Philadelphia firefighters awarded four-year contract

Philadelphia firefighters will receive 3 percent annual raises for the next three years and be protected from furloughs under a long-awaited four-year contract awarded Friday by an independent arbitration panel.

Despite changes to the firefighters' pension plan that the city sought, the award drew swift and sharp criticism from Mayor Nutter, who vowed to appeal. Bill Gault, president of Local 22 of the International Association of Fire Fighters, in contrast called it "a major victory."

"It's a fair award that addresses the needs of firefighters and paramedics and the city," Gault said in a news release, urging the city not to appeal. "There are pluses in it for both sides."

Nutter said similar wage increases awarded to police officers last year - which he did not appeal - were not offset in the fire contract by sufficient health-care savings or the ability to require furloughs.

City Finance Director Rob Dubow said the contract would cost the city an additional $146 million over the next five years, including nearly $80 million in health-care costs.

Nutter said the police award afforded the city ways to offset costs but the firefighter contract did not, "short of simply cutting services."

"This award is bad in the short term and worse in the long term," Nutter said. He has 30 days to appeal to Common Pleas Court.

Nutter said he would appeal the furlough issue - he won the right to require unpaid leave of police officers for up to two weeks a year - and almost all wage and benefit aspects.

The administration also will appeal provisions that prevent the city from eliminating certain jobs regarded by the union as vital, and a provision that would change the testing process for battalion chiefs and deputy chiefs.

Nutter will not appeal the 401(k)-type pension plan that will be offered to new employees, which affords the city some long-term savings but little up front.

New firefighters who opt to stick with the traditional pension plan will have to contribute 6 percent of their salaries, instead of 5 percent for current department employees.

Unlike police, who for the first time will be exempted from the city's residency requirement, firefighters will still have to live in the city.

The more than 2,100 firefighters have been operating under the terms of a contract that expired more than 15 months ago.

The new terms include no pay increase for the contract's first year, which ended June 30, and raises of 3 percent a year effective retroactively to July 1. The contract expires June 30, 2013.

The city will continue to contribute $1,270 per employee per month to cover health-care costs until Dec. 31. At that point, the union's health and welfare fund will switch to a self-insurance program – as the police union did last year - that is intended to save the city millions in years to come.

But the award to the Fraternal Order of Police saved the city nearly $10 million in its first year alone, while the firefighters' award achieves no savings in either of the first two years, Kenneth M. Jarin, the city's representative on the three-member panel, wrote in a dissenting opinion.

City officials criticized the firefighters union for failing to keep health-care costs down, with its per-member cost now 12 percent higher than police and 20 percent higher by the end of the contract, Nutter said.

"This contract award ignores the city's ability to pay and locks us into a course filled with even more pain of the type we've weathered in recent years," Nutter said.

Gault, in an interview, said, "The problem is our usage, and our usage is high because of what we face out there. When we get an injury, it's not a paper cut."

The contract provisions provide little incentive for firefighters to keep their health-care costs down, Nutter said. The arbitration panel "totally overlooked" the differences in health-care costs between the firefighters and the FOP, according to Jarin's dissent.

Gault, responding to news of Nutter's intended appeal, issued a statement: "Our award provides the city with additional savings and keeps firefighters living in the city, which would add to the city's tax base and income. Mayor Nutter didn't get every single thing he wanted. Neither did we. But we're not crying and stomping the floor."

Traditionally, the firefighter and police contracts mirror one another in their essential components, and become a starting point for the city's bargaining sessions with its two nonuniformed employee unions.

Though the administration has been loath to implement furloughs in the Police Department, that provision was thought to be a precedent for other contracts, where furloughs would be implemented more easily.

But with such striking differences in the residency requirement and furlough protections between police and firefighters, it is difficult at this point to say what the impact might be - beyond likely wage increases - for the other two unions, which have been without a contract since July 1, 2009.

District Council 47 president Cathy Scott declined to comment, saying she had not yet reviewed the firefighters contract. Pete Matthews, president of District Council 33, did not return a call.

Current firefighters will see no change in their pension benefits, but new hires will be able to join a new retirement plan that combines a traditional but reduced pension benefit with a defined-contribution plan similar to a 401(k) in the private sector.

The estimated pension savings are mostly long-term, with the city saving up to $1.4 million over five years and up to $9.2 million over 20 years.

The firefighters will pay the first $5 million in health claims from their health-care reserve fund, which now stands at $24 million. In addition, firefighters had sought "stress pay" of 5 percent of salary, which police receive, but it was denied.

New hires will also be limited in vacation time, permitted to take off only one week from May 1 to Sept. 30 for their first five years. That change is intended to save the city overtime costs.

The administration's frustration with the award was reflected in the 10-page dissent by labor lawyer Jarin. The panel is composed of one representative chosen by the union, one by the city, and a third agreed upon by both sides.

Jarin wrote that his two fellow arbitrators gave "lip service" to the city's fiscal challenges by granting nearly $67 million in pay increases but offering no plan for how the city would pay for those raises without cuts in service.

In contrast, Jarin said the police contract offset 9 percent in pay raises for officers by reducing how much the city contributed to the union's health-care fund, and by allowing the city to impose up to 30 unpaid furlough days a year, among other changes. In all, Jarin said, the firefighters contract "places more than $100 million of unanticipated costs on the backs of the taxpayers."

He also dissented from the contract awarded to police in December. Under the terms of that deal, officers received a total of 7 percent in raises in the first three years of a five-year contract.