LIHU‘E — An audit of the Kaua‘i Fire Department’s overtime practices has revealed that, rank-for-rank, training and the Sparky Trailer have contributed most to potential pension-spiking.
The performance audit, conducted by external auditor Spire Hawai‘i, LLP, covered from July 1, 2014 through June 30, 2018. The Kaua‘i County Council requested the audit in May 2019, and got the report back on Wednesday.
In 2018, the county assessed about $2.4 million for excess pension payments to the Hawai‘i Employees’ Retirement System, which makes up over 10% of the county’s budget. Of that, the KFD was responsible for $2.2 million of excess pension costs in FY2018 for 13 personnel who retired in 2017.
The increase, the report said, was due in part to county employees whose retirement pay was increased by significant additions to pay, such as overtime, other forms of premium pay or salary increases.
A major issue is pension-spiking, when employees maximize overtime as they near retirement, usually in the last few years of employment, to raise their average annual income. Many pensions are based on employees’ total earnings for the last three years before they retire, meaning extra overtime can increase the base of pension payments.
The report found that KFD personnel “heavily” utilized overtime opportunities due to collective bargaining and “lax administrative practices and oversight.” The “major sources” of overtime included rank-to-rank recall, the Sparky Trailer and training.
Rank-to-rank, the practice of calling in personnel of the same level or position when one is out, accounted for 67% of overtime costs for the retirees of 2017. This type of recall is used primarily when somebody takes a vacation, sick leave or has to attend training.
In July 2014, firefighters were allowed to work up to 12 shifts at 288 hours of rank-for-rank per year. In the assessed 2014-2018 period, firefighters used about 89% of these hours. In 2015, this accounted for $835,642 and, in 2018, just over $1 million.
The audit notes one instance of an employee earning more than 288 hours, and 10 instances of firefighters earning more than 144 hours in a half-year period. Both of these practices are not allowed under KFD policies.
“While sick leave is a normal cost incurred by employers for the benefit of employees, the cost resulting from the abuse of sick leave is heightened for KFD when firefighters use a RFR (rank-for-rank) shift to fill in for a sick-leave shift,” the report notes.
Additionally, the report mentions that KFD may not be compliant with the collective-bargaining agreement, “as it has not actively monitored, evaluated or reported on the cost of RFR to the Hawai‘i Firefighters’ Association (“HFFA”) as required by the CBA.” In the time since the audit, KFD has begun tracking and reporting rank-for-rank overtime.
Training accounted for 7% of overtime. About 45% of training firefighters attended was paid at the overtime rate. About 52% of off-island training was paid at the overtime rate for those 2017 retirees.
On average, firefighters trained for about 130 hours on-island between 2016 and 2017.
Four of the personnel who retired in 2017 exceeded this figure, and one incurred 372 hours. Among the four, they averaged about 76% in overtime during training, whereas others were at 45%.
About 6% of overtime costs were derived from working in the Sparky Trailer.
Seven of the 2017 retirees participated in the program from 2014 to 2016. Three of these participants earned 221 total hours in a fiscal year, according to the report.
One fire captain earned $164,259 in total pay, of which overtime was $146,307.
Audit recommendations and response
Many of the recommendations by Spire boiled down to regularly accessing and evaluating practices, like staffing levels, training and evaluations.
Even prior to the audit, some practices have been corrected, like transitioning to on-duty training, placing limits on extra-duty assignments and excluding higher-ranking personnel from community-risk-reduction events. KFD has also instituted procedures for leave requests that monitor sick leave and vacation.
But some of the findings suggested that some of the reasons for the excess pension costs are “out of KFD’s hands,” the report says. And this is in part for rank-for-rank recall, collective-bargaining agreements, and KFD’s culture where seniority is rewarded.
KFD Chief Steve Goble, who started his tenure in July of this year, said this was a “cleansing process internally” for staff members who were able to participate.
“This needed to be looked at, (Spire) did a good job at looking behind the curtains and really learning about the facts at hand that were driving the issues of concerns,” Goble said.
“I think the culture is something that we as managers have to be very intentional about, right? Driving the behavior and practices, and the character of our organization going forward. So this was very serious, and part of our charge and part of my charge coming into the organization.”
Goble was critical of past practices, and said it’s important to be mindful going forward of what works well within the KFD system and where to make changes.
“Rank-for-rank is not a bad thing. It does provide a continuity, and provides key leadership in roles in the department,” Goble said. “It is something that we need control over, and the ability to manage resources better.”
Earlier this year, Goble briefed the council on this topic, and councilmembers began to feel like responsibility was being taken and movements toward correcting these past actions were being made.
Councilmember Mason Chock on Wednesday noted this, saying he believes Goble has responded correctly to the audit and accepting of the Spire recommendations. But, Chock, said, it still comes down to the culture.
“What we have seen is an abuse of the public trust as far as I’m concerned, and mismanagement…and oversight,” said Chock, a former firefighter. “So I think when we look forward to how we’re going to address this from the management level.”
As the council, Chock and other members said they need to make a firm stance on collective-bargaining-agreement language on rank-for-rank and work with other counties to address these issues.
“I was asking how we stop this abuse and control spending because I’m worried about the future,” council Vice Chair Ross Kagawa said Wednesday.
“I’m worried about the keiki and I’m worried about people that are not firemen or married to firemen, but everybody. And it (pension spiking) was not right. I hope with Chief Goble we start getting it right.”
Sabrina Bodon, public safety and government reporter, can be reached at 245-0441 or firstname.lastname@example.org.