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Sarasota Thu Feb 24, 2011 4 years ago

Pensions to outweigh revenue

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by: Robin Roy City Editor

For the first time in Sarasota’s history, City Hall’s pension obligations will cost more than tax revenue will generate, according to city projections.

“This is the biggest issue the commission will face this decade, ” said City Manager Bob Bartolotta.
Next fiscal year, the city expects to pay $16.8 million in retirement benefits to general employees and police officers, as well as contributing to the county’s fire department pensions.

At the same time, it is expecting to take in $14.9 million of ad valorem tax revenue in the general fund.
Those projections are based on the assumption that property values will decrease by 8% next year and the millage remains steady at 2.7771.

Mayor Kelly Kirschner believes drastic measures will be needed if nothing changes.

“You either start eliminating great numbers of staff or raise taxes,” he said.

The city is currently negotiating with the teamsters union, which covers nearly all non-management city employees.

Its negotiations with the police union are currently at an impasse and are going to a special magistrate.

If either side rejects the ruling, city commissioners will impose a one-year contract, and the commission has already advocated changing to a 401(k)-style plan.

Much of the consternation at City Hall centers on police pensions.

But police union President Sgt. Mick McHale said there’s a good reason Sarasota police officers receive the pension benefits they do.

“I don’t think the public is aware that police officers don’t pay into Social Security,” he said.

If they don’t take another job that does pay into Social Security, they will not receive Social Security benefits upon retirement.

McHale said pensions are the only safety blanket officers have.

“When you’re asking men and women to risk their lives, it’s only fair the city gives some assurances to guarantee the officer can sustain his standard of living upon retirement,” he said.

How pensions are calculated 
Police

An average salary is calculated from the highest three years in the officer’s last 10 years of employment.
His number of years of service is then multiplied by 3%. The resulting percentage is the officer’s base retirement salary, which increases 3.2% each year.

For example: The three-year average salary of an officer retiring with 25 years of service is $100,000.
25 x 3% = 75%

$100,000 x 75% = $75,000 base salary

General employees
The calculation is much the same, except years of service are multiplied by 2.5%, and annual retirement salary increases are 3%. A general employee has to work for 30 years to receive the full 2.5%.
For example: Three-year average salary of retiring employee with 30 is $100,000.

30 x 2.5% = 75%

$100,000 x 75% = $75,000 base salary

To view a table displaying retirement costs, click here.

Contact Robin Roy at rroy@yourobserver.com

 

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