making up about 45% of that group. Of course union members will be vocal and support their cause, but as for the rest of the world, not so much. Everyone else is on the outside looking in, and you might say that’s our tough luck or the result of our own choices and moves during life. However, police and firemen have also chosen their difficult path, and it is unfortunate as economic conditions deteriorate, particularly in cities, they are not going to be able to continue to be richly rewarded. Probably they will be the last to be taken down, as it appears the teachers are the first target of the corporate/political process we are suffering with, and police and firemen are necessary to maintain civil order and safety. Remember the Blackwater guards sent in during Hurricane Katrina? Private military contractors in Iraq? When looking to spend less and get more “production,” substitutes will be found for public-sector workers. There will be no loyalty or sentimentality. Your Post Office workers will end up getting screwed next, and as folks get dumbed down further to accepting less, of inferior quality, including the quality of life, and paying more, you will see privatization (and maybe worse) taking hold all across the public spectrum. The good old days when union workers had the best deals and were envied are gone. It’s not 1933, and the important and in some cases heroic function unions once served to insure workers’ rights for a large slice of the population is not the big picture anymore. Maybe not this year, but not too far down the road, unions will be systematically weakened further, through simple economics (no money!), attrition and political/media propaganda. As well as shooting themselves in the foot. Millions of the unemployed and under-employed will not be sympathetic to the union cause.
And I would suggest the Pension Benefits Guaranty Corporation’s assets are dwarfed in comparison to their responsibilities, much as the Federal Deposit Insurance Corporation is with regard to the bank deposits they are supposed to cover.
en.wikipedia.org/wiki/Labor_unions_in_the_United_States
Indices,
You are correct, PBGC’s current liabilities are much greater than its assets. PBGC requires a new round of reforms too. However, PBGC does not insure government plans. The Postal Service is a government plan but its pension plan is well funded. The real exposure at the Postal Service is, like in Bridgeport and CT, retiree health benefits. These are not insured by anyone and will need to be subject to major reforms to make them comparable, affordable and sustainable.
The Postal Plan is funded for 75 years into the future and that has been cited as a major reason why the PO is in such dire financial straits.
I applaud the actions of both Stuart Rosenberg and Jim Morley. I may not have always agreed with Stuart and some of his organizational directions and policies on the Fire Commission but I do know Stuart well enough I can assure you this is not political posturing but a very serious acknowledgement of the fiduciary responsibilities all members of the Fire Commission should recognize at this time.
As to Jim Morley, I have known Jim long before he was a firefighter and I a politician. He is a man of personal integrity and definitely is doing this with the men on the job and formerly on the job in mind.
As a former member of the Fire Commission and by extension a former trustee of the Pension Fund as well as a business financial professional, the fiduciary responsibilities entrusted in all of these individuals should never be taken lightly. And each and every one of the commissioners can face personal financial liability if they abdicate the trust put in them.
And although the city may be advising them the city would never abandon their responsibilities to the retirees, the city cannot relieve the trustees of their fiduciary responsibilities.
I would advise all commissioners to seek their own legal counsel in this matter so they understand as well as Stuart and Jim do the consequences of their poor decisions.
For those who have asked what all of this means, my educated guess is the city in attempting to lessen their pension obligations have persuaded the active firefighters to join the state plan. However, the state is saying Bridgeport is $20 million short in what the state believes is the actuarial prudent amount the city should have set aside.
Now the city is attempting to raid other funds in order to meet the state funding requirements.
So the city is asking the trustees to trust them and transfer additional funds. However, as some people have pointed out if ten years down the road the city’s finances worsen and it tries some form of bankruptcy claiming these pensions are insolvent, these trustees can be legally sued in an effort to make the fund whole. Very, very serious consequences.
Lennie,
Kinda reminds me of when Ganim was trying to change money managers with the Pension Plans. Back then I believe it was the Polices Commission that balked at the plan citing their fiduciary responsibilities to the members of the Pension Plan.
The administration needs to answer two questions. First, what is the basis for the additional transfer to the state? If it is required in order to cover existing pension entitlements of the Plan B members transferred to MERF, it is probably appropriate. However, transferring funds to prefund the costs of future service would inappropriate, unless Plan B has surplus resources. That brings us to the second and perhaps the most important question. If the proposed transfer is made will Plan B have sufficient resources to meet its obligations to existing retirees?
Phil, the answer to your question is overall no. They will have funds for a very few years and then go into the pay as you go mode like plan A.
Andy Fardy–How are you in any way qualified to make that statement?
pcf: I have spent three years studying the budget and all the numbers. I have spoken to people involved in this latest pension scam. I am also one of the people in pension plan A.
There have been two mayors who have bonded for millions and millions of dollars to fund pension plan A. Somehow most of that money has disappeared and we are back to pay as you go.
Giving the majority of Pension plan B money to the state puts the city in pay as you go mode in a few years. There are approx 106 people (I think that’s high} currently covered by plan B who will not be included in the state plan thus they will be paid by the remaining plan B money. Its simple, the money will run out in a few years. These are not my ideas. The pension trustees hired an independent actuary, it’s their words. That’s how I know.
There are several possibilities. I do not know much about this stuff but I was thinking of a few things. Just random guesses. Actuarial science is more of a guessing game than a science. Especially when the group you are analyzing is small. Say the actuary says you need $30 mil with a margin of error +/- 25%. The commissioner may want to keep $50 mil ($30 mil + 25% and a safety margin). The mayor may not be that conservative. Save the money the city would have to pay to MERF and let the future worry about itself.
The city may see bankruptcy coming. Transfer the money to defer future payments to MERF. Declare bankruptcy and rid yourself of the plan B debt. It would be like knowing you are going to declare bankruptcy so you get a credit card. Use the card to pay off your car or house. Once you go into bankruptcy the credit card debt goes away.
Over the past few years the city moved several unions out of MERF. Why move the firefighters into MERF? How solvent is MERF? Is MERF going to use the $50 mil to pay current obligations and have no money when current workers retire? Didn’t the city recently skip a pension payment? Was the $50 mil that payment or did they pay it forward?
Like the way you speculate, BOE SPY, but we can get closer to reality by presenting the info in an actuarial report commissioned by the Trustees. Need a little time to review and then post the results.
Went to City Clerk’s office yesterday for what I believe is a matter of public record. Found agendas for Fire Pension B Trustee meetings are filed at City Clerk faithfully each month (along with agendas for Fire Board and Fire pension A Trustee sessions. So far, so good. Asked about the minutes of the meetings? Not at the City Clerk’s office.
Called the Clerk of the Board of Fire Commissioners who said he had Minutes. Asked about Exhibits for the minutes. He thought someone else would have those. Very interesting. Made a date to see him this morning to look at minutes and get copies (that I am willing to pay for). Less than one half hour later he returned my call to tell me I would need to prepare a Freedom of Information letter as he had been advised when he called the City Attorney Office (and later indicated this is the indicated process from the City). I admitted to him I was familiar with FOI letters but had no success in getting what I asked for and then explained what the “FOI dance” entails. He doubted my rendition. I canceled my meeting with him and sought and discovered an alternative route to the info.
More later. Tough going to get to the truth in this City, but time will tell.
John Marshall Lee, been there done that, the fire department is real good at stonewalling.