INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS HAROLD A. SCHAITBERGER THOMAS H. MILLER General President General Secretary-Treasurer

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2 INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS HAROLD A. SCHAITBERGER THOMAS H. MILLER General President General Secretary-Treasurer March, 2014 Dear Member of Congress: On behalf of the 300,000 men and women of the International Association of Fire Fighters, I am pleased to provide you with a copy of our 2014 Legislative Issues book. Our nation s first responders face significant challenges at the federal, state and local level, and are directly affected by decisions that are made in Washington, D.C. This briefing book is intended to provide you with a better understanding of the perspective of the nation s professional fire fighters and emergency medical personnel on some of the issues facing Congress in From March 16-19, hundreds of IAFF members from across the country will come to Washington, D.C. to attend the IAFF s annual Legislative Conference. I hope you will have the opportunity to discuss the issues outlined on these pages, as well as challenges at the state and local level, with your fire fighter-constituents. Thank you for your consideration of our views. The IAFF Department of Governmental Affairs stands ready to assist you and your staff throughout the year. Please do not hesitate to call on us. We look forward to a cooperative and productive year. Sincerely, A Harold A. Schaitberger General President

3 IAFF Legislative Issues Book 113th Congress - Second Session Table of Contents Issue Page Funding for SAFER and FIRE Grants Fact Sheet 4 Key Points 5 Fixing the Healthcare Reinsurance Fee Fact Sheet 6 Key Points 7 Protecting Public Sector Pensions Transparency Act Fact Sheet 8 Transparency Act Key Points 9 SAFE Retirement Act Fact Sheet 10 SAFE Retirement Act Key Points 11 Federal Fire Fighter Trade Time Fact Sheet 12 Key Points 13

4 IAFF LEGISLATIVE FACT SHEET FUNDING FOR SAFER AND FIRE GRANTS The IAFF supports robust funding for the SAFER and FIRE grant programs and providing $680 million, evenly divided, for the two programs in Fiscal Year BACKGROUND The SAFER and FIRE grant programs were created by Congress to help address the significant staffing, equipment, training and health and safety needs of fire departments. SAFER provides funding to help pay the costs associated with hiring personnel to maintain safe staffing levels, while FIRE grants fund equipment, training and other fire department needs. The importance of adequate fire department staffing has been well-documented by independent studies. The National Fire Protection Association (NFPA), the consensus standards-making body of the fire service, and the Occupational Safety and Health Administration (OSHA), have both promulgated standards for the minimum number of fire fighters needed to respond safely and effectively to emergencies. Far too few jurisdictions meet these minimum safe staffing levels, a problem made even more acute by the Great Recession. Similarly, the FIRE grant program allows fire departments to purchase equipment and receive training that such departments could not otherwise afford. Equipment and training funded by the FIRE grant program help fire fighters do their jobs safely and effectively by improving the effectiveness of fire department operations and protecting the health and safety of local fire fighters. For Fiscal Year 2014, SAFER and FIRE were funded at $680 million - $340 million each. Although the programs received a slight increase over funding levels for the previous two fiscal years, funding remains down from a historical high of $810 million, a reduction caused by congressional efforts to reduce the deficit. Unfortunately, the recent recession has also led communities nationwide to reduce fire department staffing and cut back on training and equipment purchases. Combined, such cuts at both the national and local level undermine emergency response and pose significant threats to public safety and local preparedness. CURRENT LEGISLATION Funding for SAFER and FIRE will be addressed as part of the Department of Homeland Security Appropriations Act for Fiscal Year CONGRESSIONAL ACTION The House and Senate Appropriations Subcommittees on Homeland Security will consider the Fiscal Year 2015 appropriations bills in the spring of

5 KEY POINTS FUNDING FOR SAFER AND FIRE GRANTS The SAFER and FIRE grant programs provide funding directly to local fire departments to ensure such departments have sufficient personnel, equipment and training to operate safely and effectively. The SAFER and FIRE grant programs have been shown to be among the most efficient and effective grants administered by the Department of Homeland Security. By utilizing a peer-review process and awarding funds directly to fire departments, SAFER and FIRE grants go to those communities where they are most needed, with a minimum of overhead. All of the national organizations representing the fire service support the SAFER and FIRE grant programs, including groups representing fire chiefs, volunteer fire fighters, arson investigators, and fire training personnel. The programs are also supported by manufacturers of equipment and apparatus, as well as local government groups. The role of the fire service has transformed from providing local response to an integrated national system that responds to a wide range of local emergencies and national disasters. When the country is under attack or when a natural disaster occurs, local fire fighters respond. The federal government has a responsibility to help ensure that local fire departments can effectively protect the public safety. Equipment, training, and personnel funded through SAFER and FIRE enable fire departments to respond to all emergencies, including both man-made and natural disasters. The nation s fire service has long faced significant staffing, equipment and training shortages. According to a 2011 Needs Assessment conducted by the National Fire Protection Association, personnel, equipment and training shortages encumber fire departments of all sizes and interfere with departments ability to respond to common emergencies. Adequate staffing is essential to both fire fighter safety and the public safety. Federal government studies have shown that operating below minimum staffing is a leading cause of fire fighter fatalities, and numerous independent studies of fire department operations demonstrate that lack of personnel significantly increases response time. Providing sufficient funding for SAFER and FIRE is more crucial than ever. The recent recession has forced local fire departments to cut services and staffing, as well as postpone purchasing critically-needed equipment, apparatus and training. SAFER and FIRE allow the federal government to provide temporary help to local communities facing budget shortfalls to ensure that such communities have sufficient resources to protect the public safety. The critical shortages facing fire departments are reflected in the number of applications submitted for SAFER and FIRE grants. For Fiscal Year 2013, over 10,000 fire departments applied for more than $2.1 billion in FIRE grants, and over 1500 departments applied for more than $1.6 billion in SAFER grants. If Congress fails to provide sufficient funding for the SAFER and FIRE grant programs, fire fighter safety as well as the public safety would be put at significant risk. 5

6 IAFF LEGISLATIVE FACT SHEET FIXING THE HEALTHCARE REINSURANCE FEE The IAFF supports H.R and fixing the Reinsurance Fee. BACKGROUND The Patient Protection and Affordable Care Act (ACA) extends insurance coverage to millions of previously uninsured Americans. While insurance companies will now have access to millions of new customers, they will also be facing higher costs as less healthy individuals are absorbed into the system. To help lessen the impact of this additional cost, the ACA created the Transitional Reinsurance Program. This program will provide temporary assistance to insurance companies to help mitigate cost increases associated with insuring people who have pre-existing conditions. The Transitional Reinsurance Program is funded by a fee imposed on health insurance companies for three years based on the number of people they cover. Because the fee is based on the total number of individuals covered, rather than number of policy holders, the fee is said to be assessed for each belly button. In the first year, the fee will be $63 per individual and in the second year, $44 per individual. While the third year is yet to be set, the law dictates that the tax amount would decrease from the second-year amount. While large insurance companies will be able to pay this fee from the increased revenue they receive from their new customers, many observers believe that self-insured plans which cover a smaller pre-defined group will be adversely impacted by the fee. Because self-insured plans, including those managed by unions and local governments, will not be gaining new customers under the ACA they will in effect be subsidizing large insurance providers. To address this problem, organized labor and others who sponsor these health plans have argued that the fee should be eliminated, delayed or at the very least that self-insured plans should be simply exempt from the tax. In response to this effort, the Obama Administration delayed the fee for plans that are both self-insured and self-administered. This fix would only benefit a small number of self-insured plans, but Administration officials claim that any further relief would require Congress to change the law. CURRENT LEGISLATION House: Summary: H.R. 3489, legislation to repeal the funding mechanism for the Transitional Reinsurance Program Sponsors: Representative Patrick Tiberi (R-OH) Representative Dan Lipinski (D-IL) H.R would repeal the Reinsurance Fee. CONGRESSIONAL ACTION On November 14, 2013, H.R was introduced in the U.S. House of Representatives and referred to the House Committee on Energy and Commerce. 6

7 KEY POINTS FIXING THE HEALTHCARE REINSURANCE FEE The Transitional Reinsurance Fee (aka Belly Button tax) is a tax imposed on insurance companies to help offset the higher costs associated with providing coverage to less healthy individuals. The fee will be assessed on a per capita basis for both fully insured and self-funded health plans and will help fund a reinsurance program for high cost individuals. The fee will impose a hardship on self-insured plans that will not be gaining new customers under the Affordable Care Act. Self-insured plans, such as those sponsored by unions and local governments, only cover people in a pre-determined class such as employees of a city. The relief proposed by the Obama Administration did not go far enough. In December 2013, the Administration exempted self-insured, self-administered plans from the reinsurance fee for the 2015 and 2016 benefit years. Unfortunately, most self-insured plans are not self-administered and therefore will not be affected by the rule change. The Obama Administration proposed additional changes to the law, splitting the collection date for the reinsurance program to help spread out costs. For example, for the $63 year one fee a plan would owe $52.50 per covered life in January of 2015 and $10.50 sometime in the 4 th quarter of The other changes proposed by the Administration changing the timing of when payments are due and clarifying the application to supplemental or secondary group health coverage also do not alleviate the additional financial burden imposed on self-insured plans. Administration officials claim that further relief must come from Congress because it would require a change in law. Members of Congress from both parties and both chambers have come out in support of fixing or eliminating the reinsurance fee. Opponents of fixing the Reinsurance fee claim that it would amount to a bailout for labor unions. Although many of the self-insured plans are sponsored by labor unions most notably Taft-Hartley plans there are many other plans that are sponsored by employers. In the public sector, most selfinsured plans are sponsored by municipalities. Self-insured plans will face other challenges stemming from the Affordable Care Act. For example, their plan participants will not be able to access the subsidies that are provided to those who buy insurance on the exchange. The reinsurance fee will therefore exacerbate the problems being imposed on these plans by the Affordable Care Act. 7

8 IAFF LEGISLATIVE FACT SHEET PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT BACKGROUND The IAFF opposes the Public Employee Pension Transparency Act (H.R.1628/S.779). Pensions for state and municipal employees have traditionally been governed at the state and local level, free from federal government interference. The Public Employee Pension Transparency Act (H.R. 1628/S. 779) would impose unprecedented federal requirements on these institutions, and undermine the retirement security of fire fighters and other public sector employees. The legislation would require state and local governments to issue misleading reports about the health of their pension plans in an apparent effort to make such plans appear to be underfunded. States and localities that decline to issue such reports would lose their ability to issue tax-exempt bonds. The bill also bars federal bailouts of pension funds, even though no pension funds have sought a bailout. Contrary to the bill s stated intent, the transparency requirements would actually create confusion about the stability of pension plans. For the first time, the federal government would force states and local governments to list pension fund liabilities based on risk free rates, which is equivalent to the interest earned on Federal Treasury bonds. The risk free rate is far below conservative actuarial forecasts and below what pension funds have historically earned. By forcing public pension funds to use the lower Treasury bond rate, the overall pension liability will appear drastically larger than it actually is. This will cause unnecessary alarm, and frighten legislators into making unnecessary cuts or worse, disbanding pensions altogether in favor of more costly and less secure 401(k)-style defined contribution plans. The truth is that the alleged public pension crisis is overblown. State and local governments responded to the challenges posed by the Great Recession by instituting a number of reforms. Since 2010, fund balances have been steadily recovering and the overwhelming majority of public pensions are now on sound financial footing. Moreover, there is no need for additional reporting requirements as PEPTA sponsors claim. States and localities already require full transparency, and adding a duplicative layer of federal reporting will impose additional burdens on pension plans without providing any helpful information to plan participants or taxpayers. CURRENT LEGISLATION House: Senate: Summary: H.R. 1628, the Public Employee Pension Transparency Act Sponsor: Representative Devin Nunes (R-CA) S. 779, the Public Employee Pension Transparency Act Sponsor: Senator Richard Burr (R-NC) The Public Employee Pension Transparency Act would require states to calculate their long-term obligations using unrealistically low rates of return on investments, and create a false picture of the plans funded status. CONGRESSIONAL ACTION 8 On April 18, 2013, H.R was introduced in the U.S. House of Representatives and referred to the House Committee on Ways and Means. On April 23, 2013, S. 779 was introduced in the U.S. Senate and referred to the Committee on Finance.

9 KEY POINTS PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT Managing and funding public pensions has historically been the job of state and local governments. PEPTA represents an unprecedented and unwarranted federal intrusion into state and local affairs. The so-called public pension crisis is largely a myth. Pension funds have rebounded strongly from the great recession, and the vast majority of plans are now on solid financial footing. In the few jurisdictions where plans are underfunded, states and local governments are working aggressively to address the shortfall. There is no need for federal intervention. The requirement to project long-term plan earnings based on the risk-free rate of return runs counter to accepted actuarial practices. Currently, professional actuaries make projections of plan earnings based on estimates that examine both past performance and conservative predictions for future growth. PEPTA proposes to replace this sound, professional process with a politically motivated formula. Reporting a plan s funded status using this artificially low rate would provide a misleading picture of the fund s health and could force policy makers to abandon pension plans that have worked well for generations. Defined benefit pension plans provide a secure retirement for public employees. Replacing defined benefit plans with 401(k)-style defined contribution schemes, as the sponsors of PEPTA suggest, would undermine retirement security, and pose huge transition costs on states and localities. Defined benefit pension plans also provide for death and disability benefits, which other types of retirement plans do not. Just as Congress recently reaffirmed that military personnel who are injured in the line of duty should receive a secure pension, states and local governments should be able to provide the nation s domestic defenders with disability benefits. PEPTA would make it much harder for jurisdictions to continue to provide such coverage. PEPTA requires states and localities to comply with duplicative reporting requirements. Pension plans already fully report funding projections and other relevant information under state and local laws. Adding an additional federal layer of reporting will impose burdens on plans without increasing transparency. Sponsors of PEPTA claim that federal intervention into state and local pension funds is needed to avert a federal bailout of underfunded pension systems. But no pension plan has ever sought a federal bailout, and none plan to do so. 9

10 IAFF LEGISLATIVE FACT SHEET BACKGROUND SAFE RETIREMENT ACT The IAFF opposes S. 1270, the Secure Annuities for Employees (SAFE) Retirement Act. In response to concerns that taxpayers may need to bail out underfunded pension plans, legislation has been introduced to replace traditional defined benefit pension plans with annuities purchased from insurance companies. Under the SAFE Retirement Act (S. 1270) public employers would purchase insurance annuity contracts each year on behalf of all employees. An employee s retirement benefit would be determined by the number of contracts purchased on their behalf and the amount of each contract. Proponents of the legislation claim that shifting responsibility for paying retirement benefits to insurance companies will protect taxpayers because pensions will no longer be guaranteed by the government. They also claim that, if fully utilized, annuities would pay an adequate retirement benefit. The proposal allows employers to purchase annuities worth up to 30% of a fire fighter s salary (20% for non-public safety officers) each year. If contracts are purchased at the maximum amount each year for 30 years or more, the total benefit paid should be enough for a public safety officer to retire. Opponents of the legislation counter that employers are unlikely to invest the full 30% of salary each year, which means that the total benefit paid by the annuities may not provide enough income to retire on even if a fire fighter works for 30 years a long career for such a demanding occupation. Employees would have no way of knowing from year to year if their employer is going to purchase an annuity contract on their behalf or the amount of such contract, so they would have no way to plan for retirement. Moreover, the proposal does not provide for death and disability benefits as current defined benefit plans do and sets the minimum retirement age at 57, which is past when many fire fighters feel able to continue performing their duties. Finally, opponents note that the legislation is based on a faulty premise. The vast majority of defined benefit plans are adequately funded and present no risk to taxpayers. The few plans that are facing significant challenges are being overhauled and expected to return to full solvency. As long as employers make their annual required contributions, current pension plans will continue to be able to pay adequate benefits, as well as death and disability benefits, for current and future generations. CURRENT LEGISLATION Senate: Summary: S. 1270, the Secure Annuities for Employees Retirement Act Sponsor: Senator Orrin Hatch (R-UT) The Secure Annuities for Employees Retirement Act would replace public employee defined benefit plans with insurance annuities. 10 CONGRESSIONAL ACTION On July 11, 2013, S was introduced in the U.S. Senate and referred to the Committee on Finance.

11 KEY POINTS SAFE RETIREMENT ACT This legislation does not guarantee a retirement benefit. Contrary to claims, the new and voluntary insurance annuity plan would not provide any sort of guaranteed benefit upon retirement. The employer would decide each year whether to purchase an annuity contract and how much to spend it could be zero. The retiree s benefit would be wholly dependent on these year-to-year decisions. The SAFE Act irresponsibly assumes generous employer contributions. Claims that insurance annuities will provide a secure retirement are based on the assumption that employers will voluntarily contribute a large percentage of payroll each year towards retirement. History demonstrates that employers often underfund retirement plans, and shifting from defined benefit pensions to insurance annuities will make it even easier for employers to avoid making their annual contributions. Even under the most generous assumptions, the insurance annuities created under the SAFE Act will not provide a retirement benefit equal to the amount typically paid by defined benefit pensions. Under more realistic assumptions, the benefits paid by insurance annuities will not be sufficient for a fire fighter to retire on. Insurance annuities don t include death or disability benefits. Under current defined benefit pension plans a fire fighter who suffers a career ending injury early in their career will be eligible for retirement benefits. Under the SAFE Retirement Act, the injured worker s disability benefit will be based solely on the number of annuity contracts purchased on their behalf. Similarly, widows and dependent children of fallen fire fighters would lose their eligibility for benefits under the misnamed SAFE Retirement Act. The legislation is based on the erroneous assumption that current state and local defined benefit pensions are underfunded. The overwhelming majority of such systems are adequately funded, and the few that are facing challenges are moving aggressively to change their structure. Claims that unfunded pension liabilities contributed to the Detroit bankruptcy are false. The Detroit pension system is 97 percent fully funded. If enacted, the legislation would impose large transition costs on the employer as it does not address the large legacy costs associated with converting defined benefit plans to insurance annuities. Employers would be responsible for funding the new annuity plan as well as the old defined benefit plan, without the added benefit of continued contributions from workers. It is not clear if there is a legal reason why this legislation is even needed. Employers already can purchase insurance annuities for their employees, but very few have ever opted to do so. Why should the federal government encourage use of a retirement vehicle that employers have previously rejected? 11

12 IAFF LEGISLATIVE FACT SHEET FEDERAL FIRE FIGHTER TRADE TIME The IAFF supports H.R. 1141, the Federal Firefighter Flexibility and Fairness Act and encourages Members of Congress to cosponsor the bill. BACKGROUND Municipal fire fighters across the country are allowed to swap shifts or trade time and still be paid according to their regular work schedules. Municipal fire fighters who trade time are paid as if they had worked their scheduled shifts. This workplace flexibility gives fire fighters at the state and local level the ability to take time off for family obligations by trading shifts with fellow fire fighters without drawing down their leave. Unlike their municipal counterparts, federal fire fighters can only trade time within a two-week pay period. Any shift swaps outside a pay period affect calculation of hours worked and overtime pay. Currently, if two federal fire fighters swap shifts outside of a pay period, one would have his or her weekly pay reduced, while the other would be paid overtime. This can be burdensome and costly to the federal government. As a result, some federal fire departments simply refuse to allow fire fighters to trade time. This problem is easily remedied by excluding trade time from the calculation of overtime pay in the federal sector. This would serve as a cost-effective tool to give more leave flexibility to federal fire fighters while maintaining minimum staffing requirements during potential federal fire fighter personnel shortages. Trade time may also aid in the ability of federal agencies to recruit and retain trained fire fighters and boost fire fighter morale. Federal fire fighters deserve the same flexibilities in the workplace as their fellow state and local fire fighters. The Federal Firefighter Flexibility and Fairness Act was crafted to address this inequity by excluding trade time from the calculation of overtime pay for federal fire fighters. CURRENT LEGISLATION House: Summary: H.R. 1141, the Federal Firefighter Flexibility and Fairness Act Sponsors: Representative John Sarbanes (D-MD) Representative Rob Wittman (R-VA) The Federal Firefighter Flexibility and Fairness Act would exclude trade time from the calculation of overtime pay for federal fire fighters. 12 CONGRESSIONAL ACTION On March 13, 2013, H.R was introduced in the U.S. House of Representatives and referred to the Committee on Oversight and Government Reform.

13 KEY POINTS FEDERAL FIRE FIGHTER TRADE TIME Trade time agreements provide fire fighters workplace flexibility to take time off by trading shifts with fellow fire fighters without drawing down their leave. Trade time agreements are widespread and commonplace in the municipal sector, and work well to provide municipal fire fighters flexibility to take time off for family responsibilities or unexpected personal obligations. Extending trade time flexibility to federal fire fighters is a matter of fairness. Federal fire fighters hold some of the nation s most hazardous and stressful jobs working at military bases, VA hospitals and protecting our communities from wildfires. They deserve to enjoy the same flexibilities in the workplace as do their municipal brothers and sisters. Currently, if two federal fire fighters swap shifts outside of a pay period, one would have his weekly pay reduced, while the other would be paid overtime. This is costly for the federal government. Excluding trade time from the calculation of overtime pay in the federal sector would save the federal government from incurring such overtime costs. The legislation in no way impacts management s prerogative to set a schedule. Because agreements to trade time would be subject to a supervisor s approval, such agreements would only occur in situations which would incur no negative impact on the department. Allowing federal fire fighters to swap shifts instead of taking annual leave helps staff-strapped federal agencies overcome personnel shortages. Unfilled federal fire fighter positions can remain vacant for up to half a year. Trade time may aid in the ability of federal agencies to recruit and retain trained fire fighters, as well as boost fire fighter morale. The legislation is bipartisan. H.R is cosponsored by members on both sides of the aisle. In the 111 th Congress, the legislation was approved unanimously by the Committee on Oversight and Government Reform and passed the full House by voice vote. 13

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15 INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, AFL-CIO, CLC 1750 New York Avenue, N.W. Washington D.C Phone Fax Harold A. Schaitberger General President Thomas H. Miller General Secretary-Treasurer Peter L. Gorman Chief of Staff Kevin B. O Connor Assistant to the General President Barry Kasinitz Governmental Affairs Director Shannon A. Meissner Deputy Director, Governmental Affairs Ben Timmins Governmental Affairs Representative David B. Billy Political Director Andrew R. LaVigne Deputy Political Director Thomas K. McEachin Grassroots Coordinator Ian Stublarec FIREPAC Representative