Retirement Benefits in
Florida Governments
David S. T. Matkin, PhD
Research Fellow, LeRoy Collins Institute
Assistant Professor of Public Administration
Florida State University
Florida Clerks and Comptrollers Meeting
June 11th, 2012
Agenda
• Municipal Pension Plans
– Cities and Special Districts
– Size and source of the problem
– Possible solutions
• Other Post-Employment Benefits
–
–
–
–
City and County
What are they?
Potential problem?
Governmental responses?
Municipal Pension Plans
•
•
•
•
•
Defined Benefit Plans
Trends in Assets & Liabilities
Actuarial Assumptions
Annual Costs
Retirement Payments
Pension Plan Grades
TABLE 1: GRADING SUMMARY
GRADE
PERCENT FUNDED
NUMBER OF
CITIES
RECEIVING
PERCENTAGE OF
CITIES RECEIVING
A
B
C
D
F
More than 90% funded
80 to 90% funded
70 to 80% funded
60 to 70% funded
Less than 60% funded
30
48
63
36
31
14%
23%
30%
17%
15%
LEROY COLLINS INSTITUTE
RECOMMENDATIONS
Recommendations
Recommendations for state government on health
benefits:
1. Among other options, Florida lawmakers should give much consideration to
repealing current Florida law requiring the implicit subsidization of healthcare
benefits for Florida local governmental retirees.
2. State oversight by a relevant state agency should be provided in statute to
manage local retiree health benefit obligations. This agency should establish
standards and provide technical assistance, if desired, to local government
staff and local officials.
Recommendations
Recommendations for state and local governments on
administration and transparency:
1. Municipalities should set a minimum contribution rate to ensure minimal
contribution levels during good years and reduce the need to significantly
increase contributions during periods of fiscal stress.
2. The statutory restrictions on the use of premium tax dollars that link increases
in tax premium funds to the provision of additional benefits should be
reduced or removed. Municipalities and counties should be able to use
premium tax dollars to cover their current pension obligations.
3.
Localities should improve the accessibility of funding, actuarial reporting and
liabilities information to its taxpayers.
COUNTY AND CITY OPEB PLANS
The OPEB Concept
• Other Post-Employment Benefits
– Retirement insurance subsidies (primarily healthcare)
• Explicit and Implicit Benefits
What did governments do?
Increase Benefits?
What did governments do?
Decrease Benefits
YEAR
2003
2004
Qualifications Made More
Restrictive
Reduce Size of DefinedBenefit
Switch from Percent-Benefit
to Defined-Benefit Value
Plan Reduction Totals
2006
2007
2008
2009
2010
Total
1
1
2
1
1
Reduce Size of PercentBenefit
Capped Benefit at the
Current Level
Explicit Benefit to Defined
Contribution
Closed Explicit Benefit
2005
1
1
1
1
1
1
1
1
1
2
1
5
2
1
6
1
2
4
1
2
2
4
1
1
1
4
2
13
6
4
1
3
9
6
33
What did governments do?
• Fund the Liability
– Explicit Benefits (n=67)
• Pay-as-you-go = 45
• Prefund (Non-GAAP qualified) = 4
• Prefund (GAAP qualified) = 18
– Implicit Benefits (n=83)
• Pay-as-you-go = 76
• Prefund (Non-GAAP qualified) = 2
• Prefund (GAAP qualified) = 5
What did governments do?
• Explicit Benefits, FY2010
What did governments do?
• Implicit Benefits, FY2010
Recommendations
Recommendations for local governments on
retiree benefits:
1. The minimum age before a retiree qualifies for benefits should be
gradually raised. A reasonable age to begin receiving benefits could be
approximately 60.
2. Localities should not include overtime or additional earnings/bonus pay
in the base salary used to calculate pension benefits.
Questions and Discussion