System well-funded, working well

By Rick Scofield and Dave Mohlis

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Public employee pensions, especially for firefighters and police officers, have generated much discussion in Iowa and around the country. Any analysis of public pensions in Iowa has to take into consideration that Municipal Fire and Police System of Iowa is not just a pension system - it is also a disability/workers' compensation system. The Iowa Public Employees' Retirement System (for other public employees) is strictly a pension system, so comparing the two is like comparing apples and oranges.

The cities do not pay Social Security or workers' compensation/disability for firefighters and police officers as they do for other employees under IPERS. Should they be required to pay these items, it would be an increase of approximately 36.6 percent - 6.2 percent for Social Security and an average of 30.40 percent for workers' compensation/disability.

If police and firefighters were in a plan like IPERS, the cities would pay about 46.55 percent of covered wages compared with their current 26.12 percent. And, firefighters and police officers pay into their workers' compensation through their contribution to their pension and disability system whereas private sector and IPERS-covered employees do not.

When Gov. Terry Branstad signed this legislation in 1992, it provided for the state to contribute to the system. That has since been phased out by the Legislature. The cities should be encouraging the governor and the state to meet their obligation for the health, safety and welfare of Iowans in accordance with the 10th Amendment to the state constitution instead of trying to balance their budgets on the backs of public safety employees.

Let's review the assumed investment return rate of the firefighter and police pension system. In the 21 years the system has been up and running, only five years has it fallen below the assumed 7.5 percent rate with two of those years being during the recent stock market crash. Over the last three years, the investment return rate has averaged 14.71 percent. Since the inception of the system 20 years ago, it has averaged a 7.59 percent return.

This system is well funded (currently 85 percent) and running the way it was designed. Cities are financially benefiting from the pooling of their funds and the firefighter and police officer contributions that effectively reduces the cities' disability/workers' compensation costs for these high-risk employees.

The governor has suggested paying for police officer and firefighter pensions with a 60/40 split in contributions between the city and the police officers and firefighters. Using an average pay of $48,992 per year for a firefighter in one of our cities, and then recalculating the contributions to the pension system as a 40 percent share for the employees, it would mean an increase of $2,355 taken out of the employees' paychecks. What policymakers have to remember is that the police officers and firefighters are taxpaying members of their communities, so they are not only paying their share of their pension contribution rate but their taxes also go toward the cities' contribution, so they pay twice - out of their paychecks and in their property tax bills.

The solvency of the police-fire pension system is important to our members. Before any changes are considered, policymakers should look at all the facts and determine if there is a problem that needs to be fixed. Pension systems are long-term instruments and the Municipal Fire and Police Retirement System of Iowa is working just as it was designed.

Rick Scofield of Cedar Rapids is president, Iowa Professional Fire Fighters. Comments: rscofamy@aol.com. Dave Mohlis is president, Iowa State Police Association. Comments: mohlisd@waterloopolice.com