Edward A. Kelly
54th Convention, International Association of Fire Fighters
As we gather at the 54th International Association of Fire Fighters Convention in Seattle, Washington, I thank you for allowing me to serve as your General Secretary-Treasurer. It is an honor to serve in this capacity during the centennial of our great international union. As we reflect on the amazing journey the IAFF has made during the past 100 years for the advancement of our mission and the welfare of those entrusted to our care, let us also forge our path to the future.
Since taking office on September 17, 2016, my staff and I have hit the ground running and I credit the hardworking, professional environment provided at the IAFF headquarters. In addition, I appreciate the warm and sincere guidance provided by General President Harold Schaitberger and the entire Executive Board.
While other unions and organized labor as a whole report declining membership, our IAFF has continued to grow to more than 313,000 members. We continue to look for new innovations while addressing the challenges our affiliates are facing across the United States and Canada.
The 2016 IAFF elections culminated in the largest change of leadership among our Executive Board members in 50 years, which is why, as we chart the course for our future, we rely on the proven leadership, experience and direction of General President Schaitberger and the wide experience and talents of our 16 district vice presidents.
The district vice presidents are responsible for ensuring our members in local, state and provincial associations have access to the services and tools that enable them to be successful as we move into our next 100 years as a strong and powerful union. I appreciate their willingness to serve their respective districts with dignity and respect while offering the opportunity to learn from their knowledge and experience.
My goal is to continue to provide the membership the oversight, transparency and diligence that is expected and required by my office. Please read a brief overview of the continued progress of each department supervised by the Office of the General Secretary-Treasurer.
The General Secretary-Treasurer’s Office is responsible for managing the IAFF annual budget of $67 million. This has been accomplished by securing additional grant funds and other non-per capita sources and increasing membership through organizing initiatives. We have continued to develop and implement policies to ensure the highest level of fiscal integrity and transparency.
Each year, the three elected IAFF trustees hire an independent auditing firm to conduct an examination of our accounting records and systems. The audit is comprised of reviewing evidence, supporting the amounts and disclosures in our financial records, evaluating our internal controls and overall financial statement presentation, and reviewing all federal government grants. The entire audit is supervised by the board of trustees.
When the audit is complete, a report is presented to the IAFF Executive Board by the trustees and representatives of the auditing firm. We are extremely pleased to report that we continue to receive a clean bill of health with no adverse findings. Both the 2016 and 2017 audit reports are available on this convention website. I would like to thank our trustees: Alex Forrest, Region 1 Trustee, representing Canada; Mark Ouellette, Region 2 Trustee, representing the eastern United States; and Tony Mejia, Region 3 Trustee, representing the Western United States. These leaders work tirelessly to ensure that financial security and transparency are maintained for our future.
Part of annual budget preparation entails identifying areas in the budget where we can save money for our membership. Future operations budgets will have narrower margins for error with rising operating costs and inflation pressures.
On July 1, 2017, we transitioned the IAFF into a self-funded healthcare plan with United Healthcare, saving $800,000 in comparison to what we would have paid the AFL-CIO Health Insurance Trust this year. This amount includes the additional administrative fees we incurred as a self-funded plan. In concert with this effort, the Human Resources Department signed a three-year contract with UNUM for group term life insurance. Again, the coverage offered to our employees and retirees is the same or better at a reduced cost. The savings will be approximately $12,000 per year.
Although our affiliates cannot use credit and debit cards to pay the per capita tax to the IAFF per our constitution and by-laws, we provide an online service that facilitates payment of dues at no cost to the affiliate or the International. I am pleased to announce that since the launch of the Auto Per Capita draft program, more than 1,600 affiliates are currently participating, and nearly 40 percent of the per capita tax revenue is moving through this new, innovative channel.
Additionally, we identified a trend in per capita invoices that poses a challenge to managing our finances and, by extension, delivering programs and benefits to our membership. Over the last six years between 10 and 15 percent of our monthly per capita tax invoices are paid more than 45 days after the date of invoice. A resolution is being introduced at this Convention for your consideration to change our policy for the remittance of per capita revenue in our constitution and by-laws to a 30/60/90-day cycle. Our proposal sets a 30-day period from the invoice date to be considered on-time and allows for an additional 60 days for the payment to be received before the payment is considered delinquent. If the invoice is not paid within 90 days, the affiliate membership would be considered delinquent and would be placed on involuntary suspension.
We are very excited that the new IAFF System Management Active Response Technology (SMART) platform is now live as of April 2018. Over the last year, IAFF SMART has gone from conception to development and now is in full production for our affiliates in the United States and Canada. We hope this platform will provide the next generation of union administration management for every IAFF affiliate. The IAFF SMART platform will provide our locals with cutting-edge technology to connect, collect and communicate with their members.
Maintaining sound financial footing is not solely a function of cutting spending. We must also set funds aside to help us weather challenging times that we may face and allocate resources to make strategic investments in our future. As we dissected our budget and analyzed our financial structure against the backdrop of the economic climate, we feel strongly that our reserves need a boost to ensure that we always have a minimum of four months of operating expenses on-hand and a maximum of six months of expenses, at which time this provision will sunset. There is a resolution for consideration during the Convention to dedicate a revenue stream to fund our reserves. This resolution seeks to retain the funds allocated to the Fallen Fire Fighter Memorial renovation which will sunset in fiscal year 2019 and dedicate the 21 cents per capita tax to fund our reserves. Saving during good financial times with funds that do not directly increase the burden borne by our members allows the Executive Board to be proactive rather than reactive in the face of future challenges. Most importantly, the use of these funds will require executive board action.
As we examined the employee and staff pension funds, the approach was to ensure we protect the defined benefit for our employees while easing the burden on our operating budget. I am pleased with the results of an early decision to retain Jennifer Mink and her team at Investment Performance Services (IPS) as our pension consultants. Our employee pension fund has returned 14.5 percent net of fees over the last year and is valued at $26,990,595. The staff fund has performed nearly as well. It has returned 12.5 percent net of fees and is valued at $64,031,532. The difference between the plan returns is a result of the staff plan now providing $250,000 per quarter in beneficiary payments. By implementing a fiscally sound investment strategy and engaging in routine performance monitoring the operating budget savings was $1 million during fiscal year 2018.
When we made changes to the pension fund management, we also reviewed the relationship with our custodial bank and renegotiated a revised fee structure. With our pension funds approaching a combined value of $100 million, the IAFF would have paid $90,000 in custodial fees under the previous contract. Under the new contract in fiscal year 2018 we expect to pay about $16,000, and we expect this savings of at least $70,000 per year to continue. Taking into account the additions I mentioned here and the initiatives we’ve added to the 2018 budget, we are delivering over $2.5 million of savings to IAFF members.
Like most unions, the IAFF relies on maintaining accurate records on individual members and affiliate bodies to be successful. The IAFF staff works diligently to maintain membership records for hundreds of thousands of individuals, including active and retired members, former members and more than 3,300 affiliates. Employees are always happy to help with any questions or concerns from local, state and provincial officers.
Maintaining security and confidentiality of the membership database is of paramount importance. Our members can rest assured that strict policies are in place to protect their data, and that we do not sell or transfer membership lists to unrelated vendors.
We continually explore every opportunity to enhance the functioning of the finance and membership departments, whether it be through technology or enhanced processes. Our goal is to continue to provide, both to the IAFF and its members, the highest level of support possible.
The General Secretary-Treasurer leads the Human Resources Department at the IAFF and serves the needs of the union by building and sustaining partnerships with all the managers and departments of the IAFF. The Human Resources Department is committed to advancing the needs of the union by serving as an advocate to ensure that policies are relevant and in compliance, incorporate best practices and keep key staff members aware of concerns facing the union and its personnel. The Human Resources Department implements, administers and monitors operating systems that affect all aspects of human capital management, including employee/labor relations, benefits management and administration, recruiting and talent management and HRIS systems.
During 2016 the IAFF made the transition to a new 401(k) fund advisor, RBC Wealth Management. The service provided by RBC is significantly higher than what we received from the previous fund advisor, both to the organization and our employees. RBC holds at least four well-attended employee seminars each year and four extremely thorough meetings with the 401(k) plan trustees. Due to its efforts, the fees paid by the plan participants to Nationwide and for fund advice dropped by about 20 basis points. With RBC we introduced a variety of additional low-cost funds for our plan participants. In addition, we added an option to the 401(k) where plan participants can choose professional active management of their portfolio.
In late 2017, after a thorough search and evaluation process, we replaced our HR/payroll system managed by ADP WorkforceNow with a complete human capital management system called Dayforce by Ceridian. The new suite combines HR, payroll, benefits administration, recruiting and onboarding. Dayforce also allowed us to move our Canadian employees and retirees onto the same platform. We streamlined our internal processes regarding management of HR information and improved reporting and analysis. The employee and manager facing portal in Dayforce, which includes a mobile app, has functionality that represents a significant improvement over ADP. The annual cost for Dayforce is slightly less than ADP.
The IAFF Human Resources Department aims to support the growth of managers and employees. Human capital is an organization’s most important asset and the engine behind its success. Programs are designed to coordinate recruiting efforts, provide orientation to new staff, manage the hiring process by partnering with hiring managers, implement performance and appraisal systems, provide career planning, succession and employee development programs. The Department administers all employee benefits programs including health insurance, life insurance, retirement programs and voluntary benefits. The Department also develops and ensures compliance with policies and procedures, the IAFF/OPEIU Local 2 collective bargaining agreement and federal and District of Columbia laws and regulations.
As we reflect on our 100 years of progress, it is important to acknowledge the goals of the IAFF mission, which is to protect each other with the same tenacity, selfless determination and devotion to duty that every fallen fire fighter has demonstrated, the willingness to give all one can give.
Be you, be strong, be fire fighters!