Schenectady fire chief’s pension deal on hold

Fire Chief Robert Farstad increased his salary by 40 percent this year through a deal with the mayor that the City Council didn’t know about and never approved.

The deal not only gave Farstad more pay this year, but would substantially increase his pension when he retires next year.

After a reporter informed City Council President Gary McCarthy — who strongly criticized the situation — the mayor put the deal on pause.

Late afternoon Wednesday, Mayor Brian U. Stratton met with Farstad and told him the deal is off. For now, Stratton said, there’s no more overtime.

“We’re going to stop it now until we get something to the council,” Stratton said.

But council members said they have no intention of approving the deal if they’re ever asked.

In essence, the mayor had been allowing Farstad to increase his pension by submitting overtime requests for work that had been part of his regular duties in previous years.

So far this year, Farstad has asked for more than 12 weeks’ worth of overtime for everything from attending minor fires to talking about fire safety with neighborhood groups.

Firefighters said Farstad regularly shows up for fires that are already in hand and being supervised by the deputy fire chief on duty. Farstad declined to comment.

As management, he is not eligible for overtime. Until last year, his job required him to attend major fires and functions during his time off without overtime pay. His salary of $106,080 was considered high enough to cover the extra hours.

Then Stratton changed the rules. In 2009, he began allowing Farstad to collect overtime. The deal was in exchange for $117,000 worth of accumulated sick leave, vacation time and longevity pay.

As Stratton explained it, the idea was that Farstad would put in for overtime equaling $117,000 between 2009 and 2011. In turn, he would give up all of his $117,000 payout when he retires in 2011.

“It’s really giving us the opportunity to pay him what we owed him over a three-year period,” Stratton said.

pension impact

But he never ran the idea past the City Council, and he apparently didn’t realize that the change would increase Farstad’s pension tremendously.

Sick leave and vacation payouts don’t count when the state Comptroller’s Office calculates pensions. But overtime pay does — and the way that Farstad was allowed to collect it gives him the maximum increase possible in his pension.

At first, Stratton insisted the change would not affect Farstad’s pension. But when a reporter went through the list of retirement system rules and how they related to Farstad’s overtime, Stratton’s director of administration agreed that Farstad would benefit greatly.

Stratton seemed stunned.

“Wait, wait, that’s not what we said,” he told Director of Administration John Paolino.

“Yes it is,” Paolino said, to Stratton’s apparent surprise.

Stratton quickly changed direction. “We are looking at all of this,” he said a moment later, vowing to review it to see what impact it would have on Farstad’s pension. “What’s the bottom line here? How much are we talking?”

If Farstad were to continue as the deal had projected, he would be able to base his pension on a salary of $175,800, rather than his normal salary of $106,080. That would give him a pension nearly equal to his full salary, according to the state retirement system rules.

If he were to instead take his $117,000 in payouts, almost none of it would count toward his pension, because sick leave and vacation time are deducted before calculating the pension, according to the state Comptroller’s Office.

In essence, he stands to gain tens of thousands of dollars a year because of the deal.

Stopping it now may have little effect. Farstad’s pension will be based on the year in which he made the most money — which would be this year, if he is not allowed to collect overtime next year. In that case, after various retirement rules reducing his salary are taken into account, his pension would be based on a salary of $128,017 — still well above his $106,080 salary but not as high as the $175,800 would have been next year.

Rumors of Farstad’s overtime began to circulate during the development of the 2011 city budget and was subsequently confirmed by a freedom of information request by The Daily Gazette.

The practice of collecting overtime in the last few years before retirement so as to greatly increase a state pension is quite common.

But Governor-elect Andrew Cuomo has strongly criticized what he calls “pension padding,” saying workers are wrongly increasing their pensions to the detriment of the state retirement system, which doesn’t have the money to pay everyone and is no longer earning enough on the stock market to make up the difference. In the last decade, Schenectady has gone from paying nothing to paying $6.5 million a year to the retirement system.

McCarthy said Farstad’s overtime payments are a form of pension padding.

“I believe that is exactly what it is,” he said, adding that he didn’t even know that Farstad was getting overtime until he was contacted by a reporter.

“It’s improper for that to be paid, if in fact that happened,” he said. “The council has sole authority over changes in the terms and conditions of employment. I don’t think any of our management should receive overtime. The base salary should compensate them.”

Farstad and Assistant Fire Chief Michael Della Rocco are the only city managers who are allowed to get overtime. Della Rocco put in for just $750 in overtime last year, the first year in which he and Farstad could get overtime. Della Rocco didn’t ask for any overtime pay this year. But Farstad asked for $43,164. The deal called for him to ask for up to another $69,751 next year.

Stratton tried to defend the deal by saying that the City Council had approved it. When McCarthy categorically denied that, Stratton said former Councilman Mark Blanchfield had secretly approved it.

He said Blanchfield verbally approved it in 2008, during the development of the 2009 budget.

“My understanding was Blanchfield was acting with the authority of the council president,” Stratton said, adding that despite his years as a City Council member, he didn’t realize that the council had to vote on the overtime deal.

But Blanchfield wasn’t council president in 2008 — he stepped down at the end of 2007.

In 2008, he was chairman of the finance committee, but he and the mayor were at odds over the budget, with the mayor accusing Blanchfield of making cuts for political purposes. The mayor said then that Blanchfield was not speaking to him.

Blanchfield, who is now a city judge, said he doesn’t remember making any deal with Stratton about Farstad’s overtime.

Stratton insisted Blanchfield had signed off on the deal.

“I’m not making things up,” he said. “Together with Council President Blanchfield, we put this into place to save the city the cost of one lump sum.”

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