Lawyers, Key West and money: The fight to control St. Louis firefighter pensions

ST. LOUIS — Board meetings of the Firefighters’ Retirement Plan are usually bureaucratic affairs. Investment performance is reviewed. Deferred retirement applications are vetted. Dry, lengthy reports are discussed.

But in November 2018, the pension board was fighting about Key West.

Paul Payne, the city’s budget director, said going to an industry conference in South Florida looked less like education than vacation. And he told Kenny Mitchell, a firefighter trustee who wanted to go, just that.

Meeting minutes relay what happened next: “Trustee Mitchell responded to Trustee Payne with a profane remark.”

For 50 years, St. Louis firefighters got most anything they wanted when it came to their pension system. Mayors and aldermen approved reams of new benefits, let firefighters run the board overseeing the money and coughed up tens of millions of dollars when markets went south.

But sweeping reforms passed in 2012 have fractured the relationship. Many perks were cut to save money — the city said the pensions were so rich, they could lead to bankruptcy — and the system itself was split in two.

The original, firefighter-led board still handles benefits for older and retired members, but it is cut off from new hires and younger cohorts. Their benefits are administered by a new board where city appointees hold sway over whether to advocate for benefit increases, who works for the plan and, yes, whether trustees can go to seminars.

Now, firefighters are back at the Board of Aldermen, urging them to eliminate the new board and let the old board take over. They say the move will reduce administrative costs and boost firefighter morale. But a review of the new pension board’s meeting minutes over the past 10 years indicates the fight is about more than that, and offers a window into what could follow.

Firefighter board members have locked horns with city appointees over authorizing trips to investment seminars, hiring the plan’s attorney and restoring benefits like extra cost-of-living adjustments for widows.

Michael Pollihan, a retired firefighter who served on the board from 2013 to 2019, said he was disgusted by the resistance.

“Everything was Paul Payne (saying), ‘That’s too much, that’s too much, that’s too much,’” he said.

Payne, on the other hand, said the fights were evidence of why the new board was needed. The firefighters’ effort to replace it, he said, is about more than saving on administrative costs.

“It’s about trying to turn back some of the changes we made in 2012,” he said.

Alderman Tom Oldenburg, who represents a number of firefighters in his southwestern ward, in June filed a bill to return control of all pensions to firefighters and passed it through the board Dec. 1 on a 17-7 vote. Mayor Tishaura O. Jones vetoed the plan Friday, echoing Payne’s fear of a return to crisis.

Oldenburg said Friday his bill is only about putting firefighters in charge of their retirements and saving money. The mayor and aldermen would still have to approve benefit increases, he argued.

He said he had 19 of 20 votes necessary for an override, and lines on two more.

A rocky start

The pensions are funded by contributions from both firefighters and the city.

In 1959, a 30-year firefighter’s pension paid about 40% of the average of his final five years of pay. In 2000, the same firefighter got 75% of the average of his last two years. And in between, mayors and aldermen agreed to refund firefighter pension contributions in a lump sum when they retired, let them start banking pension checks before they retired and cash in thousands of hours of sick leave.

Then the Great Recession hit, tanking the pension fund’s investment returns and forcing the city to cover deep losses. By 2012, a third of the fire department’s budget was going to pensions. Mayor Francis Slay responded with proposals to cut benefits for new hires and younger firefighters, and to put administration of their benefits under a new board controlled by city appointees.

Firefighters declared the proposals illegal and fought back at the Board of Aldermen, in the media and in court. But while they succeeded in preserving some benefits, significant reductions held. The old, firefighter-run pension board was relegated to dealing with older firefighters and retirees, meaning no new members and a long, slow march to dissolution.

The new board for the Firefighters’ Retirement Plan started meeting in late spring 2013 and immediately got off on the wrong foot.

The board’s four city appointees held three meetings before firefighter representatives were elected, and while it was mostly housekeeping, firefighters didn’t understand why they didn’t wait.

“That pissed a lot of people off,” Pollihan recalled recently.

So did the travel policy. Pension board members have to do a certain amount of training each year. It can be done with local law firms and cost less than $200. But there are also events across the country, in big cities and vacation destinations. Early on, Richard Frank, the city’s personnel director and the board’s secretary then, warned trustees to be prudent because their expenditures would be public record.

And in 2015, Payne, the city budget director, successfully removed seminars in New Orleans and Santa Barbara, California, from the list of trips the system would cover.

But he hit a nerve with Key West. In late 2017, an attempt to take that seminar off the list was stymied by board members Mitchell, fellow firefighter John Costello and Bridget Halquist, an attorney appointed by Slay.

That winter, the three dissenters headed to the island for a week at a cost of about $2,000 per person, including $1,200 each for four nights in a waterfront hotel.

The next year, Payne told the board he got his training done in a one-day $95 session with a local law firm. He chided Mitchell, prompting the profanity. And while Payne got outvoted that year and the next, he eventually knocked the event off the list.

A fight over lawyers

Firefighters on the new board were less successful with pushes on benefits.

In 2017, they started pushing to pay extra cost-of-living bumps to widows. Under the old system, widows who maxed out their regular increases could get dividends from a special fund to compensate.

Administrators said city ordinance did not allow such payments from the new system and that state law required the pension to be better funded before making changes. When city officials blocked a move to get a second legal opinion, Mitchell suggested making the payments regardless of legality. He eventually backed down.

The issue was resolved when the older board stepped in and agreed to pay the widows.

Mitchell’s next complaint: The 2012 pension reforms had left new firefighters as the only city employees who couldn’t start banking pension checks while they were still working. He contended that it wouldn’t cost the plan anything to change that.

City staff said that was highly unlikely, and again pointed to state law requiring a system to be at least 80% funded before adding benefits.

But Mitchell kept pushing for months, asking why the board needed to follow state law because it was created by local ordinance. City lawyers prepared a memo pointing out that the system was governed by state and local law, and that state law trumped local law.

The state funding standard came up again the following year, when firefighters got the board to pay for a study making the case for allowing certain firefighters with 30 years of service to retire with full benefits before the minimum retirement age of 55.

Around the same time, firefighters restarted a push to hire a private attorney to replace city lawyers they’d fought since the reform battle.

Mitchell thought the City Counselor’s office had a conflict of interest because its first loyalty was to the city. A 2017 attempt to hire someone else failed when city appointees blocked him. In 2020, he got a mayoral appointee on his side to authorize a search for new lawyers.

But the City Counselor’s office ran the search and picked Thompson Coburn, a law firm that helped the city reduce firefighter benefits during the reform fight. Mitchell was not amused.

By the next month, there was nothing he could do. He was elected to serve as a trustee of the older system. Under the new system’s rules, he couldn’t serve on both boards and he had to give up his original seat.

He filed a lawsuit challenging the rule.

Mitchell declined comment, citing the lawsuit.