Minneapolis sues for firefighter and police pension money

In court, the city disputed the way pension funds were calculated.

Robert Downs

The city of Minneapolis and the Minneapolis Police and Firefighters Relief associations , which administer pension funds, began a trial Monday in a case that could save the city $11 million next year in property tax levies. In these disputed pension systems, employee benefits, referred to as âÄúunits,âÄù are directly dependent on the amount paid from their salaries. Thus, higher salaries mean higher pension benefits. The city sued the associations in 2006, arguing that the funds improperly inflated salary bases because of the use of benefits such as longevity pay, sick hours and overtime pay, which they said shouldnâÄôt be included. The city hopes Hennepin County District Judge Janet Poston will declare that the associations did not calculate salary according to the terms of a 1995 settlement, which resulted in higher than accurate salaries. This judgment would require the associations to recalculate salary amounts and refund the city for money overpaid. The fund still supports the families of 563 firefighters as of Dec. 31 and 847 police officers as of July 23, and only 27 active firefighters and 13 police officers are still paying into the funds. This leaves the city making up the difference in pension, and those funds are garnered through property tax levies. State law requires that police pension be funded through 2020. Mayor R.T. Rybak has already proposed an 11.3 percent property tax increase for next year. In particular, the city alleges that shift differential âÄî adding extra benefits for overtime or undesirable shifts âÄî was incorrectly factored into the value of pension units, because it went above limits defined in the Fair Labor Standards Act (FLSA). These issues were first raised by the city on recommendation from the city auditor in 2004, based on data from the fiscal year 2003. Andrew Lentz, a senior finance analyst for the city , said under oath Monday that their pension calculations followed collective bargaining agreements, but still excluded some items. âÄúWe did not factor in non-FLSA pay into unit calculation,âÄù he said. Representatives from both the city and the associations would not comment during litigation. Both pension funds were closed in 1980 to newly hired police officers and firefighters, who from then on received pension from the statewide Public Employees Retirement Association (PERA ), which does not pay employees based on salaries. In the PERA system, all employees put an equal amount of money into the pool, and each member receives the same benefits. Attorneys for the associations claimed that the city waited much too long to raise objections over the way the benefits have been calculated, because during yearly discussions since 1995 the city had not objected over these terms. The trial is set to continue Tuesday.