South Farmingdale Fire District officials have switched to a new retirement plan they say will contain costs and retain volunteers -- and set an example for other departments to follow.
Earlier this month, voters approved a referendum 52-0 changing South Farmingdale's defined benefits program to a cheaper defined contribution program, both taxpayer funded.
Under the new plan, the district will put $700 annually into an account for each eligible firefighter and EMS worker. The district has 71 eligible volunteers.
The district spent $291,374 in 2012 on its Length of Service Award Program -- LOSAP, a retirement benefits plan for volunteers. Under the new plan they project costs will drop to an estimated $50,000 in 2015, including a roughly $4,000 annual administrative fee.
Firefighters with credit under the old program will still get those payments, which can be as high as $600 a month after they turn 62. Active firefighters will start receiving credit under the new program in 2015.
South Farmingdale Fire District board chairman Thomas Mastakouris predicted Long Island's other fire districts -- the state comptroller's office listed more than 100 in 2012 -- will follow suit, as the districts grapple with costs for LOSAPs that more than doubled on average from 2003 to 2012 in Long Island.
"It's going to be the way of the future with the fire districts," Mastakouris said. "We're concerned about costs, we're concerned about taxpayers, we still want to keep experience in the firehouse, we still want the member for retention and recruitment."
In March, Moody's Investors Service said South Farmingdale's change to a defined contribution plan could positively impact its credit rating, noting it was estimated to save more than $200,000 annually.
Mastakouris said he believes his is the first district on Long Island to make the conversion and that since February, he's had "at least a dozen" phone calls from other districts on the Island interested in the program.
William Young, general counsel to Association of Fire Districts of the State of New York, which advocates for fire districts, said conversion to defined benefit programs is on people's minds, but it hasn't risen to "a groundswell."
A review of comptroller's office data found that LOSAP costs rose by 117.5 percent in Nassau and 103 percent in Suffolk from 2003 to 2012, in districts with expenses in both years.
In South Farmingdale, LOSAP costs rose from $35,069 in 2003 to $291,374 in 2012, a 730.9 percent increase, according to the state comptroller's office data.
Mastakouris said the district received bad investment advice for years, leading to underpayments and an underfunded program, in addition to Wall Street losses. They spent extra money in recent years to catch up, he said.
As a result, the district's defined benefit program will be fully funded with roughly $2 million in investments at the end of this year, he said.
One benefit of the defined contribution plan is the required calculations are more predictable. "It's easy to budget," Mastakouris said.