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

1. Florida’s Municipal Pensions (and OPEBs): Research from theLeRoy Collins Institute Carol S. Weissert Director of Institute Professor of Political Science Florida State University October 9, 2013

2. 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.

3. 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

4. OPEB(s) • Beyond Pensions: Florida Local Governments and Retiree Health Benefits 12/13

5. 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

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

7. Typical municipal pension plan in Florida is 70 percent funded

8. One-third of municipal plans had failing grades • Looked at funding levels—assets/liabilities • Grades based on % funded; <70 failing

10. Police and Fire Plans More Likely to be Underfunded

11. 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

12. Costs of Plans by Participant • Police and Fire $21,738 • Fire only $17,819 • Police only $15,245 • General only $9,297

13. Increasing Pension Problems Cannot Be Blamed on the Economy

14. Local Governments Picking Up Most of the Costs

15. Retirees Payroll Growing

16. In 2010 for the first time, the typical municipality paid out more money to retirement benefits than it contributed in benefits earned that year.

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

18. 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

19. Beyond Pensions

21. Funded Levels

23. Percent Contribution Actually Paid

24. Increase Necessary for Full Contribution

25. OPEB Recommendations • Consider repeal of law requiring implicit benefits • Provide state oversight of local retiree health plans

26. More Work? • Elected officials • Disability benefits • Defined contribution health plan? • FRS health subsidy available for local governments

27. Contact Us • http://collinsinstitute.fsu.edu/