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Living within Our Means: Cuts and Consequences

posted Oct 16, 2011, 3:24 PM by Freddy Suastegui
Monday, 03 October 2011 15:54 Miriam Cronkhite

How did we get here?

Firefighter Captain Bill Huddleston has proudly served the City of Hollywood for 23 years. Despite the recent decision to cut pensions, he intends to remain an active member of The Hollywood Fire Department. City employees already in retirement will not be affected, but active employees will be “crushed,” said Huddleston. In an attempt to manage the City’s 2012 budget, pension terms for firefighters, police and general employees will mean increased retirement ages and the loss of cost-of-living adjustments, among other things.

Hollywood cannot afford the pension structure that is currently in place, said city officials. According to a 2009 Hollywood Police Valuation Report for the 2010-2011 fiscal year, the total required contribution from the City is $13,136,365 or 47.27 percent, compared to the previous year where the City’s required contribution was 41.72 percent. As the economy faltered, the debt grew.

Some feel the City squandered money, leading to this $38 million budget gap. Nearly all the emergency funds have been exhausted, said Interim City Manager Cathy Swanson-Rivenbark. A balanced budget is a challenge for many communities. Cities facing similar financial hardships are monitoring places like Hollywood to help develop a model of restructure that is affordable and sustainable. The nation is attempting to live within their means.
Although an overwhelming number of residents either have their home in foreclosure or property values that have plummeted, some still insist the situation has become extreme because of poor planning. “The economy’s impact was foreseeable, so the fact that spending continued was unadvisable and most certainly compounded the problem,” Huddleston said.

The City has been accused of denying the unions their right to “collective bargaining.” “The City’s firefighters offered huge concessions in an attempt to help the City through this crisis. My gut feeling is that the City appreciated the offers and would have been willing to address them if, and only if, the referendum failed,” Huddleston said.

Firefighter Union President Dan Martinez said union proposals were never taken seriously. “We offered viable solutions but this was never about negotiations; this is strictly about the decimation of benefits,” Martinez said.

According to Swanson-Rivenbark, good faith negotiations were made to try and reach a “tolerable compromise for both sides.” She added that negotiations with union representatives covered the reintroduction of a DROP program the union had developed, ways to pay back pay cuts and discussions with AFSCME about the possibility of a four-day work week for public services employees.

Because an acceptable and fair compromise could not be reached, citizens voted on the referendum and chose to move forward with the City’s proposed pension reform.  

Prior to the vote, many were under the impression that voting for the new pension reform meant voting against tax hikes. “We believe the biased nature of the ballot, the misleading information mailed and e-mailed on the taxpayer’s dime, and the intimidation of the public through threats of raising taxes led to the public voting for unlawful change,” Martinez said.

Swanson-Rivenbark explained that there are different scenarios regarding the City’s options to come up with a balanced budget. The City had already allotted for the $8.5 million in budget cuts and if pensions were not going to be restructured then other options were layoffs, pay cuts or tax hikes.

None of the options are painless. According to Swanson-Rivenbark, 21 percent of Hollywood citizens meet the federal definition of poverty and 47 percent fall in the low-income bracket. With the new budget, citizens already face a total tax increase of 11 percent, nine for property tax and two for a fire fee increase. A 23 to 27 percent tax increase, in lieu of pension cuts, is not feasible for residents.

Here and now

Hollywood is a City that has “almost gone bankrupt,” Swanson-Rivenbark said. The Mayor and city officials are searching for a way to remain a financially solvent city, but some are concerned that it may come at the cost of the safety and security of Hollywood and its citizens.

“The Hollywood Fire Department has the lowest starting pay in Broward County at $12.54 an hour,” Martinez said. According to Martinez, “approximately 45 percent of our most recently hired firefighters have applications at other fire departments throughout South Florida.” This is prior to the effects of the pension cuts.

Kristi Huddleston, wife of firefighter Captain Bill Huddleston, referred to the cuts as “pension gutting,” noting that the City will no longer be able to receive funds from Chapters 175/185, or $1.5 million from the state. In order to receive funding, the City must remain in compliance with prior requirements. “Monies come at a cost,” said Swanson-Rivenbark, noting costs associated with maintaining the Chapter Plan benefits exceed the amount of funds received from the state.

According to Hollywood firefighter Brian Wilkie, even those who are already scheduled for retirement, and who are “grandfathered” in, will lose their ability to DROP. The Deferred Retirement Option Plan (DROP) is an optional benefit allowing qualified active members to work while accumulating funds in a special account to be distributed at retirement. Those already in DROP will not lose that ability, but there will be a co-pay increase in medical insurance, Swanson-Rivenbark said.  

Wilkie said those at “different stages in their career are impacted in different ways. Some public employees are struggling with the salary cuts, while others are more concerned about their retirement. I’m also worried that by the time I retire, there won’t be anything left for me. That’s not a comforting thought,” he said.  

According to Huddleston, also a member of the Pension Board and on the Contract Negotiation Team, the firefighters proposed a DROP program that was "praised by the City's hired actuary as being the best terms relating to a DROP plan in the entire state." However, the terms of the DROP program were not modified, instead the program was eliminated. "It quite literally will devastate many of us financially," Huddleston said.

Effective Oct. 1, employees must contribute 9.5 percent of their earnings to the pension fund. This comes shortly after the pay cuts and layoffs in June. The challenge of even tighter budgets and insecure futures can lead to loss of homes and forced relocations.

What does the future hold?

The Bureau of Labor Statistics projects the labor force participation rates for those 65 and older will increase through 2014. However, in these positions that are very physically demanding, some are concerned about the recently extended retirement age. “The longer our City forces our firefighters to work, then they have no interest in their safety or in the correlated safety of the public for that matter,” Martinez said.

Those trained in Hollywood will also receive training in beach rescue procedures and paramedic training. The concern is that they will not remain in Hollywood after receiving training.

Huddleston said prospective employees will use Hollywood to gain experience only and then look for a job with better pay and benefits. “This is not good in this profession. The myriad of situations that we could encounter every day requires continuity in our ranks in order to train for, prepare for and learn from previous incidents. The citizens will be the ones to suffer when you have a workforce that is basically made up of probationary firefighters and police officers,” he said.

“This pension reform will have the same unlawful and fleeting impact on the financial state and security on the City of Hollywood that a hardened criminal would feel after a robbery spree. It is unlawful through and through,” Martinez said.

Some say the City is leading toward privatization to unburden themselves of supporting pension funds. Swanson-Rivenbark said the City is considering whether it is “viable to create other business models” like a quasi-independent agency, meaning it would receive funding from an outside entity but would be given a fair amount of independence of operation.

Huddleston said he doesn’t believe the City is leaning toward privatizing the department and thinks it would be a bad move to do so. “Fire and police should never be used as a means to make a profit.”

Martinez said several grievances and an Unfair Labor Practice complaint has been filed with the Public Employees Relations Committee. They hope to gain reinstatement of full benefits with backpay. “We are confident that the law is on our side,” Martinez said. According to Swanson-Rivenbark, the City had funding set aside for legal fees and those funds were offered into the negotiations pot, but now that money will be used for this lawsuit.

It is not a winning situation for anyone involved. The City does not want to be battling its own employees. Both sides are confidant they are doing what is best for the citizens of Hollywood.