John D. Brewer - Executive Director
Pension history of the St. Louis Fire Department is long and enumerated in the texts of the State of Missouri and the City of St. Louis going back into the late 1800s. As early as 1843, St. Louis Firefighters, which were all volunteer at the time, established a Firemen’s Fund. This fund was supported solely by dues and donations which assisted injured firefighters while recovering. (Fund, The Firemen's, 1914)

The First Pension

On March 31, 1885, the Missouri General Assembly passed legislation allowing for the formation of a Pension Fund and Relief Association that would be supported by contributions from firefighters, charity balls, and donations from the neighborhood businesses and citizens. (Taaffe, 1886) At the time, Article IV, Section 47 of the Missouri Constitution forbade the Missouri General Assembly from authorizing cities to grant public money to any individual or association. (Assembly, Missouri General, 1875) Over the next decade, civic leaders, legislators, and Fire Chief John Lindsay pushed, and won support for an amendment to the State Constitution. (Mo., St. Louis, 1893) The amendment passed with overwhelming support of the citizens at the state and local level. Permissive legislation was passed by the Missouri State General Assembly on March 16, 1893, and on July 12, 1893, the Municipal Assembly of the City of St. Louis passed Ordinance 17260. (St. Louis, MO., 1894)

The Pension Fund was initially established with the $83,809.68 still in the old Pension Fund and Relief Association. Ordinance 17260 would add dedicated funding for the system by establishing a 1% contribution for all firefighters. All fines levied on firefighters for rules infractions were also placed in the fund. Donations from the public were still welcome; plus .5% of all revenue received by the City for licenses issued by the City was dedicated to the fund. This was at the time, an extraordinary conveyance afforded only to the firefighters, due to the dangers and disabling injuries of the job. In time, similar pensions would be established for police and other city workers as well. (Swindler, 1958)

1893 St. Louis firefighters pension fund (first publicly funded pension in the State of Missouri)
1916 Amendment allowing pensions for the blind
1926 Amendment allowing for police pensions
1932 Amendment authorizing old age pensions
1945 Amendment allowing for public employee pension plans

As with any legislatively enacted statute, things did not remain static. Changing times and views toward worker benefits afforded several revisions of the benefit structure for St. Louis firefighters throughout the next century. Large scale tier structural changes were made in the years 1919, 1944, and 1960. This left the firefighters pension system with the responsibility of administering as many as three tiers of benefit at one time.

1960 Tier – The Firemen’s Retirement System

The most modern tier of benefits was established in the 1960 plan; The Firemen’s Retirement System of St. Louis. Benefits and expenses are paid with income accrued from employee and employer contributions as well as investment income from a large investment portfolio. Earned benefits are evaluated on a 30-year timeframe and contributions are required annually to meet the benefit expectations over that 30-year period. When investment markets are doing good as in the late 1990s, City required contributions drop below average. When markets do poorly as in the early 2000s, City required contributions rise above the average.

This is what happened in the early 2000s as the City’s required contributions to FRS began to rise due to an economic recession. This was coming on the heels of many years of reduced required contributions due to a booming economy in the late 90s.

At this point Mayor Slay chose to underfund FRS starting in 2003 and continued through 2007. After a Missouri Supreme Court ruling requiring the City to fully fund the retirement system per statute, the City made a one-�me payment of $46,272,941 to FRS on 9/27/2007 for the underfunding of years 2003-2006. (Neske v. City of St. Louis, 2007) The City made an additional payment of $14,285,300 on 6/12/2008 for the contribution that was not paid in 2007. The breakdown of the required contributions, the percent paid, and the amount actually paid, is listed in the table below.

2003 through 2007 Underfunding of FRS

A lawsuit was first filed by the Police Retirement System and then joined by the Firemen’s Retirement System. After a successful verdict in the Missouri Supreme Court, the Employees Retirement System threatened a lawsuit, and the City made that system whole as well. Over a five-year period the City underfunded the three retirement systems by over 150 million dollars. The tables below are from the St. Louis City CAFR 2008. They show the extent to which the City underfunded the three systems and the indebtedness created, for decades to come, by ignoring the clear requirements of the law.

Unfortunately, for the three retirement systems, while 2003 – 2007 were good return years for the markets, earnings were muted due to the absence of these amounts from the portfolios. These large payments were finally made in late 2007 and mid 2008, just in time for the great recession to upend the markets yet again.

Post Great Recession

The court’s order to pay back required contributions for years of underfunding did not sit well with the mayor’s office. The mayor used this ruling, as well as an increase in the required contributions due to the great recession, as jus�fica�on for a call to reduce retirement benefits for employees of all three systems. However, while all systems were discussed, only the Firemen’s Retirement System bore the
brunt of active legislation. Negotiations began in good faith, and begrudgingly, many concessions were eventually agreed to by the membership and even drafted into legislation that was introduced at the Board of Aldermen. These efforts were never considered enough however, and the mayor’s office pushed for the full dissolution of the FRS through a series of legislative changes.

2012-2013 FRP

Ordinance 69245 sought to dissolve the Firemen’s Retirement System of St. Louis and use the funds of the FRS to create a new system with reduced benefits and administrative function. (Schmid, 2012) This was met with a renewed lawsuit by the Board of Trustees of the FRS for which the courts ultimately ruled in favor. The judge ruled that benefits already earned could not be reduced, and the FRS must be allowed
to continue administering those earned benefits. (Firmen's Retirement of Stl ET AL V City of St Louis, 2013) But Judge Dierker did not stop there. He added a blueprint for what the courts would accept in the creation of a new system. A new retirement system for all firefighters with a reduced set of benefits for all non-vested firefighters with less than twenty years on the job.

The city quickly followed up with Ordinance 69353 creating the Firefighter’s Retirement Plan and freezing the current FRS and its benefit structure. (Wessels, 2013) This has led to the unique situation in which you have two retirement systems for one job classification – St. Louis firefighter.

It is common to have multiple tiers of benefits in one retirement system. FRS administered three tiers of benefits as recently as 10 years ago. Yet there is nowhere else in the country that has two completely separate retirement systems for one job classification. It’s simply not done, and for good reason; It creates problems in administering the systems, it creates problems for the firefighters trying to understand their benefits, and it creates unnecessary cost for the City. These factors were the impetus for Board Bill 146.

Board Bill 146

What BB146 does not do:

BB146 does not get rid of FRP, the new system.

BB146 does not change benefits or return them to what they were before 2013. In fact, thereare no benefit changes in BB146.

BB146 does not get rid of local control. The mayor and the Board of Aldermen have sole
discretion in the altering of FRP benefits under BB146.

And the bill does not get rid of the City’s control of disabilities. BB146 establishes a City majority committee for determining disabilities.

These were all issues of concern for the City in creating FRP and so they are all preserved in BB146.

What BB146 does is bring the administration of both the old FRS system and the new FRP system under one administration; one staff and one board. This streamlines services by having one set of administrative staff instead of two, one consultant instead of two, one actuary, one auditor, and so on. That move alone saves the City over a half a million dollars a year. There would be additional savings by investing the assets of both systems in the same investment vehicles. With a combined portfolio of 600 million dollars, the reduction in management fees would be significant. And when you factor in this aspect, the savings are closer to a million dollars each and every year for the City.

Let’s be clear, all assets would be tracked separately, the funds would not be intermingled, both systems would have independent audits and valuations. But a combined portfolio would reduce risk. One need look no further than fiscal year ending September 30, 2022, to see a practical demonstration of this risk.

That loss was larger than any one loss in the entire history of the FRS; greater than the loss in the great recession of 2008 which was the impetus for pension reform. In fact, the FRP board now has the distinction of returning the highest one-year loss to any pension system in the history of this City. Now compare that to the other three City pension plans in 2022.

The clear outlier is the FRP, the new system, which did 7.7% worse than the FRS. And that is a direct result of diversity risk. There are many asset classes that FRP is not large enough to invest in, meaning that its board is not able to properly diversify its portfolio to lower risk. With BB146 that portfolio would now have access to the same investments as FRS and, hence, the same diversification. Likewise,
as FRS winds down many years from now, it would benefit from the same paired diversification. That diversification means a steadier return for the systems over time which creates a steadier contribution requirement for the City. It also allows for a reduction in fees – which can be a significant savings over time.

Board Bill 146 provides advantages to firefighters

Currently a firefighter must visit the FRS to retire or get a benefit estimate, then that firefighter must go to the FRP to retire there or get the second half of the estimate. Then the firefighter is left to put those two parts together and figure out what their total benefit is. This creates confusion and often results in several visits to each system before making a decision. Bill 146 would allow them to retire in one place, to get all their benefit information in one place, and to get a full picture of their retirement.

Under BB146, members of the system will comprise the majority of the board. This is the same structure afforded to the boards of all other City retirement plans and the vast amount of retirement systems across this country. In fact, every board member of the Employees Retirement System of St. Louis is currently a member in that system.

Administering the funds

Examples of how two separate systems have created problems for administering benefits to firefighters:

Portability

One of the biggest issues is portability. In the State of Missouri you can move your vested public
pension benefit from one retirement system to another just like you can move your 401k from one job
to another in the private sector. There are over 60 firefighters who were medics prior to their firefighter service and have a vested pension in ERS. Many of them would like to move that pension to their current retirement system. This is an easy task and happens all the time in other systems. Both administrations, both systems’ actuaries and attorneys worked on this but were unable to accomplish this. The unique situation is that as the money comes over it has to be split between two systems and there is no way to do that with two actuaries. So, portability is available for everyone but firefighters. BB146 would fix this. There would be just one actuary splitting the money between the two systems.

Ad Hoc COLA

Another issue is the share program that gives firefighters and widows a small year-end bonus once they are no longer eligible for a cost of living increase. This comes from a fund in FRS that is self-sustaining. The share program was written into the legislation of the FRP; the city meant to continue it on in the new system. But prior to any disbursement, firefighters were told that the City had overlooked providing a funding mechanism for the benefit. So, new firefighters have lost a benefit that they were intended to receive even in the new FRP. Having one administration would allow for the payment of that benefit because the payment would not have to go to FRP, it could be paid out directly to the retiree or widow.

Board Bill 146 is good for the City, it’s good for firefighters, and it simplifies the administration of both systems.

Works Cited

Assembly, Missouri General. (1875). The Constuon of the State of Missouri. The Constitution of the State of Missouri. 1875. St. Louis, Missouri: W. G. Gilbert, Law Book Publisher.

Cheiron. (2022, January). Firefighters’ Retirement Plan of the City of St. Louis Actuarial Valuation Report as of October 1, 2021. Cheiron.

Cheiron. (2023). Employees Retirement System of the City of St. Louis Actuarial Valuation Report as of October 1, 2022. Cheiron.

Cheiron. (2023). Firefighters’ Retirement Plan of the City of St. Louis Actuarial Valuation Report as of October 1, 2022. Cheiron.

Cheiron. (2023). The Police Retirement System of St. Louis Actuarial Valuation Report as of October 1, 2022. Cheiron.

Firmen's Rerement of Stl ET AL V City of St Louis, 1322-CC00006 (Circuit 22 January 2, 2013).

Fund, The Firemen's. (1914). History of the St. Louis Fire Department With a Review of Great Fires and Sidelights

Upon the Methods of Fire-fighting from Ancient to Modern Times, from which the Lesson of the Vast

Importance of Having Efficient Firemen May be Drawn. St. Louis, MO.: Central Publishing Company.

Gabriel, Roeder, Smith & Company . (2008). Firemen’s Retirement System of St. Louis Annual Actuarial Valuation as of October 1, 2008. Chicago, Ill.: Gabriel, Roeder, Smith & Company .

GRS. (2023). Firemen’s Retirement System of St. Louis Annual Actuarial Valuation as of October 1, 2022. Chicago, Ill.: Gabriel, Roeder, Smith & Company.

Hochschild, Bloom, and Company LLP. (2008). The Firemen's Retirement System of St. Louis Annual Financial Report

Fiscal Year Ended September 30, 2008. St. Louis, MO>: Hochschild, Bloom, and Company LLP.

Mo., St. Louis. (1893). The Mayor's Message with Accompanying Documents, to the Municipal Assembly of the City of St. Louis, at its Session, 1893. St. Louis, MO.: Nixon - Jones Prinng Company.

Neske v. City of St. Louis, 218 S.W.3d 417 (2007) (Supreme Court of Missouri, En Banc. March 13, 2007).

Office of the Comptroller. (2008). 2008 City of St. Louis, Missouri Comprehensive Annual Financial Report Year Ended June 30. St. Louis, MO.: City of St. Louis, MO.

Schmid, C. (2012, August 29). Ordinance 69245. An Ordinance establishing the Firefighters Retirement Plan of the City of St. Louis. St. Louis, Missouri: St. Louis Board of Aldermen.

St. Louis, MO. (1894). The Mayor's Message with Accompanying Documents, to the Municipal Assembly of the City of St. Louis, for Fiscal Year Ending April 9th, 1894. St. Louis, MO.

Swindler, W. F. (1958). Missouri Constitutions: History, Theory and Law. Williamsburg, VA.: Faculty Publicaons, William & Mary Law School.

Taaffe, B. T. (1886). Journal of the House of Delegates, St. Louis, April 1885 To April 1886. Journal of the House of Delegates, St. Louis, , 390.

Wessels, A. (2013, January 20). Ordinance 69353. An Ordinance amending the Firefighters Retirement Plan of the City of St. Louis. St. Louis, MO.: St. Louis Board of Aldermen.

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