Now that the city is on the road to recovery from a dismal budget two years ago, officials plan to make what they say is a long overdue but costly increase to firefighter retirement benefits.
Millbrae officials have been talking for years about increasing the retirement benefits rate, which hasn’t changed since the 1980s, as a way of improving retention rates for firefighters, Fire Chief Dennis Haag said.
The city, still recovering from a dismal budget two years ago, finally struck a deal with the Millbrae Fire Fighters’ Association in December for the increase, which will cost the city nearly $160,000 more annually, according to Assistant City Manager Jeff Killian.
“It’s definitely an improvement that makes us more competitive,” Haag said.
Millbrae currently uses the “2 percent at 50” formula to calculate annual retirement benefits for firefighters. The formula takes the employee’s years of service, multiplied by 2 percent and then multiplied again by their annual salary, Assistant City Manager Jeff Killian said. Employees can max out their benefits and retire at age 50, but the formula percentage is reduced if one retires earlier.
The city aims to change this formula to a more lucrative “3 percent at 55” plan, which is already used for firefighters in Burlingame, Daly City and Pacifica, according to December 2005 data from the California Public Employee Retirement System.
Someone with 25 years of service by age 55 could then earn approximately 75 percent of his or her annual income, Killian said. Division chiefs, who are one step under the fire chief, can earn between $93,000 and $113,300 annually, Haag said.
Some fire departments, including Redwood City and the South County Fire Authority, get a “3 percent at 50” plan, which allows employees to retire earlier with maximum benefits, according to the data.
The City Council took its first look at the updated contract at a special Wednesday meeting, and will take another reading at its regular July 25 meeting. In order for the new rate to go through by the end of August, the council had to get the ball rolling, Killian said.
The city lost four firefighters — which was the last major exodus from the department, Haag said — during the recent economic crunch. The department will have 26 firefighters this fiscal year, but Haag said he is the only one close to retirement.