Town Manager Bruce St. Denis says that the town’s three pension plans help attract employees.
And getting rid of the plans, or modifying them, St. Denis said, may not be cost effective.
At a Kiwanis Club of Longboat Key meeting Thursday, March 25, the town manager told approximately 50 people in attendance that the more than $25 million in unfunded liabilities the plans have are a result of declining property values, declining portfolio investments and raises that were given to attract better employees.
In the year 2000, St. Denis said, investment losses began taking a hit and the town agreed with an actuary recommendation to smooth out losses over a 30-year period instead of a 15-year period.
“It saved us $450,000 per year in pension costs, but it came back to haunt us when the state objected to it,” St. Denis said.
St. Denis said that, at the same time investments began to flounder, the town agreed to raise salaries to attract firefighter/paramedics to the area. The town also attracts firefighter/paramedics, St. Denis said, by allowing them to contribute up to 10% of their salaries to their pensions.
“Resolving our unfunded liabilities is not as simple as saying, ‘Let’s go to a defined benefit contribution plan’ or moving our plans into the state retirement system,” St. Denis said. “We still have to be competitive with other municipalities, and I know of no other communities that have done away with their pensions.”
St. Denis also explained that regardless of whether the town changes its plans or moves them into the state system, it still owes the obligations to its employees in the current pension plans.
“We still have to pay for the losses we accrued,” said St. Denis, who explained that when property values begin to rise again, the town will receive some reimbursement in state monies for making additional benefits to its firefighter pension plan.
When a member of the audience asked the town manager why the town couldn’t make changes to the plans and lower employee pay now while the economy is suffering, St. Denis said the town can’t be the frontrunner of change.
“We (the town of Longboat Key) are just a flea on the end of a dog’s tail,” St. Denis said. “If we did that before other larger municipalities did, we would lose our employees and be unable to attract new ones.”
At the Town Commission’s Thursday, March 25 regular workshop, St. Denis also received permission to fund a pension study of the town’s three pension plans that’s expected to cost approximately $100,000.
“We have had a lot of discussion about the options we can take, but we don’t really know the costs involved,” St. Denis said. “This is a financial problem we have and we need to find out the costs involved for each option.”
Contact Kurt Schulteis at firstname.lastname@example.org.
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