TAB Study Referenced in Palm Beach Post Editorial
Our study of county pay and benefits ( Palm Beach County Pay and Benefits – How Much is Enough? ) was recently referenced in a Post editorial ( Rein in fire-rescue costs: Pay that was reasonable in better times no longer is ) regarding Fire/Rescue compensation.
We came to the conclusion that the county should consider these elevated levels of compensation when they begin contract negotiations with the IAFF shortly. The Post agrees.
It should be noted that since the time of our study, the Governor has proposed FRS changes that would require participants to contribute 5% of their salary to their pension. County Budget Director John Wilson indicates that each 1% pension contribution is worth $1.4M in Fire/Rescue. Additionally, the FRS accrual rate for special risk class (about 87% of Fire/Rescue employees) would drop from 3% to 2% – potentialy worth another 7% in expense. All other things being equal, these changes, if enacted, would reduce the average Fire/Rescue compensation by about $10,000.
Florida Cities, Counties Can’t Afford Promised Pensions
In a recently released study, the nonpartisan LeRoy Collins Institute at Florida State has concluded that many local governments throughout the state cannot afford the pension obligations they have promised to their employees.
According to the Sally Kestin, in a Sun-Sentinel article today, municipal pensions account for more than half the payrolls in Miami, Pembroke Pines and Hollywood.
Called a “time bomb” by the report, and a “catastrophe” by state Senator Jeremy RIng (D-Parkland), the report makes several recommendations to ease the burden – none of which will be good news to those who have had promises made to them.
Read the story HERE.
It should be noted that Palm Beach County government, including PBSO and Fire/Rescue, participate in the state run Florida Retirement System (FRS). Although not fully funded this year, it is in better shape than some states, and Governor Scott has proposed major changes to FRS that will make it much more affordable for participating governments. By our measure, the Scott proposal could save up to $60M per year for PBC, although it will depend on some details that haven’t yet been analysed – particularly the contribution rate for special risk employees if the accrual drops to 2%. TAB will be publishing our estimates in this area in a coming article.
Chris Christie on Public Sector Salaries
This man tells it like it is.
FRS Pension Reform Options and their Possible Savings
The Office of Program Policy Analysis and Government Accountability (oppaga) published a report a year ago, laying out options and their savings for reforming FRS. In light of possible legislative action in this area, it is a good primer on the system, its history, and how it could be changed.
CLICK HERE for the report.
Abstract
The Florida Retirement System has evolved since its creation, which has increased state and local government costs. The Legislature could consider several options for modifying the system’s retirement class structure to reduce system costs, including consolidating employee retirement classes, restricting class membership, modifying benefits for some classes, and requiring employees to contribute to the retirement system. These options would generally shift FRS back to the model that existed when the system was established in 1970, move the system closer to the model used by most other states, and recognize the longer life expectancy of current employees. By doing so, the options would reduce benefits for affected employees. Therefore, when considering these options, the Legislature should consider the overall system of employee compensation and how changing the Pension Plan and the Investment Plan would affect that system.
A related report on a Defined Contribution Plan option and the enhanced predictability of such a plan is HERE