Administrators and board members at the North Shore Fire Department are considering ways to reduce the department's looming retirement liability.
That sum, said Fire Chief Robert Whitaker, is in part the legacy of labor agreements struck before the department consolidated in the mid-1990s, as well as more recent agreements. NSFD's post employment benefit, paid to firefighters who are allowed to retire at 50 at the earliest, comprises a health insurance benefit that lasts until Medicare eligibility and payouts for accrued unused sick leave.
"Benefits go back to the start of the organization," Whitaker said at a board of directors meetings Tuesday. "It's a blend of how the benefit was administered."
At present the department spends about $900,000 on retirement benefits, about $400,000 of which is an amount the board decided last year to begin putting away to fund the benefit in the long term. Though the $400,000 does help to mitigate periods where more retirees are drawing benefits, Whitaker said, it's a far cry from the nearly $3 million Milliman estimates the department would need to sock away every year to fully fund the $30.4 million.
"It's highly unusual to find someone fully funding it," Whitaker said. "I don't really see that as an option."
Whitaker and NSFD Finance Director Lynn Burton on Tuesday presented a range of options that could at most nearly halve the department's $30.4 million unpaid liability.
Burton said according to Milliman, the department could cut about $6.5 off the unfunded liability if it puts away an additional $350,000 each year.
By increasing deductibles, co-pays, and modifying other details of the health insurance benefit, the liability could be reduced by about $3 million, Burton said. By modifying the health insurance plan every year, likely by shifting more costs to retirees, to keep the annual premium increase at 4 percent, nearly $8 million could be shaved off the top of the unfunded liability.
A combination of benefit changes, holding the annual premium increase to 4 percent, and putting away more money each year, would nearly halve the unfunded liability to $16.6 million, according to the actuarial study.
NSFD administrators are also keeping an eye on a bill in the Legislature which would require government agencies to fully fund retirement benefits for new hires in a separate account. Given the budget constraints that both NSFD and the member communities have felt in recent years, Whitaker said the legislation could cause problems.
"The challenge would be to fund it," Whitaker said. "It's not a bad bill, but it's how you come up with the money."
The board didn't take any action on particulars of the benefit Tuesday. A committee formed last year will continue to study the liability and report back to the board.
Your link to the biggest stories in the suburbs delivered Thursday mornings.
Enter your e-mail address above and click "Sign Up Now!" to begin receiving your e-mail newsletter Get the Newsletter!
- North Shore Police Reports: June 25, 2015
- North Shore Police Reports: June 18, 2015
- North Shore Police Reports: June 11, 2015
- Tosa man allegedly exposed himself at Fox Point tanning salon
- North Shore Police Reports: June 4, 2015
- North Shore Police Reports: May 28, 2015
- Two men charged with robbing Topper's Pizza in Fox Point at gunpoint
- North Shore Police Reports: May 21, 2015
- North Shore Police Reports: May 14, 2015
- Winter's not through with us yet