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Florida's pension plan healthy

Florida's teachers and government workers have the healthiest state pension plan in the nation, Standard & Poor's Corp. said in a report issued Thursday.

The ratings company analyzes plans' financial health, paying particular attention to whether they have enough assets to cover their projected payments to current and future retirees. The typical plan had a 15 percent shortfall in fiscal 2004. By contrast, Florida's $119-billion plan had a 12.1 percent surplus, an extra $12-billion.

Part of that surplus was spent in fiscal 2005, but the Florida fund ended the year with 8.8 percent more than it needs to meet future costs, a $9-billion surplus.

S&P said the need to increase pension contributions is causing budget stress in many other states where legislators face rising costs for education and health care.

One big looming issue is an accounting change that will force government employers to start setting aside money to pay health benefits promised retirees. Most governments will have to comply in the 2008 fiscal year.

"We've done a great job. We just don't seek publicity and recognition for it," said Coleman Stipanovich, executive director of the State Board of Administration, which manages the pension fund. "We hope members of the Florida Retirement System recognize it."

The Florida system has 845 public-sector employers, including school districts, cities, counties and the state. About 660,000 employees and 240,000 retirees participate.

Pension fund health starts with adequate employer payments and can fluctuate substantially with investment performance.

"The Legislature has been very responsible in terms of good fiscal policy," Stipanovich said. The board's trustees and staff deserve credit for the way the fund's investments have been managed, he said.

"We don't make our decisions on political and social agendas," he said. "We act solely in the interests of the plan."

Public and private pensions have had their health dramatically affected by fluctuations in the stock market. During the strong bull market of the 1990s, pension investments performed so well the average fund had plenty of assets to meet projected liabilities.

The market's reversal in 2000-02 wiped out that cushion in most states, although recent performance has been better.

Underfunding can result from an increase in projected expenses based on retirees living longer or improvements in their benefits.

S&P, which rates the credit worthiness of states and local governments and corporations, gave its top AAA rating to plans in Florida and eight other states: Delaware, Georgia, Maryland, Minnesota, Missouri, North Carolina, Utah and Virginia. Higher credit ratings reduce borrowing costs.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

PENSION PLAN ON TOP

Florida's public employees' pension plan is the nation's bestfunded state plan, according to a new report from Standard & Poor's Corp. This chart shows the bestand worstfunded plans in fiscal 2004 based on the ratio of fund assets to liabilities. Plans with numbers below 100 percent don't have enough assets to fund their liabilities.

FIVE BEST

Florida 112.1%

North carolina 108.1%

Georgia 101.0%

New York 99.7%

Wisconsin 99.4%

FIVE WORST

West Virginia 43.9%

Oklahoma 57.0%

Rhode Island 59.9%

Connecticut 59.9%

Illinois 59.9%

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