East Contra Costa Fire will save big with new way to figure pensions

Aug. 28--A change in the way East Contra Costa Fire Protection District's pension contributions are figured will help the beleaguered district save more than an estimated $1.2 million in annual expenses.

Chief Brian Helmick asked the Contra Costa County Employees Retirement Association, which manages its pension, for the change, and the board unanimously approved his request on Wednesday.

As a result, the East Contra Costa Fire chief requested to pull out his district, long plagued by revenue shortfalls, from a pension group that also includes the larger Contra Costa Fire Protection District. The request was made after determining that basing pension costs solely on its own employee pool will be more "equitable" and result in cost savings.

"This is one example of us kicking over every rock trying to correct a decade of challenges in the way our pensions were set up and to deal with growth," Helmick told the board. "It won't fully fund a station, but it's sure a good chunk of a station and it's in the right direction."

The independent rural fire district serves 128,000 residents in a 249-square-mile area that includes Brentwood, Oakley, Bethel Island, Knightsen, Byron, Discovery Bay and Morgan Territory. Though it once boasted eight fire stations, it's now down to three stations, each with three firefighters staffed around the clock -- half the number recommended for its size.

East Contra Costa Fire has been grouped in a pension pool with the much larger ConFire since 2009, when it dwindled to fewer than 50 employees, but Helmick said its monetary contributions to the pool should only be based on its own assets and number of members rather than the two combined.

Set up similar to insurance groups, pooling agencies for pensions can be a way to protect the smaller districts in case their numbers dwindle even more because of injuries, illnesses or financial losses, but Helmick said that didn't happen. Over time, the number of retirees in ConFire grew while East Contra Costa Fire's numbers remained much smaller, so East County was paying more to subsidize the larger group.

"Our board concluded that the financial burden imposed on our district is inequitable with ConFire and this burden will continue to detrimentally affect our service delivery, our employees and our strategic planning," Helmick said.

The most equitable way to figure out each district's pension costs, he said, is to base it on each one's own assets and actual number of retirees.

By separating and basing costs on its own numbers rather than simply on combined payrolls assuming each district has a similar percentage of retirees, East Contra Costa would see an estimated 85% decrease in its unfunded liability or unfunded debt obligation but he wants it based not just on payroll, but on the actual liabilities of a distrct -- its true number of retirees, ] while ConFire would see a 3.43% increase, according to the report.

"I think the district has always been at a disadvantage (since joining with the ConFire pension pool)," Helmick said, regarding the way its pensions contributions were calculated. .

Retirement board trustee Rusty Watts agreed.

"They are very different in their makeup of active and inactive (retired) employees," he said. "I understand East Fire's concern. They have had to pay the big guy a significant amount of money that they would have to use otherwise servicing their own district."

East Contra Costa Fire Board member Joe Young said it has a small number of retirees compared with ConFire.

According to the report, as of December 2018, ConFire had 565 retirees while East Contra Costa had 24 retirees in the pension plan.

"We knew there was a problem several years ago, but we didn't have the horsepower or the time to force the issue," he said.

Some trustees, though, questioned whether the action would set a precedent and if the district might later want to re-join the pool.

Helmick said the district's situation is unique and he will not ask to re-pool at least in the next five years -- if ever -- citing its long-term growth plans.

East Contra Costa Fire expects to grow its number of firefighters in the future because of recent measures it has taken coupled with new development, he said. The district now requires impact fees on all development, the money of which will pay to build and equip new fire stations. A new community facilities district for all new development will also ensure there's money to operate new stations, he said.

Helmick said savings from pension costs will not open a new station "but it's one step closer to being able to do so."

ConFire, meanwhile, opposed the move to separate, according to Chief Lewis T. Broschard, whose budget could take a hit if the change were allowed. The district also provides much aid to the understaffed East Contra Costa Fire, he said.

Helmick made it clear the issue was with the retirement board.

"This is very much a policy and equity issue, it has nothing to do about our operations nor is it us versus them," he said. "They are my partners, my colleagues."

The break from the pension pool with ConFire will simply "correct the record," he said.

"It ends the historical situation where East Contra Costa Fire has cross-subsidized ConFire and recognized that going forward our pension liabilities will be based on the unique demographics of East Contra Costa Fire and ConFire viewed separately and with decisions being controlled by their own respective boards."

With separate pools, East Contra Costa Fire will cut its pension costs from $1.17 to about 79 cents for every dollar of pay, he said.

Before the vote, trustee Candace Andersen said she supported the measure even though she chairs the ConFire board.

"From a ConFire standpoint, having East Contra Fire in a strengthened position is only going to help us," she said.

Fireboard member Young later said the board's approval is an "outstanding benefit" for East Contra Costa Fire.

Though residents won't see any immediate changes, it will result in permanent cost savings, he said.

"As we add more staff, they aren't going to be as expensive as if we hadn't gotten this change."

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