State law requires firefighters to pay 6 percent of their salary towards their retirement. But once a firefighter hits 20 years of service, they don't have to contribute anything.more>>
State law requires firefighters to pay 6 percent of their salary towards their retirement. But once a firefighter hits 20 years of service, they don't have to contribute anything. That differs from most other retirement systems in the state.more>>
Lee Zurik Investigation: ‘Playing With Fire’ and pointing fingersMore>>
People behind the effort to expand the Convention Center have a plan they think will ease traffic in the Warehouse District.more>>
People behind the effort to expand the Convention Center have a plan they think will ease traffic in the Warehouse District and rework the way cars, bikes and pedestrians circulate in the area.more>>
New Orleans, La. -
For every tax dollar you pay to City Hall, 10 cents go directly to the New Orleans Firefighters Pension Fund to help fill a huge cash shortfall.
"When you put all commitments that we have to make in some instances, based on these assessments, it's almost $50 million" says New Orleans Mayor Mitch Landrieu. "If taken alone by itself the Firefighters Pension Fund at $50 million, it would be the fifth largest department in city government. That is unsustainable."
A recent audit shows that funding shortfall at $270 million -- that comes to about $750 per New Orleanian. That's money that needs to go into the Fire Pension Fund to pay current and future retirees, and experts say that $750 you owe is likely a low estimate.
"They're avoiding the basic funding mandate," says fund attorney Louis Robein.
Robein has filed a suit in court, trying to order the city to pay more into the fund.
Robein says the city hasn't paid its fair share, underfunding the pension fund over the past few years by $54 million.
"Firefighters, see, watch you, others in the news and see that the city is committed roughly 10 million a year to fund the consent decree," says Robein. "I'm not saying the city was wrong in doing that. But it's a priority in their minds. Well, this is a priority too."
Robein argues the city is legally mandated to pay. Every year the pension system is underfunded. The liability grows, making it that more difficult to crawl out of the financial hole.
"They got to find the money," says Robein, "they got to fund it. This plan is going to go beyond critical in terms of funding."
Every year the pension board tells the city how much it owes, to pay its share of pension costs.
Mayor Landrieu says, "This doesn't have anything to do with the value of firefighters. Each of those guys and gals are heroes. This is about pension board and this is about the liability they impose on the taxpayers, the citizens and, in my opinion in an unsustainable way, have to be changed."
The city says mismanagement is to blame for the underfunding and cites some of the examples we've used in previous stories of questionable investments made by the Fire Pension Fund. The board is mostly made up of current and retired firefighters. The mayor compared it to Monopoly money -- in a way, he says, their money is not real. If they make a bad investment, the city -- taxpayers -- have to make up for the loss.
"The board as it's currently structured allows people who don't have responsibility for balancing the city's budget to invest the city's money... is not a good model either," says the mayor.
"To me, the trustees being made up of firefighters whose pensions are dependent on those very decisions… They have a direct interest in making the best decisions," says Richard Hampton, the fund's CEO and secretary-treasurer.
Board members and the city seem to agree on one thing: Changes to the system need to be made, changes that may not prove popular with firefighters.
"It's not complicated to fix, everybody has to bend," says Landrieu. "Everybody has to yield. Some people have to put more into the system, you have to retire a little longer. The city has to do its part and you have to fix it but you can't let it stay like it is. That's not an outcome that's going to be acceptable."
Hampton says, "We felt that it may be time for the firefighters to increase their pension contributions. That would go directly towards lowering that overall unfunded liability. We're looking at some schedules to help come up with making those changes."
Financial battles between the firefighters and city dates back to the 1980's.
"They have longstanding beefs with the entity of the city of New Orleans that in some instances are not without merit," acknowledges the mayor, "But is has to be fixed."
But the pension board thinks much of the responsibility is on the city for failing to contribute millions of dollars into the pension fund.
There has been a drastic drop in the money on hand need to pay current and future retirees. It's what's called the unfunded liability. In 2007, the unfunded liability was at 76 percent, but since then has plummeted to 37 percent.
Pension experts have criticized the fund's investments, particularly the heavy investment in real estate. In 2007, the pension board put 10 percent of its investments in real estate. In 4 years that has jumped to 45 percent.
The city says that and other troublesome investments have led to the increase in liabilities. The pension board blames most of it on the city for failing to pay $54 million. Regardless, it's current firefighters and taxpayers who will have to come up with the money.
"To say this board is responsible for all the bad actions that all the previous administrations in the city has done in order to create the unfunded liability that is now created is a huge injustice," says Hampton.
Investigators say an Algiers man shot and killed a masked robber who held him and his wife at gunpoint. The incident happened just before 10 p.m. Wednesday in the 1800 block of West Homestead Drive. Policemore>>
Investigators say an Algiers man shot and killed a masked gunman who attempted to rob him and his wife at their home.more>>
Tuesday, August 19 2014 4:10 PM EDT2014-08-19 20:10:07 GMT
The police chief for Gulf Shores along Alabama's coast is weighing-in on the actions of the law enforcement commander in charge of Ferguson, Missouri's in the wake of an escalating crisis brought on bymore>>
Gulf Shores Police Chief Ed Delmore wrote a blistering open letter to Captain Ronald S. Johnson, who was given command of law enforcement operations following days of looting and rioting in the city.more>>
Dashcam footage captures an amazingly acrobatic motorcycle accident. As a car switches lanes, a motorcyclist slams into the vehicle's rear bumper. The motorcyclists is launched into the air, flips andmore>>
Dashcam footage captures an amazingly acrobatic motorcycle accident.more>>
Fox 8 WVUE-TV
Louisiana Media Company, LLC.
1025 S. Jefferson Davis Parkway
New Orleans, LA 70125