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Pension Clips Jan 2010


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A group of articles about South Florida PublicPensions.

Published in: Business, Economy & Finance
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Pension Clips Jan 2010

  1. 1. CITY OF FORT LAUDERDALE POLICE AND FIREFIGHTERS’ RETIREMENT SYSTEM WWW.FTLAUDPFPENSION.COM FLORIDA PENSION NEWS STORIES ON POLICE AND FIREFIGHTERS Prepared by Fred Nesbitt, Director of Public Information January 31, 2010 Jacksonville to fire union: Take pension deal or it’ll get worse By Matt Galnor, Jacksonville Democrat, Jan 20, 2010 If Jacksonville’s public safety unions don’t move quickly to accept a pension reform proposal that applies only to new employees, the city will take steps to cut retirement benefits for current workers, too. The sides haven’t discussed pension costs in great deal. Firefighters on Tuesday proposed a 3 percent pay increase — far off the 3 percent cut the city offered during the first bargaining session last fall. The fire and police unions have refused to negotiate pension changes, citing a city settlement the unions say require those changes to be addressed by the Police and Fire Pension Fund. The proposal now on the table would: Increase minimum retirement requirements from 20 years of service at any age to 25 years of service and a minimum age requirement of 52; Eliminate the guaranteed 8.4 percent return on deferred retirement accounts; Increase the employee pension contribution from 7 percent of pay to 8 percent. The proposed pension changes would save the city $1.27 billion over 35 years, according to the city. Manhattan housing project that sank Florida's $250 million pension investment now in flux Tampa (blog), Jan 26, 2010 The fate of the humongous Manhattan housing project that Florida's state pension fund invested in -- and has since written off all $250 million of its stake and $16 million in fees -- is once again in flux. The bottom line? The $250 million investments of pension funds, plus $16 million in fees on the deal, are most likely gone forever. Jury Finds Vivendi Misled Investors By Natasha Gural, Jan 29, 2010 Vivendi SA, the Paris-based owner of the world’s largest music company, misled investors about its financial condition before a $46 billion merger nearly a decade ago, a U.S. jury ruled on Friday. The lead plaintiffs in the case were the Retirement System for the General Employees of the City of Miami Beach and several individuals. Pension funds are usually the lead plaintiffs in such cases as the law requires a large institutional litigant if available. Florida recently moved to discourage lawyers from prodding pension funds into action by capping the fees that they'll pay at $50 million.
  2. 2. Florida investment panel OKs cap on legal fees Business Week, Jan 26, 2010 The Florida panel that invests state money including pension funds has approved a $50 million per case cap on legal fees paid to outside lawyers. The three-member State Board of Administration on Tuesday unanimously adopted the limit proposed by one of its members, Attorney General Bill McCollum. The new rule also combines the cap with a proposal by Chief Financial Officer Alex Sink to make fees a factor in selecting law firms, which will inject competition into that process. Florida's expected budget shortfall grows to $3 billion in 2010-2011 By DARA KAM , Palm Beach Post, Jan 19, 2010 Plummeting property values, rising numbers of poor people needing health care and a decline in the value of the state's pension fund are among the budget woes lawmakers are grappling with as they prepare to craft this year's spending plan. Failed real estate deal costs Florida pension fund $266 million By Brandon Larrabee, The Florida Times-Union, Jacksonville, Jan 28, 2010 A multibillion-dollar Manhattan development formally unwound this week after costing the state's pension system $266 million and fueling a debate over oversight of the $113 billion fund. "This should have no bearing on us one way or the other," said Dennis MacKee, a spokesman for the State Board of Administration, which oversees the retirement fund. "Right now, it looks like what we have on the books is what it's likely to end up as." What the board has on the books is $0, after essentially conceding that the entire investment is gone. Pension process, mayoral veto power discussed By Joe Wilhelm Jr., Jacksonville Daily Record, Jan 31, 2010 The Charter Review Commission discussed amending the Charter relating to retirement and pension benefits. Commission Vice Chair Mary O’Brien proposed an amendment that would require a thorough financial analysis of any addition or subtraction of retirement or pension plan benefits. Jacksonville Police and Fire Pension Fund Executive Director/Administrator John Keane explained that the analysis O’Brien was suggesting was already being done by the State of Florida. O’Brien countered by explaining the State has its own Ethics Code, but the City has its own Ethics Code and that requiring the analysis of the benefits would support the state’s efforts. The Commission voted 12-1 in favor of the motion. Want City Property? Just Wait By Janie Campbell,, Jan 31, 2010 A projected $45 million dollar budget shortfall -- made just months into the new fiscal year -- has City of Miami officials in what commission chairman Marc Sarnoff called "crisis mode." Ballooning pension obligations, plummeting property tax collections, and rising costs may force the city to plunder its already vulnerable reserves and sell off assets to balance its books.
  3. 3. Finance OKs Pension Fund investment changes By Mike Sharkey, Jacksonville Daily Record, Jan 31, 2010 Police and Fire Pension Fund Executive Director/Administrator John Keane is one step closer to being able to invest his contributors’ money in the same manner as the City’s general employees’ pension plans as well as state pension plans. Tuesday, the City Council Finance Committee approved legislation that will allow Keane to use the Fund’s money in a wider range of investments. Currently, Keane is able to invest 35 percent in domestic equities, 20 percent in international equities, 25 percent in fixed income and 20 percent in real estate. He said the new percentage won’t be determined until the legislation passes. “This will put us on the same footing as the State,” said Finance Chair Stephen Joost. Cocoa wrestles with pension funding By Keyonna Summers, Florida Today, Jan 27, 2010 The Cocoa City Council wants hard numbers and discussion with firefighters and police before deciding on a plan to reduce taxpayers' responsibility for $13.5 million owed to the departments in pension costs. Instead of taking a vote on the issue during a special meeting, council members called for negotiations with police and fire union and pension board members. They also requested information on how other cities across the state are balancing escalating pension costs with other expenses. Jacksonville will follow its own charter, brings city workers into pension plan By Matt Galnor, Jacksonville Democrat, Jan 22, 2010 This week, Jacksonville City Hall is starting to follow its own law for employee retirement benefits — and it will cost taxpayers nearly $3 million a year. Beginning this pay cycle, the city will put all civil service employees in the pension plan, rather than filtering some into the less lucrative Social Security system. The moves comes a month after a group of employees – now close to 100 – filed a lawsuit seeking rights to the pension after the city said they weren’t eligible because they didn’t pass a physical examination. Change Of Plans: Consolidated Government Will Pay For City Pensions North, Jan 14, 2010 Language slipped in the consolidated government proposal at the last minute would make every resident of Escambia County responsible for funding the City of Pensacola’s problematic pension plan. Consolidation supports had preached multiple times that county residents would not be saddled with Pensacola’s unfunded pension debt — currently over $75 million. Miami leaders fear a financial meltdown By Charles Rabin and Michael Sallah, Palm Beach Post, Jan 31, 2010 Facing a widening financial crisis, Miami leaders are already projecting a $45 million budget shortfall this year that could force the city to deplete its reserves and sell key assets to stay afloat. Rising costs, slumping property tax collections and ever-growing pension obligations are feeding a meltdown that's now forcing administrators to look for drastic new sources of income not needed since the state took over Miami's books 14 years ago.
  4. 4. Cocoa eyes pension expenses tonight By Keyonna Summers, Florida Today, January 26, 2010 Cocoa City Council members tonight will hold a special meeting to discuss ways to reduce the cost of police and fire pension plans to taxpayers. Any shortfalls in what the pensions promise to pay and the amount of money set aside has to come from a city's general fund. Under current pension benefits for 66 police officers and 35 firefighters, officials said employees contribute 6.5 percent of their pay toward the plans. The city contributes 58.8 percent, or almost 60 cents of every dollar, to the fire pension plan and 22.3 percent to the police pension plan, according to an administrative services report. The rest comes from the state, earnings, interest and premium taxes. As of Oct. 1, taxpayers were estimated responsible for a $13.5 million difference in what the pensions promise to pay and the amount of money set aside. Among the cost-saving measures the council will consider are making employees pay more into the plans, decreasing benefits that aren't required by the state or switching to the Florida Retirement System. According to the Florida League of Cities, pension laws and other measures that have increased benefits for police and firefighters over the past decade have cost taxpayers across the state $345 million – spending that could lead to increased property taxes, crime rates and other "fiscal crises" in some cities. Guest commentary: Taxes and escalating pension costs Carl W. Suarez, Naples Daily News, Jan 17, 2010 You may have read my commentary last fall on how the Collier County property appraiser has been enabling the collection of extra taxes through over-assessments — particularly at the lower end of the market. Well, where exactly is all that extra tax money going? Escalating pension costs are one major culprit. The city many years ago could have chosen to go with the standard Florida state retirement plan (FRS) and did not do so. The current pension costs from published budgets as a percentage of overall city payroll from 2005 to 2009 have escalated 128 percent (yes, that’s right; not a typo) from 8 percent to approximately 18 percent of overall payroll. City firefighters vest 4 percent per year and police 3.67 percent. Just do the simple math: That means an 18-year-old new-hire firefighter can work 25 years, retire at the ripe old age of 43 and receive the average of his top three years’ pay at the top end of the payroll spectrum, inflation-adjusted for possibly 40 to 50 years or more. Firefighters blast city as contract is ratified By Andrew Abramson, Palm Beach Post, Jan 11, 2010 As the city cut around $20 million from its budget this year, the fire department took by far the largest cut with a 14 percent decrease to its budget, or about a $2 million cut. Tom Wesolek, the union treasurer and incoming president, said this in front of the city commission: “The list of proposals (from the city) should make each of you blush with embarrassment - closing the firefighters pension plan, bankrupting the health insurance plan, altering the work schedule to such that combined with the cuts in city wages, some firefighters would have suffered a 40 percent reduction in pay. It was no way to begin negotiations in an environment where more than ever before the union and city needed to work together.
  5. 5. Bill Cotterell: FDLE shows the way to savings By Bill Cotterell, Tallahassee Democrat, Feb 1, 2010 Increase the period for vesting in the Florida Retirement System from six years to 10. Don't let everybody join the Deferred Retirement Option Plan. Letting department heads approve DROP applications would mean they could tell some senior employees to just go ahead and retire, replacing them (or not) with lower-paid workers. Those in critical positions could be approved for DROP, which allows their pensions to be banked for up to five years while they continue working. But you run into favoritism and discrimination with that option. Offer buyouts to employees nearing retirement or running out the DROP clock. This would be a better deal for the state than having to lay off newer employees, many of whom have had some extensive training at the taxpayers' expense.