State pension reform law robs Kuna of millions in fire funds

State pension reform law robs Kuna of millions in fire funds

by
Dustin Hurst
January 29, 2015
Dustin Hurst
Author Image
January 29, 2015

A state pension law has robbed the Kuna Rural Fire District of millions of dollars throughout the past 35 years, IdahoReporter.com confirmed this week.

Robin Ward, the fire district’s accountant, told IdahoReporter.com those are dollars her agency could have used to buy new equipment or hire more firefighters and provide better services for taxpayers.

“We are still understaffed, and we need facilities and equipment,” Ward said Thursday. “We run a three-man crew, but we really should run a four-man crew.”

The quirk comes 35 years after Idaho reformed how its firefighters accrue retirement benefits. In 1980, the state merged the Firefighters Retirement Fund and the Public Employee Retirement System of Idaho. That change meant, at least for some government entities, paying significantly less for pensions.

The fire pension program required employers to pitch in 17.2 percent of worker wages to the benefit account, while PERSI, the program for most state and city workers, requires governments to pay in 11.6 percent.

As part of the reform, though, the state mandated a small number of fire agencies employing firefighters meeting certain conditions to continue paying the 17.2 percent rate. That applied to all firefighters, not just those who qualified for the fire pension system.

That meant some agencies paid 17.2 percent into the fire pension fund, plus the other 11.66 for firefighters hired after 1980.

Here’s the kicker: Kuna has paid into the system since 1980, but hasn’t had an active participant or retiree participating in the fire fund since 1985.

PERSI spokesman Kelly Cross said Kuna had one firefighter who qualified for the fire pension system when the two programs merged in 1980. That worker, though, left the fire district, with a separation benefit instead of pension payments, in 1985.

In essence, Kuna’s been paying for absolutely nothing for 30 years. It hasn’t come cheap, either. Ward estimated the extra expense will cost the district an extra $120,000 in pension payments this year -- enough to employ at least two firefighters.

Cross said the district paid $850,000 into the fire pension fund between 2001 and 2014. Tracking the money back to 1985 would likely reveal a total well above $1 million -- if not $2 million in total contributions.

Here’s the shot to the gut: The fire district cannot leave the arrangement. If Kuna tried, it would likely face a lawsuit from the state.

The pension reform law requires fire agencies that qualified for the fire pension program during the 1980 merger to continue pumping money into the system until the last retiree passes away and it stops paying benefits.

At that time, if the system boasts any leftover funds, retirees would receive refunds from the state.

Ward and colleagues have started a discussion about how to leave the system, but they know they must present a thoughtful approach -- or face consequences.

“We’d like to be excluded from anything going forward,” Ward said. “But we’d also like to be included in any refunds.”

If the fire district cannot thread the legislative needle in the near future, Kuna taxpayers will be on the hook for hundreds of thousands more in unneeded pension payments. Officials project the fund will continue operating for at least two more decades -- if not three.

There’s some good news for Kuna, though. Last fall, with the fire pension system overfunded, PERSI commissioners dropped the payment rate from 17.2 percent to 5 percent, easing the budget burden.

Still, that extra 5 percent -- again, on top of the 11.66 they already pay for all their workers -- is money they’d rather spend on staffers and equipment.

“Pretty sad, huh?” Ward asked. “If you don’t have a retiree or an employee, why would you have to pay in?”

House Commerce and Human Resources Committee Chair Stephen Hartgen, R-Twin Falls, told IdahoReporter.com he wasn’t familiar with the issue until PERSI addressed it in his panel just days ago.

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