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Pension hike for firefighters approved

June 19, 2013
By Josh Moniz - Staff Writer , The Journal

NEW ULM - In order to try to boost recruitment and improve retention of veteran firefighters, the New Ulm City Council approved increases to the Fire Department Relief Association pension plan on Tuesday.

The proposal has the City gradually ramp up its annual contributions to the Relief Association over a three-year period. The organization previously provided monthly payments, but it now gives lump sum payouts at retirement at the rate of $3,750 per year of service. The proposal seeks to raise that amount to $4,125 per year by 2016, with smaller steps of raising it to $3,825 per year in 2014 and then $3,975 per year in 2015.

The proposal does not adjust pensions to approximately 40 retired firefighters who are still on a monthly payment program. The changes for those individuals are dictated by the Relief Association, which is an organization independent from the City. Increases for the monthly retired firefighters are usually adjusted up by the organization when it has strong budget balances. Such increases have not been made in several years due to the organization's fund and investments dropping in 2008 and then slowly growing. The organization hopes to increase those pensions as the economy improves.

The Relief Association's proposal to increase payouts for active firefighters who retire will require the City to pay $12,179 more per year by 2016. The gradual increase would mean the City goes from paying $58,273 total to the organization annually to $70,452 by 2016. The increase will come from taxpayer funds in the City budget, but the increased amount is relatively small compared to typical City operation costs.

Board members of the Relief Association requested the raise due to increases in hours of training required of firefighters and the department's struggle with retaining experienced firefighters. The last increase to the pension program payouts was in 2009 when it was increased from $3,000 per year of service to $3,750.

New Ulm Fire Department Chief Paul Macho said the department has always sought to maintain around 42 firefighters, but challenges to recruiting during the down-turned economy and the department's limited recruiting tools have prevented this goal for several years. The department has faced the related problem of declining numbers of veteran firefighters. It currently has 41 firefighters with 16 firefighters with less than five years of experience, primarily due to people retiring or moving on to other work. Thus, 40 percent of the department lacks long-term experience. A larger pension could help attract new firefighters, Macho said.

The Relief Association runs its own operations separate from the City with its own board to make decisions. However, the City is responsible to help maintain the funds by annual payments to build up the payouts for when retirements occur and to cover shortfalls. The increased payouts are not expected to significantly impact the stability of the organization's fund. The fund is currently funded by its investments up to 88 percent of its operations, largely due to recovery in its investments. The increased contributions will drop that down to around 85 percent funded. The organization is optimistic that the improving economy will boost the revenues on their investment to 100 percent funded or beyond in the coming years.

In other business, the Council also approved signing a MnDOT Office of Aeronautics Grant Agreement to fund requests by the Federal Aviation Administration to add saw-cut grooving to the final pavement surface on the New Ulm Municipal Airport's primary runway. The City is currently finishing an airport project that includes resurfacing the runway. The additional $87,000 cost of the grooving will be entirely covered by a state grant in the agreement.

(Josh Moniz can be e-mailed at jmoniz@nujournal.com

 
 

 

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