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Home > Topics > Legislation & Funding

Md. volunteer responders push for pension changes

Proposals including lowering the age of eligibility to receive pension benefits, as well as lowering the retirement age

By David Anderson
The Aegis

HARFORD COUNTY, Md. — Harford County government and the county's volunteer fire and EMS companies are discussing proposed changes to a county-funded retirement program for the volunteer firemen, including lowering age of eligibility to receive benefits.

The proposals, including dropping the minimum age to collect pension benefits from age 55 to age 50, could add nearly $1 million a year to the $2 million annually that the county contributes to the retirement fund, people with knowledge of the discussions say.

Harford County Executive David Craig held a preliminary meeting July 14 with leaders of the Harford County Volunteer Fire & EMS Association, and he plans to provide more information this week when he meets with association leadership, as well as Emergency Services Director Russell Strickland and members of the county's Public Safety Commission.

Craig, who leaves off in December after serving as county executive since mid-2005, does not expect a resolution of the retirement issue while he is in office.

"We're down to the last four months in office, and it's going to require legislation," Craig said Thursday.

The Harford County Council must approve changes to the Length of Service Award Program, or LOSAP, a county-funded retirement program for volunteer firefighters and EMS personnel that has been on the books nearly four decades.

"It may be one of those situations where we make a recommendation and pass it on to the next administration," Craig said.

Ten changes requested

Leaders of the Fire & EMS Association have a list of 10 desired changes to LOSAP. In addition to lowering the age to begin receiving the pension for people who have been serving for 25 years from age 55 to age 50, they also want to lower the retirement age from 70 to 60 for people who have 10 to 24 years of service, according to a copy provided by the association.

In November 2007, the county council approved lowering the retirement age from 60 to 55 for those with 25 years of service.

Association leaders also want to increase spousal benefits from 50 percent to 75 percent, and provide 100 percent of benefits to a spouse of a fire company member who dies in the line of duty, as well as removing cutoff for accruing points toward retirement at 50 years of service.

They also want to establish a minimum LOSAP enrollment age of 16.

"The association is pleased we've made it this far with our points, and we're looking forward to hearing what Mr. Craig has to say with his review of our proposal," association spokesman Rich Gardiner said Thursday.

An actuarial study conducted by Bolton Partners Inc. of Baltimore in May indicated the county would have to increase its annual LOSAP contribution by $980,407 to accommodate all proposed changes, according to a copy of the study provided by the Harford County Department of the Treasury.

The county contributes $1.9 million a year to the retirement plan, according to the study, and it would have to contribute $2.8 million a year to cover all 10 proposed changes.

"Based on the data they had in their files on LOSAP, they applied the requested changes to the database to determine the cost," Treasurer Kathryn Hewitt said of the actuaries.

Lowering the retirement age alone would cost an extra $765,486 a year, according to the study.

'Two-point sell'

Gardiner called the LOSAP program "a two-point sell; it's recruitment and retention."

He said the fire and EMS service can retain more members with a program with a lower retirement age and improved spousal benefits, and recruit new members with "this great pension opportunity."

"It's a small price to pay for the retention and recruitment of the volunteers," Gardiner said of the projected increase in spending.

Gardiner said via e-mail later on Thursday that 340 people currently collect LOSAP benefits "in some degree."

According to the county's most recent annual financial report, covering the 2013 fiscal year that ended June 30, 2013, there were 389 retirees and beneficiaries receiving benefits that year and 274 "terminated" plan members entitled to but not yet receiving benefits.

The plan also had 1,123 "active" members, those accruing the necessary points to receive benefits, for a grand total of 1,789 people who are receiving benefits or could receive them in the future.

Benefits are calculated at $12 per month for the first 25 years of service and $6 per month for each year in excess of 25, according to the report. The maximum monthly benefit, payable as a life annuity, is $450, with the 50 percent survivor benefit to a spouse. In addition, the pension plan provides a $5,000 burial benefit and benefits for disability.

County financial support

The county contributes to the plan each year based upon actuarial determinations, according to the annual report, with the contributions in turn being invested.

As of Sept. 30, 2012, the last year reported, the fireman's pension fund had $19,403,068 in assets and an actuarial accrued liability of $29,236,000, according to the report, for funded plan coverage of 66 percent and an unfunded liability of $9,832,931. For comparison, the pension plan for sheriff's deputies is about twice as large from an assets and liabilities standpoint and has a similar percentage of funded coverage.

The county's 12 volunteer fire and EMS companies are supported by a mix of annual contributions from Harford County, ambulance service billing and company fundraisers.

The county budgeted $6.2 million for fire operations and the Fire & EMS Association for the 2014-2015 fiscal year which began July 1, according to Kim Spence, the county's chief of budget and management research.

The county also set aside $2.6 million for the Volunteer Fire & EMS Foundation in FY2015 – the paid ambulance operations, as well as $2.03 million for pensions, including $50,000 for the actuarial study, and $225,000 for capital projects, Spence said.

The capital funding covers $125,000 for enhancements to the Norrisville fire station and $100,000 for "volunteer fire company facility repair," which association officials distribute for smaller fire company capital projects, Spence said.

Association leaders are also seeking permanent funding of LOSAP, rather than annual appropriations from the county budget.

'Excellent benefit'

State Sen. Barry Glassman, who is the favorite to succeed Craig in this year's county executive election and a longtime member of Level Volunteer Fire Company, calls LOSAP "an excellent benefit."

Glassman, a Republican, is running against Democrat Joseph Werner.

"I agree that it is a good retention tool," Glassman said of LOSAP, noting the contributions older members have made to building and maintaining the companies.

But Glassman said he is also concerned about projections for the state and local economy and the "flat trajectory" for the county's budget.

"No matter who wins the county executive position, we're going to have a change in five months, and I think the county should freeze its hiring and any additional expenditures that aren't absolutely necessary," he said.

Glassman said he would want to know the exact cost of an increase in benefits and look at the county's books toward the end of the year, after the state comptroller's office releases its projection of income tax revenue, a measure of the health of the economy.

"I think it's an excellent program, but the decision still has to be made within those parameters of what our revenue is," he explained.

———

McClatchy-Tribune News Service
©2014 The Aegis (Bel Air, Md.)

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