Moves To Reform Government Pensions Applauded
BY BUDDY NEVINS
State and municipal pension reform is on the front burner in Tallahassee.
The new House Speaker Steve Crisafulli, R-Merritt Beach, said earlier this month he will make a stepped up effort to change the state pension system.
There are roughly 621,000 public employees in Florida in the state retirement system. Of those, 514,000 are in the traditional defined pension plan, with the other 107,000 in a 407(k) type investment plan.
Florida’s state pension is in much better shape than other states. Still, it has an unfunded mandate of more than $20 billion.
The overriding goal of the super 81-member Republican House majority is to limit the future scope of the defined pension. One idea: Encourage more incoming employees to join an investment plan.
Although reform has the support of the House, it faces a tougher time in the Senate. There Democrats and a handful of Republicans have killed efforts to change the system.
As a way to move the reform forward, Crisafulli is splitting the reform of municipal pensions for police and firefighters from changes in the state system, which covers a majority of county government and school employees.
The League of Cities, which is most concerned with the police and firefighter pensions, applauded Crisafulli’s approach today.
Here is there news release. If I was a cop or firefighter, I would be watching this one….very closely:
Statement from the Florida League of Cities Regarding
Pension Reform During the 2015 Legislative Session
CONTACT: Erika Branchcomb / (850) 701-3653
FOR IMMEDIATE RELEASE: November 21, 2014
“Florida city taxpayers have faced high pension payments for too long and need relief. The Florida League of Cities has been a tireless advocate for responsible pension reform for years. We applaud House Speaker Steve Crisafulli’s decision to separate meaningful pension reform legislation from any reforms to the Florida Retirement System. We agree this is a better path.
“While we greatly respect the work of Florida’s firefighters and police officers, state mandated pension benefits for local police and firefighters are hurting the ability for Florida cities to provide necessary services to their local citizens. It is imperative that we stand together to bring sensible reforms to this unsustainable system. This is essential to ensure that our communities continue to thrive and to secure our ability to provide fair compensation and benefits to future police officers and firefighters.
“We are encouraged by the Speaker’s vision and look forward to working with legislative leaders in the upcoming year to pass meaningful pension reform for city taxpayers.”
XXXXX
November 24th, 2014 at 2:30 pm
You can’t print enough money to take care of Police Officers and fire fighters that want to retire in their 40s and 50s and pay them at 80%. One city requires only 20 years to retire at 80%.
Reform is needed to have a system where a police officer can get a small percentage 40% until they reach the age of 66 and then give them the 80% at that time. They are just too young for the rest of us to support them.
November 24th, 2014 at 4:58 pm
Police officers make up a very small amount that pull state pensions. In Miami Dade they are roughly 6,000 active police
officers. In Broward it is 4000 these are the
Largest counties in Florida. Oh yeah the
State troopers are about 10,000 statewide.
November 25th, 2014 at 10:06 am
All employees of State and local governments should be treated as equal as it relates to pensions.
The idea that Police and Fire are “more equal” than General Fund employees is simply wrong.
The politics behind this very unequal approach is simple:screw general fund employees as they are less important as political tools than Police / Fire employees.
November 25th, 2014 at 4:56 pm
In the City of Sunrise, the police can retire after 10 years of service at the age of 47.
And then, there are the wannabe DEA agents. Per Sun-Sentinel, Lieutenant $59K, Sergeant $64K, ten Undercover agents $6k to $41K in overtime in 2012 to clean up the streets of Canada, Peru, New York and so on. They can have 300 hours of overtime included for pension calculations.
Instead of bringing crime to the city, I would appreciate the police start curbing the illegal parking around Westpine Middle School. Parents park on the sidewalks and swales clearly marked with No Stopping/Parking/Standing signs. The city has had a sign up promising a Passive Park for about five years. This must be one of the services the city couldn’t complete due to police overtime.
The following statement is in the 2013 audit.
“During the last ten years, the City’s expenses related to public safety have increased not only in amount, but also as a percentage of total expenses excluding debt service (a ten-year increase of 17.6 percent). Much of the increase reflects a trend that has seen the salaries and benefits of police and firefighters growing at a faster rate than those of other categories of public-sector employees.”
November 25th, 2014 at 6:43 pm
The unfunded liability argument is a scare tactic. There are plans that have been out of control. But saying the unfunded liability is the problem is like saying your mortgage is underfunded by hundreds of thousands. What needs to be looked at is the funded percentage. If it’s less than 70-80 percent funded it needs help. But they are designed to run with some unfunded portion. There could be rules based on the funded percentage. Maybe benefits are reduced until the funded percentage reached a certain point.
November 26th, 2014 at 9:23 am
I agree with Mike’s comments with one exception;his last sentence.
Any pension fund shortfall should be made whole NOT by screwing the employees who played by the pension rules but by other funding mechanisms approved by the City Commission who neglected to make the required contributions to those pension plans in the first place.
November 26th, 2014 at 9:27 am
That’s an apples to oranges comparison, they aren’t even both debt. The other issue you neglect to mention is that the constitution requires general appropriations to make up the shortfall. That’s money coming directly from senior services, education, and the environment to go into someone’s pocket.
November 26th, 2014 at 2:32 pm
Buddy:
The headline says the move to reform pensions is “applauded”. By who? I understand that your article refers to the League of Cities applauding this, but I believe that many others will and should disapprove.
First, let me clarify that I am limiting my remarks to the State Pension system. Local Governments can set up their own pensions, and they should be able to make changes to their own pensions.
Based on what I have read from the comments, many people don’t understand what the current rules are. Pensions are calculated based on a formula set up by the state. The formula is your accruing percentage times the number of years that you were employed in the Pension system, times the average of your five highest years of salary. For example, if your accruing percentage is 2%, you are employed for 20 years, and the average of your last 5 years of salary is $50,000, your pension would be 2% times 20 (40%) times $50,000, or a total pension of $20,000/year. Most employees (Regular Class) accrue their percentage at 1.6%. Police, firefighters, and a few similar positions which are considered dangerous and require physical ability are members of the Special Risk Class, which has an accruing percentage of 3% per year. There is a summary of the Florida Retirement Plan at the following website: https://www.rol.frs.state.fl.us/forms/spd-pp.pdf .
Although “well said” says that all employees should be treated the same, I think and the Legislature has always thought, that certain jobs are inherently too strenuous and too important to Public Safety to want an elderly workforce there. I think that we can agree that we don’t want police in their 60’s chasing teenagers, or firefighter/paramedics trying to rescue people while the firefighters are in their 60’s. Also, remember that in the Special Risk Class, you must serve at least 6 years to “vest” in the retirement program (if you retire or leave in less than 6 years, you receive no pension benefit whatsoever), AND you must be at least 55 or have 25 years of service in the Special Risk Class. If you retire before that, there is a penalty of 5% per year. For example, If you are in the Special Risk Class, you worked for 15 years, your annual salary averaged $50,000 over your last 5 years, and you want to retire and start receiving your pension at the age of 50, your salary would be calculated as follows: 15 years times 3% =45%; 45% of $50,000 =$22,500. HOWEVER, if you retire at 50 instead of 55, and want to start receiving your pension then, that $22,500 would be reduced by 25% (5% times 5 years), and your new pension would be only $16,875. As we can see, many of the stories about pensions are simply not true.
I would also argue that the decrease in “defined benefit” pension plans, and the accompanying increase in “defined contribution” plans (IRA’s, 401k”s, etc.) are contributing to the rise of income inequality, and will lead to a rise in poverty among seniors. I believe that America as a nation would be better off with more defined benefit plans, and the solution is to increase the number of defined benefit plans in the private sector, and not cut them in the public sector. The fact that defined benefit plans are more common in the public sector merely emphasizes the importance of Unions to all working people.
This does not mean that there are not abuses in the pension system. There are. Government should carefully examine what should be included in the average of the last 5 years of salary. Should it only be base pay? Sick, overtime, accumulated leave? There are small changes that could be made that over time will have a very large impact on the health of the pension system, without eliminating the concept of a defined benefit plan.
November 27th, 2014 at 4:50 am
@Mike,
I am simply putting forth that politicians who neglect to properly fund pension plans for short term political gain need to understand that their irresponsible actions come with consequences….in the case you mention, $ must come from other programs the government administers.
It is simply wrong to reduce earned pension benefits to retirees to make up for shameful governmental action that resulted in pension fund shortfalls.
Pension shortfalls are not the fault of hard working governmental employees….the responsibility to properly fund pension plans lies squarely with elected officials
November 27th, 2014 at 4:58 am
@Mr. Geller;
You miss-understood the meaning of my post…..@Mike had stated that pension short falls could be made whole by reducing pensions for retirees until the shortfall is made up.
This is simply unfair to those retirees.
It makes no diff if those employees are cops, firemen, or general fund.
Any reduction in the pension benefits for all three of these classes of employees should be treated equally….period.
November 27th, 2014 at 11:46 am
The Geller brothers are the worst examples of public officials I have ever seen, their physical appearance, obese, dirty, disorderly so demonstrates their political positions, bloated expenses in the public sector with no monitoring or responsible management! To see either Geller brother is to scream for the KOCH BROTHERS to fund a Retire the Geller Brothers PAC! It has always amazed me that my fellow Jewish Democrats can vote for these two time and time again! It really shows the “tribal” nature of South Florida politics, a Black Plantation looser going illegally on the Fort Lauderdale City Commission to please useless State Senator Chris Smith, and the Geller brothers continuing in public office!
November 28th, 2014 at 4:20 pm
3% per paycheck is taken by the state already to fund pensions from everyone who will draw from it. This was cover the so called shortfall. The was enacted by the legislature and Rick Scott under his first term in office as a cap on new employees amount drawn for it.
November 29th, 2014 at 9:40 am
This help is in stark contrast to Kennie Hobbs at the City of Lauderhill. Hobbs is the Assistant City Manager/Finance Director for the City and Executive Director of the Lauderhill Housing Authority. It recently came to light that Hobbs has two housing loans from the Housing Authority — one for $400,000 in 2007 and a second one of $375,000 this summer. And the Deputy Director of the Housing Authority has a $318,000 housing loan from the Housing Authority. According to a released article these loans come from pension plans of the city employees. If anywhere needed pension reform, we would say it is Lauderhill. And the first part of that reform would be elimination of pension loans for Hobbs and elimination of Hobbs himself. No where in the State is this done.
November 29th, 2014 at 2:50 pm
“Well said”
I apologize for misunderstanding you.
I agree with what you said.
November 29th, 2014 at 6:03 pm
Chaz, I thought Lauderhill had its own Pension System, not part of the State so they can do things differently?
Chaz, do you have a problem with employees deciding what they should invest their own pension funds in? And that employees can’t take advantage of their granted benefits.
I guess Chaz you do. Not everyone would agree with you.
November 30th, 2014 at 9:06 am
Well Said and Geller exemplify the problem with pensions. Placing politics and selfishness over common sense on any issue is never a proper way of solving anything.
Government didn’t “fail” to properly fund pensions.
In negotiations with unions where both parties, sometimes only the union, had the right to select actuaries to do studies. The projected costs received from those sources sometimes turned out to be unsustainable compared to actual costs.
Governments and unions agreed to these arrangements in good faith believing them to be workable. When good faith arrangements turn out to be unsustainable, new good faith must replace the former unsustainable arrangement. Either party that refuses to act in further good faith lacks it. Elected leaders need to have some backbone and insist on good faith when solving problems.
Faced with pension plan unsustainability, if retirees are going to pull some kind of entitlement stunt, which amounts to a huge fuck you to the tax payer, then the thing to do is declare the pension funds bankrupt and unable to meet future obligations.
Government simply pays everyone out lump sum, everyone gets the share they earned from the pot of money that remains, and that’s the end of pension fund. It will be the end of pensions also. It will end the bleeding. Smarter approach is to figure out how to keep the thing alive on fair and workable terms.
As in all things financial, the wise adage of Wall Street applies eternally true. Bears get fed, bulls get fed, pigs go hungry.
November 30th, 2014 at 1:30 pm
You said it best! Take advantage… I rest my case.
November 30th, 2014 at 3:38 pm
Chaz is wrong? I don’t think so.
Obviously this person did not even read the article before commenting. They are giving up trying to reform the Florida Retirement system and now just looking at reforming municipal pension plans only. Yes municipal pension plans like Lauderhill and Kennie Hobbs. That is why the Florida League of Cities issued a statement. And municipal pension plans are supposed to under an appointed pension board approving investments (as required by Florida Statutes) not a lone wolf like Hobbs operating at will giving himself home loans.
So next time read.
December 1st, 2014 at 8:44 am
Again, Chaz’s wrong again.
Lauderhill’s, like other cities, have pension boards elected by the employees and then appointed/approved by the Commissions. Just like the law requires. The pension board does the investing, and as far as I can see, the pension board approved investing it with the Housing Authority to give employee loans at above market interest rates.
I see nothing that shows it doesn’t follow Florida Statutes on investments approved by those boards, and not by Kennie Hobbs.
Chaz, you don’t know, or more likely don’t care to know the truth.
Is it possible you could be wrong (again)?
December 1st, 2014 at 11:28 am
@Also Attended……
The bottom line is that government must fund pensions as per legal contract and/or application of current laws,Charters and Constitutions.
Pension reforms are certainly needed, however, those currently participating in a pension plan must not loose earned pension benefits and those already retired and receiving a pension should not have their pension amended to offset the inadequate funding of those pension plans by elected government officials.
December 1st, 2014 at 4:26 pm
While the Pension Board(s) may have authorized some investment in Real Estate funds, in general one finds it very hard to believe that the Pension Board is aware of or has endorsed housing loans to employees from those invested pension funds.
That would above the authority and powers of the Pension Board authorized by Florida Statute.
See a lawsuit coming here against the Pension Board if they have acted so.
***
I also wonder your persistent interest … wonder how much you pinched from this fund.
December 1st, 2014 at 9:57 pm
Nada, Nothing, Zero. Chaz Wrong Again.
I just don’t like bad reporting, guilt by association, guilt by innuendo, and generally making it up as you go as the truth (which it isn’t). It must be a real rush for you too, and demeans real reporters working hard doing their job.
Not that you don’t on occasion get something right. After all a broken clock is right twice each day. But I think it is time for people to call you out when you are wrong, and I intend to do so in the future in a variety of cities or wherever you write about that is wrong.
December 2nd, 2014 at 11:36 am
No more comments from Chaz Stevens or his opponents. It is getting very boring.