Council backs pension increase for firefighters
After tabling a smaller request at its February meeting, the Wadena City Council voted unanimously March 11 to provide a city guarantee for an 12.6 percent increase in the annual contribution to the firefighter pension fund.
The Wadena fire department relief association, which provides retirement accounts for city's 20 paid on-call firefighters, asked the city to back an increase from $2,175 to $2,450 for each year of active service.
The hike doesn't require any city money up front, but rather requires the city to pitch in if a bum economy shrinks the pension fund below the level needed to pay retiree benefits.
The fund is made up of money from investments, state fire aid, and relief association fundraising and dues. Buoyed by a strong market, it grew 18.2 percent last year. The 2014 increase will leave a 10 percent cushion to absorb a market decline.
In 2009 and 2010, when the economy tanked, the city paid a total of about $6,000 to cover investment losses. It hadn't had to do that since 1987.
The city backed one pension increase in the previous five years, a 15.4 percent hike in 2013.
In February, the relief association requested a smaller hike of 5.7 percent for this year. During a half-hour discussion, council members expressed reservations about the proposal.
"It's a volatile thing," council member Toby Pierce said. "Pension plans are a huge liability down the road so I don't feel very comfortable, especially since you got an increase last year."
As most of his department watched from the seats, Wadena Fire Chief Dean Uselman delivered a passionate address to the council, telling them that not approving the increase is "like robbing potential retirees of money."
From 2003 to 2013, the city contributed a total of about $18,500 to the fund. Meanwhile, the relief association donated more than $51,000 worth of firefighting equipment to the city, including pagers, hoses and nozzles.
"That's equipment that should be provided by the city and we're buying it through fundraisers," Uselman said. "... I believe the taxpayers of the city are getting a pretty good deal."
In a unanimous vote, the council tabled the request.
Mayor Wayne Wolden asked the relief association to return in March with more information, including the average annual fund increase over the past several years.
The relief association board held a 80-minute special meeting Feb. 17 to discuss their request in greater detail with Wolden and the city administrator. Before the March meeting, board members spent time with each city council member to explain the pension fund and make their case for an increase.
This time around, the association asked for a 12.6 percent increase, hoping to reinstate the "gentlemen's agreement" standard of a 10 percent cushion that councils had agreed to for years.
"Their request today is based on that agreement," Wolden said when the issue came up on March 11. The mayor thanked the firefighters for their efforts and said he would support their increase.
"I believe the relief association has done its homework well," he said..
Council member Gillette Kempf said, "You can't really put a dollar figure on the service we get from our fire department."
After members briefly thanked and commended the relief association, the council unanimously passed the request.
The result is good for everybody, relief association board member Brent Johnson said after he left the meeting. "It was done fairly and justly."
Firefighters at least 50 years old with at least 10 years experience qualify for 50 percent of their accrued benefits in a lump sum upon retirement. After 20 years of service, members are eligible for 100 percent of benefits.
A more lucrative pension fund will make the department more attractive, relief association president Brian Brauch said. "I think it will hugely help with recruiting."
Although several are eligible, Uselman said no Wadena firefighters are planning to retire this year.
"Nobody's leaving just because we got a raise," he said.
Also during the March 11 meeting, the council approved four-year contracts to provide fire department service to Compton, Leaf River and Wadena townships.
Later, it authorized the purchase - with $7,500 from the city and $5,000 from the relief association - of new extraction equipment for the fire department.