Firefighters disability pension costing city millions

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wwltv.com

Posted on April 25, 2013 at 10:49 PM

Updated Thursday, Apr 25 at 11:01 PM

Mike Perlstein / Eyewitness News
Email: mperlstein@wwltv.com | Twitter: @mikeperlstein

NEW ORLEANS -- A major battle is being waged in the courts and the Capitol over pensions for New Orleans firefighters. The city maintains that the Fire Department doesn't pay nearly enough to cover its pension obligations, leaving the city on the hook for millions of dollars to cover the shortfall.

But as the city considers painful solutions, including furloughs, one very costly element of the pension raises a whole new set of questions: firefighters on disability.

Plumbing, construction, carpentry and landscaping are just some of the jobs held by New Orleans firefighters receiving a disability pension. And the fire department’s pension rules allow it.

These disabled firefighters have been determined by the New Orleans Firefighter’s Pension Board that they suffer a medical condition that leaves them unable to fight fires – even if they can handle other kinds of physical jobs.

"The information you shared ought to send red flags up within the board to make sure that they are scrutinizing every case,” Deputy Mayor Andy Kopplin said.

To examine the prevalence of disability claims, Eyewitness Investigates looked at 10 years of civil service records covering all firefighters who left the department. Our exclusive analysis found that the number of ex-firefighters collecting disability is much higher than state and national averages.

National studies use 12 percent as a benchmark, although those studies note that fire department disability rates vary widely because there are so many differences in pension plans from city to city.

The Louisiana Fire Pension system, which includes all departments in the state except New Orleans and Baton Rouge, falls in line with the national number at 14 percent.

Jefferson Parish estimates it's percentage of disability retirements at about 4 percent. Baton Rouge is also at 4 percent.

St. Bernard Parish is above the state average at 21 percent.

But in New Orleans, the overall percentage is 42 percent. And in recent years, the numbers are even higher.

Since 2006, the percentage is 57 percent. And in 2012, 70 percent – nearly 3 out of every 4 – employees who left the New Orleans Fire Department were approved for disability.

Kopplin said he was taken aback by the numbers, especially in light of a $17 million civil court judgment the city lost earlier this month, shifting the burden of shoring up the pension fund to city taxpayers.

“Is 70 percent of fire retirees being disabled, is that consistent with best practices? Is that something that makes sense intuitively?" Kopplin asked. “This is just another example of where decisions may have been made that weren't thoughtful that weren't proper.”

Richie Hampton, CEO of the Firefighters Pension Board, explained how the process works.

Firefighters with more than 12 years on the job qualify for a pension ranging from 30 to 50 percent of their salary. Anyone with fewer than 12 years is not eligible.

But anyone who can prove a work-related disability automatically gets the full 50 percent pension, regardless of how many – or how few – years they served.

The cost of covering disability payments adds millions of dollars a year to a pension that the Bureau of Governmental Research says is woefully underfunded.

BGR President Janet Howard called the firefighters’ pension situation "a debacle."

"It’s a serious problem,” Howard said. “The plans are very generous and the employee contributions are very low. It's 6 percent for firefighters and nationally the median for contributions from employees is 9 percent. So that makes a big, big difference."

Kopplin said the shortfall takes out a major chunk of the city’s annual budget, nearly 10 percent.

"We spend about $50 million – or 10 percent of the budget – on one item: pensions for former firefighters. So it's one of the biggest expenditures the city makes," Kopplin said.

Hampton pointed out career firefighters who retire after more than 30 years don’t cost the city any extra money. They receive the same 50 percent pension, regardless of whether they're disabled, he said.

However, Hampton conceded that retirees who claim disability after fewer than 30 years cost the city millions every year, although he could not provide the exact cost.

Among firefighters who claim disability, Hampton said only a small percentage of those benefits go to ex-fighters with fewer than 12 years. Those are the employees who would not qualify for any pension, but get a full 50 percent of their former salary due to disability.

Since 2006, according to civil service records, 16 out of 134 firefighters – 12 percent – who retired on disability served fewer than 12 years.

Even so, Hampton said that short-timers are a concern.

"It gave a lot of people heartburn to give some of those guys 50 percent,” he said. “It doesn't sit well with the board when people try to pull a fast one. We don't look at it lightly."

Hampton said scrutiny by the board on disability claims is strict, requiring a doctor's diagnosis and report submitted to the board for approval.

But a review of a year's worth of board minutes shows that nearly every disability applicant was approved without objection.

"This is just another example of where decisions may have been made that weren't thoughtful that weren't proper," Kopplin said.

So who makes the final decision on disability claims? The fire department pension board.

The board, formally known as the New Orleans Fire Fighters’ Pension and Relief Fun, is made up of 10 people, two appointed by the city and the other eight, current or former firefighters appointed by the fire department.

The city is pushing a bill in the Legislature to reduce the board to five members, three appointed by the mayor, one of them being the fire chief. The city also is pushing a bill to increase firefighters' pension contributions from 6 to 10 percent.

“Right now that system is not under the control of the city of New Orleans, yet we're responsible - the taxpayers' are responsible - for paying the bills that they rack up," Kopplin said.

Meanwhile, the firefighters' union has launched a counter-attack, supporting competing bills that call for much more gradual reform. For example, one of the competing bills backed by the fire department also calls for a pension increase up to 10 percent, but the increase is phased by one percent each year.

The firefighters’ union president, Nick Felton, declined to be interviewed on the pension issue, saying he couldn’t comment because of ongoing litigation with the city.

 

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