Privatizing to solve pension mess
North Riverside firefighters can show the way
Published in Chicago Tribune, July 8, 2014
In 1979, the original Sony Walkman was the newest way to listen to music. Switchboard operators still connected telephone calls. That's also when the Illinois village of North Riverside signed its first contract with the firefighters' union.
A lot has changed in 35 years. But the union has clung to its decades-old business model and now faces a dilemma: adapt, or risk losing its only customer. The union's most recent contract expired April 30. The village of 6,700 faces a $1.9 million budget shortfall. Officials say $1.8 million is due to rising police and fire pension costs. It's a common scenario in Illinois. Most public officials think they have no choice but to raise taxes or cut government services — which often means putting firefighters and police out of a job.
North Riverside has proposed a third option: Privatize the fire department.
No firefighters would lose their jobs. Instead, the public safety company already providing North Riverside's paramedic services would become their employer. Firefighters would be paid the same salary and receive comparable health insurance benefits. They would wear the same uniform and report to the same fire chief.
"Everything at the station would remain the same, except who signs the paycheck," said Village President Hubert Hermanek Jr.
Beyond preserving all the firefighters' jobs and keeping intact the level of fire protection, the move also would save the village more than $3.5 million over the next five years. Most savings would come from firefighters banking what they've put into their pensions and earning new retirement benefits through a 401(k).
It's hard to put a price tag on the bravery and service provided by any fire department. But on all accounts, this plan seems like a win-win for the community and rank-and-file firefighters.
However, for the head of the firefighters union, the plan is a no-go.
"We feel that our contract is binding and they cannot just replace it," said Rick Urbinati, president of North Riverside Firefighters Union Local 2714.
Not ever? Not even after it has expired?
"No. The contract stays in place," Urbinati said in an interivew.
If the choice is between firefighters losing their jobs or everyone's job being protected at the private company, why not choose the latter?
"In a century and a half, we do not work for private companies," Urbinati said.
"That's the stance we have," Urbinati said.
But would the union consider a 401(k) instead of a pension?
"No," Urbinati said.
The objections boil down to: Employing firefighters through a private company would protect rank-and-file jobs, but displace the union. Even if the union reorganized with the private company, the union would face competition for providing services.
"They're not going to have the same clout with this company as they have with the city council," said Adrian Moore, a privatization expert at the Reason Foundation. "All their political power won't matter. It will be, 'How much is this company willing to pay and is the company willing to hire other people?'"
Years ago, public unions were different. Pensions were commonplace and one could expect to keep the same job for a lifetime.
But because new ideas and competition constantly are introduced, society changes. At some point, we upgrade the Walkman for the Discman for the iPod. We learn to be flexible and embrace innovation, because the way things were done 30 and 40 years ago might not be the best way to do them today.
The question now for Local 2714 is whether it is willing to put the jobs of the rank-and-file firefighters ahead of its own self-preservation and yearning for "the way things were." Failing to do so will cost firefighters their jobs.