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Florida lawmakers propose new rules for local pension funds

TALLAHASSEE — In a year when lawmakers are slashing state oversight and regulations, there is one area where they are moving to add a layer of more rules — local government pensions.

Under a plan that won swift approval by the Senate Budget Committee on Thursday, local government pensions would face tough new reporting requirements — and the short-term use of insurance premium taxes — to become stable again.

A report by the LeRoy Collins Institute found that dozens of Florida cities and counties do not have enough money to pay future pensions and health care benefits promised to current employees. Cities such as Bradenton, Hollywood, Hialeah, Miami, Cape Coral and Titusville, for example, owe retirees between one and four times more in health care benefits than the money they now spend on their total budgets. Miami was short about $26 million in 2009, while St. Petersburg had a gap of $11 million that same year.

The weakness of the local pension funds has prompted Gov. Rick Scott to demand that all governments abandon traditional defined benefit plans, raise employee contributions, use taxpayer funds to pay off the fund deficits and put all employees into 401(k)-style defined contribution plans.

The Senate plan rejects the governor's call to force all workers into defined contribution plans. Instead, it requires local governments to offer defined contribution plans but lets them determine their own mix of pension offerings, under stricter oversight.

At a time when proposals in the Legislature have drawn the ire of teachers, police and firefighters unions, the Senate bill by Sen. Jeremy Ring, D-Margate, was greeted with a rare show of support.

"It's a careful balance between the financial needs of some of our cities that are struggling now and the job that police and firefighters do,'' David Murrell of the Police Benevolent Association told the committee.

Also supporting the compromise: the Fraternal Order of Police and the League of Cities.

The bill also requires the following:

• Unused sick leave may not be included in calculations of retirement benefits; overtime may be included but is capped at 300 hours.

• Money from insurance premium tax dollars may be used to fill the deficit in pension accounts.

• Cities must offer defined contribution "supplemental plans" by Oct. 1, but the measure does not prevent them from offering traditional defined benefit plans.

• The Department of Financial Services must rate the financial strength of each city's plan, and cities must provide a fact sheet summarizing their retirement plans' actuarial status.

Opposing the bill were Sens. Eleanor Sobel, D-Hollywood, and Gary Siplin, D-Orlando.

Florida lawmakers propose new rules for local pension funds 04/14/11 [Last modified: Thursday, April 14, 2011 10:06pm]
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