Proposed bill would stabilize pension plan
SHERIDAN — The Wyoming Legislature’s Appropriations Committee reached a milestone in a months-long conversation last week as it approved a bill draft addressing the state’s quickly depleting Fire A pension plan.
The unanimous approval of the draft at the committee level is the first step in a long process, Appropriations Committee Chair Rep. Bob Nicholas, R-Cheyenne, told the pensioners Oct. 25 during a meeting in Cheyenne. The 260 pensioners and their spouses covered by the plan should be prepared to fight for their funds when the Legislature convenes this spring.
“We’re going to try to do it, but we’re going to need your help,” Nicholas said. “It’s going to be hard work.”
The Wyoming Retirement System’s Fire A Pension Plan is a plan for paid firefighters hired before July 1, 1981. All subsequent hires have been placed in a Fire B Pension Plan, which has reduced benefits compared to the A plan. The A plan is currently funded at a level of $82 million and serves 260 pensioners and their spouses, including 25 individuals from the city of Sheridan.
In 1997, the plan was deemed to be fully funded, and the Legislature terminated all employee and employer contributions into the plan. With the dollars invested in the stock market, it was expected the plan could sustain itself.
However, the fund began to experience problems after the 2001 recession, when the plan dropped from being 147-percent funded to 95-percent funded in one year. The account saw another sizable drop after the recession in 2008, when it dropped from being 106% funded to 84-percent funded from 2008 to 2009.
The plan needs an additional $154 million to be fully funded, according to Wyoming Retirement System Executive Director David Swindell.
The bill draft approved by the committee last week finds those funds in a variety of different ways, according to Sen. Larry Hicks, R-Baggs. Under this proposed plan, the fund will be actuarily sound by 2043.
According to the proposal, the state will contribute $75 million toward the pension fund. Of those dollars, $55 million will go directly to the pension plan, Hicks said, while $20 million will be loaned to the employers who have employees participating in the pension fund, including the city of Sheridan. That $20 million will be paid back to the state over time, Hicks said.
The pensioners themselves will be impacted through the removal of a 3-percent cost-of-living adjustment offered each year, Hicks said. Otherwise, there will be no reduction in benefits for the pensioners.
Pat Crank, former Wyoming Attorney General and legal representation for many Fire A plan members, conducted a survey of 117 pensioners and found 79-percent approved of removing the cost-of-living adjustment if it meant the fund could stay solvent. Only three respondents said they would approve of any additional benefit cuts.
The remainder of the $154 million will be found through an allocation of the state’s fire insurance premium tax dollars to the Fire A fund, Swindell said. Currently 100 percent of those dollars go to the state’s Volunteer Firefighter Pension Fund, which is currently 76-percent funded. The bill proposes only 60 percent of the tax dollars going to the volunteer fund starting in 2022, with the remaining 40 percent going to the Fire A fund.
Doing this delays the timeframe by which the volunteer fund will be fully funded, Swindell said. The volunteer fund is now expected to be fully funded by 2034. If there were no changes in the current allocations, it would be funded by 2028.
The Legislature will redirect the tax dollars to the volunteer fund once the Fire A fund reaches 100-percent funding in 2043, Nicholas said.
The bill approved by the appropriations committee was one of two proposed solutions. The other, proposed by Rep. Lloyd Larsen, R-Lander, would have involved a $50 million contribution from the state, along with a $15 million loan to employers and the 40-percent tax dollars contribution. This proposal would have fully funded Fire A by 2050, Larsen said.
While Hicks acknowledged the extra cost of his plan — and the difficulty of getting it passed through both chambers of the Legislature this spring — he said he would rather err on the side of caution.
“What I don’t want to do is that, 15 or 20 years down the road, these people are back in here because the fund is broke again and other legislators have to clean up the mess we made,” Hicks said. “Quite frankly, the actuarial assumptions are not conservative enough for my taste, and I think it would be prudent to make this investment now…I think it’s prudent, and I think it’s wise.
“…But I want to reiterate to the pensioners out there: the motion we just made makes it even more incumbent upon you to ensure you show up when this is being debated, because this makes it even more difficult to get this through the rest of the Legislature.”