Working group formed to look into fire pension plan
CHEYENNE — The dollars in the Wyoming Retirement System’s Fire A Pension Plan are being expended faster than they’re growing, with the account losing $42,000 a day. That means, in the minute it took you to read this paragraph, it just lost another $29.
Time is of the essence for the plan, which serves 266 pensioners and their beneficiaries, including 25 Sheridan residents. If nothing changes, the fund will be exhausted sometime in 2026.
This is the nightmare scenario for Tom Chapman, board chairman for the Wyoming Retirement System. There is no better time to start searching for a last-minute fix to ensure the pensioners’ longtime economic security, Chapman said.
“The Fire A only makes up 1 percent of our total assets, but that really doesn’t matter because behind every pension, there’s a person,” Chapman said. “All of our Fire A folks are retired. They’ve worked hard. We don’t want to see these people left high and dry… We think this may be one of our better opportunities for a fix because it’s certainly one of our last.”
During its meeting June 15, the Wyoming Legislature’s Joint Appropriations Committee took the first step to finding solutions by forming a working group of legislators to collaborate with the Wyoming Retirement System on potential solutions.
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 41% funded with $97.96 million.
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% funded to 95% funded in one year. The account saw another sizable drop after the recession in 2008, when it dropped from being 106% funded to 84% funded from 2008 to 2009.
The plan needs an additional $140 million to be fully funded, according to Wyoming Retirement System Executive Director David Swindell.
Solutions to the pension problem could take several forms, according to former Attorney General Patrick Crank, who serves as legal representation for many of the members of the Fire A plan.
One involves developing a bill similar to House Bill 51, which passed the House but died in the Senate in 2014, according to Crank. That bill featured a variety of funding measures, including increased contributions from the state; funding from the six cities, two counties and one county airport who have employees covered by the A plan; and a reduction of benefits to pensioners and their beneficiaries, whoreceive an average annual benefit of $60,764.
Crank said the goal of potential legislation would be to split the cost of fully funding the pension between the various parties so it is, if not inexpensive, as painless as possible.
“If we come to a good agreement, there will be no real winners and no real losers,” said Sheridan resident Robert Simmons, who is one of the Fire A pensioners.
In preparation for potential actions by the Legislature, the city of Sheridan set aside $200,000 in its fiscal 2022 budget for contributions to the pension plan.
If the legislative process fails beneficiaries, a legal process may save the fund, Crank said.
As a final effort, a number of beneficiaries have filed a complaint in Laramie District Court seeking a declaratory judgment saying there is only one fire pension account in the state, and Fire A beneficiaries can be paid out of the Fire B Pension Plan when the Fire A fund expires. If A and B were combined, the combined fund would also fail, but in 22 years rather than five, Crank said. This buys legislators more time to find a workable solution for the state’s pensioners.
While Crank said he was hopeful about the lawsuit, he said finding a workable legislative solution was the best way to move forward.
“I saw on your interim study topic that someone was concerned an action might be taken that would affect the lawsuit,” Crank said. “But I would submit that’s silly. I hope you do something that affects the lawsuit. If you come up with a plan… that solves the problem, we’ll dismiss the lawsuit… You’re facing a dire problem for these folks, and it’s your job to act. I know you can act, and there are a lot of smart people here, and I hope you do act.”
The working group hopes to bring potential legislative solutions back to the appropriations committee in early fall, according to Rep. Bob Nicholas, R-Cheyenne.