Delve into 12: Pension plans

The town budgeted a total $2,855,980 for employee pensions in the 2011-12 fiscal year — more than 15% of its total budget. That amount keeps the town on track in making payments, but it doesn’t eat into the unfunded liability for the town’s three pensions that total more than $26 million.

Currently, the firefighter pension fund is 45% funded. The police pension fund is at 50%; the general employees fund at 53%.

In March, a Public Interest Committee (PIC) Pension Committee, comprised of five Key residents who are retired businessmen, held a public information session. At that meeting, Committee Co-Chairman Ed Adams described the plans as “huge, outdated, voracious dinosaurs.”

Co-Chairman Dick Antoine warned that taxpayers could eventually be on the hook for $4 million to $6 million per year as the town pays liabilities.

The town is far from alone in its pension woes. The National Center for Policy Analysis claims the unfunded state and local unfunded pension liability is more than $1 trillion. The July study also notes that all states underestimate the unfunded pension liability by using an unrealistically high assumed rate of return — often 8% or higher — in calculating the value of pension plans.

The Longboat Key Town Commission met throughout the summer in executive sessions, which are closed to the public, to discuss the growing pension problem. The last executive session was held in October, and the commission will likely resume these discussions in early 2012.

Town Manager David Bullock said that addressing the firefighter pension fund is the top priority because of contract negotiations. The town and its firefighters agreed to a tentative contract in May that expired Sept. 30. The firefighters continue to work under that contract, and negotiations will resume in the early part of the new year. Both police and firefighter pension negotiations will be subject to collective bargaining; General employees are considered “at-will” and are not represented by a collective-bargaining unit.

“It’s a large liability for taxpayers, and we’ll be looking at options for getting it funded,” Bullock said. “We’re going to meet the obligations that we have. There’s no other choice. It’s the law.”

Fast fact: A Florida League of Cities report released in August stated that the town of Longboat Key is one of just six cities in the state in which required pension contributions exceed 50% of police payroll costs for the 2010-11 fiscal year. The town is also one of 19 Florida cities in which required firefighter pension costs exceed 35% of payroll costs, according to the report. 

Mounting costs
The following numbers represent the town’s total pension
costs from the past five years.
Actual amount 2007-8: $1,551,155
Actual amount 2008-9: $1,830,475
Actual amount 2009-10: $1,602,938
Adopted budget 2010-11: $2,811,855
Adopted budget 2011-12: $2,855,980

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