This month, the last of the town’s three pension plans will freeze. Taxpayers, as a result, will have what Town Manager Dave Bullock sought for future employee benefits since he began pension modification discussions with employees in May 2012: predictability.
But taxpayers are still on the hook for benefits that past and present employees already earned through the three plans. And, later this month, the town will learn from its actuaries the amount of unfunded liability it faces. Past estimates place the amount at approximately $28 million.
The town will then have to determine how it will pay off that debt.
Town staff and the town’s Investment Advisory Committee have recommended budgeting annually for an amount above the town’s required contribution instead of asking taxpayers to approve a bond to pay off the debt.
“No one is saying we have to pay it all now and fund the burden all at once,” said committee member and commission candidate Armando Linde in October. “The bond market is in disarray, and interest rates will continue to rise. I suggest we forget about the bond.”
The committee recommended to the Longboat Key Town Commission that the town continue to budget pension debt and also address the issue annually.
Bullock has said he’s comfortable with a budget policy to pay off pension liabilities, but warned that if state actuaries ever request the town close the plans and pay off the liabilities, “then that’s what we’ll have to do, and a bond would come back into play.”
Bullock first proposed freezing pension plans in May 2012.
The town’s firefighter union ratified a contract in February 2013 that enrolled employees in the Florida Retirement System (FRS).
General employees now receive an automatic town contribution of 10% of their salaries in a new 401(a) and a match of up to an additional 3%. The town’s police union agreed on a contract that includes a 401(a) option similar to what general employees received.
“This is extremely important for our long-term financial viability,” said Bullock.
The town will freeze the last of its three pension plans this month. Now, it will have to determine how to pay down its pension debt estimated at $28 million.
Players: Town Manager Dave Bullock, Longboat Key Town Commission, Investment Advisory Committee, town employees
Contact Robin Hartill at firstname.lastname@example.org