Town wins arbitration battle

Fred Musante, Editor
November 01, 2007

A state labor arbitration panel handed the town a victory last month in a 10-year battle with the firefighters' union over the Fire Department pension fund.
Mayor James Miron said the arbitration award will save the taxpayers about $15.2 million over the next 23 years by reducing the town's pension obligation to the International Association of Firefighters.
Finance Director John Norko said the award will save the town $400,000 on it annual contribution to the pension fund and also reduce the town's unfunded pension liability by $2.5 million.
Miron announced the victory at a press conference Monday, though the panel issued its decision Oct. 12, which is the day it became effective.
"This was a significant victory for the town of Stratford," said Miron.
He credited town officials and labor negotiator David Dunn for their efforts since 1997, when negotiations to change the pension fund rules formally began. He also noted that his insistence to make the issue's resolution a priority since last year may have speeded the award.
Town negotiators thought they had a good negotiating position, because the police union and other town employee bargaining units accepted similar pension changes in 1997 and 1998 without a protracted battle.
The firefighters' union has 45 days to appeal the arbitration decision, but to do so, Dunn said, they must base the appeal on a major error in the arbitration process.
He said he heard the union may appeal but hasn't received official notice.
The Stratford Star was unable to contact union officers for comment.
Fire union officials reportedly want to prepare a court appeal to overturn the arbitration panel award.
Dunn said court appeals of arbitration panel awards are limited narrowly.
Miron said the firefighters fought for delays for a decade to benefit from maintaining the old rules, which gave them more favorable benefits for retiring on disability pension than on regular "superannuation" pensions after 30 years of service.
He said the new rules put firefighters in the same place as police officers and other employees.
The key issues the town won involve the amount of the firefighters' contribution, and the income percentages firefighters will receive for disability and superannuation pensions.
The employee contribution will increase from 6 percent to 8 percent, which reduces the town's contribution from 94 percent to 92 percent.
The award increases the superannuation pension from 60 percent of pay to 70 percent after 30 years, but reduces the disability pension from 66.66 percent of the previous year to 50 percent of the previous two-year average.
Miron said under the old rules, firefighters received higher pensions for disabilities than for regular service, and that resulted in numerous questionable disability pension claims.
Of the 110 firefighter retirements in the last 10 years, he said, 71 firefighters (64.5 percent) retired on disability pensions but only 39 on superannuation pensions.
Similarly, before this issue was settled with the police union in 1998, two-thirds of police officer retirements were for disability pensions, but since then there has only been one, Miron said.
The town's unfunded pension liability dates from 2000-02 when the Town Council cut pension allocations in two consecutive town budgets to lower the tax rate. Then pension fund investments lost value in the 2001-02 recession, creating an unfunded liability currently estimated at $68.5 million.
Recently, town officials said if the pension allocations before the recession had been maintained at the levels pension consultants recommended, the unfunded liability would have been limited. Instead, it requires taxpayers to pay extra to make sure the pension fund has enough money to pay employees when they retire.
Norko said pension fund investments are currently earning a rate of 14.4 percent, well above the projection of 8.5 percent, and that is more good news.
The increase is partly due to the bull market on Wall Street and partly to the fact that the Pension Board, a Town Council committee, recently changed pension investment managers and adopted a higher-income strategy for the fund's investment portfolio.


©Stratford Star 2007