An Excellent Overview of “…Funding of State and Local Pensions: 2009-2013”: Challenges for Coral Gables and Other Local Governments

September 8, 2010 Leave a comment

This conclusions are highly relevant to Coral Gables budget policies, namely, we are facing a good three or four years of adjustment.  I would say that taxpayers cannot make up the difference.

The…key findings are:

State and local [pension] plans, which were headed toward full funding, were knocked off track by the financial crisis.

Their funding ratio dropped to an estimated 78 percent in 2009 from 84 percent in 2008.

Funding will likely continue to decline to 72 percent by 2013.

Reversing this decline will be difficult, as plans face constraints in increasing revenues from either employee contributions or taxes.

via Center for State and Local Government Excellence — Issue Brief: The Funding of State and Local Pensions: 2009-2013.

See this and other interesting reports on local and state funding issues at the Center for State and Local Government Excellence.

Filed under Budget, Finance, Pensions

Connecticut Unfunded Liability Reduction Plan: Ideas for Coral Gables

September 8, 2010 Leave a comment

Other governments are facing the same issue of unfunded liabilities for pension and health benefits.  The following is a proposal from the Governor of Connecticut to face a large unfunded liability of $34 billion.

Very important to note that not only does the pension fund have unfunded liabilities, but the unfunded health benefits are also larger in Connecticut.

In some regard these changes seem tougher than the changes that are being explored with the unions by the City of Coral Gables.

The proposals include establishing a defined contribution plan for new employees, capping pension salaries at $100,000, increasing the normal retirement age to 65 and the early retirement to 60, and hiking the early retirement penalty.

The plan includes

Under a recent state union agreement, current employees with less than five years of service and all new employees must contribute 3% of their earnings to help pay for retiree health benefits. Previously, there was no contribution from active employees to fund retirees’ health plans. [Does this remind you of Coral Gables.]

Establishing a rule that there would be no cost of living adjustment (COLA) in years where there are negative investment earnings.

Moving final average salary computation from three years to five years for pension purposes.

Reducing the timeframe for buying back military and other service.

Reducing the anti-spiking provision from 30%  to 18% over the previous two years’ earnings.

The governor called for changes in the “Rule of 75” to a “Rule of 80” for retiree health insurance and increasing the premium share for every five years of service below 25…

[The Governor] also wants to increase the premium share for retiree health insurance to active rates for the former employee and a higher amount for dependents and wants to reduce long-term health cost trends through service delivery changes such as higher co-pays for emergency room and specialist visits…

“…The problem in Connecticut has accumulated over decades, to the point where we have about $25 billion in unfunded liabilities for retiree health benefits and about $9 billion for retiree pensions.”

via PLANSPONSOR.com – Rell Puts Forward Benefit Unfunded Liability Reduction Plan.

Filed under Budget, Employees and Unions, Pensions

Coral Gables’ Police Salaries and Benefits: Did You Pick the Wrong Profession?

September 3, 2010 Leave a comment

One can calculate average salaries and benefits in the 2010-2011 Estimated Budget for Coral Gables for the police department and you get the following amazing salaries and benefits.  This clearly evidences that it is time to cut salaries and benefits substantially.

  • (1) police chief $152,917 plus about $99,396 = $252,313 (note:  I have estimated benefit costs as 65% of salaries, but they could be a little more or less for any given position.)
  • (1) assistant police chief $84,220 plus $54,743 benefits = $138,963
  • (3) police sergeants $90,772 average plus $59,002 benefits =$149,774
  • (2) police lieutenants  $110,473 average plus $71,808 benefits = $182,280
  • (97) police patrol $78,449 average plus $51,858 benefits =$130,307

These are just averages.  They do not show very high salaries and benefits for certain individuals.  We trust that Mr. Salerno has set the negotiating conditions for lower salaries and benefits.

Filed under Budget, Employees and Unions, Finance, Government, Pensions

Why Can’t Coral Gables Cut Pensions: FL Cities are Cutting Pensions Now

August 22, 2010 Leave a comment

Please read what other cities are doing.  Coral Gables employees, including police and firefighters should accept big cuts now.

Once they were considered a sacred perk for public sector employees.

But pensions have morphed into an albatross for many municipalities, compounded by shrinking tax revenues, investment losses and longer life spans.

…

Recent money-saving measures range from Sunrise raising the retirement age from 58 to 62 for new general employees to Hollywood requiring greater pension contributions (9 percent, up from 7) from their general employees. Other cities, including Pembroke Pines, Fort Lauderdale and possibly Hallandale Beach, are shifting new hires to 401(k)-type plans, which are subject to fluctuations in the market.

…

Municipalities with the largest payrolls are beset with heavy pension shortfalls. They include Fort Lauderdale ($306.8 million shortfall), Hollywood ($353.3 million) and Pembroke Pines ($201.4 million) in Broward County and Delray Beach ($51 million) and West Palm Beach ($90 million) in Palm Beach County.

Retirement contributions for Fort Lauderdale firefighters and police, for example, will rise from 8 to 8.25 percent of their base pay in October 2011. New hires already contribute 8.5 percent.

In Pembroke Pines, general employees hired after July 1 will shift to a 401(k)-type plan… New officers and firefighters hired after May 1 won’t receive longevity pay, while current employees will have their longevity pay frozen at the current rate.

via South Florida cities begin slashing pension costs – Sun Sentinel.

Filed under Coral Gables, Employees and Unions, Pensions

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