Report Says Local Pensions Are Underfunded
Florida’s city pension plans are overburdened and underfunded. That’s according to the latest report from the non-partisan LeRoy Collins Institute. The report is once again raising the issue of pension reform and how best to deal with a large number of mainly local police and firefighters who are in the local pension systems.
When it comes to city pension plans, experts say the numbers just don’t add up. According to researchers at the LeRoy Collins Institute, more employees are retiring and claiming benefits, fewer contributions are coming in and the rate of return on investments is lower than expected. But Carol Weissert, who heads the research group says local cities are beginning to make changes to the pension plans.
“They’re actually freezing the cost of living or reducing cost of living increases in a number of municipalities. They’re reducing the ability to get a lot of overtime before you retire, so you’re seeing those kinds of things, many of which we’ve recommended.”
The Collins Institute report says the decline in pension funding began around 2000, and that by 2004, a majority of the state’s 492 pension plans were underfunded and continue to be in that position.
“Every time we get money from the state, we have to add more benefits," said the League’s legislative director Scott Dudley says in 1999 the state changed the rules around the kind of benefits and incentives employees can receive when they retire.
"There’s a whole long list of ways to make the pensions better and the legislature put handcuffs on us and said, if you’re going to use this money then you’re going to have to provide these benefits,” Dudley said.
Cities are able to get a percentage of the premiums paid through homeowners and auto insurance plans. But some of that money, by law, has to go to funding more benefits. The Florida League of Cities has been pushing state lawmakers for greater leeway in making pension decisions, and says it will continue those efforts during the 2013 legislative session. Police and Firefighter unions have opposed efforts to change the system.
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