OCEAN CITY – An amendment allowing the purchase of pension years will advance to a second reading with the support of town officials.
On Monday, the Ocean City Council voted unanimously to amend the town’s pension plans for public safety and general employees on first reading. City Manager Terry McGean said the changes would allow public safety and general employees to purchase up to five years of service credit at full actuarial cost.
“Under the current pension ordinance, the ability to do that is not allowed,” he said.
McGean told councilmembers this week the fire department had hired an employee who has sought to transfer years of service from their previous employer in Baltimore City to the Town of Ocean City. To that end, he presented two ordinances that would allow public safety and general employees to buy pension years.
“By leaving Baltimore City and coming to Ocean City, he was losing time in his pension from Baltimore City,” he explained. “We were approached as to whether he could purchase that additional time, make up that difference, essentially by contributing additional money into the Ocean City pension.”
McGean expressed that the town wanted to maintain this employee and had looked at a pension plan amendment that would allow him to make up those pension years.
“That is one instance where this code change would now allow that, up to five years, at the full actuarial cost,” he said.
Human Resources Director Katie Callan said the individual in question – a training chief – was looking to purchase four years of service. She said spreading out payments would cost him roughly $124,000, while paying a lump sum would cost him $109,000.
“If they funded that over 26 pays, over four years, there was a higher amount,” she explained. “If it was one lump sum contribution, it would be a lower amount.”
McGean noted the pension plan amendment would also allow employees who would like to retire early and receive a full pension amount to purchase up to five years of service credit at full actuarial cost.
“This would also allow that to happen, whereas right now there is no mechanism which would allow that,” he said. “The cost is significant, as you can see, and typically it is going to be in the six figures. So it’s not something anyone is going to do lightly, but this would allow that opportunity.”
However, IAFF Local 4269 President Ryan Whittington told the council this week the proposed pension plan amendment would not solve the fire department’s problem. In an email sent to the Mayor and Council ahead of Monday’s meeting, he noted it was not feasible for an employee to purchase service credit at the amount proposed.
“While the idea of allowing for the purchase of pension years may seem favorable on the surface, the reality is far less promising,” he wrote. “When we delve into the actual figures, it becomes apparent that this option is simply not feasible for the average person coming from another municipality with a pension system.”
To that end, Whittington asked the council to consider part-time service credit. He pointed out that while the council has emphasized the importance of hiring additional part-time staff, more was needed to attract applicants.
“I urge you, esteemed Mayor and respected Council Members, as you explore this ordinance to also explore alternative approaches that will allow for a more reasonable and equitable transfer of pension years, such as part-time service credit,” he wrote. “It is crucial that we recognize the true value of the dedicated individuals who contribute to the growth and success of our fire department. By addressing the part-time service credit and exploring new ways to support our employees, we can ensure a brighter future for the Ocean City Fire Department and its vital role in protecting our community.”
During Monday’s meeting, Council Secretary Tony DeLuca made a motion to approve the pension plan amendments on first reading, but to have McGean explore part-time service credit ahead of the second reading.
“For the second reading, I’d like to have Terry put together the cost of part-time service credit …,” he said. “I’d like to know what that number is for part-time service credit.”
McGean, however, noted that would be difficult to achieve, as he wouldn’t know how many employees would take advantage of it.
He also argued that Whittington’s request should be part of the collective bargaining process.
“What is being proposed now is cost neutral,” he said. “What would be proposed by President Whittington would not be cost neutral. Honestly, I think the correct time to do that would be as part of the bargaining agreement.”
DeLuca, however, noted that the IAFF contract would not be reviewed for another three years, as it had just been extended. He argued every effort should be made to consider options that would improve safety, reduce overtime and bolster part-time staff.
“I just have to be frank, you all are opening up a huge Pandora’s box if you want to start talking about this,” McGean replied. “This isn’t something that’s going to get settled in 30 days. And to be honest, we have a gentleman here who is under a time crunch as to whether he’s going to continue with the town or not.”
Councilman Peter Buas said he agreed with allowing employees to purchase service credit on the front end but questioned the reasoning for allowing an employee to purchase service credit on the back end, or at the end of their service. McGean said it was also a concept he struggled with.
“I think if a person wanted to leave their employment with the city early to the extent they were willing to invest six figures to do so, maybe that’s a request we would consider accommodating,” he said.
The council ultimately agreed to strike that option from the pension plan amendment. After a lengthy discussion, a motion to approve the first reading of both ordinances – one for public safety employees and one for general employees – passed unanimously.
“We’ve created an avenue, and hopefully we’ll have more discussions,” said Council President Matt James.
During public comments, Whittington urged the council to consider part-time service credit and continue conversations with the IAFF. He argued the proposed amendment was not effective in attracting employees to the fire department.
“This not going to fix the immediate problem …,” he said. “Just because we’re not in bargaining, does not mean we cannot have these conversations.”
