50 Retiring Prov Firefighters Will Cost City Millions for Overtime

Sunday, June 28, 2015

Forty nine Providence firefighters have  filed for retirement this current fiscal year ending June 30, which is nearly four times the normal annual amount, according to the head of the city's firefighter union  -- and the moves could have major implications on overtime costs for the city.  

Providence firefighter Local 799 President Paul Doughty said that the number of retirees more than doubled when Providence Mayor Jorge Elorza announced in May his plan to reorganize the current four platoon structure to three with a condensed shift schedule, which he said could save $5 million annually beginning in FY2017 -- and the firefighters immediately opposed (See GoLocalTV coverage HERE).

"Fourteen [firefighters] had retired between January and the Mayor's announcement in May, and then 27 since then, with 9 more in queue," said Doughty.  "To put in perspective, now we'll be down almost a whole shift and a half.  We were running a hundred short -- even if they put us on two shifts, we'd still be short."

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Doughty said the usual amount of retirees over the same time frame has been around 15 each year.  Currently, the number of firefighters is "roughly at 403," according to Doughty. "I can't keep track, they're retiring so fast," Doughty said on Friday. 

"People had concerns about their family life, or lack thereof, with the proposed changes -- childcare arrangements, all those factors weigh in, and a lot of people had to make a decision about their future," said Doughty.  

The Mayor's office said they were not available to comment on Friday.

Overtime, Pension Implications

While Elorza had touted potential for cost savings with the platoon change, City Council President Luis Aponte said the potential for impact on callback with the attrition could be "significant." 

"With the climate of insecurity that exists, some firefighters would might not have retired at this point are deciding to move on," said Aponte.  "What remains is the policy of minimum manning, and with fewer officers, there could be a significant spike in overtime. "

Aponte said that the city has usually budgeted for around $5 million annually in firefighter overtime.  "But we always overspend, it's usually around $10 million in the end," said Aponte.
Providence Internal Auditor said that the city will be spending around "seven and half million" in fire callback costs this year -- but the uncertainties surrounding if or when a platoon change will go into effect make it "hard to predict" what the outcome of a reduction of over twelve percent of the firefighter force will mean.  

"There's a lot of moving pieces," said Clarkin.  "If there's not another school, this will have an impact on callback costs."

In his budget, Elorza proposed a new firefighter class for fiscal year 2016, but Doughty said he has yet to hear of anything since the proposal.  

"We don't have a say in a new class, there's nothing they have to negotiate with us, it's a managerial decision," said Doughty.  "I let them know that's something they should consider, or they'll be paying more overtime."

Doughty said budget documents showed that city had accounted for a school of 56.  "If they did it tomorrow, the whole process would take about nine months," said Doughty, of bringing new firefighters online.

Pension Impact?

Aponte pointed out that the retiring firefighters have the option to take out their contribution -- with a lesser benefit -- which could have in impact on the city pension fund's bottom line.  

"It's not just the numbers, it's how they're retiring. There's an option -- option four -- that allows Class A employees, which firefighters are, to retire with all of their contribution and take lesser pension benefit," said Aponte.  "So say they each take out even $100,000 a piece, the potential impact to the pension fund -- the immediate impact - is significant.  If you take more and more assets out, it has to work harder to make a return sufficient to pay for existing retirees.  It goes through burn rate faster."

Clarkin noted that for retirees who chose that option, then getting a lesser benefit would have "minimal impact" -- but he said the asset value of the fund could see and immediate impact.  
"From an actuarial standpoint, you end up getting a less of a benefit, so the impact is minimal," said Clarkin. "So say you'd get pension of $60,000, but you decide to take the contribution out through option four, then now you would get say 50,000."

"Obviously, it would take the [fund] asset value down," continued Clarkin. I don't think it will be a problem from the system itself,  It will definitely have an impact on the available asset amount."
 

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