Fire Department Struggles With Internal Flames Over Pension Plan

Last week Stuart Rosenberg, the long-time chairman of the Board of Fire Commissioners, resigned in a dispute involving the city’s proposed changes to the retirement benefits of city firefighters. James Morley also resigned as treasurer and a trustee of the Pension Plan B. How and where pension benefits are executed has become the talk of the town among municipal employees. Financial watchdog and citizen journalist John Marshall Lee spent several days researching and interviewing officials associated with this pension issue. He files this report that provides background, process and potential impact.

Personal integrity is difficult to observe, especially in the field of public service it seems since it is infrequently encountered. The reasons are probably manifold but that is not the subject of my story today. Rather I wish to point to an example of individual integrity in the midst of chaos respecting Mayoral appointment practices and fiscal decisions by Trustees that have long-term ramifications and serious consideration of what it means to be a community fiduciary, a Trustee where it is very difficult to be fair to all concerned, but certainly worth trying.

The Fire Union settled a contract in the spring of 2012. One change meant fire personnel who are employed currently will look to the State of CT MERF (Municipal Employees Retirement Fund) for future pension benefits. (Currently Fire Commissioners are joined by two Fire union members to form the Fire Pension Plan B Board.) From that point both City retirement contributions and firefighter contributions would flow to MERF. One additional fact: a portion of the approximate $72 Million of Fire Plan B assets (June 30, 2012) would be transferred to the State. I have been told about $22 Million of those assets passed from the Plan B Trust to the State last July, 2012 based on the unanimous vote of the Trustees on the Fire Plan B Pension Board.

At that point the balance of the fund, worth about $50 Million, would remain with the Plan B Pension Trustees, with NO FURTHER INFLOW of regular funding since all retirees had left City employment, earning an investment return and paying out COLA increased benefits every year to those retired or 50% to their survivors until the last person is dead. Of course, if the assets diminish or expire before the last beneficiary dies, THE CITY TAXPAYER WILL AGAIN BECOME RESPONSIBLE FOR PAYING PLAN BENEFITS.

The Fire Commission is supposed to have seven members appointed by the Mayor subject to Council approval. As of last month there were only five members serving. Two vacancies existed. If as reported on Only In Bridgeport the Chairman resigned, then the Pension Board may have only six members. Per its rules can it function to vote on matters? If the City is presenting alternatives that would transfer $10s of Millions to the State, what is the advantage to all parties?

Of course before the Chair’s resignation, not one of the five public members was serving an unexpired term. That is an opportunity where the Mayor enjoys ‘special influence’ towards “See it my way, or take the highway!” (I do not have the minutes of significant meetings since they are not in the City Clerk office. I have been told they are in the Clerk of the Commission office but he has to report my request for the minutes to the City Attorney office, per City policy, and I have been told I need an FOI request. That’s a topic for another essay on another day, titled “The FOI Dance.”) It is crippling in its effect on personal integrity, as well as taxpayer-citizens becoming informed!

Some Background: The Commission did something unusual for a Bridgeport board. They hired an independent consulting actuary and an outside attorney who specialized in retirement plans. This was to assist them to know the effects of a decision they would be required to make. They studied the characteristics of the current, future and past beneficiaries as well as the Plan B pension formula and ran at least four alternatives to guide the Trustees in being both fair to all parties and realistic in assumptions. The Trustees selected a middle of the road path including a lower assumed net investment return, 4.25 with .75 assumed expenses, than the current 8% and a 3% COLA. They did not look to guarantee benefits for the current retirees by way of purchasing an annuity that would have been more expensive. They used Federal ERISA Section 4044 asset allocation guidelines to support transfer of the $22 million to the State MERF and retain $50 Million for the Fire Plan B Trustees. This was less than the estimated $60,721,000 liability estimate of a “risk-free valuation.” The transfer occurred after June 30, 2012 according to the 2012 City external audit (CAFR).

Keeping too little money in Plan B poses a future risk to City taxpayers if annually reducing pension assets prove insufficient to meet retiree benefits in the real world. Providing more funds, perhaps $10 millions, to the State at this time (in addition to those transferred last spring) seems of no real benefit to City taxpayers. However, is the administration attempting to cut down current obligations to the State, funded by the City operating budget? Or is there some other undisclosed reason? What would make a long-time careful Trustee resign, and the City attempt to provide less than a full story? This is the issue of the moment and deserves more investigation.

Stay tuned to see how soon this Commission will be restored to full size. See whether the Mayor, while focused on new appointments, chooses to re-appoint worthy members to full new terms allowing them to exercise their abilities and judgments rather than being ‘hand puppets’ for the administration. And, when will agendas, minutes and exhibits for minutes become consolidated as hard-copy public records at the City Clerk office without need for FOI for all boards, commissions, councils and committees? How many years will it take for all of these to be available electronically, like so many of the Mayor’s messages? Time will tell.

(The Chairman of the Fire Commission and of the Pension Plan B Fire Board was Stuart Rosenberg, a lifetime Bridgeport resident. He is a registered voter, unaffiliated with any party. He has served on the Fire Commission for more than 25 years and would seem to have been mayorally re-appointed to the Board at least once in the past because his term expired within the past six years. Previously he was a member and President of Bridgeport’s “finance board,” the Board of Taxation and Apportionment, before Charter Reform, approved by the voters, eliminated that body.)