Branstad Says Police and Fire Should Contribute to Pensions
Gov. Terry Branstad said in an interview this week that local fire and police officer should be splitting the cost of pension funding with local government.
By Lyle Muller and Robert Maharry
IowaWatch.org staff writers
Iowa's 4,000 professional local fire and police officers should contribute 40 percent of their pension’s funding – a move that would have increased their obligation to the retirement pool 17 to 29 percent in recent years, Gov. Terry Branstad said in an interview with IowaWatch.org.
Local government would pick up the other 60 percent that goes into the pension fund, Branstad said.
Splitting the costs along those lines would save local governments millions of dollars and put the public safety employees’ retirement packages in line with retirement programs other public employees have, he said in the interview, conducted earlier this month and published today, Tuesday, July 24.
Employees pay into the system but at a fixed rate of 9.4 percent of their wages. That amounted to 31 percent of the pension fund’s total costs in fiscal 2011, the last year for which data are available. The share was 34 percent in fiscal 2010.
Local cities must cover the rest under Iowa law, regardless of how much is needed, to make the system strong enough financially so that it can cover pensions paid to the 4,000 fire and police officers in Iowa who have retired.
The split Branstad suggested hits hot button topics: taxes, reducing government spending, and a growing move in several states to trim public employee benefits.“Obviously, we don’t agree with it,” Rick Scofield, a retired Cedar Rapids fire captain and president of the Iowa Professional Firefighters organization, said.
But Branstad said he is siding with local government on this matter.
“We’re hearing a lot from municipal governments: this is not fair, that this is creating some real financial burden,” he said in the interview, which also covered other topics. “And you can talk to the city of Cedar Rapids or Des Moines. I’ve heard from a number of those mayors and from city managers: this is a real significant financial burden.”
Any change would have to be addressed in state law, which establishes the rate that firefighters and police pay into system and what cities pay. That law prohibits cities from paying less than 17 percent of the employees’ pay. The cities’ rate now is 26.12 percent of an employee’s paycheck, said Terry Slattery, executive director of the Municipal Fire and Police Retirement System of Iowa, which administers the pension program.
The Municipal Fire and Police Retirement System's board of directors sets the cities' rates annually, based on actuarial analyses of the pension plan's pay-out obligations. Cities covered 67 percent of the pension fund's fiscal 2011 total costs, which included pay-outs and administration. That was up from 62 percent the previous year, the fund's budget figures show.
The rest was covered by a $1.5 million state appropriation in fiscal 2011, down from a little less than $2.6 million the previous year. That appropriation was dropped to $750,000 in fiscal 2012 and eliminated this fiscal year, which began July 1.
Forty-nine Iowa cities contribute to the Municipal Fire and Police Retirement System of Iowa. Firefighters and police officers with more than four years of service are entitled to a portion of their final pay, with the percentage growing to a maximum of 60 percent if they worked for 22 years or more.
For the full interview story: www.IowaWatch.org