The Florida League of Cities says its disappointed Governor Rick Scott has approved a new law changing how local pension reports are interpreted. The group says the new measure makes local pension funds look worse than they already are.
About 60 percent of Florida’s local pensions are 80 percent funded. That figure is used to determine whether a pension program is healthy. Florida League of Cities Kraig Conn says cities are well aware of the figures, and he says a new law requiring the use of a lower rate of return for financial outlooks makes the funds look even worse.
“Investors and bond agencies will view these reports and they will shed a light on the financial status of our state that may not be accurate," he said.
Historically, pension fund earnings are determined using a seven-percent rate of return over a decade. But lately pensions have been getting about four-percent. The difference looks like a shortfall on paper, even if it doesn’t exist. Those figures could hurt a city’s ability to issue bonds for things like major infrastructure projects.
Meanwhile, a self-assessment by the Florida League of Cities says there’s been slight improvement in economic conditions over the past year. The group points to fewer local government layoffs and more hiring, along with a more streamlined permitting processes for building and construction.
“I think that the slight improvement shows cities are headed in an upward trend and are definitely improving, but still have while to go in the recovery," said League Spokeswoman Monica Beyrouti.
It’s the first year the League has done such a report and Beyrouti says as more data becomes available the study will become more detailed. For example, while the report shows local government revenues are up, it doesn’t account for continued troubles in many local pension funds—which could lead to a drain on available funds for services.
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