City Council - Special Meeting

afternoon everyone's mayor cyril jefferson convening the special meeting of the high point city council uh here with me in the room every member of council is present to say councilmember johnson and mayor protean peters before we begin our discussion we'll have an adoption of our agenda is there a motion to do so so i'll second motion made by councilman holmes seconded by councilman andrew any discussion on that motion to adapt our agenda all those in favor please signify for today. The first order of business is item 2026-331, presentation on the fire special separation allowance actuarial study and draft policy. To kick us off, we'll recognize Mr. Bobby Fischion, our financial services director, as well as Angela Kirkwood, our human resources director.

Thank you, Mr. Mayor, members of the City Council. Earlier this year, during the projections on a fire separation allowance as well as a draft policy. So Angie and I are going to walk you through that information today. To start off with, here are some assumptions we had to make because the policy does not exist today. So we put these assumptions together and then packaged them to our actuary with the census data for the fire department as of June 30th and we got some projections Assumptions. It is a council approved policy, right? It's not a state mandated policy like the law enforcement officer separation allowance. It is completely city funded, so there is no employee contribution to this. It's just local dollars. It provides a retirement separation allowance for fire department employees based on service and final base pay. and eligibility generally requires 30 years of service or age-based thresholds similar to other retirement programs that the city has. It also requires at least five years of continuous fire service. The benefit continues until re-employment into a local government retirement system position at age 62 or in the case of death. So there's a lot of numbers on the screen. During the budget process our budget director provided some estimated benefit payments. Those would correspond with the bottom line, the projected benefit payments. The much larger number is the total pension liability. So I've talked about this when I present our annual financials. I talk about the law enforcement pension liability, the local government retirement system pension liability. Those are not liabilities you would expect to write a check for tomorrow, not like you would on debt service or other types of liability. That is an actuarily determined liability based on estimated benefit payments discount it back to today. So that's a lot of words to say. It's an estimated liability that represents that benefit. It can change wildly depending on other assumptions, depending on retirement um not retirement rates but depending on uh interest rates at that point in time it can change depending on average merit increases other assumptions that go into it what i will tell you is that the assumptions you see as part of this plan are the same ones that our local government employee retirement system use so a huge population over the entire state SO RELATIVELY COMMON ASSUMPTIONS, I WOULD SAY. NOTHING SPECIALIZED TO THE CITY OR TO OUR EMPLOYEES AND CERTAINLY NOT TO HISTORY BECAUSE WE DON'T HAVE HISTORY AT THIS POINT FOR HOW PAYMENTS WOULD GO OUT OVER TIME. Oh, I did not show. OK, so really quick, just how these numbers change over time, the projected benefit payments. I do want to point out that as of June 30, 2026, you only had five firefighters that were at least 25 years of service. And then you had 50 that were between 20 and 25. So you'll kind of see that benefit payment kind of head up over that first five-year hump. Just a matter of who has service credits today in the system. It's also important to remember these numbers are just a single point in time. So June 30th of that year gave us that discount rate, which projected that liability. It changes over time. Are there any questions about those terms or those numbers on that page? again the benefit payment is kind of the cash that's actually going to leave the city the other just think of this as accounting numbers to put it on to our financial statements there's something off about that first number on the row for projected pension expense under 2027 so that is that's kind of what i was saying where that is kind of the offset to the liability so you have to incur that accounting expense in the first year that the liability goes on your books And I'm going to turn it over to Angela to talk about the policy details.

Good afternoon, council members, mayor. In regards to the policy, HR did create a fire special separation policy, and it was included in your package. Everybody got that, correct? okay um the the policy criteria basically is the firefighter must be under the age of 62 have five years as a city of high point firefighter status immediately before retiring have 20 years of service as a sworn firefighter and be eligible for a full unreduced benefit under ledgers so that's the the policy that we're recommending

it's the traditional benefit and that's how we presented it to you all you're saying 20 years as a sworn office sworn firefighter in the state or just period no with the city of high point okay back we like five years our five years in our 20 years between the five and twenty

The 20 years is 20 years of service as a city of High Point employee. Five years as a sworn law police firefighter.

Yes. So for instance, you could have someone kind of in the shop or as a mechanic in the department. So although they are a fire department employee, they weren't actually in the fire service. So we want to make sure that separation allowance was for folks that were actively serving as firefighters for some point in their career. The 20 years that you're hearing there is because unlike the law enforcement benefit, not every city has the fire separation allowance. So we want to make sure that the city of High Point is self-funding this benefit, that we don't have individuals that may have worked their entire career with another department that did not have this benefit, and then they come to the city of High Point FOR THE LAST, YOU KNOW, TWO TO THREE YEARS OR TEN YEARS, AND THEN HIGH POINT IS RESPONSIBLE FOR PAYING THE FULL FRAME OF THE SEPARATION ALLOWANCE. SO WE'RE MAKING SURE THAT THEIR LENGTH OF SERVICE HAS BEEN WITH THE CITY OF HIGH POINT, SINCE THIS IS A CITY-FUNDED BENEFIT, AND ALSO MAKING SURE THAT AT LEAST FIVE YEARS OF THAT HAS BEEN SERVING AS A BUYER FIRE.

LET ME ASK THIS QUESTION REALLY JUST BASED ON THAT LAST POINT YOU MADE, MADAM MANAGER. IF PART OF THE LIMIT is that if someone's coming into the city in order to qualify for the benefit, they have to have at least two years with the city. I think part of what council, and I can't speak for everyone at this table, but I think part of what, at least part of what we heard, and that may have gone to some of our thinking on this, was that a benefit is important not only to show whatever appreciation you want to show to employees, but it's really important for retention and then also So I think there's a part of this that I get the retention and appreciation part, but it doesn't feel like it helps with the recruitment if you've got a benefit that someone says, well, I'm, I don't know how many years in, really, really good at the job, but I know I'm not doing another 20 years when I get to high point.

Correct. And I think that there is flexibility if council chose to adjust the time of service that they would want individuals to have with the city itself to pay for the benefit. I would also highlight for council that we have not seen issues of recruitment in the fire department. We have typically ran where we're able to fill our positions. I think an example of that is with the safer positions that were hired that were approved with our last grant. We were able to get those positions on board. If you look at the attrition over the last five years in the department, you typically have higher vacancy rates in your police department and in public services than what you have in the fire department. I mean, it's a decision that you all can make with your policy, but you have not seen the issues with recruitment there.

Does it mean contiguous service or does it, if someone left the city, THE RE-ENTRY FORM?

NO, IF THEY HAD PRIOR SERVICE WITH US AND THEY SEPARATED AND THEN CAME BACK, THEN WE WOULD LOOK AT THEIR TOTAL SERVICE WITH THE CITY FOR THAT.

NO LONGER WITH WHAT MR. MAYOR WAS SAYING, I KNOW THAT TIMES, AND MAYBE KILFUR IS THE WRONG WORD, WE TEND TO KIND OF and try to encourage them to come to High Point. The policy... But the policy as it is written would tend to make it not as attractive to have someone

PRACTICE WHERE WE'RE PROMOTING FROM WITHIN. IT'S TYPICALLY PRACTICE, BUT IT WOULD, IF SOMEONE WAS COMING OUT, COMING INTO OUR DEPARTMENT LATER IN THEIR CAREER FROM ANOTHER DEPARTMENT, THEN THEY WOULD HAVE A HARDER TIME MEETING THAT 20-YEAR SERVICE THRESHOLD.

FROM MY UNDERSTANDING, WE'RE ABOUT 15 TO 20 DRIVERS SHORT. IS THAT CORRECT?

I can give that information for you. I'm not sure in terms of drivers. But I do know we're running several processes at this time too. So it may be a function of time where we are in a process.

Thank you. So what's like the average age of a new firefighter? Or median age?

I'm not sure, sir.

I guess say about 20 years. I mean, if they're all about 30 or they're all 25 or... We get people who join out of high school.

We actually have a career change. I mean, I guess it depends. We're going to use it as incentive to bring in new firefighters? No.

No, what I'm saying is, based on the way it's set up, it is not currently set up as an incentive to recruit new firefighters. Not, sorry. It could recruit new firefighters, but we're talking mid-career folks. Yeah. If you're using it as an incentive to recruit someone who's planning to spend $20 million as the policy is currently constructed.

I'm trying to figure out what you was coming from. Was it used as an incentive or illegal, the way she explained it?

Are you asking me what are my thoughts on what she said? Yeah. I mean, part of this hinges on Madam Manager's point about recruitment.

but we are also seeing more local municipalities adding a special separation law, so I don't think that would be as much of a danger as you think. I tend to agree with you, but a lot of other municipalities are adding this SSA.

There's no guarantee that they won't use it to their advantage. Well, that's true. I mean, like, you know, with municipalities, they had a point one time where People would leave school, go back to the city, and work for four years. And then get a higher position, and they work for four years. So they retire. They get their retirement from that position that they're working at. So how do we know that they would not use that to their advantage to come in and work for the city for five years to get to that same level? So when they retire, they get more money.

I will say there's a comparison chart that's in the packet, and really different cities have handled this differently. Elizabeth City, 30 years or more of service. City of Gastonia hired before April 1st, 86. Greensboro did not do a specific time. They have the five years. New Hanover County, 30 years or more of credible service. And then we have the 20 years. I MEAN, IT'S EACH ORGANIZATION KIND OF HANDLED IT DIFFERENTLY. THERE WERE A COUPLE THAT WE DID NOT HEAR BACK FROM, BUT THIS WAS THE INFORMATION THAT WE HAD AT THE TIME FOR THE MEETING.

YEAH, IT CERTAINLY ACCENTIVIZES ON THE RETENTION SIDE, FOR SURE.

LONG-JEOPARDY RETENTION.

TO STAY WITH YOUR DEPARTMENT.

I CAN SEE THAT. AND PART OF THAT THINKING FOR SOME IS THE AMOUNT OF TIME AND INVESTMENT INTO TRAINING AND PREPARING PEOPLE FOR THE ROLE.

I'M SPEAKING OF TRADING, I'M KIND OF THINKING OF RECRUITING MILITARY FOLKS WHO ARE SEPARATING, AND THEY WOULD HAVE, YOU KNOW, TIME. THEY MAY NOT HAVE TIME TO MAKE THE 20 YEARS, BUT THEY GENERALLY

And the purpose of showing you the benchmarking is just to kind of highlight that with the city of High Point and these other agencies that have taken the initiative to lay out this benefit, there are over 552 cities and counties and towns in North Carolina. So to just have five out of 500 Everyone's working on the policy, but I think this shows a good faith effort on behalf of the city to move forward and think about, you know, the loyalty of your firefighters and how you can move forward and allow them to have the same benefit.

Definitely appreciate that. Have we heard from Mebane? I believe that they recently instituted something like that.

Mebane didn't respond.

They did not respond. They did not respond.

on court or Gastonia?

Gastonia responded.

Did they respond?

Yeah. Conquered some policy. Burlington reached out. They were actually drafting their policy. So I think everyone has given it some serious thought. And as Tasha mentioned, the criteria and eligibility is left up to the municipality, because you have to think about long term HOW DO YOU WANT THIS TO BENEFIT THE EMPLOYEES THAT HAVE COMMITTED THEIR CAREER HERE?

YEAH. IT MIGHT JUST BE THE WAY IT'S IN THIS SPREADSHEET, BUT IT SAYS 20 YEARS OF SERVICE AS A SWORN FIREFIGHTER. GOING BACK TO WHAT YOU SAID, YOU'RE LOOKING AT FIVE YEARS OF SWORN FIREFIGHTER, 20 YEARS AS A CITY EMPLOYEE, RIGHT? SO MAYBE JUST TAKE THAT THERE.

IS THAT CITY OF... That's city of High Point work. We're talking about people working in the shop, transitioning to different levels. Is that within the department itself years of service or just under the umbrella of the city? Oh, it's written as city.

And again, it's a draft.

years of service and say public services and they become firefighter and now they're eligible for that benefit how many years if you can climb that ladder and carry that gear

Thank you. I know this is information only.

Well, typically policies like this are not brought to council for approval, but we wanted to make sure that we brought this back to you to see if there were any changes that need to be made. Our recommendation is that we would go ahead and finalize this so that we could have this ready to go and be effective January 1st of 2027. So that gives us enough time to get

um just the logistics in place between finance and hr to make sure that we read that we're ready for this are the are the pay structure for police departments and fire departments uh in other municipalities are they all on a congruent way that not necessarily the dollar amount they're paid but the structure in which they're paid as far as how much is salary how much is is some is that also used by cities and the way they attract employees?

I mean, in terms of?

People are always talking about how, well, they're paying first-year firefighters this much, and this city's paying that much. far as any other benefits or the way the Social Security is handled or any of that is that all the same it's the same for all employees except for the police department they receive a special retirement benefit that's not available to other employees so that's also state mandated as well right but outside of dollar amount that we always compete on with other cities the structure of the way that firefighters

for the most part unless there's some nuance that you've heard that I have not.

Yeah, I'd say part of the benefit of doing it where it's got to have the 20 years of service is, at least from a financial planning standpoint, ANY OTHER QUESTIONS OR THOUGHTS HERE, RECOMMENDATIONS FROM COUNCIL? THANK YOU FOR THE WORK.

SO BASED ON THE DISCUSSION TODAY, WE'LL STILL MOVE FORWARD WITH THIS BECOMING EFFECTIVE JANUARY 1. DOES THAT WORK FOR COUNCIL?

YEAH. AND, YOU KNOW, IF WE FIND SOMETHING EGREGIOUS, IS THERE STILL TIME TO TWEAK THINGS?

IDEALLY, YES, BUT IT WILL BE DIFFICULT. and also it helped if the messaging of it can sometimes get jumbled up when you start making changes like that understand and that financial table you all showed us um in terms of budgetary impact it's based off of this policy and it's also very close to what we're seeing when we look at the projected pension expenses for the police department i mean we're spending about a one and a half million for that so i mean when you think about kind of that long-term number that's there it's fairly accurate what we're seeing from the separation allowance that we have on the law enforcement side yeah

ONE QUICK QUESTION, THOUGH. IF WE HAD A FIREFIGHTER WHO WANTED TO RETIRE, LIKE, DECEMBER THIS YEAR, THEN THIS COMES OUT, AND THEY PROBABLY JUST WANT TO STILL LET ANYBODY RETIRE.

Any discussion on that motion to go into closed session? All those in favor, please signify by saying aye. Aye. Any against? The ayes have it. We're going to close session.