Joplin election measure intended to resolve police, fire retention

Oct. 27--A Nov. 5 ballot measure asking Joplin voters to enact a half-cent sales tax to fully fund the 70-year-old Police and Firemen's Pension Fund is rooted as much in an effort to keep experienced officers and firefighters on the job as to assure there is enough money to pay all the retirement and disability benefits owed them, city officials said.

That question, called Proposition B, is similar to measures officials in other Missouri cities have asked voters to adopt to address the stability of public safety workers.

The process that led to the proposal followed a year of turmoil at City Hall as firefighters, police officers and residents packed the council chambers a number of times seeking higher pay to stem a drain of seasoned emergency workers. The Joplin Police Department at one point said it was even forced to reduce services because of the loss of officers who took jobs where they earned more money or had smaller workloads.

Thinning ranks

Along the way, two proposed pay plan adjustments to address the situation were scrapped, once because a proposal was rejected by the police and fire unions and another because city officials said it was not affordable.

Joplin's Police Chief Matt Stewart told the City Council in May that he would start rolling back services as a result of thinning ranks.

Members of the police union, Fraternal Order of Police Lodge 27, had given the council information about staff retention issues the officers said was related to low pay and heavy workload. At the point that the department reached 13 vacancies -- which climbed in later weeks to 19 -- Stewart announced that he would cut responses to minor crimes and traffic accidents and take other measures to compensate for the labor shortage.

Later in the year, the city, after cutting expenses proposed by finance director Leslie Haase, made money available for public safety wage bumps and promised to continue to work on the issue. That resulted in discussions that started earlier this year between council leaders, the city manager, police and fire chiefs, union representatives and others, leading to Proposition B.

Pension realization

Joplin Mayor Gary Shaw and Mayor Pro Tem Ryan Stanley said that when engaging in those talks and looking at how other cities had addressed similar challenges, the group came to the realization that the pension plan was a big reason for the talent drain.

The pension is designed to allow retirements after 20 to 25 years of service. Workers have to stay that long to have retirement benefits, and the plan cannot to be transferred if workers leave for other jobs. Leaving early also means workers forfeit the years they have invested working at Joplin.

"Losing officers due to normal retirement has been a concern for decades," Stanley recently wrote in a social media post. "When an employee reaches full retirement, there is no compelling reason to not then retire. Many of our officers are the leadership for neighboring departments. They fulfilled their commitment to the city to receive full retirement, but they still had a desire to continue working and serving," Stanley wrote.

Part of the Proposition B proposal would move police and firefighters who have been hired since 2009 and future new workers to a fully funded state pension fund, the Missouri Local Government Employees Retirement System. The measure would generate funding for that and to bring the funded level of the pension up from its current 64% funded level to being fully funded.

Stanley said LAGERS will not require a 10% contribution from workers like the city pension does, which would give workers an automatic 10% pay raise if voters approve Proposition B.

Also, Stanley told the Globe, "Under LAGERS, they would have the ability to extend their career, and they would add to their pension those additional years. With the city pension, there is no additional incentive to continue to work for us."

Pension problems

Joplin, like many other governments, has been struggling for more than a decade to prop up the sagging funded ratio of the pension plan, which dropped to a low of 51%.

With a change in plan benefits approved in 2009 to reduce costs and the addition of $2.5 million in lump-sum contributions by the city since then, along with improved investment markets, that level has climbed to about 64%. But it is still about $24 million short of having enough money to fulfill its obligations to past and current workers.

The city now spends $3 million a year to meet its obligation, and that will climb in future years as more workers are added unless it is closed. The closed fund would still provide benefits owed to existing and new workers, city officials said.

But it is using up money the city could spend on pay raises, streets, parks and other needs, said the mayor. And that unfunded liability also has caused Standard and Poor's to lower the city's credit rating slightly.

"I will say that in my opinion, this is the largest financial threat the city faces," Stanley said. "It was that way when I came onto council, and if it is not addressed, it will be the biggest threat we will face when I leave office."

Springfield solution

In the search for a solution, those involved in the city talks worked with Sheila Maerz, a former Joplin human resources director who recently retired as the human resources director for the city of Springfield. There, she administered benefits to police officers and firefighters from Springfield's pension fund and assisted in identifying a way to resolve funding issues with that plan when they came up.

Springfield began resolving its pension shortage nearly 10 years ago with a voter approved three-quarter-cent sales tax.

"In early 2000, the funding level dropped below 80%. When it hit 79.9%, that was a wake up call that things were going in the wrong direction," Maerz said.

Changes were made to the plan in 2006, but despite those changes, by 2008, the funded level fell to 47.6%.

Springfield leaders proposed a 1-cent sales tax in 2009 to try to fix their plan, but that was rejected by voters. The proposal was to close the plan to new hires and move new workers to LAGERS, similar to the current Joplin proposal.

City leaders there then appointed a residents committee to find out if there was a better way to resolve the funding problem, and that committee concluded that the 1-cent proposal was too much for voters to accept. The group recommended three-quarters of a cent, and that won voter approval later in 2009.

"By the time of the vote, the funded level was down to 35%, with a liability of over $200 million," in unfunded benefits owed, Maerz said of Springfield.

That sales tax was adopted for five years and was renewed by voters in 2014 for another five years. Now the plan's funded level is at 80%, and voters there again are being asked for another five-year extension of the tax, which is expected to fully fund the pension fund, Maerz said.

Joplin's city leaders are proposing a half-cent tax for a period of 12 years or until the pension reaches a funded level of 120%. The city finance director said that would provide a cushion for times when the investment value of the fund might decrease. City officials said if that level is reached before the 12 years, they will end the sales tax as soon as possible. They believe the sales tax will generate $5 million to $6 million a year that will generate enough over that time period to take care of the pension, pay for the move to LAGERS and end the need for further taxes to pay for the fund.

Government leaders and firefighter pension officials in Jefferson City decided in 2004 to close out their pension fund and move workers to LAGERS. Funding for that was done with a property tax, and the last of the city's firefighters were transferred into that pension plan in 2017.

Similar moves have been by cities such as St. Joseph, Fulton and Belton.

Some of those cities used property taxes to close their funds and move to the state pension plan, but Maerz said, "Property taxes leaves a small number of people to pay the share. Like Joplin, we are very dependent on sales tax in Springfield. Both communities swell between 8 a.m. to 5 p.m., and you have police and fire providing services to all those people," who come to work and shop and for other reasons.

"A sales tax is a fair way for all of those people using those services to pay for those services," Maerz said.

Joplin's mayor said the city work group looked at and passed on the possibility of using a property tax.

"That puts more of the burden on fewer people and costs people who have a limited income," Shaw said.

Resident views

Joplin resident and certified public accountant Tom Franz, a founder of a finance committee that studied city financial issues assigned to it by City Council, encouraged city officials a decade or longer ago to deal with the underfunded pension.

"My take is essentially that we (the city) promised certain benefits to the uniformed employees, so we owe it to them not to have to worry if it will be there. Under the current funding, the hole is so deep that even at $3 million a year, we're paying the minimum payment on a credit card bill, never getting out of the hole," Franz told the Globe.

"The sales tax allows the city to pay off the past debt and move the police and fire employees to a plan which the city can afford and which the employees want to be in. It will also allow the city to have some funding to make wages more competitive so we can retain our experienced police and firefighters," Franz said.

But attorney Bob Scott, of Joplin, said he is concerned about the effect a higher sales tax total will have on Joplin's economy.

"I do support straightening out the pension issue, just not with another sales tax," Scott said. "I worry that there will be a straw on the camel's back that will result in people shopping other than in Joplin, and we will never know why."

The mayor said the City Council knows that tax increases are not always popular.

"Nobody really enjoys paying taxes, but we have to have them just like everyone else does to pay for the things we need," Shaw said. "This tax is going to have a very good and lasting effect on the city that not only solves the need but puts us in the position to have funds to do other things we need to do because we won't be continuing to put so much money from the city's general fund into the pension."

Worker pension contributions

Those covered by the Joplin Police and Firemen's Pension fund prior to January 2009 are covered by what's known as Tier 1 of the plan, a "20 and out" retirement benefit. The employees pay 18.08% of their wages into the fund.

After 20 years, the employees are eligible to retire. They get a lump-sum repayment of all they paid into the plan, which generally amounts to about $100,000, with the exact amount determined by the amount of the wages they earned during their career. They receive a monthly retirement benefit of half the monthly wage they earned while working. Those who leave their jobs before 20 years get a refund of whatever they paid into the fund.

Tier 1 employees will not move to LAGERS if Proposition B passes. Those benefits will be continued to be paid by the existing pension fund. The fund will be discontinued after all benefits have been paid out to Tier 1 employees or their survivors.

Workers hired after Jan. 31, 2009, are covered by a revision in the plan called Tier 2, adopted by its members to try to address the underfunding. Those workers pay in 10% of their wages, but they do not receive those contributions back when they retire. If they leave the job before that, they get the total contributions back.

They are eligible to retire after 25 years, but the multiplier to determine their benefit is lower than in Tier 1.

Tier 2 workers will have the option to move to the LAGERS plan if Prop B is approved. Those hired after the enactment of Prop B, if approved, will be covered by LAGERS.

Police and firefighters are not covered by Social Security unless they hold other jobs that provide that coverage. However, the amount of their Social Security is reduced by a percentage of their pension income unless they worked 30 years or more in other jobs.

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