florida’s municipal pensions (and opebs): research from the leroy collins institute

Florida’s Municipal Pensions (and OPEBs): Research from the

LeRoy Collins Institute

Carol S. WeissertDirector of Institute

Professor of Political ScienceFlorida State University

October 9, 2013

LeRoy Collins Institute

The mission of the LeRoy Collins Institute is to perpetuate the leadership of Governor LeRoy Collins by developing and promoting bold, visionary public policy that will empower and uplift Floridians for generations to come.

Pension Reports

• Trouble Ahead: Florida Local Governments and Retirement Benefits 2/11

• Report Card: Florida Municipal pension Plans 11/11

• Years in the Making: Florida’s Underfunded Municipal Pensions 9/12

• Looking at Florida’s Municipal Pensions 2/13• Doing It Right: Recognizing Best Practices in

Florida’s Municipal Pensions 8/13

OPEB(s)

• Beyond Pensions: Florida Local Governments and Retiree Health Benefits 12/13

Scope of Problem

• Many, but by all means not all, municipal pensions in Florida are underfunded

• Recent trends are toward more underfunding• Health benefits are the below-the-radar issue

Average annual retirement contributions for cities is 5.5 percent of their total expenditures

Typical municipal pension plan in Florida is 70 percent funded

One-third of municipal plans had failing grades

• Looked at funding levels—assets/liabilities• Grades based on % funded; <70 failing

Police and Fire Plans More Likely to be Underfunded

Also looked at costs of plan by grade

median cost per participant• A Plan $5,784• B Plan $12,666• C Plan $12,410• D Plan $18,886• F Plan $26,305

Costs of Plans by Participant

• Police and Fire $21,738• Fire only $17,819• Police only $15,245• General only $9,297

Increasing Pension Problems Cannot Be Blamed on the Economy

Local Governments Picking Up Most of the Costs

Retirees Payroll Growing

In 2010 for the first time, the typical municipality paid out more money to retirement benefits than it

contributed in benefits earned that year.

Doing It Right

• Funding ARCs• Requiring employees to share in costs• Limiting the size of COLAs• Limiting pension spiking• Setting realistic actuarial assumptions

Our Recommendations

• Raise retirement benefit recipient age• Provide minimum contribution rate in good

times to cushion needs in fiscal stress• Exclude overtime and bonuses in pension

benefit calculation• Remove statutory restriction on premium tax

dollars• Encourage transparency

Beyond Pensions

Funded Levels

Percent Contribution Actually Paid

Increase Necessary for Full Contribution

OPEB Recommendations

• Consider repeal of law requiring implicit benefits

• Provide state oversight of local retiree health plans

More Work?

• Elected officials• Disability benefits• Defined contribution health plan?• FRS health subsidy available for local

governments

Contact Us

• http://collinsinstitute.fsu.edu/