Study shows city pension woes here to stayby John Kennedy | September 26th, 2012
Municipal pension plans are stretching thinner in Florida as a smaller workforce supports a growing number of retirees — with prospects bleak that funds will recover, a report released Wednesday concludes.
The Leroy Collins Institute’s latest review of the plans found that while the sluggish economy has contributed to the funds’ problems, deeper woes plague them.
“These municipal pension issues were not created overnight and can’t be changed overnight,” said David Matkin, a public administration professor at Florida State University, who studied Florida’s 492 municipal pension plans for the Tallahassee-based institute.
The problems track those facing the Social Security system or Medicare: Too few workers supporting a growing number of retirees. If anything, municipal budget cuts and layoffs in recent years have contributed to the imbalance, analysts said.
The result: city commissioners must earmark a larger share of municipal budgets for pension benefits. That means citizen services decline, Matkin said.
“They take up a space that is demanded by other services,” Matkin said. “You have to have some budgeting tradeoffs.”
A report released last November by the Leroy Collins Institute gave mixed reviews on the health of pension plans in 100 Florida cities, with one-third drawing ‘D’ or “F” grades for being underfunded. In Palm Beach County, plans in six cities earned failing, or near-failing grades.
Boynton Beach’s police plan and Palm Beach Gardens’ police and fire pensions were among the 15 percent of municipal plans drawing F’s. Various Plans in Riviera Beach, Boca Raton, Jupiter, Boynton Beach and Lake Worth earned D’s in the Collins Institute analysis of financial strength.
But general employee pensions in Boca Raton, Delray Beach and the West Palm Beach police pension also were named as some of the best-funded plans in the state.
Matkin found Florida’s pension slide began in the early 2000s, well before the recession. The timing is close to when Gov. Jeb Bush and the Republican-led Legislature approved changes that improved city police and fire pensions.
The provision requires that growth in dollars flowing to cities from state taxes on property insurance premiums go to additional benefits for police officers and firefighters.
Cities next responded with such pension sweeteners as cost-of-living adjustments, lower retirement age, or an increased “multiplier” used in determining pensions based on years-of-service, all of which municipal officials say have forced cities to spend hundreds of millions of dollars more on pension costs since 1999.
The pro-union law was the first measure enacted by Bush and Republican legislators in Florida that year, then the first GOP-controlled government of any state that had been part of the Confederacy. Bush had been endorsed in the 1998 governor’s race by police and fire unions over Democrat Buddy MacKay, largely on the strength of the promised payback.
Bush eagerly signed the measure - relishing the symbolism of making good in a hurry on a campaign promise.
Bush and Republican leaders, however, are rarely thought of as being allied with unions. Indeed, Bush last year co-authored an Op-Ed in the Los Angeles Times, decrying the financial woes of states, putting much of the blame on union contracts.
Bush’s co-writer was Newt Gingrich, then a candidate for the Republican presidential nomination.