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Morris firefighters, city manager disagree on contributions to pensions

By Tom Larson

Sun Tribune

A disagreement about city money that goes to the Morris Fire Department Relief Association's pension fund will be hashed out during an informational meeting July 23.

Morris City Manager Blaine Hill, in an effort to shave costs as the state's economic crisis worsens, wants to rescind an annual payment of almost $22,000 to the Relief Association's retirement account, which he says is fully funded even without the city contribution.

Firefighters maintain that the money is needed to keep the pension fund in good health, aid recruitment and potentially save the city in the future from having to make a large, lump-sum payment to cover pension payouts. It's a commitment to the department the city made several years ago and should continue to honor, they say.

Morris City Council members discussed the dispute at their meeting Tuesday, and decided it's an issue that warrants further examination. The council and city staffers will meet in a work session with firefighters at 5:15 p.m. on Thursday, July 23, at the city fire hall.

The debate about paying or not paying the pension supplement is rooted in Minnesota's budget quagmire, which is expected to cost the City of Morris hundreds of thousands of dollars in state aid over the next two years, and possibly even more in the future.

Hill and his staff are combing through the budget to cut almost anything that isn't an essential city service or expense, and at the same time not having to lay off employees. He concluded that the firefighter's supplement can be cut without any harm to the department's pension fund.

Hill cites a state audit of pension funds that showed that in 2007 the firefighters' pension account was funded at 137 percent, which ranked it in among the top 10 percent in Minnesota. The firefighters' annual pension benefit of $1,350 per year of service compares with the average in the region of a little over $1,000 per firefighter, and is in the top 66th percentile in the state he said.

But the firefighters contend they've worked hard to earn the city payment and have more than made their case for its continuance. It helps them remain on par with some similar-sized departments and is a prudent investment in keeping the department strong.

Relief Association Treasurer and firefighter Joel Krusemark said the fund currently is running a deficit for 2009, according to a Schedule Form for Lump Sum Pension Payments, which is compiled by accountants and must be filed with the state by Aug. 1.

Currently, state law dictates that 2 percent of homeowners insurance policies in a fire department's coverage area be set aside for pension payments. This puts an average of about $26,000 per year into the Relief Association fund, Krusemark said.

In 2002, the association asked the city council to approximately match the state's money and contribute an additional $750 for each of the 29 firefighters per year to the pension fund. That totaled $21,750 per year at the time.

The city approved funding 50 percent of that in 2002, and in the last three years has funded the full amount, Krusemark said.

The benefit is more than earned, said Morris Fire Chief Doug Storck. The department has a 121 square mile coverage area, and covers all of Stevens County for rescue services, in addition to having Mutual Aid agreements with surrounding counties. Firefighters are on-call at all times.

To be eligible for the pension, a firefighter has to respond to 70 percent of fire calls, drills and meetings each year and serve at least 20 consecutive years. Firefighters are fully vested after 20. A firefighter who leaves the department before reaching 15 years forfeits all pension money.

Right now, firefighters are paid $10 per hour when on duty and they receive less for meetings. The current pension amount of $1,350 per year of service means that a retiring, 20-year veteran -- who must be at least age 50 to begin collecting -- would receive a $30,000 pension payment.

The plan is on par with other cities in the area. Krusemark said Glenwood kicks in $21,321 per year to its firefighters' pension fund per year, and that Carlos pays in about $26,000. Glenwood's pension benefit is $1,600 per year of service and Carlos' is $2,600 per year of service.

Hill said Glenwood also ranks among the state's top 10 percent in Minnesota, but that Carlos, with a 2000 Census population of 329, is too small for an accurate comparison.

Hill said he made his comparisons using cities with populations about the same as Morris, with a range of plus or minus 1,500 people, and with similar tax capacities, levies and aid numbers as Morris.

Hill's group of cities averaged $8,089 per year of service, and he notes that some cities, such as Benson, do not make supplemental contributions to their fire relief funds.

"The focus should be on a fair annual benefit, not front loading money with no rationale for doing so," Hill said.

Storck said the pension is a productive recruiting tool. For example, the department had 29 firefighters when the supplement plan was enacted and the force currently has 33 firefighters.

"We lean heavily on that plan for recruiting," Storck said. "We call it 'Incentive to Serve,' and it works. That's why it's there."

Hill said his proposal isn't meant to minimize the department's effectiveness or dedication. His conclusion is that the state money is enough to cover pension payouts, and he noted that the city is required to cover the difference if the fund balance isn't enough to cover the pensions. He disputes the firefighters' contention that by cutting the supplemental funds that the city is "taking away" pension money.

At a time when cities are scrimping to make up for lost Local Government Aid, cutting the supplemental funds is preferable to facing the prospect of laying off city workers, he said.

At Tuesday's council meeting:

• The council unanimously rejected a petition that Highland Drive be restored to a 40-foot width while the Highland Homes Addition is under construction.

The petition, signed by 23 residents, came on the heels of the council's recent decision to restore Sunnyslope Road to 40 feet because of additional traffic in and out of Key Row Apartments. Sunnyslope residents and Chief of Police Jim Beauregard said the 40-foot roadway would be safer given its location. City staff recommended a 36-foot roadway, citing studies that state a more narrow roadway would tend to slow traffic.

The petitioners said the potential for heavy snows and a curve in the roadway would make it difficult to see traffic.

However, Hill said that proper maintenance and driving would mitigate those factors, and Highland Drive area does not carry as much traffic. Beauregard concurred, saying that the situation was not similar to that on Sunnyslope Road.

• The company AES completed an asbestos abatement study of the elementary school property and estimated it will cost $293,000 to remove asbestos from the building. The cost can be reduced by $47,000 if concrete floors aren't recycled. The floors are covered by tiles containing asbestos. Hill said he has no plan ready for starting the removal process and will examine the study as part of the city's budgeting process.

• The Highland Homes project underground work was completed ahead of schedule and that curb, gutter, storm sewer and driveway repairs are in progress. A first layer of bituminous will be installed soon, with a final layer scheduled for early spring 2010.

Crews also installed final layers of blacktop on College and Oregon avenue projects and that cracked curbs and sidewalks would be repaired soon.

• The city police department is preparing a final candidate list for a full-time officer position. Interviews will be conducted this month and a hiring recommendation could be presented in August.

There is concerns that hiring an officer might not fit with current budget alterations, and the city is awaiting word about a COPS grant, which would help the city pay for a full-time position for three years.

• Victor Youle is retiring from the city after about 12 years. A retirement party is set for July 23 at Pomme de Terre Park.