Florida’s Municipal Pensions (and
OPEBs): Research from the
LeRoy Collins Institute
Carol S. Weissert
Director of Institute
Professor of Political Science
Florida State University
October 9, 2013
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.
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
OPEB(s)
• Beyond Pensions: Florida Local Governments
and Retiree Health Benefits 12/13
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
Average annual retirement contributions for
cities is 5.5 percent of their total expenditures
Typical municipal pension plan in
Florida is 70 percent funded
One-third of municipal plans had
failing grades
• Looked at funding levels—assets/liabilities
• Grades based on % funded; <70 failing
Police and Fire Plans More Likely to be
Underfunded
Also looked at costs of plan by grade
•
•
•
•
•
A Plan
B Plan
C Plan
D Plan
F Plan
median cost per participant
$5,784
$12,666
$12,410
$18,886
$26,305
Costs of Plans by Participant
•
•
•
•
Police and Fire
Fire only
Police only
General only
$21,738
$17,819
$15,245
$9,297
Increasing Pension Problems Cannot
Be Blamed on the Economy
Local Governments Picking Up Most of
the Costs
Retirees Payroll Growing
In 2010 for the first time, the typical municipality paid
out more money to retirement benefits than it
contributed in benefits earned that year.
Doing It Right
•
•
•
•
•
Funding ARCs
Requiring employees to share in costs
Limiting the size of COLAs
Limiting pension spiking
Setting realistic actuarial assumptions
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
Beyond Pensions
Funded Levels
Percent Contribution Actually Paid
Increase Necessary for Full
Contribution
OPEB Recommendations
• Consider repeal of law requiring implicit
benefits
• Provide state oversight of local retiree health
plans
More Work?
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•
•
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Elected officials
Disability benefits
Defined contribution health plan?
FRS health subsidy available for local
governments
Contact Us
• http://collinsinstitute.fsu.edu/