Police and firefighters covered under the older LEOFF1 pension plan are concerned that a proposed merger with the newer LEOFF2 plan could put their benefits in jeopardy.

Old policemen and firefighters never die — they just have their pensions raided.

At least that’s how it feels to many members of the Law Enforcement Officers and Firefighters Pension Plan 1 (LEOFF1), which covers close to 8,000 retired and soon-to-be-retired police, sheriff’s deputies and firefighters statewide.

The Washington State State Senate Ways and Means Committee heard testimony on Thursday regarding a bill that would merge LEOFF1 — which stopped enrolling new participants in 1977 — into LEOFF2, which covers newer enrollees.

While both plans are adequately funded — for the time being, anyway — LEOFF1 provides its participants far better benefits, particularly with respect to healthcare.

“That’s why they switched to LEOFF2 in 1977,” said retired Seattle police officer Jeff Caldwell. “The Legislature and the public didn’t want to keep paying for the kind of benefits we get.”

Caldwell said LEOFF2 retirees would be upgraded to LEOFF1 benefits if Senate Bill 6563 passes.

“I don’t blame them for wanting that,” he said, “but  the LEOFF1 people have never been a part of the discussion. I think they just want to get their hands on the pension plan’s surplus when all the LEOFF1 guys are dead and gone.”

According to fellow LEOFF1 retiree Jerry Taylor, both LEOFF1 and LEOFF2 are funded at better than 120 percent and have a combined valuation exceeding $11 billion.

Each also currently have a surplus of more than $1 billion.

“It’s pure politics,” Taylor said of the move to merge both plans. “The Washington State Council of Firefighters (WSCF) is a powerful lobby, and they want the improved benefits for the current membership.”

The reconfigured entity would be managed by the LEOFF2 board — seven of whose members are LEOFF2 retirees who would benefit directly from the enhanced benefits.

“What they really want is control over the whole $11 billion system,” Caldwell said. “And they’d get it. Under this bill, the Legislature would hand the LEOFF2 board total autonomy over rates and assumptions for the pension system.”

WSCF President Kelly Fox concedes the plan would give the LEOFF2 board almost unchecked authority. “But we’re also assuming a lot more of the risk associated with the plan,” he said. “If we’re going to manage that risk, the board needs to have the ability to do what it believes is right.

“The strength of this bill,” Fox said, “is that a merged plan is better than the existing two plans individually.”

LEOFF2 board member Steve Nelson agreed.

“The merged plan,” he said, “is more financially solid than either plan is on its own.”

Nelson said analysts have projected there is a 28 percent risk that the LEOFF2 plan will run out of money by 2030.

“After the merger,” he said, “That risk goes to zero.”

“We would never do anything to jeopardize the benefits of our LEOFF1 brothers,” Carl Burke, representing the Washington Fraternal Order of Police, assured the committee. “We’re very concerned about the fear and anxiety this bill has produced among certain stakeholders.”

“What’re we’re trying to do is keep both plans solvent and take care of all of our members,” said Pat McGelliott, former president of the Tacoma Professional Fire Fighters Union, IAFF Local 31. “I’m disgusted when I see the opposition put out lies to this committee.”

Speaking only for themselves, Taylor and Caldwell said they aren’t sure why the Legislature would agree to cede authority over the plan to the LEOFF2, but they speculate the lawmakers could be planning to withhold the state’s $75 million contribution to the pension fund this year in order to fund other priorities and help close the current $1.5 billion revenue gap.

The LEOFF2 board, they believe, would gladly trade that payment for total control over the LEOFF1 and LEOFF2 systems.

“They’re buying an $11 billion pension plan for $75 million,” Taylor said. “It’s not a bad deal — for them.”

Lastly, critics of the plan believe the bill is too vaguely written. They document, they point out, even lacks a clear statement of why a merger is needed.

“When I saw this bill had been reintroduced, I asked why,” said retired Seattle Police Lt. Ken Conden. “Why is there no legislative intent? Why do we have to do this now, when both plans are currently healthy? Why does LEOFF1 have no representation on the board?

“It could be a good bill,” he said, “but for me there are still too many unanswered questions.”

SB-6563 has 10 sponsors, only one of whom is a Republican.

The Senate Ways and Means Committee took no action on the bill Thursday.

This entry was posted on February 17, 2012 at 5:18 pm and is filed under Budget & Taxes, Economy, Law, Politics, Unions & Labor. You can follow any responses to this entry through the RSS 2.0 feed.