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Omaha Alliance for the Private Sector Featured Article
The New York Times, June 19, 2010
In Budget Crisis, States Take Aim at Pension Costs
By MARY WILLIAMS WALSH
Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.
Illinois raised its retirement age to 67, the highest of any state, and capped the salary on which public pensions are figured at $106,800 a year, indexed for inflation. Arizona, New York, Missouri and Mississippi will make people work more years to earn pensions. Virginia is requiring employees to pay into the state pension fund for the first time. New Jersey will not give anyone pension credit unless they work at least 32 hours a week.
“We can’t afford to deny reality or delay action any longer,” said Gov. Pat Quinn of Illinois, adding that his state’s pension cuts, enacted in March, will save some $300 million in the first year alone.
But there is a catch: Nearly all of the cuts so far apply only to workers not yet hired. Though heralded as breakthrough reforms by state officials, the cuts phase in so slowly they are unlikely to save the weakest funds and keep them from running out of money. Some new rules may even hasten the demise of the funds they were meant to protect.
Lawmakers wanted to avoid legal battles or fights with unions, whose members can be influential voters. So they are allowing most public workers across the country to keep building up their pensions at the same rate as ever. The tens of thousands of workers now on Illinois’s payrolls, for instance, will still get to retire at 60 – and some will as young as 55.
One striking exception is Colorado, which has imposed cuts on its current workers, not just future hires, and even on people who have already retired. The retirees have sued to block the reduction.
Other states with shrinking funds and deep fiscal distress may be pushed in this direction and tempted to follow Colorado’s example in the coming years. Though most state officials believe they are legally bound to shield current workers from pension cuts, a Colorado victory could embolden them to be more aggressive.
Colorado pruned a 3.5 percent annual pension increase to 2 percent, concluding that was the fastest way to revive its pension fund, which was projected to run out of money by 2029. The cut may sound small, but it produces big results because it goes into effect immediately. State plans vary widely, but many have other costly features, like subsidized early-retirement benefits, which could likewise be trimmed for existing workers.
Despite its pension reform, Illinois is still in deep trouble. That vaunted $300 million in immediate savings? The state produced it by giving itself credit now for the much smaller checks it will send retirees many years in the future – people who must first be hired and then, for full benefits, work until age 67.
By recognizing those far-off savings right away, Illinois is letting itself put less money into its pension fund now, starting with $300 million this year.
That saves the state money, but it also weakens the pension fund, actually a family of funds, raising the risk of a collapse long before the real savings start to materialize.
“We’re within a few years of having some of the pension funds run out of money,” said R. Eden Martin, president of the Commercial Club of Chicago, a business group that has been warning of a “financial implosion” for several years. “Funding for the schools is going to be cut radically. Funding for Medicaid. As these things all mount up, there’s going to be a lot of outrage.”
Joshua D. Rauh, an associate professor of finance at Northwestern University who studies public pension funds, predicts that at the current rate, Illinois’s pension system could run out of money by 2018. He believes the funds of other troubled states – including New Jersey, Indiana and Connecticut – are also on track to run out of money in less than a decade, unless they make meaningful changes.
If a state pension fund ran out of money, the state would be legally bound to make good on retirees’ benefits. But paying public pensions straight out of general revenue would be ruinous. In Illinois’s case, it would consume about half the state’s cash every year, bringing other vital state services to a standstill.
Mr. Rauh said he thinks any state caught in that trap would have little choice but to seek a federal bailout. Bigger pension contributions and higher taxes can go only so far.
Many state officials, hoping for a huge recovery in the markets, say that such projections are too pessimistic, and that cutting benefits for future workers must suffice, given laws and provisions in state constitutions that make membership in a state pension fund a contractual relationship that cannot be breached.
Lawyers, though, are raising the possibility that those laws are being misinterpreted.
“It makes no sense to suggest that an employee who works for the state for a single day has acquired a right to have future pension benefits calculated for the next 20 to 40 years under whatever method was in effect on that single first day of service,” states a legal memorandum prepared for the Commercial Club of Chicago, which is concerned that a public pension collapse would badly damage the city’s business climate.
The club’s members include senior executives of big companies, like Boeing, Aon, Kraft, Motorola and I.B.M., that have frozen pensions or slowed the rates at which their workers build up benefits.
Some of those cuts set off titanic battles. The most famous was at I.B.M., which changed its pension plan just when many of its older workers were about to earn sharply higher retirement benefits. Aggrieved workers sued, but after a long battle, a federal appellate court found that the cuts were legal.
“An employer is free to move from one legal plan to another legal plan, provided that it does not diminish vested interests,” or the benefits workers have already earned, wrote Chief Judge Frank H. Easterbrook of the Seventh Circuit Court of Appeals in Chicago. He did not distinguish between corporate employers and states.
Colorado is basing its legal defense, in part, on a 1961 state supreme court ruling that said pension cuts for current workers were allowed if “actuarially necessary,” and will argue that it applies to retirees as well. Other states may not have such legal tools.
In California, Gov. Arnold Schwarzenegger has gone a different route, bargaining with the 12 unions that represent public employees. Last week four of them agreed to let the state cut its own contributions by requiring current workers to pay sharply more for the same pensions. The workers will contribute 10 percent of their pay, in some cases double the previous rate, to the state pension fund. Some other states are raising employee contributions as well, though less sharply.
In New Jersey, the administration of Gov. Christopher J. Christie recently imposed pension cuts on future hires, but has been quietly looking into whether it could also reduce the benefits that current employees expect to accumulate in the coming years.
“Can they change the benefit formula going forward? Sure. It’s not etched in stone,” said Edward Thomson III, an actuary and trustee of the New Jersey pension system who was asked to offer an opinion on whether New Jersey could adopt the federal pension law – the one that covers companies – as its governing statute.
A state assemblyman, Declan J. O’Scanlon Jr., recently introduced a bill to ratchet back a 9 percent pension increase that the state gave most workers in 2001.
“I think this will pass constitutional muster,” Mr. O’Scanlon said. “Otherwise, I fear the whole system will fall apart. Nine years – we’re out of money.”
Amy Schoenfeld contributed reporting.
This article has been revised to reflect the following correction:
Correction: June 27, 2010
An article last Sunday about the ways in which states are trying to control the cost of their pension plans described a pension cap in Illinois incorrectly. The cap applies to the annual salary upon which pensions will be based (for employees hired after Jan. 1, 2011, the cap is $106,800, indexed for inflation). The pension itself will not be capped at that amount.
For Immediate Release: Contact: David Nabity
Thursday, March 18, 2010 (402) 618-6759
OMAHA ALLIANCE PROPOSES $6 MILLION SOLUTION FOR FIRE DEPARTMENT
Fire Department Is Overstaffed By At Least 64 Employees
(OMAHA, NE) – The Omaha Alliance for the Private Sector (OAPS) today announced its “$6 Million Solution” for the multi-million-dollar deficit being run by the Omaha Fire Department this year. OAPS said that the Omaha Fire Department is currently over-staffed by as many as 64 firefighters at an average cost of $100,000 per firefighter, totaling more than $6 million.
“The financial waste in the fire department can be found in a number of areas,” said OAPS spokesman David Nabity. “Current leaders in management have allowed the employee ranks to swell to numbers clearly not needed to maintain public safety. In addition, there are way too many employees in supervisory positions. The department is grossly top heavy. Our analysis shows the Fire Department can be downsized by at least 64 employees while maintaining public and firefighter safety,” Nabity said.
The Omaha Alliance for the Private Sector has analyzed the differences between the Omaha Police Union Contract supported by the Mayor and the police contracts from other Midwestern cities, many of which are included in the Commission of Industrial Relations (CIR) list of Comparable Cities.
There are a number of areas within this proposed contract that include significant costs that other cities have not embraced. Some of these items were originally limited or removed by the CIR but then added back during recent negotiations. In addition, we have not found a circumstance where the CIR has ruled on Pension Benefits and it is disingenuous on the part of some city leaders to suggest that Omaha cannot renegotiate this contract because the CIR will object or add back worse language for the city. This contract actually added worse financial language than the CIR provided during its last ruling.
The following information provides more than enough reason to start over with this contract by using an independent negotiator to represent the city.
The Contract Is Too Long:During these uncertain economic times, it not wise to sign a five-year contract with any labor union. Our economy could deteriorate in future years making the financial commitment by Omaha taxpayers even more difficult to fund. The City should have the ability to reexamine the contract after one year, which means this contract should be for no more than three years. Other cities across the Midwest understand this and have limited their contracts to 1.85 years on average.
Sick Leave Provision: The CIR ruled that annual accumulation of Sick Pay must be limited to 108 hours and total accumulation must not exceed 3,200 hours. However, this new contract expands it to 124 hours with the ability accumulate an “unlimited” number of hours. There is also a “bonus” provision that provides an additional 200 hours. No other city in our analysis provides such an expensive Sick Leave provisions.
Banked Hours: Following the CIR ruling, the contract does reduce banked hours on an annual basis from 134 hours. However, a new “excess time bank” has been created in which all hours in the “Comp Time Bank” which are over 134 hours are deposited for cashing out later. This provision is not what the CIR expected and no other comparable city on the list allows for this type of banking of hours. Most require the banked hours to be cashed out within the year.
Omaha Alliance for the Private Sector
“Deal of the Century?”
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Steps for Wage Increases: Most of the cities we reviewed have wage increase steps that exceed 9 years. This new contract “compresses” the steps which results in over $1,181,368 in new payroll expenses even though “zero, zero” increases has been stated by city leaders. During these difficult financial times, city leaders should be looking for ways to cut the total payroll, not expand it. The financial impact (including pension liabilities) of this contractual change needs further analysis before any contract is signed.
Wage Supplement for Card Employees: This provision provides 2.5% additional compensation for Police Officers. No other city in our analysis provides this benefit.
Pension Plan: The Pension Plan provided for the members of the Police Union of the City of Omaha is THE richest pension plan we have found. In every way, this plan provides benefits that are way beyond the norm across Midwestern cities and brings an unnecessary annual expense of at least $12,111,698 to the taxpayers of Omaha.The reasons for this are as follows:
The plan is not based on “Base Pay” or “Average Annual Salary.” It allows for Overtime, Specialty Pay, Premium Pay, Vacation Pay, Sick Pay, Comp Time, and Excess Time Bank to be applied to the retirement plan formula. No other city we studied allowed all of this to be included in compensation for pension purposes.
The plan allows for retirement at age 45. The earliest retirement we found was age 48. Most allow early retirement at age 50.
The annual benefit, given all the compensation allowed to be included, is much higher than other cities. St. Paul, Minnesota allows for a top benefit of 90% after 30 years, however, this benefit only includes Average Annual Salary without all the additional compensation factors.
The annual contribution required under the new contract is more than double that of other cities. Please see below:
Omaha Alliance for the Private Sector
“Deal of the Century?”
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City’s Employees
City
Pension Cost
Cost
Omaha, NE
33.67%
16.15%
Lincoln, NE
11%
8%
Des Moines, IA
17%
9.4%
St. Paul, MN
14.1%
9.4%
Tulsa, OK
13%
8%
Oklahoma City
13%
8%
Wichita, KS
17.5%
7%
Cincinnati, OH
19.5%
10%
Average =
15%
8.5%
By increasing the City’s portion of the retirement plan contribution to 33.67%, Omaha is paying 18.67% more than other cities are willing to pay. That extra 18.67% will cost the city $12,111,698 each year. Right here in our own Douglas County, the members of the Sheriff’s Union only get a County contribution of 8.5%. Does it make sense that Omaha Police Officers get 33.67% and our County Sheriffs only get 8.5%?
Given the incredible expense of this new pension funding strategy, we believe the Personnel Board should examine changing the retirement age to 50, reduce the maximum benefit payout to 65% and limit the types of compensation that can be included in the benefit formula. These changes would significantly reduce the annual funding requirement by Omaha taxpayers and change our pension plan to more closely mirror plans offered by other cities. No other city was willing to allow such an expensive pension system for any of their employees.
The Deferred Retirement Option Program (DROP): DROP Option brings with it a number of variables that make managing future City cash flow very unpredictable. It also makes planning for a healthy pension system difficult. By allowing retired union members the option to continue working at full pay and also receive their retirement benefits (although they are deferred at interest) the impact on the pension system and the City’s cash flow can be very negative for the following reasons.
Cash flows to the Pension in later years cannot be determined because of the uncertainty of which employees will use DROP and which ones will not.
By giving incentives for older (highest paid) employees to continue to work, the annual payroll for the department will be inflated beyond what it would be without the DROP. Older more expensive employees will be kept, rather than replaced by younger less expensive employees who are in better physical condition to replenish patrolman needs.
Guaranteed interest and lump sum payment options under the plan can also make the pension plan unstable and unpredictable.
Omaha Alliance for the Private Sector
“Deal of the Century?”
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For these reasons, the Omaha Alliance for the Private Sector believes that the Personnel Board should reject the proposed Police Union Contract and start the process over with independent negotiators. The individuals who negotiated the previous Police Union Contract were the same individuals who negotiated this contract and as we have demonstrated, suggested that the City adopt a contract that is grossly more expensive for Omaha citizens than other comparable cities.
As you will see from the attached news articles, many cities across America are faced with the same budget issues that Omaha is experiencing. The leaders of these cities are finding ways to trim the fat that exists within the Police, Fire and Civilian departments. They are taking a balanced approach working to treat all employees with the same level of equity.
This Police Union Contract would be rejected by the leaders of most cities across America due to its incredible cost to the taxpayer. With that in mind, we ask that the Personnel Board and the City Council look out for the best interests of all citizens in Omaha – not just one employee group – and reject this contract as it is written. We are also asking the citizens of Omaha to let their voices be heard and call their city council person and the Mayor’s office and ask them to start over with a new contract negotiation process.
(OMAHA, NE) – The Omaha Alliance for the Private Sector today released more results from their research and investigation of the Omaha Fire Department showing that mismanagement of the department is costing Omaha taxpayers millions of dollars. The Omaha Alliance for the Private Sector (OAPS) announced its findings at a news conference at the Omaha Press Club.
“The Fire Department management team has needlessly caused the Omaha Fire Department to be $4.7 million over budget just this year alone,” said David Nabity, OAPS Treasurer and spokesman. “It is our hope that by making public what we have already discovered, it will help the our city officials better understand why it is important to start over on the negotiation process for a new fire union contract by using independent negotiators. We also hope that the citizens will finally say enough is enough and outraged enough to demand real reform within the Fire Department,” Nabity said.
The OAPS released numerous instances where mismanagement is costing taxpayers unnecessary dollars. Among the findings:
1. The executive office of the department is severely over staffed with unbudgeted positions costing taxpayers hundreds of thousands annually.
2. A year ago, 18 firefighters were hired to staff a new Elkhorn suburban firehouse that has not even been built. The annual cost of these positions exceeds $1,350,000.
3. Since the current management team has been in charge, staffing has significantly increased beyond the true needs of the department to maintain firefighter and public safety. Approximately 15% of the workforce is not working on a daily basis costing possibly over $6,000,000 annually.
4. Specific individual firefighters are receiving “out of class” pay above what they are entitled to in the Omaha Fire Union contract costing taxpayers countless dollars.
5. The department allows a system that fosters poor accountability of a select group of firefighters’ through “detached duty status” making their whereabouts at any given time difficult to determine which causes confusion, overstaffing and bloated payroll costs.
6. Lax management of firefighter status may result in firefighters getting paid as working while they are on vacation.
7. Recently, many lower-waged civilian staff members were fired and replaced by uniformed firefighters who are paid double the wages costing taxpayers hundreds of thousands of dollars.
(more)
Omaha Alliance for the Private Sector
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8. Today, there is one captain for every three firefighters, and those assigned to positions above the rank-and-file firefighter represent 40% of the department costing taxpayers hundreds of thousands of dollars.
9. The department applied for and was awarded a federal grant based on staffing requirements that weren’t met, yet the city took monies from the grant reserve in violation of the federal laws governing that grant.
10. Mismanagement of the Kloewer [pronounced: “KLAY-ver”} Memorial fund: We have reason to believe the City was overcharged by $59,000 for heart monitor equipment purchased from Zoll Medical Corporation. The total bill for these Heart Monitors is $423,117. The department raised $299,000 from donors for this equipment leaving a balance due of $124,117 and yet the city is being billed $183,117 in four annual installments to pay the balance due, a $59,000 disparity.
11. It appears that funds allocated for a fire suppression system within fire department headquarters were redirected to build an office for the fire chief which created an unbudgeted expense of over $400,000.
The OAPS also pointed out some instances where it appears Fire Department management has ignored the current union contract or not acted properly on rulings from the Commission of Industrial Relations (CIR) that would have allowed for proper management and lowering costs. Those are:
12. Fire Department management, contrary to the Collective Bargaining Agreement, misused “Call Back” and overpaid firefighters $1,200,000 over the last three years.
13. Lax rules and mis-accounting of “comp time” resulted in many receiving time and a half on their wages allowing some firefighters to “spike” their income and increase their pensions by more than 30%.
14. There are now 45 captains on ambulances – even though the Commission of Industrial Relations (CIR) recently stated clearly that these captains are not needed on the ambulances – costing Omaha taxpayers up to $1 million annually.
“Because of these findings, the Omaha Alliance for the Private Sector – on behalf of the taxpayers of Omaha – calls on City leaders to launch an independent financial audit of fire department operations by inviting the Nebraska State Auditor to review all activity within the Fire Department,” Nabity said. “In addition, we call on City Leaders to ask for a legal investigation with the City Attorney and the U.S. Attorney to study all of the activity within the department that may be in violation of city, state and federal laws.”
“Finally, we ask the citizens to engage in this process by calling the Mayor and the City Council and ask them to complete a thorough financial and legal investigation of the Fire Department and begin the process of making Fire Department management more responsible to the citizens of Omaha who pay for the bloated Fire Department budget,” Nabity said.
1)The executive office of the department is severely over staffed costing taxpayers hundreds of thousands annually.
The Fire Department is only supposed to have three assistant chiefs, and there are currently six. Current Fire Department management created special positions, titled “Operational Chiefs,” for select members of the department without any apparent true need for those positions. They did not exist in any annual budget of previous administrations. These positions have never been budgeted or approved by the unit of government required to do so: the City Council.
2)A year ago, 18 firefighters were hired to staff a new Elkhorn suburban firehouse that has not even been built.
Ground hasn’t been broken on this new facility yet, Fire Department management, during this difficult budget time, added 18 new positions with no facility to house them. This action is a direct cost to the city of $1,350,000 assuming that these new firefighters plus benefits cost the city $75,000 annually.
3)Since the current management team has been in charge, staffing has significantly increased beyond the true needs of the department to maintain firefighter and public safety. The Daily Leave Reports show that you only need 180 firefighters per day, that there are excess numbers of those on leave and that accountability has been totally lost as to the whereabouts of firefighters. Approximately, 15% of the daily workforce is not working. The Commission for Industrial Relations clearly stated that the department should reduce the number of those that are on Daily Leave and yet the numbers continue to be extremely high. In our opinion, this again shows that management is manipulating the payroll systems and employment of the fire department masking that the department is significantly over staffed. This mismanagement alone could account for $6,000,000 a year in unnecessary costs.
4)Specific individual firefighters are receiving “out of class” pay above what they are entitled to in the Omaha Fire Union contract, costing taxpayers countless dollars.
We have been told repeatedly that there are individuals receiving this inflated pay today that were not under the management practices of the previous administration. The actual cost to the city cannot be determined without specific records of who today is getting out of class pay and compare those to the numbers under previous administrations. The Union Secretary admitted he was getting this “out of class” pay at the December 2009 meeting to the dismay of many in attendance at that meeting.
5)The department allows a system that fosters poor accountability of a select group of firefighters’ through “detached duty status” making their whereabouts at any given time difficult to determine which causes confusion, overstaffing and bloated payroll costs.
a.A “detached duty status” used by the management team takes firefighters off the recording books and does not allow supervisors or the payroll department to keep track of the employees, which positions them to be out of the realm of accountability. It moves the firefighter off of a truck and onto a 40 hour work week somewhere in the Fire Bureau.
b.When this occurs, it proves that you have more firefighters than you need to properly staff the department, and it again misuses the payroll of the city. Also, these individuals assigned to a “detached duty status” are receiving pay that does not exist in the union contract. During the month of January, emails were sent from Central Headquarters offering discretionary leave, due to excessive manning which allowed firefighters to burn “comp time” and “annual leave” time. During the previous administration, we have been told that there was virtually no “detached duty” activity.
6)Lax management of firefighter status may result in firefighters getting paid as working while they are on vacation. One example is the firefighter who was on vacation in Belize recently. He was originally marked as being at work for four of the days he was really in Belize. Either this kind of behavior is condoned by management, or there is such a lack of personnel controls that management didn’t know he was on vacation. Either of these instances shows that our firefighter personnel are not being managed effectively or efficiently for the taxpayers of Omaha.
7)Recently, many lower-waged civilian staff members were fired and replaced by uniformed firefighters who are paid double the wages costing taxpayers hundreds of thousands of dollars.
These firefighters are not trained as secretaries or administrative assistants, and yet these high-salaried personnel are being forced into those jobs. This is a good example of mismanaging the department. Why would you put the highest paid individuals you have into positions that warrant lower wages, at the same time losing the institutional intelligence of veteran civilian employees? This move is costing the city hundreds of thousands of dollars.
The method of terminating these employees is also disturbing. Current Fire Department Management “offered these employees up” for budget reductions to the City Council. Once the Council approved these staffing budget cuts, along with other cuts, Fire Management placed the blame on the Council and then encouraged the Union to file a lawsuit saying the Council is forcing firefighters to do civilian staffing activities. This is an example of how current Fire Management is setting the City up to fail by recommending action and once taken, sues the City for taking it. It makes for an impossible situation for the City to fiscally manage the department.
8 )Today, there is one captain for every three firefighters, and those assigned to positions above the rank-and-file firefighter represent 40% of the department costing taxpayers hundreds of thousands of dollars.
This organizational structure makes the department grossly top heavy, and is a key reason the department is over budget. This is far removed from the typical model of managing a public safety department. A recent CIR decision identified this as not appropriate and stated that the city can change this if they want as it’s a “management prerogative”. Yet, nine months later, the Mayor’s office has not moved to correct this gross mismanagement.
POSSIBLE LEGAL ISSUES
9)The department applied for and was awarded a federal grant based on staffing requirements that weren’t met, yet the city took monies from the grant reserve in violation of the federal laws governing that grant.
We are referring to the Federal (SAFER) Grant totaling $1,950,000 over five years. It was designated to pay for 18 new firefighters to staff the new Elkhorn Suburban Fire District house that has not been built. The grant specifically required staffing of the Omaha Fire Department to reach 684 employees in order to receive grant funds. The department never reached 684 employees, yet the city took $200,000 from the grant reserve in December of 2009. This could be a serious violation of Federal grant rules and put the city in a position of misleading Federal Authorities. It could also put the entire city in a position of losing other grants in the future? If that weren’t bad enough, even though these firefighter’s salaries are completely covered by the SAFER grant, the city is continuing to collect taxes from the citizens in the Elkhorn Suburban Rural Fire District for these new hires.
10)The department has used a special fund called the Kloewer [pronounced: “KLAY-ver”} Memorial fund, a fund developed to cover training expenses in what we believe are inappropriate ways. Rather than going for just firefighter training, the fund has covered the costs of special trips, special dinners, non-training competitions and equipment purchases. Accounting records on fund activities are inconsistent. The following is what OAPS has assembled regarding this fund:
a.We have reason to believe the City has been overcharged by $59,000 for heart monitor equipment purchased from Zoll Medical Corporation. The total bill for these Heart Monitors is $423,117. The department raised $299,000 from donors for this equipment leaving a balance due of $124,117 and yet the city is being billed $183,117 in four annual installments to pay the balance due. The question needs to be asked, where is the additional $59,000? The City has already paid two payments totaling $91,558.50. By omitting that they had raised far more than stated to the City and City Council, thereby causing the city to pay $59,000 more for the equipment than needed, the Fire Department has misled the donors, the City and the City Council. These potentially deceptive actions – if proven true – are grounds for severe discipline and dismissal.
b.The department has billed local businesses for rental of City property, yet those funds have gone into the Kloewer Fund when they should have gone into the General Fund for the City of Omaha.
c.Donor checks to the Kloewer Fund for slightly under $10,000 have been filed away rather being deposited in this or any account.
d.There has been $34,225 donated to the fund for a new Water Rescue project that was not approved and subsequently rejected by the City Council and $7,305 was spent for specialized training for Water Rescue before the program was approved by the City. A Mr. Greg Adams was the recipient of these funds.
e.A total of $14,980.97 was spent on non-training-related social activities such as the Firefighters Ball and the On Target Challenge competitions between various Fire Departments. These Union sponsored activities should not be paid for out of the Kloewer fund since it is the property of the City of Omaha.
f.The Kloewer fund appears to be controlled by the fire chief, at his sole discretion with little to no oversight from the city. This fund must be brought under strict City oversight now.
11)It appears that funds allocated for a fire suppression system within fire department headquarters were redirected to build an office for the Fire Chief which created an unbudgeted expense of over $400,000.
To start with, the headquarters remodeling project was $170,000 over budget. When the current Chief diverted funds to build his executive offices, it did not leave enough funds to install the fire sprinkler system. Recently, the State Fire Marshal has mandated that a sprinkler system be installed at an additional cost of $250,000 to the taxpayers. Those two mistakes total $420,000 to fix. We all need to ask, why would the FD, after performing over 5,400 inspections on other properties throughout the city – making sure sprinkler systems were properly installed in those locations – think it would not have to have a sprinkler system in its own city facilities, which houses fire fighter sleeping arrangements?
MISUSE OF CONTRACT AND CIR RULINGS
12)Over the past three years, Fire Department management has continued to “call back” firefighters at a cost to Omaha taxpayers of $1.2 million in unnecessary wages. Fire Department management has brought back firefighters at time-and-a-half pay, even though the current contract states that once the department reaches 657 firefighters, callback is not required. This has cost the City $1.2 million in unnecessary wages, not to mention benefits, and appears to be a clear violation of the current contract. (See page 145 of CBA) By ignoring the Collective Bargaining Agreement, these actions could be considered “theft by deception” and if proven true be grounds for severe discipline and dismissal.
13)Lax rules and mis-accounting of the “comp time” system has resulted in many receiving unnecessary time-and-a-half pay and allowing some firefighters to increase their pensions more than 30%.
We have been told that it is common knowledge within the department that the leadership team of the department has instructed firefighters on how to manipulate holiday and vacation time until their last year so their wages “spike” by 540 hours to boost their pension income. The total liability of these actions could reach more than $11 million annually after accounting for the pension liability associated with the excessive pay. This deceptive use of the contract to accumulate additional “comp” hours is another example of mismanagement and warrant severe discipline and dismissal.
14)There are now 45 captains on ambulances – even though the Commission of Industrial Relations (CIR) recently stated clearly that these captains are not needed on the ambulances – costing Omaha taxpayers up to $1 million annually.
Fire Department management has unnecessarily kept captains on Fire Department medical units and continued to pay the higher wages of these captains, totaling approximately $675,000 in annually. With pension costs included, the costs exceed $1,000,000 annually. By doing this, Fire Department management is willfully disregarding the CIR’s ruling (See page 8, Final Order), and shows they are making little attempt to run a financially efficient department. This is another example of ignoring the authority of the CIR and ignoring the stewardship responsibility that department heads should have toward the citizens of Omaha.
Because of these findings, the Omaha Alliance for the Private Sector – on behalf of the taxpayers of Omaha – calls on City leaders to launch an independent financial audit of fire department operations by inviting the Nebraska State Auditor to review all activity within the Fire Department. In addition, we call on City Leaders to ask for a legal investigation with the City Attorney and the U.S. Attorney to study all of the activity within the department that may be in violation of city, state and federal laws.
Finally, we ask the citizens to engage in this process by calling the Mayor and the City Council and ask them to complete a thorough financial and legal investigation of the Fire Department and begin the process of making Fire Department management more responsible to the citizens of Omaha who have been forced to pay for the bloated Fire Department budget.
OAPS CALLS ON MAYOR, COUNCIL TO THROW OUT CURRENT FIRE UNION CONTRACT, HIRE NEW NEGOTIATION TEAM FOR CITY
Group Questions Management Decisions by Current Fire Department Leaders
(Omaha, NE) – The Omaha Alliance for the Private Sector (OAPS) today said that the City of Omaha has lost control over the management of Omaha’s Fire Department and called on Omaha’s Mayor and City Council to throw out the current Fire Union Contract and hire a new negotiating team. The Omaha Alliance made the request at a news conference at the Omaha Press Club Wednesday morning.
“Over the past two decades, through several administrations and city councils, and through several leaders of the Omaha Fire Union, the authority to regulate Omaha’s Fire Department has been methodically – and, we assume, intentionally – shifted from Omaha’s city ordinances into the Fire Union Contract itself,” said David Nabity, spokesman for OAPS. “This was by no accident.”
“The Fire Union Contract approved in 2007 continued this process of taking the power away from the Mayor, the City Council, the Fire Chief – and the people of Omaha themselves – and locking it into the Fire Union Contract where, once approved, can not be changed until a new contract is negotiated. Not by ordinance, not by petition of the people, perhaps not even by a directive of the Office of Homeland Security,” Nabity said.
“No one who negotiated the 2007 contract should be involved in any current or future negotiations for the city, especially if they were ever a member of the fire union. The Omaha Alliance for the Private Sector calls upon the Mayor and the City Council to appoint an independent negotiator to stand for the taxpayers’ best interest; Someone who knows how to interpret these legal contracts and someone who receives no personal benefit either directly or indirectly from these negotiations,” Nabity said.
Rick Bettger, Board Secretary for OAPS, mentioned several provisions in the current union contract that are unrealistic in today’s economy. Bettger pointed out that Omaha’s Fire Union Contract contains 171 pages full of provisions that tie the hands of management and prevent the city from taking reasonable steps to reduce costs during a city budget shortfall. Bettger noted that Des Moines’ contract is only 32 pages, St. Paul has 37 pages and Lincoln’s Fire Union Contract is only 55. All of these cities are included on the state’s “comparable” list from the Commission for Industrial Relations. Bettger pointed out that it is clear Omaha’s Fire Union Contract is micromanaging the Fire Department and preventing any real reforms or budget cuts from taking place.
“These provisions show some of the parts of this contract that just don’t measure up to the current economic reality being faced by Omaha’s citizens or by the stresses being placed on Omaha’s city budget and Omaha taxpayers,” Nabity said. “Fire Department management has not embraced the recent Commission of Industrial Relations (CIR) ruling that allows them to make staffing and management changes. It’s common knowledge that the Fire Department is $4 million over budget. With the CIR ruling, the Fire Department could have made the changes necessary to bring the Fire Department in within budget. This demonstrates that Fire Department leadership has not made genuine efforts to cut inefficiencies and redundancies in the department. And that can no longer be tolerated.,” Nabity said.
“The Omaha Alliance for the Private Sector is asking the citizens of Omaha to say ‘enough is enough.’ Call the Mayor and your City Council representative and tell them to start over. Start over with this contract by replacing the current negotiation team, engage an independent negotiator and force the management changes within the Fire Department that will save significant tax dollars.”
