Scottsdale firefighters’ plan to create a city-backed pension program for its former Rural/Metro members hit a snag because of the realization it would be illegal under state law.
The union proposal that would be funded by the firefighters — with the city accepting up to $70 million in liability — was set to be discussed by the City Council earlier this week, but was withdrawn by the firefighters after learning the plan would not be eligible under the Public Safety Personnel Retirement System.
Steve Springborn, a fire engineer and president of the Scottsdale Firefighters union, said the next step is to seek changes during the 2008 legislative session and then bring the proposal back to the council, which must give final approval.
According to the proposal, all sworn Scottsdale firefighters would contribute 5 percent of their pay for 30 years to fund the pensions of the former Rural/Metro Fire Department employees that were eligible for a 401(k) pro but not a pension under their previous employer. Under the plan, the former Rural/Metro employees would receive credit for the number of years served, up to 20 years.
Both new recruits and longtime Rural/ Metro employees who served Scottsdale before the municipal fire department was created in July 2005 started qualifying for the state pension two years ago. Springborn said if this proposal isn’t approved, longtime employees are likely to work a full 20 years with the Scottsdale Fire Department before retiring.
Springborn said the effect would be a lack of attrition with a high number of retirements hitting the department in 2025. With the pension, there would be healthy attrition and it would provide more op- portunities for young firefighters to move up through the ranks, he said. Springborn said 99 percent of sworn firefighters voted to approve the pension proposal.
The city would not be contributing any money to the plan. However, the fire department needs Scottsdale to partner with the state retirement system and that means the city would be liable for up to $68.9 million over 30 years, according to estimates.
The council would not be precluded from giving firefighters an extra 5 percent raise each year to cover the cost of the pension, however Springborn said the department is committed to never asking for that money.
“What we’re saying is we don’t want them to ever do that,” Springborn said. “We’re simply asking for the opportunity for us to pay for that benefit.”
A majority of council members have expressed support for the concept, but reservations remain.
“I want to get the firefighters a pension ... but to figure out a way to do this that doesn’t put the city in a bind is going to be very tough,” Councilman Bob Littlefield said.
The proposal was brought by the firefighters union to city officials, then presented to the council during a May 8 budget hearing even though the plan called for no budget appropriation. There was no mention by City Manager Jan Dolan, who addressed the council on the topic during the meeting, that there could be legal issues with state law. Dolan did not return calls to discuss the fire pension proposal.
The council chose at that time to postpone the issue, saying more information was needed and there had not been adequate exposure to the public.
A meeting was then set for June 12, but it was canceled after the firefighters withdrew the proposal because of the needed law change.