Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Pension costs create looming crisis in St. Pete Beach

ST. PETE BEACH — Rising pension costs and falling investment returns have put the city's pension funds more than $22 million in the red — a financial crisis the City Commission will begin to address next month.

The shortfall represents the amount of money the city will owe all current and former employees when they reach retirement age, as well as continuing payments to current retirees.

Particularly at issue is whether the city can afford to continue paying its retired firefighters and police officers a lifetime guaranteed monthly pension.

General city employees have a 401(k) style retirement plan where both the city and the employee contribute to a pension fund that is then invested.

Management of these funds is turned over to the employees upon their retirement to be withdrawn all at once or over a period of years.

The plan is subject to the rise and fall of financial markets and there is no lifetime guarantee pension as exists in the fire and police pension plans.

Over the past few months, negotiations between the city and its fire, police and general employee unions have failed to reach an agreement on future pensions.

City Manager Mike Bonfield wants to change guaranteed fire and police pensions to a 401(k) defined contribution plan that would give retirees a lump sum at retirement.

The fire and police unions disagree.

A 27-page special magistrate report on the fire union negotiations failed to bring the sides into alignment.

The commission will meet Aug. 14 to deal with the impasse over the fire union pension plan, and on Aug. 15 to resolve the dispute over the police and general employee plans.

"All of the defined benefit plans are in trouble," said finance director Elaine Edmunds. "We have big unfunded liabilities."

Money is put into the pension plans by the city and employees, supplemented by some state tax revenues, and then invested under the direction of three autonomous pension boards.

Although appointed by the commission, those boards, guided by investment and actuarial consultants, make their own decisions within the parameters of state pension laws.

Over the past few years these boards assumed a far greater return on investment than actually occurred —- mostly during the economic downturn of the past few years.

As a result, too few dollars were put aside by the city and employees to meet present and future retirement needs.

"Every year we don't hit the assumptions means we did not put enough money into the plans," Edmunds said.

The fire pension fund is $9 million short, the police fund is $7 million short and the general employee fund is $6 million short.

According to Edmunds, most cities strive to have 80 percent of their pension liabilities in the bank. Some actually reach 100 percent. St. Pete Beach has only between 48 percent and 62 percent, depending on the plan.

Rising pension obligations have put the city nearly $1 million in the red in its operating budget for the coming year.

The commission is considering eliminating the police department, cutting services, raising taxes and changing the pension system entirely.

Bonfield wants to freeze pension benefits, but during negotiations all three employee unions refused and declared an "impasse."

Bonfield is asking the City Commission to end the current fire and police pension plans and enroll those employees in a 401(k) style plan.

Employees would not lose the money they have already earned in their pensions, but would be able to "cash out" and transfer that money into a 401(k).

The main benefit to the city, Bonfield said, is that the $22 million shortfall would stop growing and the risk of a future market downturn would be borne by the employee, not the taxpayer.

"The driving factor is the cost to taxpayers for this unfunded debt," Bonfield said Tuesday.

Pension costs create looming crisis in St. Pete Beach 07/24/12 [Last modified: Tuesday, July 24, 2012 4:15pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Five reasons why Kentucky can beat Florida for the first time since 1986

    College

    By Matt Baker

    GAINESVILLE — Florida's 30-game winning streak over Kentucky is one of the most impressive feats in the country.

    Florida Gators offensive lineman Martez Ivey (73) celebrates Florida Gators running back Mark Thompson's  (24) touch down in the first quarter, putting Florida on the board 6-0 during the game between the University of Florida and the University of Kentucky in Ben Hill Griffin Stadium on Saturday, Sept. 10, 2016, in Gainesville, Fla. Florida defeated Kentucky 45-7. ANDRES LEIVA   |   Times

  2. Once targeted by the Bucs, Dalvin Cook thrills for the Vikings

    Bucs

    How good would the Bucs be with running back Dalvin Cook?

    Minnesota Vikings running back Dalvin Cook (33) slips a tackle by Steelers strong safety Sean Davis (28) to score a touchdown Sunday in Pittsburgh. [AP photo]
  3. Review: More than 20 years later, 'RENT' still matters

    Stage

    TAMPA — Two decades after Rent shook up Broadway with a starkly joyous musical that demanded to be recognized, a nostalgic tour is taking audiences back.

    The 20th anniversary tour of RENT, shown in 2016, comes to the David A. Straz Jr. Center for the Performing Arts Sept. 19-24, 2017. Photo by Carol Rosegg.
  4. Dennis Miller, headed to Tampa with Bill O'Reilly: 'We don't know each other that well'

    Events

    Dennis Miller often gets cast as the odd comic out these days.

    Dennis Miller will perform with Bill O'Reilly at the Spin Stops Here Tour at Amalie Arena in Tampa. [Spuffy Productions]
  5. Tampa Bay among top 25 metro areas with fastest growing economies

    Economic Development

    Tampa Bay had the 24th fastest growing economy among 382 metro areas in the country for 2016. According to an analysis by the U.S. Bureau of Economic Analysis, Tampa Bay's gross domestic product, or GDP, increased 4.2 percent from 2015 to 2016 to hit $126.2 billion.

    Tampa Bay had the 24th fastest growing economy in the country for 2016. Rentals were one of the areas that contributed to Tampa Bay's GDP growth. Pictured is attorney David Eaton in front of his rental home. 
[SCOTT KEELER | Times]