CFFA 660
  • June 23, 2017
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  • Proposed Legislative Changes to Retirement System
    Updated On: Jun 17, 2017

            Members,
    The CFFA Local 660 would like to address some concerns circulating about the current House Bill 565 AN ACT TO AMEND THE LAW ESTABLISHING THE CHARLOTTE FIREFIGHTERS' RETIREMENT SYSTEM. We have heard there is concern the State of NC is attempting to take over our retirement system.  Let us put you at ease.  This is not the case.  The NC Legislature is simply clarifying, making additions and technical corrections to issues that have been brought up on numerous occasions over multiple years to the Charlotte Firefighter Retirement System (CFRS) Board and the City of Charlotte. To be clear these issues are NOT new.  Although these are issues that the CFFA has brought to the forefront with City Staff, the CFRS Board members, Fire Department management, and Legislators we did not see the bill prior to its being introduced. However, the amendments contained in House Bill 565 were introduced to correct any misinterpretations of the CFRS ACT.  Since the start of the legislative session in January, Legislators on multiple occasions have attempted to work with the City Staff to address these issues that they admittedly recognize are in error. Repeatedly, these Legislators. Unfortunately, the City and the CFRS Board have refused to correct these issues. Therefore, House Bill 565 as was told to City Staff beforehand, was introduced to solidify the CFRS sustainability, to ensure hour for hour Final Average Salary (FAS) calculations of sick and vacation time accrued on your paycheck, as well as ensure that the CFRS is an independent body that represents the makeup of the majority of the members of the CFRS, and to ensure that policies and procedures of the CFRS Board are in compliance with the CFRS Act. The changes and additions to the CFRS Act are as follows:
    • The first amendment in Section 1 subdivision (9) -"for a Member with a 52-hour average workweek, the following maximums shall be applicable: 720 hours of vacation (12-hour accrual rate), 288 hours of sick (12-hour accrual rate), 24 hours of Garcia Time, for a 40-hour workweek (standard 8:00 AM to 5:00 PM) Member, the following maximums shall be applicable: 320 hours of vacation (eight-hour accrual rate), 192 hours of sick (eight-hour accrual rate), these amounts as resolved by the Charlotte City Council in the Personnel Rules and City Council Resolutions"
    1. This change clarifies the maximum hours of sick and vacation set by City Council. These maximums are being shown in hours (your check shows hours) based on the Personnel Rules and Council Resolutions.
    2.  A 52- hour work week employee receives 60 days maximum (60 days X 12-hour accrual rate = 720 hrs.) The same applies for sick (24 days X 12-hour accrual rate = 288 hrs.)
    3.  A 40-hour work week employee (standard 8 to 5) (40 days X 8-hour accrual rate = 320 hrs). The same applies for sick (24 days X 8-hour accrual rate = 192 hrs.)
    4. The 24 hours of Garcia time is only paid out during the last year because by law you have to use the Garcia day during the year to maintain a 52 hr. work week.
    • The second amendment in Section 1 subdivision (9) - " July 1, 2017, the annual Compensation of each Member taken into account under the Act shall not exceed two hundred thousand dollars ($2000,000) the annual compensation limit under section 401(a)(17) of the Internal Revenue Code, as amended by section 611(c) of the Economic Growth and Tax Relief Reconciliation Act of 2001.One hundred sixty thousand dollars ($160,000.
     For purposes of determining benefit accruals in a plan year, beginning after December 31, 2001, (to be removed) June 30, 2017, the compensation limit for any prior determination period shall be two hundred thousand dollars ($200,000). The two hundred thousand dollars($200,000)  limit on annual compensation shall be adjusted for cost-of-living increases in accordance with section 401(a)(17)(B) of the Code. (to be removed)   one hundred sixty thousand dollars ($160,000)." 
    1. This amendment brings us closer to where the CFRS was before it was raised to $200,000. This was done in 2006. The maximum at that time was $150,000.
    2.  This change also brings us closer in line with the Local Government Retirement System (LGRS). LGRS changed the way their maximums were calculated once a member reached above 100 percent of their salary in retirement. This was done to help keep the system sustainable.
    3. The $160,000 threshold was to bring our maximum to the highest level Civil Service approved position (Deputy Chief) at top pay with a full retirement (30 years). This is to not only protect the sustainability of the system, but also maintain cohesion with the Civil Service Act and the CFRS Act regarding an outside Fire Chief.
    • The next amendment is to Sec. 19. Disability Retirement in the Line of Duty-(b) An 'Application for Disability Retirement in the Line of Duty' shall be administered pursuant to the Disability Regulations adopted by the Board of Trustees from time to time and approved by the City Council of Charlotte and administered in a uniform and nondiscriminatory manner.
                      The only change here is to change who has to approve the Disability Regulations from the City of Charlotte to the City Council of Charlotte.
    • The third amendment is to Sec. 25. City of Charlotte Contributions-(a) The City of Charlotte shall contribute to 9 the Charlotte Firefighters' Retirement System an amount equal to the Member's Compensation 10 multiplied by twelve and sixty-five hundredths percent (12.65%) for each and every payroll of such Member and for any vacant positions at the rate of pay approved in the Budget multiplied by twelve and sixty-five hundredths percent (12.65%). 
    1. This change requires the City contribute 12.65% of each member's compensation even for vacant positions.  This in effect increases the funding to our system.
    2.  For each position vacant or not, the Council has approved 12.65% funding into the CFRS. Payroll funding is based on allocated positions; this change ensures that even if the position is vacant the 12.65% portion of each position's salary is paid into the CFRS as approved by Council.
    • The next amendment is to Sec. 29. Board of Trustees - "(a) The Board of Trustees shall consist of
      11 (to be removed)13 Trustees, as follows: (i) City Manager, (to be removed) Manager or Deputy City Manager;
       or some other City department head or employee as duly designated by the City Manager (to be removed) (ii) City Finance Director, or a deputy finance directordirector as duly designated by the City Finance Director; (to be removed)(iii) City Treasurer; (iv)
      a Chairman of the Board (to be re moved) and three Trustees to represent the public and who are residents of Mecklenburg County and who are appointed as follows: one Trustee shall be appointed by the Governor, one Trustee shall be appointed by the Speaker of the House of Representatives, and one Trustee shall be appointed by the President Pro Tempore of the Senate by the Resident Judge of the Superior Court of Mecklenburg County as follows (to be removed): one Trustee shall be appointed by the Governor, one Trustee shall be appointed by the Speaker of the House of Representatives, and one Trustee shall be appointed by the President Pro Tempore of the Senate and who shall hold office for a period of three years or until their successor shall have been appointed and been qualified; (v) three five Members of the Retirement System, with one Trustee representing each of the following civil service ranks: Firefighter I, Firefighter II, Firefighter-Engineer, Fire Captain, and Battalion Fire Chief, each of whom shall be elected by a vote of the Members of the Retirement System for a term of three years, pursuant to the Charlotte Firefighters' Retirement System Election Regulation; and (vi) one (to be removed)Retiree two Retirees of the Retirement System to be elected by a majority vote of the retirees of the Retirement System for a term of three years, pursuant to the Charlotte Firefighters' Retirement System Election Regulation. The terms of office for elected Member Trustees and, effective July 1, 1989, for appointed Trustees, shall be graduated so that no more than three Trustees' terms shall expire each year. Any Member shall be eligible to succeed himself as a Trustee. The Board of Trustees shall, by a majority vote of all the members, select a chairman of the Board of Trustees.
       
    1.   This section changes the makeup of the board. The does away with the Chief Superior Court Judge appointments. This change was made due to the process that was in place. The CFRS Board would send names to the Judge and he would appoint those individuals. This was brought to our attention after meeting with the Superior Court Judge himself. To make sure that the CFRS Board is a truly independent body and appointments are not given through the buddy system, these appointments will come from the Governor, The Speaker of the House of Representatives, and the President Pro Tempore of the Senate. They must still be residents of Mecklenburg County This is not a political takeover of the system. This is to solidify independence of the CFRS Board.
    2. This section also, requires that the City manager himself or herself or the Deputy City Manager is a Trustee of the CFRS. This eliminates not being informed.
    3. The change as to the rank structure being added in the elected members is twofold. First, Firefighter I through Battalion Chief make up the overwhelming majority of the members of the CFRS, most of which work a 52 -hour work schedule. This change is a more accurate representation of the membership of our retirement system. Secondly, this is succession planning, and this structure allows more people to be involved brings more perspective into the decision making of the CFRS Board.
    4. The retirees also receive an additional voice on the CFRS Board, as our membership has grown the number of retirees have grown also. One voice is not sufficient.
    5. The last change simply places into law how the Chairman of the CFRS Board is selected.
    • The next amendment is to Sec. 36. Employment of Professional Services (C) Legal Counsel- "(c) Legal Counsel. The City attorney and staff shall be the legal adviser to the The Board of Trustees. (to be removed)
      The Board may Trustees shall employ separate legal counsel as it deems necessary and beneficial for the operation of the System. This legal counsel shall not be contracted with the City of Charlotte.
      "
    1.  This change ensures that the legal advice given to the CFRS Board is truly independent.  As of today an attorney from the City Attorney's Office makes recommendations and gives opinions to the board. Retaining an attorney that works specifically for the CFRS Board and not the City, ensures that the opinions and interpretations of the Acts and laws given are done so without bias in favor of the City as an employee of the City.
    2. Secondly, we have witness situations where the City Attorney's Office representative and an outside attorney that has been called in by the CFRS Board disagree. The CFRS Board by having its own attorney can seek the opinion of additional outside attorney as confirmation as needed.
    • The next change is an addition to Sec. 39. Authority of City of Charlotte to Make Changes with Respect to the Retirement System - "All changes to the Retirement System or Procedures require approval of the City Council."
    This section is a protection for the membership, this addition makes it clear that the CFRS Board or the City Staff cannot make unilateral changes to the CFRS System or its changes. It is also writing into the CFRS ACT City of Charlotte Ordinance 3354 adopted in 1992 which says that any retirement policy changes must be approved by City Council.
    • The addition is to Sec. 41. Rules and Regulations- "Consistent with the provisions of this act, act and approval of the City Council, the Board of Trustees shall have the authority to adopt the rules and regulations for the administration of the Retirement System and for the transaction of its business.
       
               This change clearly states the Board of Trustees of our system has the authority with approval from the Charlotte City Council to adopt the rules and regulations to operate our system. City Council by City Ordinance 3354 has been required to approve any retirement policy changes since 1992.  There is no authority given to the state. There is no political takeover of our retirement system by the State. The Board of Trustees we elect run our system.
    • The final addition is to Sec. 51. Restrictions -  
      (6) The City of Charlotte shall not use the Funds in the CFFRS as part of their CAFR, and Funds from the CFFRS shall be kept in a separate bank from City of Charlotte Operating Accounts. At no time shall funds be commingled."
       
    This addition prohibits the City of Charlotte from using our funds as part of their Comprehensive Annual Financial Report (CAFR). More importantly, it prohibits the City of Charlotte from commingling CFRS fund with General Fund money.
    To conclude, House Bill 565 ensures that every member has his or her final average salary calculated by the letter of the law as stated in the CFRS Act. Those members who work a 52 hr. work week will have their Final Average Salary (FAS) for retirement will see an increase (60 days of vacation X 12 hr. accrual = 720 hrs.) vs (68 days X 10.4 hrs. = 707.2 hrs.) (24 days of sick X 12 hr. accrual = 320 hrs.) (24 days of sick X 12 hrs. accrual = 288 hrs.) vs (24 days of sick X 10.4 hrs. = 249.6 hrs.) 
                    As you read the CFRS Act you will find that there isn't any mention of the 10.4 formula currently used to reduce your accrued hours as currently being done. You will also find no approval of the 10.4 formula by the City Council, City Manager, or the CFRS Board. This bill expressly puts into law the 12 hr. accrual rate for FAS calculations, because that is how it is earned. Lastly, House Bill 565 ensures that the CFRS Act's maximums are followed for 52 hrs. week employees and 40 hrs. week employees. Recently, City Staff members as well as CFRS Board members voted to give 40 work week employees the same 68 days of vacation accrual that 52 hrs. work week employees received. This created a higher FAS for some 40 hrs. work week employees and was an unfunded mandate on the system. House Bill 565 corrects this issue and brings the FAS calculation into compliance with the CFRS Act. For a complete look at House Bill 565 follow the link below.
    We ask that you take some time and read the legislation for yourself so you may be fully informed and you can make an educated decision about the impact of the bill. 
    In Solidarity,
     
    Executive Board of Local 660

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