Pensions to outweigh revenue

 

Pensions to outweigh revenue

 

Date: February 24, 2011
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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Currently 6 Responses

  • 1.
  • AFTER READING THE EDITORIAL COMMENTS OF FORMER MAYOR KIRSCHNER & AN ARTICLE IN THE “OBSERVER” REGARDING CITY OF SARASOTA PENSIONS, THE TOTAL LACK OF FACTS AND EXAGGERATIONS BY THE THESE PARTIES NEED SOME CLARIFICATION. UNFORTUNATELY, THERE IS NOT SUFFICIENT ROOM IN THE MEDIA TO FULLY EXPLAIN ALL THE DETAILS, BUT LET ME GIVE IT SOME JUSTICE.

    GOVERNMENT PENSIONS & BENEFITS HAVE BECOME THE “FLAVOR OF THE MONTH”…WITH MUCH HYPE & PROPAGANDA BY SARASOTA OFFICIALS…SUCH DATA MISINFORMS THE PUBLIC AND CURRENT & FUTURE COMMISSION CANDIDATES

    REGARDING FORMER MAYOR KIRSCHNERS COMMENTS…VERY FEW OFFICERS HIRE ON THE POLICE DEPARTMENT AT 20 YEARS OF AGE & RETIRE AT 45…MOST OFFICERS ARE MORE LIKE 24-27 YEARS OF AGE, WHEN HIRED…AND OTHER THAN THE CHIEF OF POLICE, AND A FEW OTHER HIGH RANKING STAFF THRU OUT THE CITY, FEW, IF ANY, RANK & FILE OFFICERS & GENERAL EMPLOYEES MAKE SALARIES ANYWHERE NEAR $ 100,000.00 A YEAR AFTER 25 YEARS OF SERVICE.

    AND I CANNOT THINK OF ANY RETIRED OFFICER, AFTER FIVE {5} YEARS INTO THEIR RETIREMENT, THAT ARE MAKING ANYWHERE CLOSE TO THEIR LAST YEARS SALARY, MUCH LESS MAKING TWICE THAT SALARY BY AGE 65.

    THE METHOD OF CALCULATION IS CORRECT, BUT WITH THE WRONG NUMBERS.

    WHY INSERT AN “AVERAGE SALARY OF $ 100,000.00” FOR POLICE OFFICERS & GENERAL EMPLOYEES…I’M SURE THOSE EMPLOYEES WOULD READILY ACCEPT THAT FIGURE, IF ONLY IT WAS TRUE. THE FORMER MAYOR’S EXAGGERATIONS ARE WHAT CAUSES MISTRUST, INSTEAD OF DISCUSSIONS TO ADDRESS THESE ISSUES.

    BUT OTHER ISSUES NEED TO BE CLARIFIED, AS WELL.

    IF THE CITY OF SARASOTA IS OFFERING PENSIONS AND HEALTH CARE, WITHOUT MAKING PROPER PLANS TO FUND THEM, THEY SHOULD HAVE TO EXPLAIN WHY THEY DID NOT FUND SUCH PLANS PROPERLY. HOWEVER, IT IS NOT THE EMPLOYEES OR RETIREE’S FAULT…SOME GOVERNMENTS SIMPLY SPEND THE TAX REVENUES, AND IGNORE THE FUTURE COSTS FOR PENSIONS & HEALTH CARE…BY “KICKING THE ISSUE DOWN THE ROAD”…THOSE ARE THE ENTITIES THAT ARE IN TROUBLE…BUT THE CITY OF SARASOTA IS NOT ONE OF THOSE ENTITIES, FOR SEVERAL REASONS.

    THE CITY OF SARASOTA IS SIMPLY TRYING TO AVOID PAYING THEIR REQUIRED CONTRIBUTIONS TO THE EMPLOYEES & RETIREES.

    THE CITY OF SARASOTA PENSION BOARDS & PENSION FUNDS, ARE STILL IN VERY GOOD CONDITION, EVEN WITH THE DOWN MARKETS OF THE LAST FEW YEARS. THE INVESTMENT MARKETS ARE RECOVERING…THE DOW IS ABOVE 12,200 TODAY.

    THE POLICE PENSION PLAN IS FUNDED AT 83%....IT WAS AT OR NEAR 100% JUST A FEW YEARS AGO…ANYTHING ABOVE 80% IS CONSIDERED AS A HEALTHY PENSION PLAN.

    ADDITIONALLY, THE POLICE PENSION PLAN HAS GONE FROM A HIGH OF 192 ACTIVE MEMBERS IN 1992…AND NOW STANDS AT …144 ACTIVE MEMBERS CONTRIBUTING TO THE POLICE PLAN. {AS OF 09-2010}

    39 OFFICERS WERE ON RETIREMENT IN 1992…AND 175 OFFICERS ARE ON RETIREMENT AS OF 2010.

    THE CITY IS CURRENTLY CONTRIBUTING 35.94 % TOWARD THE POLICE PENSION PLAN AND 15.24 % TOWARD THE GENERAL EMPLOYEES PENSION PLAN. THESE NUMBERS ARE NOT A PERCENTAGE OF THE CITY BUDGET, BUT PERCENTAGES OF PAYROLL…IN ORDER TO CATCH UP FOR PRIOR LOSES IN FUNDING.
    THAT IS A CREDIT TO THE CITY FOR THAT EFFORT.

    THE ISSUES WE FACE ARE A CITY COMMISSION & STAFF THAT WANTS TO SIMPLY AVOID MAKING THEIR PROMISED CONTRIBUTIONS TO THESE PLANS…INSTEAD OF DISCUSSING & NEGOTIATING SOME CHANGES THAT WOULD HELP FINE TUNE THE PENSION PLANS.

    THE POLICE EMPLOYEES CONTRIBUTE TO THESE PENSION FUNDS, CURRENTLY AT 8% OF THEIR SALARY. GENERAL EMPLOYEES CONTRIBUTE 6% TOWARD THEIR PENSIONS.

    THE CITY DOES NOT ACTUALLY PAY THESE FUNDS, THE PENSION CHECKS ARE FROM THE PENSION BOARDS, WHICH MAKE THE PAYMENTS FROM THE FUND THAT ALL EMPLOYEES HAVE CONTRIBUTED TO…THE POLICE PENSION FUND EXCEEDS
    $ 131,000.000 AND IS NOW GROWING…

    THE CITY DOES HAVE A LEGAL OBLIGATION TO KEEP THE PENSION PLANS FINANCIALLY SOUND. THE PLANS ARE FUNDED BY CITY AND EMPLOYEE CONTRIBUTIONS, HOWEVER, THE MAJORITY OF THE PENSION FUNDING IS FROM INVESTMENT EARNINGS.

    THAT’S HOW A PENSION FUND IS SUPPOSED TO WORK.

    THE CITY CONTINUES TO USE SMOKE & MIRRORS TO FRIGHTEN CITIZENS INTO THINKING THE CITY IS IN A FINANCIAL DILEMMA BECAUSE OF PENSIONS, THAT IS NOT THE CASE. THE FINANCIAL CRISIS {RECESSION} CAUSED THIS PROBLEM.

    THE CITY OF SARASOTA HAS PAINTED A GRIM PICTURE, USING STATISTICS THAT ARE SOMEWHAT MISLEADING.

    THE CITY’S FIRST OBLIGATIONS SHOULD BE THE WELFARE OF THE CITIZENS, BUT THAT ALSO INCLUDES HONORING THE COMMITMENTS TO THE EMPLOYEES & RETIREES THAT HAVE MADE SARASOTA THE SUCCESS THAT IT HAS BECOME OVER MANY YEARS.

    THAT IS ALSO A DOUBLE EDGED SWORD…IT REQUIRES THE CITY TO BE RESPONSIBLE IN THEIR SPENDING. SOMEHOW, OVER THE PAST YEARS, WHEN REAL ESTATE VALUES WERE CLIMBING & FUNDS POURING INTO CITY COFFERS…THE CITY BECAME LESS THAN FRUGAL…STARTING MANY PET PROJECTS…ROUNDABOUTS THAT WILL COST MILLIONS, AND MANY OTHER SUCH PET PROJECTS.

    BUT, WHEN TIMES BECAME TIGHT IN 2007, THE CITY DID NOT REDUCE EXPENSES, OH, THEY DID LAY OFF EMPLOYEES…BUT THEY CONTINUED WITH THEIR PET PROJECTS…BUT, UNTIL THE ECONOMY TURNS AROUND, THE CITY SHOULD PROVIDE BASIC SERVICES…NOT ROUNDABOUTS…PARKING GARAGES…PARKING METERS, ETC
    ELIMINATION OR POSTPONEMENT OF SUCH PROJECTS UNTIL THE ECONOMY RECOVERS WOULD HAVE BEEN THE RIGHT RESPONSE.

    I WILL TRY TO SIMPLIFY THE ISSUES WE ARE FACING, BUT TO UNDERSTAND THE PENSION ISSUES, YOU MUST UNDERSTAND THE HISTORY BEHIND THESE ISSUES.


    BEGINNING WITH THE FIRE DEPARTMENT IN 1939…THEN THE POLICE DEPARTMENT IN 1947, AND GENERAL EMPLOYEES IN 1959…THE CITY, NOT THE UNIONS, THE CITY CAME UP WITH THE IDEA OF PROVIDING PRIVATE PENSIONS , THAT THE EMPLOYEES ARE TO CONTRIBUTE TO, AND ALSO “PROMISING” NO COST HEALTH CARE FOR ALL EMPLOYEES, …THAT PLAN DOES NOT INCLUDE THEIR FAMILIES & DEPENDANTS.

    THE CITY CAME UP WITH THE PRIVATE PENSION IN THAT ERA, HOWEVER, THE FEDERAL GOVERNMENT NOTIFIED THE CITY THAT THEIR EMPLOYEES COULD NOT BE IN THE PRIVATE PENSION PLAN AND SOCIAL SECURITY AT THE SAME TIME. THAT WAS CHANGED SOME YEARS LATER, HOWEVER THE CITY DID NOT ADVISE EMPLOYEES THAT THEY COULD PAY INTO BOTH PLANS, THUS SAVING THE CITY 6.2% IN SOCIAL SECURITY CONTRIBUTIONS OVER THE NEXT DECADES. {MILLIONS SAVED}

    REGARDING THAT DATE…LET’S USE 1960…AS THE STARTING POINT.

    THE CITY KNEW THE POOL OF RETIREES DRAWING ON THOSE “1960’S PROMISES” WOULD NOT REALLY START TO SURFACE FOR 25-30 YEARS…RETIREMENT BENEFITS THAT WOULD BE “KICKED DOWN THE ROAD” BY THE CITY FOR 25-30 YEARS.

    BASICALLY, IMAGINE YOU HIRE AN EMPLOYEE AND PROMISE THEM IF THEY WORK FOR YOU, WITH MEAGER RAISES…BUT WITH PROMISES THAT THE EMPLOYEE WILL GET THOSE BENEFITS IN 25-30 YEARS.

    THEN, IN 25-30 YEARS, WHEN THOSE PROMISES COMES DUE…THE CITY GETS AMNESIA.

    THE CITY WAS HOWEVER, ABLE TO RECRUIT NEW EMPLOYEES WITH THOSE “PROMISES”…AND ALSO USING THOSE PROMISES TO JUSTIFY THE LOW WAGES AND VERY MEAGER ANNUAL RAISES…BUT WITH THE CITY ALWAYS REMINDING THE EMPLOYEES OF THE GOOD PENSION & “NO COST CITY HEALTH CARE INSURANCE”

    THE CITY USED THOSE “PROMISES” IN NEGOTIATIONS…AND THOSE PROMISED BENEFITS, WHEN THE EMPLOYEES RETIRE.

    THE CITY WAS ABLE TO KEEP TAXES AT A LOWER RATE…AND SPEND MONEY ON THEIR PROJECTS…AND, OHH!!!!, BY THE WAY…ALSO KEEP SOME REALLY GREAT EMPLOYEES SATISFIED WITH THAT FUTURE PROMISE.

    NOW, FROM 1960 THRU APPROX 1985-1990…THE RETIREE COSTS TO THE CITY WERE RELATIVELY LOW…SOME EMPLOYEES MAY RETIRE EARLY…SOME ON MEDICAL RETIREMENT, BUT THE MAJORITY STILL WORKING DURING THAT TIME PERIOD.

    BUT BY ABOUT -1985 TO 1990…THE CITY NOW STARTS TO SEE THE INCREASE OF “RETIREMENTS” AS EMPLOYEES REACH 25…30 & EVEN 35 YEARS OF SERVICE…AND THOSE “PROMISES”.

    NOW IT IS TIME TO “PAY-UP” REGARDING THOSE “PROMISES”…WHICH THE CITY HAD…“KICKED DOWN THE ROAD”.

    SO WHAT DOES THE CITY DO…WHEN THOSE “PROMISES” START TO COST SOME FUNDS…WELL…IN 1993…THE CITY DECIDES TO CHANGE THE PLAN …AND NEGOTIATED WITH CITY EMPLOYEES…THEY MODIFIED THE “PROMISE”, TO PAY ALL PRE-93 EMPLOYEES AND RETIREES THE PROMISED “HEALTH CARE”…BUT ALL EMPLOYEES HIRED AFTER 1993 WOULD HAVE TO PAY THEIR OWN INSURANCE FEES…”KICKING THE ISSUE DOWN THE ROAD AGAIN”.

    THE CITY EMPLOYEES, THOUGH DISAPPOINTED, AGREED TO THE CITY’S REQUESTS.
    2010 ARRIVES…17 YEARS HAVE GONE BY…THE PEAK OF RETIREMENTS HAVE ARRIVED AND WILL NOW STEADILY GO DOWN, AS RETIRES, FOR LACK OF A NICER WORD…”DIE”…AND ARE REMOVED FROM THE RETIREMENT ROLLS.

    THE CITY DECIDES THEY CAN’T WAIT UNTIL 2025 OR SO, WHEN MOST CURRENT RETIREES WILL BE “OFF THE PENSION ROLLS”…AS WELL AS HEALTH CARE BASICALLY DISAPPEARING AS A COST TO THE CITY BY THEN.

    ON 09-20-2010…THE CITY PASSED IT’S RETIREE HEALTH CARE FEES FOR “SINGLE COVERAGE” RETIREES AND CURRENTLY, STILL WORKING PRE-93 EMPLOYEES.

    USING THE CITY’S NUMBERS…A COST OF $ 29,600 TO EACH EFFECTED EMPLOYEE & RETIREE OVER THE 1ST 12 YEARS OF IMPLEMENTATION OF SUCH FEES, ASSUMING THE CITY DOES NOT INCREASE SUCH FEES.

    NOW, 2011 ARRIVES…NOW THE CITY OF SARASOTA IS NEGOTIATING TO REPLACE “DEFINED BENEFITS” WITH “DEFINED CONTRIBUTIONS”…FOR THAT, THE PUBLIC NEEDS SOME CLARIFICATION, AS THERE IS A LOT OF FALSE INFORMATION OUT THERE.

    DEFINED BENEFITS IS THE SYSTEM THAT IS IN PLACE NOW…EMPLOYEES & THE CITY EACH CONTRIBUTE …8% REQUIRED FROM EACH EMPLOYEE…ALONG WITH THE CITY’S CONTRIBUTIONS.

    UNDER “DEFINED BENEFITS”, THE PLANNED RETIREMENTS ARE ACTUARIALLY PLANED…WITH AVERAGING OF INVESTMENTS PLANNED OUT OVER 30 YEARS…IN ORDER TO AVOID HIGHS & LOWS IN THE INVESTMENT STRATEGIES. THAT WAY AN EMPLOYEE KNOWS APPROXIMATELY WHAT THEIR RETIREMENT WILL BE AND CAN PLAN ACCORDINGLY.

    DEFINED CONTRIBUTIONS…THIS IS BASICALLY A 401 K PLAN…WHICH THE EMPLOYEE CONTRIBUTES TO…THE CITY CLAIMS THEY WILL MATCH THE EMPLOYEE CONTRIBUTIONS.

    THAT 401 K PLAN, AS PRESENTLY BEING NEGOTIATED…POLICE OFFICERS WOULD REQUIRE A CONTRIBUTION OF 8% AND COULD CONTRIBUTE AN ADDITIONAL 8 % PER OFFICER…THE CITY WOULD MATCH THE CONTRIBUTION , UP TO 16%, AS WELL.

    A GENERAL EMPLOYEE WOULD CONTRIBUTE APPROX 6 % AND MATCHED BY THE CITY, UP TO 08 %, AS WELL.

    THAT ISSUE WILL BE EXPENSIVE, AND WILL COST MORE TO FUND INITIALLY. WHETHER ANY SAVINGS DOWN THE ROAD WILL JUSTIFY THIS IS SOMETHING THAT NEEDS A GREAT DEAL OF STUDY.

    HOWEVER, THERE ARE POTENTIAL PROBLEMS WITH DEFINED CONTRIBUTIONS:

    EXAMPLE OF WHAT CAN GO WRONG:

    AN EMPLOYEE WORKS AND CONTRIBUTES TO THIS 401 K PLAN FOR 25-30 YEARS, THEN, JUST A YEAR OR TWO BEFORE RETIREMENT…ANOTHER STOCK MARKET DROP {RECESSION} TAKES PLACE….THE 401 K PLAN LOSES HALF OR MORE OF IT’S VALUE…

    UNFORTUNATELY, THERE IS INSUFFICIENT TIME FOR THE 401 K PLAN TO RECOVER, BEFORE THE EMPLOYEE’S RETIREMENT TAKES PLACE.

    THAT EMPLOYEE, ON THE VERGE OF RETIREMENT, IS LEFT WITH A VERY SMALL INVESTMENT INCOME…AND MUST GO INTO RETIREMENT…BASICALLY BROKE.

    THAT IS WHY A “DEFINED BENEFIT PLAN” IS CRUCIAL…IT IS STRUCTURED OVER A 30 YEAR PERIOD…SO THAT SUCH RISKS ARE SPREAD OUT OVER 30 YEARS AND IS CONSTANTLY ADJUSTED TO MAXIMIZE THE INVESTMENT RETURNS & GREATLY ELIMINATES SUCH RISK.

    CITIZENS SHOULD WATCH THE TELEVISED PENSION BOARD MEETINGS, AT A MINIMUM YOU WOULD LEARN A LOT ABOUT MANAGING PENSION FUNDS.

    HOWEVER, ONE POINT NEEDS TO BE ADDRESSED…THE CITY OF SARASOTA, AS THE “OBSERVER” ARTICLE MENTIONS, WANTS TO GO TO THE “DEFINED CONTRIBUTION” PLAN…WITHOUT REALIZING THE SIGNIFICANT COSTS & LOSES THAT SUCH A PLAN WILL COST THE TAXPAYER & CITY EMPLOYEES AND RETIREES.

    IN JULY, AUGUST, & SEPTEMBER OF 2010, THE POLICE PENSION BOARD, AFTER HEARING RUMORS OF THE CITY NEGOTIATIONS REGARDING “DEFINED CONTRIBUTIONS”, REPEATEDLY ASKED THE CITY STAFF & COMMISSIONERS TO HAVE WORKSHOPS OR MEETINGS WITH THE PENSION BOARDS, IN ORDER THAT THE CITY MIGHT UNDERSTAND THE RAMIFICATIONS & POTENTIAL COSTS SUCH ACTIONS COULD CAUSE.

    SHOULD THE CITY GO TO “DEFINED CONTRIBUTIONS”, THERE IS A STRONG LIKELY HOOD THAT EACH PENSION FUND WILL HAVE TO FINANCE THE “COMBINED CONTRIBUTIONS PLAN”…WITH APPROX $ 10,000,000 REMOVED FROM EACH PENSION PLAN…THAT IS A TOTAL OF $ 20,000,000.00 TRANSFERRED FROM THE PENSION FUNDS TO THE ACCOUNTS OF THE EMPLOYEES THAT WOULD BE ASSIGNED TO THE “DEFINED CONTRIBUTIONS” PLAN.

    ADDITIONALLY, THE POLICE PENSION PLAN WILL LOSE FROM $ 550,000.00 TO $ 650,000
    EACH YEAR…IN STATE REVENUE FEES THAT ARE PAID TO ALL PUBLIC SAFETY OPERATED PRIVATE PENSION FUNDS, WHICH ARE REQUIRED TO BE A “DEFINED BENEFITS” PLAN…NOT A DEFINED CONTRIBUTION PLAN.

    THE CITY COMMISSION AND STAFF FAILED TO SET UP A MEETING OF ANY TYPE WITH THE PENSION BOARDS AND CHOSE TO IGNORE THE HUGE LOSES THE “DEFINED CONTRIBUTIONS PLAN” WOULD CAUSE TO THE PENSION PLANS.

    SOME WOULD THINK THE CITY…ALMOST INTENTIONALLY, IS TRYING TO SERIOUSLY DAMAGE A NUMBER OF PROGRAMS, INVOLVING EMPLOYEE AND RETIREE RIGHTS AND BENEFITS.

    GO “ON-LINE” AND SEE THE POLICE PENSION BOARD MEETING OF 09-24-2010…AND AT THE END OF THE MEETING, YOU WILL SEE SOME FIREWORKS.

    BUT, BEFORE OFFICIALS & OTHERS MAKE SUCH MIS-STATEMENTS, MAYBE AN IN-DEPTH DISCUSSION OF THE FACTS WITH THE PENSION BOARDS WOULD LET CITIZENS KNOW THE CORRECT FACTS.

    LASTLY, REGARDING THE SCARE TACTIC OF PENSIONS COSTING MORE THAN THE CITY TAKES IN…THE NEWS ARTICLES QUOTED THE CITY TAKING IN $14.9 MILLION IN PROPERTY TAX REVENUE…HOWEVER THE TAX RATE WAS QUOTED AT $ 23,000,000 AT THE BUDGET HEARINGS.

    THE CITY BUDGET & REVENUES ARE APPROX $ 131,000,000 THIS YEAR FROM ALL SOURCES, THEN LOOK AT THE PENSION COSTS AND REMEMBER THAT THE MAJORITY OF THOSE FEES COME FROM PROCEEDS FROM THE PENSION FUNDS’ ACCOUNTS & INVESTMENTS.

    BUT REMEMBER SOME OF THE SMOKE & MIRRORS BEING USED IN THE COMMENTS IN THE FORMER MAYOR’S EDITORIAL, AS WELL AS “STATISTICS” FROM CITY STAFF, USED AND LISTED IN “THE OBSERVER” ARTICLE.

    BASED UPON THE CITY’S TRACK RECORD, CITY EMPLOYEES AND RETIREES HAVE LOST THEIR TRUST IN THE CITY OF SARASOTA BEING HONEST WITH THEM, OR OF THE CITY KEEPING THEIR WORD.

    THE CITY DOES NOT WRITE THE PENSION CHECKS…PENSIONS ARE PAID BY THE PENSION BOARDS…WHICH TAKES EMPLOYEE CONTRIBUTIONS FROM EACH AND EVERY PAYCHECK…WHICH ARE INVESTED AND THE RETURNS ON INVESTMENTS BASICALLY PAY THE MONTHLY PENSION CHECKS.

    THE CITY COMMISSION AND STAFF HAVE, ALMOST DELIBERATELY, NOT ADDRESSED THE HUGE LOSSES THAT DEFINED CONTRIBUTIONS WOULD COST THE PENSION FUNDS, IF ENACTED.

    ADDITIONALLY, IF “DEFINED CONTRIBUTIONS” IS ALLOWED, THE EMPLOYEE BASE FOR SUPPORTING THE TWO PENSION FUNDS WOULD BASICALLY BE FROZEN…AS THERE WOULD BE NO NEW EMPLOYEES TO CONTRIBUTE TO THE PENSIONS FUND’S GROWTH IN FUTURE YEARS, AFTER THE LAST WORKING PRE-93’S RETIRE.

    IF “DEFINED CONTRIBUTIONS” IS ENACTED, IT WOULD EFFECTIVELY “SHUT DOWN” THE PENSION FUNDS, LEAVING THEM WITH THEIR CURRENT ASSETS, AFTER LOSING $ 20,000,000.00 TO THE NEW “DEFINED CONTRIBUTIONS” PLAN.

    ALL THIS, TO BE DONE TO ALLEVIATE THE CITY FROM PAYING FUTURE FEES FOR HEALTH CARE & FUTURE CITY PENSION CONTRIBUTIONS.

    PENSIONS ARE NOT A FRILL THAT CAN BE IGNORED…I DOUBT THE CITY WOULD TELL THE CONTRACTOR OF THE “ROUNDABOUTS” OR PARKING GARAGES, THAT AFTER THE CONTRACTOR COMPLETES THE JOB, THAT THE CITY DOES NOT FEEL OBLIGATED TO PAY BECAUSE OF “BUDGET ISSUES”.

    THE CITY HAS A MORAL & ETHICAL RESPONSIBILITY TO HONOR WHAT THE EMPLOYEES HAVE PROVIDED THE CITY OF SARASOTA…THOSE EMPLOYEES PROVIDED THE CITY WITH A CAREER OF AIDING & PROTECTING THE CITIZENS OF THIS CITY.

    I don't know many people, if you approached them and said "Excuse me, put on this BULLET PROOF VEST...you might need it today" ...that would do this job.

    But the same applies to all employees, they spent a career doing the “job’ for the City of Sarasota…and expect the City to honor those commitments.

    THE CITIZENS AND EMPLOYEES OF THE CITY OF SARASOTA DESERVE TO KNOW THE FACTS, NOT A GAME OF “SMOKE & MIRRORS”. OUR CURRENT & SOME SOON TO BE ELECTED COMMISSIONERS NEED TO CHALLENGE SOME OF THE ALLEGED FACTS BEING PROVIDED TO THEM.

    THERE IS ALWAYS ROOM TO DISCUSS ISSUES & CHANGES, WHETHER A CITY BUDGET OR PENSION PLANS, BUT THESE ISSUES NEED TO BE APPROACHED WITH CARE & HONESTY.

    THERE ARE ISSUES & “TWEAKING” THAT CAN BE ADDRESSED, WITHOUT MAJOR UPHEAVAL…WHETHER IT BE CHANGING CERTAIN TERMINOLOGY, DATES OF RETIREMENT, WHEN COLA BEGINS, ETC…THAT WOULD ADDRESS THESE ISSUES.

    EVEN THE FINANCE MANAGER, POINTED OUT SMALL MODIFICATIONS OF THE PENSION PLAN THAT WOULD REDUCE COSTS SIGNIFICANTLY, YET THE CITY STAFF DECIDED ON A DIFFERENT APPROACH OF “DEFINED CONTRIBUTIONS”.

    THE ISSUE HERE IS THAT THE CITY OF SARASOTA HAS NOT ATTEMPTED TO ADDRESS THESE ISSUES WITH THE EMPLOYEES OR THEIR REPRESENTATIVE FOR THEIR INPUT AND DISCUSSION. IF THEY WOULD HAVE DONE THAT…THEY WOULD HAVE FOUND A SIGNIFICANT AMOUNT OF INFORMATION THAT WOULD HAVE HELPED EVERYONE TO ADDRESS THESE ISSUES PROPERLY.

    THE CITY HAS FAILED TO LISTEN TO ALL SIDES OF THIS ISSUE AND IS NOW ATTEMPTING TO PAINT WITH A BROAD STROKE, WHAT COULD HAVE BEEN DISCUSSED OPENLY AND THEN FAIRLY & PROPERLY ADDRESSED.

    THE CITY STAFF HAS CHOSEN THE WRONG APPROACH IN THIS MATTER, WHICH WILL ONLY AGGRAVATE THE CITY’S FUTURE.

    HOPEFULLY, THE CITY COMMISSIONERS WILL SOON REALIZE THIS AND WILL RE-ADDRESS THIS AND SPEAK WITH THEIR EMPLOYEES. DEFINED CONTRIBUTIONS IS A MISTAKE THAT SHOULD BE RE-EXAMINED.

    THE CITY OF SARASOTA NEEDS TO TAKE STEPS TO RESTORE THE TRUST THAT CITY EMPLOYEES AND RETIREES HAVE LOST IN DEALINGS WITH THE CITY OF SARASOTA.

    KEEPING THEIR WORD IS THE FIRST STEP IN THAT PROCESS.

    WHAT I FIND INTERESTING, EVEN TO THE POINT OF WANTING TO PREDICT THE FUTURE…I WOULD SUGGEST THAT IF THE ABOVE AGENDA BY THE CITY IS ALLOWED TO TAKE PLACE…AND THE PENSION & HEALTH CARE ISSUES ARE ELIMINATED AS A FUTURE EXPENSE FOR THE CITY…AND ONCE THE CITY CONTENDS WITH LACKLUSTER & POOR EMPLOYMENT RETENTION & POOR RECRUITMENT…

    THAT IN A FEW YEARS…ONCE THE DUST HAS SETTLED…THE CITY WILL AGAIN OFFER “HEALTH CARE” & PENSION BENEFITS…SO THEY CAN AGAIN GET FUTURE EMPLOYEES TO BUY INTO “THEIR PROMISES”…FOR ANOTHER 25-30 YEARS, THEN THE CITY WILL DO THE SAME THING TO THEM…BREAK THEIR PROMISES AND AGREEMENTS…HISTORY DOES REPEAT ITSELF.

    SO FOR THOSE CITY OF SARASOTA CITIZENS AND EMPLOYEES HAVING CHILDREN IN HIGH SCHOOL NOW…MAKE SURE THEY KNOW, IF CONSIDERING A CAREER WITH THE CITY OD SARASOTA…THOSE FUTURE EMPLOYEES NEED TO KNOW JUST WHAT TO EXPECT IN 25-30 YEARS…

    A SERIES OF “PROMISES”…AND LATER…A SERIOUS BIT OF AMNESIA .

    JUST MY THOUGHTS, BJ SULLIVAN…SPD-RETIRED

  •  
  • BJ SULLIVAN
    Wed 2nd Mar 2011
    at 12:47pm
  • 2.
  • AFTER READING THE EDITORIAL COMMENTS OF FORMER MAYOR KIRSCHNER & AN ARTICLE IN THE “OBSERVER” REGARDING CITY OF SARASOTA PENSIONS, THE TOTAL LACK OF FACTS AND EXAGGERATIONS BY THE THESE PARTIES NEED SOME CLARIFICATION. UNFORTUNATELY, THERE IS NOT SUFFICIENT ROOM IN THE MEDIA TO FULLY EXPLAIN ALL THE DETAILS, BUT LET ME GIVE IT SOME JUSTICE.

    GOVERNMENT PENSIONS & BENEFITS HAVE BECOME THE “FLAVOR OF THE MONTH”…WITH MUCH HYPE & PROPAGANDA BY SARASOTA OFFICIALS.

    REGARDING FORMER MAYOR KIRSCHNERS COMMENTS…VERY FEW OFFICERS HIRE ON THE POLICE DEPARTMENT AT 20 YEARS OF AGE…& RETIRE AT 45…MOST OFFICERS ARE MORE LIKE 24-27 YEARS OF AGE…AND OTHER THAN THE CHIEF OF POLICE, FEW, IF ANY, OFFICERS OR GENERAL EMPLOYEES MAKE SALARIES ANYWHERE NEAR $ 100,000.00 A YEAR AFTER 25 YEARS OF SERVICE.

    AND I CANNOT THINK OF ANY RETIRED OFFICER, AFTER FIVE {5} YEARS INTO THEIR RETIREMENT, THAT ARE MAKING ANYWHERE CLOSE TO THEIR LAST YEARS SALARY.

    THE METHOD OF CALCULATION IS CORRECT, BUT WITH THE WRONG NUMBERS.

    WHY INSERT AN AVERAGE SALARY OF $ 100,000.00 FOR POLICE OFFICERS & GENERAL EMPLOYEES…I’M SURE THOSE EMPLOYEES WOULD READILY ACCEPT THAT FIGURE, IF ONLY IT WAS TRUE.

    BUT OTHER ISSUES NEED TO BE CLARIFIED, AS WELL.

    IF THE CITY OF SARASOTA IS OFFERING PENSIONS AND HEALTH CARE, WITHOUT MAKING PROPER PLANS TO FUND THEM, THEY SHOULD HAVE TO EXPLAIN WHY THEY DID NOT FUND SUCH PLANS PROPERLY. HOWEVER, IT IS NOT THE EMPLOYEES OR RETIREE’S FAULT…SOME GOVERNMENTS SIMPLY SPEND THE TAX REVENUES, AND IGNORE THE FUTURE COSTS FOR PENSIONS & HEALTH CARE…BY “KICKING THE ISSUE DOWN THE ROAD”…THOSE ARE THE ENTITIES THAT ARE IN TROUBLE…BUT THE CITY OF SARASOTA IS NOT ONE OF THOSE ENTITIES, FOR SEVERAL REASONS.

    THE CITY OF SARASOTA IS SIMPLY TRYING TO AVOID PAYING THEIR REQUIRED CONTRIBUTIONS TO THE EMPLOYEES & RETIREES.

    THE CITY OF SARASOTA PENSION BOARDS & PENSION FUNDS, ARE STILL IN VERY GOOD CONDITION, EVEN WITH THE DOWN MARKETS OF THE LAST FEW YEARS. THE INVESTMENT MARKETS ARE RECOVERING…THE DOW IS ABOVE 12,200 TODAY.

    THE POLICE PENSION PLAN IS FUNDED AT 83%....IT WAS AT OR NEAR 100% JUST A FEW YEARS AGO…ANYTHING ABOVE 80% IS CONSIDERED AS A HEALTHY PENSION PLAN.

    ADDITIONALLY, THE POLICE PENSION PLAN HAS GONE FROM A HIGH OF 192 PARTICIPATING RETIREES IN 1992…AND NOW STANDS AT …144 MEMBERS DRAWING FROM THE POLICE PLAN. {AS OF 09-2010}

    THE ISSUES WE FACE ARE A CITY COMMISSION & STAFF THAT WANTS TO SIMPLY AVOID MAKING THEIR PROMISED CONTRIBUTIONS TO THESE PLANS…

    ALSO, REMEMBER, THE EMPLOYEES CONTRIBUTE AN EQUAL AMOUNT TO THESE PENSION FUNDS, CURRENTLY AT 8% OF THEIR SALARY.

    THE CITY DOES NOT ACTUALLY PAY THESE FUNDS, THE PENSION CHECKS ARE FROM THE PENSION BOARDS, WHICH MAKE THE PAYMENTS FROM THE FUND THAT EMPLOYEES HAVE CONTRIBUTED TO…THE POLICE PENSION FUND EXCEEDS
    $ 131,000.000 AND IS GROWING…

    EXAMPLE: IF CITY EMPLOYEES CONTRIBUTE $ 4,000,000 EACH YEAR, THE CITY IS SUPPOSED TO MATCH THAT AMOUNT. THOSE PENSION FUNDS ARE INVESTED AND IN MOST YEARS GENERATE SUFFICIENT INCOME TO PAY THE RETIREES PENSION EACH YEAR…THAT’S HOW A PENSION FUND WORKS.

    THE CITY CONTINUES TO USE SMOKE & MIRRORS TO FRIGHTEN CITIZENS INTO THINKING THE CITY IS IN A FINANCIAL DILEMMA BECAUSE OF PENSIONS, THAT IS NOT THE CASE.

    THE CITY OF SARASOTA HAS PAINTED A GRIM PICTURE, USING STATISTICS THAT ARE MISLEADING…EXAMPLE, IN CALCULATING PROJECTED PENSION COSTS, THEY CALCULATE ALL CITY EMPLOYEES LIVING TO 80-85 YEARS OF AGE…THAT IS VERY DEBATABLE…BUT IT DOES CAUSE HUGE PROJECTED COSTS, IF YOU BELIEVE EVERYONE, I REITERATE…EVERYONE WILL LIVE TO 85 YEARS OF AGE.

    UNFORTUNATELY, POLICE OFFICERS AVERAGE 66.3 YEARS OF AGE AT DEATH.

    THE CITY’S FIRST OBLIGATIONS SHOULD BE THE WELFARE OF THE CITIZENS, BUT THAT ALSO INCLUDES HONORING THE COMMITMENTS TO THE EMPLOYEES & RETIREES THAT HAVE MADE SARASOTA THE SUCCESS THAT IT HAS BECAME OVER MANY YEARS.

    THAT IS ALSO A DOUBLE EDGED SWORD…IT REQUIRES THE CITY TO BE RESPONSIBLE IN THEIR SPENDING. SOMEHOW, OVER THE PAST YEARS, WHEN REAL ESTATE VALUES WERE CLIMBING & FUNDS POURING INTO CITY COFFERS…THE CITY BECOME LESS THAN FRUGAL…STARTING MANY PET PROJECTS…ROUNDABOUTS THAT WILL COST MILLIONS, AND MANY OTHER SUCH PET PROJECTS.

    BUT, WHEN TIMES BECAME TIGHT IN 2007, THE CITY DID NOT REDUCE EXPENSES, OH, THEY DID LAY OFF EMPLOYEES…BUT THEY CONTINUED WITH THEIR PET PROJECTS…BUT, UNTIL THE ECONOMY TURNS AROUND, THE CITY SHOULD PROVIDE BASIC SERVICES…NOT ROUNDABOUTS…PARKING GARAGES…PARKING METERS, ETC

    I WILL TRY TO SIMPLIFY THE ISSUES WE ARE FACING, BUT TO UNDERSTAND THE PENSION ISSUES, YOU MUST UNDERSTAND THE HISTORY BEHIND THESE ISSUES.

    IN APPROX 1959-1960…THE CITY, NOT THE UNIONS, THE CITY CAME UP WITH THE IDEA OF PROVIDING PRIVATE PENSIONS , THAT THE EMPLOYEES ARE TO CONTRIBUTE TO, AND ALSO “PROMISING” NO COST HEALTH CARE FOR ALL EMPLOYEES, …THAT PLAN DOES NOT INCLUDE THEIR FAMILIES & DEPENDANTS.

    THE CITY CAME UP WITH THE PRIVATE PENSION, BY GETTING THE EMPLOYEES TO AGREE THAT THE CITY WOULD NOT HAVE TO PAY INTO SOCIAL SECURITY FOR POLICE OFFICERS AND FIRE FIGHTERS…THAT SAVED THE CITY 6.2% IN SOCIAL SECURITY CONTRIBUTIONS OVER THE NEXT 50+ YEARS. {MILLIONS SAVED}

    REGARDING THAT DATE…LET’S USE 1960…AS THE STARTING POINT.

    THE CITY KNEW THE POOL OF RETIREES DRAWING ON THAT “1960’S PROMISE” WOULD NOT REALLY START TO SURFACE FOR 25-30 YEARS…A FREE BENEFIT THAT WOULD BE “KICKED DOWN THE ROAD” BY THE CITY FOR 25-30 YEARS.

    BASICALLY, IMAGINE YOU HIRE AN EMPLOYEE AND PROMISE THEM IF THEY WORK FOR YOU, WITH MEAGER RAISES…BUT WITH PROMISES THAT THE EMPLOYEE WILL GET A BONUS IN 25-30 YEARS

    THEN, IN 25-30 YEARS, WHEN THAT PROMISED BONUS COMES DUE…THE CITY GETS AMNESIA.

    THE CITY WAS HOWEVER, ABLE TO RECRUIT NEW EMPLOYEES WITH THOSE “PROMISES”…AND ALSO USING THOSE PROMISES TO JUSTIFY THE LOW WAGES AND VERY MEAGER ANNUAL RAISES…BUT WITH THE CITY ALWAYS REMINDING THE EMPLOYEES OF THE GOOD PENSION & “NO COST CITY HEALTH CARE INSURANCE”

    THE CITY USED THOSE “PROMISES” IN NEGOTIATIONS…AND THOSE BENEFITS, WHEN THE EMPLOYEES RETIRE.

    THE CITY WAS ABLE TO KEEP TAXES AT A LOWER RATE…AND SPEND MONEY ON THEIR PROJECTS…AND, OHH!!!!, BY THE WAY…ALSO KEEP SOME REALLY GREAT EMPLOYEES SATISFIED WITH THAT FUTURE PROMISE.

    NOW, FROM 1960 THRU APPROX 1985-1990…THE RETIREE COSTS TO THE CITY WERE RELATIVELY LOW…SOME EMPLOYEES MAY RETIRE EARLY…SOME ON MEDICAL RETIREMENT, BUT THE MAJORITY STILL WORKING DURING THAT TIME PERIOD.

    BUT BY ABOUT -1985 TO 1990…THE CITY NOW STARTS TO SEE THE INCREASE OF “RETIREMENTS” AS EMPLOYEES REACH 25…30 & EVEN 35 YEARS OF SERVICE…AND THOSE “PROMISES”.

    NOW IT IS TIME TO “PAY-UP” REGARDING THOSE “PROMISES”…WHICH THE CITY HAD…“KICKED DOWN THE ROAD”.

    SO WHAT DOES THE CITY DO…WHEN THOSE “PROMISES” START TO COST SOME FUNDS…WELL…IN 1993…THE CITY DECIDES TO CHANGE THE PLAN …THEY MODIFIED THE “PROMISE”, TO PAY ALL PRE-93 EMPLOYEES AND RETIREES THE PROMISED “NO COST HEALTH CARE”…BUT ALL EMPLOYEES HIRED AFTER 1993 WOULD HAVE TO PAY THEIR OWN INSURANCE FEES…”KICKING THE ISSUE DOWN THE ROAD AGAIN”.

    2010 ARRIVES…17 YEARS HAVE GONE BY…THE PEAK OF RETIREMENTS HAVE ARRIVED AND WILL NOW STEADILY GO DOWN, AS RETIRES, FOR LACK OF A NICER WORD…”DIE”…AND ARE REMOVED FROM THE RETIREMENT ROLLS.

    REMEMBER…THE PEAK WAS 190 POLICE RETIREES IN 1992…NOW THERE ARE APPROX 144 POLICE RETIREES ON THE ROLLS IN 2010.

    THE CITY DECIDES THEY CAN’T WAIT UNTIL 2025 OR SO, WHEN MOST RETIREES WILL BE “OFF THE PENSION ROLLS”…AS WELL AS HEALTH CARE BASICALLY DISAPPEARING AS A COST TO THE CITY BY THEN.

    09-20-2010…THE CITY PASSED IT’S RETIREE HEALTH CARE FEES FOR “SINGLE COVERAGE” RETIREES AND CURRENTLY, STILL WORKING PRE-93 EMPLOYEES.

    USING THE CITY’S NUMBERS…A COST OF $ 29,600 TO EACH EFFECTED EMPLOYEE & RETIREE OVER THE 1ST 12 YEARS OF IMPLEMENTATION OF SUCH FEES, ASSUMING THE CITY DOES NOT INCREASE SUCH FEES.

    NOW THE CITY OF SARASOTA IS NEGOTIATING TO REPLACE “DEFINED BENEFITS” WITH “DEFINED CONTRIBUTIONS”…FOR THAT, THE PUBLIC NEEDS SOME CLARIFICATION, AS THERE IS A LOT OF FALSE INFORMATION OUT THERE.

    DEFINED BENEFITS IS THE SYSTEM THAT IS IN PLACE NOW…EMPLOYEES & THE CITY EACH CONTRIBUTE EQUALLY…8% FROM EACH EMPLOYEE…THAT SUM TO BE MATCHED BY THE CITY.

    UNDER “DEFINED BENEFITS”, THE PLANNED RETIREMENTS ARE ACTUARIALLY PLANED…WITH AVERAGING OF INVESTMENTS PLANNED OUT OVER 30 YEARS…IN ORDER TO AVOID HIGHS & LOWS IN THE INVESTMENT STRATEGIES. THAT WAY AN EMPLOYEE KNOWS WHAT THEIR RETIREMENT WILL BE AND CAN PLAN ACCORDINGLY.

    DEFINED CONTRIBUTIONS…THIS IS BASICALLY A 401 K PLAN…WHICH THE EMPLOYEE CONTRIBUTES TO…NOT THE CITY OF SARASOTA.

    A 401 K PLAN FOR POLICE WOULD REQUIRE A CONTRIBUTION OF APPROX 20% FROM EACH OFFICER. A GENERAL EMPLOYEE WOULD CONTRIBUTE APPROX 10%.

    THERE ARE POTENTIAL PROBLEMS WITH DEFINED CONTRIBUTIONS:

    EXAMPLE OF WHAT CAN GO WRONG:

    AN EMPLOYEE WORKS AND CONTRIBUTES TO THIS 401 K PLAN FOR 25-30 YEARS, THEN, JUST A YEAR OR TWO BEFORE RETIREMENT…ANOTHER STOCK MARKET DROP {RECESSION} TAKES PLACE….THE 401 K PLAN LOSES HALF OR MORE OF IT’S VALUE…UNFORTUNATELY, THERE IS INSUFFICIENT TIME FOR THE 401 K PLAN TO RECOVER, BEFORE THE EMPLOYEE’S RETIREMENT TAKES PLACE.

    UNFORTUNATELY…THAT EMPLOYEE, ON THE VERGE OF RETIREMENT, IS LEFT WITH A VERY SMALL INVESTMENT INCOME…AND MUST GO INTO RETIREMENT…BASICALLY BROKE.

    THAT IS WHY A “DEFINED BENEFIT PLAN” IS CRUCIAL…IT IS STRUCTURED OVER A 30 YEAR PERIOD…SO THAT SUCH RISKS ARE SPREAD OUT OVER 30 YEARS AND IS CONSTANTLY ADJUSTED TO MAXIMIZE THE INVESTMENT RETURNS & GREATLY ELIMINATES SUCH RISK.

    CITIZENS SHOULD WATCH THE TELEVISED PENSION BOARD MEETINGS, AT A MINIMUM YOU WOULD LEARN A LOT ABOUT MANAGING PENSION FUNDS.

    HOWEVER, ONE POINT NEEDS TO BE ADDRESSED…THE CITY OF SARASOTA, AS THE “OBSERVER” ARTICLE MENTIONS, WANTS TO GO TO THE “DEFINED CONTRIBUTION” PLAN…WITHOUT REALIZING THE SIGNIFICANT COSTS & LOSES THAT SUCH A PLAN WILL COST THE TAXPAYER & CITY EMPLOYEES AND RETIREES.

    IN JULY, AUGUST, & SEPTEMBER OF 2010, THE POLICE PENSION BOARD, AFTER HEARING RUMORS OF THE CITY NEGOTIATIONS REGARDING “DEFINED CONTRIBUTIONS”, HAD REPEATEDLY ASKED THE CITY STAFF & COMMISSIONERS TO HAVE WORKSHOPS OR MEETINGS WITH THE PENSION BOARDS, IN ORDER THAT THE CITY MIGHT UNDERSTAND THE RAMIFICATIONS & POTENTIAL COSTS SUCH ACTIONS COULD CAUSE.

    SHOULD THE CITY GO TO “DEFINED CONTRIBUTIONS”, THERE IS A STRONG LIKELY HOOD THAT EACH PENSION FUND WILL HAVE TO FINANCE THE “COMBINED CONTRIBUTIONS PLAN”…WITH APPROX $ 10,000,000 REMOVED FROM EACH PENSION PLAN…THAT IS A TOTAL OF $ 20,000,000.00 LOST FROM THE TWO CITY PENSION FUNDS

    ADDITIONALLY, THE POLICE PENSION PLAN WILL LOSE FROM $ 550,000.00 TO $ 650,000
    EACH YEAR IN STATE REVENUE FEES THAT ARE PAID TO ALL PUBLIC SAFETY OPERATED PRIVATE PENSION FUNDS, WHICH ARE REQUIRED TO BE A “DEFINED BENEFITS” PLAN…NOT A DEFINED CONTRIBUTION PLAN.

    THE CITY COMMISSION AND STAFF FAILED TO SET UP A MEETING OF ANY TYPE WITH THE PENSION BOARDS AND CHOSE TO IGNORE THE HUGE LOSES THE “DEFINED CONTRIBUTIONS PLAN” WOULD CAUSE.

    SOME WOULD THINK THE CITY…ALMOST INTENTIONALLY, IS TRYING TO SERIOUSLY DAMAGE A NUMBER OF PROGRAMS, INVOLVING EMPLOYEE AND RETIREE RIGHTS AND BENEFITS.

    GO “ON-LINE” AND SEE THE POLICE PENSION BOARD MEETING OF 09-24-2010…AND AT THE END OF THE MEETING, YOU WILL SEE SOME FIREWORKS.

    LASTLY, REGARDING THE SCARE TACTIC OF PENSIONS COSTING MORE THAN THE CITY TAKES IN…THE NEWS ARTICLES QUOTED THE CITY TAKING IN $14.9 MILLION IN PROPERTY TAX REVENUE…HOWEVER THE TAX RATE WAS QUOTED AT $ 23,000,000 AT THE BUDGET HEARINGS.

    THE CITY BUDGET & REVENUES ARE APPROX $ 131,000,000 FROM ALL SOURCES, THEN LOOK AT THE PENSION COSTS AND REMEMBER THAT THOSE FEES COME FROM PROCEEDS FROM THE PENSION FUNDS INVESTMENTS, NOT THE CITY COFFERS.

    BUT REMEMBER SOME OF THE SMOKE & MIRRORS BEING USED IN THE COMMENTS IN THE FORMER MAYOR’S EDITORIAL, AS WELL AS “STATISTICS” FROM CITY STAFF, USED AND LISTED IN “THE OBSERVER” ARTICLE.

    THE CITY COFFERS DO NOT PAY THE PENSION CHECKS…THAT IS PAID BY THE PENSION BOARD…WHICH TAKES EMPLOYEE CONTRIBUTIONS FROM EACH AND EVERY PAYCHECK…THE CITY MATCHES THOSE FUNDS, WHICH ARE INVESTED AND THE RETURNS ON INVESTMENTS BASICALLY PAY THE MONTHLY PENSION CHECKS.

    THE CITY COMMISSION AND STAFF HAVE, ALMOST DELIBERATELY, NOT ADDRESSED THE HUGE LOSSES THAT DEFINED CONTRIBUTIONS WOULD COST THE PENSION FUNDS, IF ENACTED.

    ADDITIONALLY, IF “DEFINED CONTRIBUTIONS” IS ALLOWED, THE EMPLOYEE BASE FOR SUPPORTING THE TWO PENSION FUNDS WOULD BASICALLY WITHER AWAY…AS THERE WOULD BE NO NEW EMPLOYEES TO CONTRIBUTE TO THE PENSIONS FUND’S GROWTH IN FUTURE YEARS, AFTER THE LAST WORKING PRE-93’S RETIRE.

    IF “DEFINED CONTRIBUTIONS” IS ENACTED, IT WOULD EFFECTIVELY “SHUT DOWN” THE PENSION FUNDS, LEAVING THEM WITH THEIR CURRENT ASSETS, AFTER LOSING $ 20,000,000.00 TO THE NEW “DEFINED CONTRIBUTIONS” PLAN.

    ALL THIS, TO BE DONE TO ALLEVIATE THE CITY FROM PAYING FUTURE FEES FOR HEALTH CARE & FUTURE CITY PENSION CONTRIBUTIONS.


    PENSIONS ARE NOT A FRILL THAT CAN IGNORED…I DOUBT THE CITY WOULD TELL THE CONTRACTOR OF THE “ROUNDABOUTS” THAT THE CITY DOES NOT FEEL OBLIGATED TO PAY BECAUSE OF “BUDGET ISSUES”

    THE CITY HAS A MORAL & ETHICAL RESPONSIBILITY TO HONOR WHAT THE EMPLOYEES HAVE PROVIDED THE CITY OF SARASOTA…A CAREER OF AIDING & PROTECTING THE CITIZENS OF THIS CITY.

    I don't know many people, if you approached them and said "Excuse me, put on this BULLET PROOF VEST...you might need it today" ...that would do this job.

    But the same applies to all employees, they spent a career doing the “job’ for the City of Sarasota…and expect the City to honor those commitments.

    WHAT I FIND INTERESTING, EVEN TO THE POINT OF WANTING TO PREDICT THE FUTURE…I WOULD SUGGEST THAT IF THE ABOVE AGENDA BY THE CITY IS ALLOWED TO TAKE PLACE…AND THE PENSION & HEALTH CARE ISSUES ARE ELIMINATED AS A FUTURE EXPENSE FOR THE CITY…AND ONCE THE CITY CONTENDS WITH LACKLUSTER & POOR EMPLOYMENT RETENTION & POOR RECRUITMENT…

    THAT IN A FEW YEARS…ONCE THE DUST HAS SETTLED…THE CITY WILL AGAIN OFFER “NO COST HEALTH CARE” & PENSION BENEFITS…SO THEY CAN AGAIN GET FUTURE EMPLOYEES TO BUY INTO “THEIR PROMISES”…FOR ANOTHER 25-30 YEARS, THEN THE CITY WILL DO THE SAME THING TO THEM…BREAK THEIR PROMISES AND AGREEMENTS…HISTORY DOES REPEAT ITSELF.

    SO FOR THOSE CITY OF SARASOTA CITIZENS AND EMPLOYEES HAVING CHILDREN IN HIGH SCHOOL NOW…MAKE SURE THEY KNOW, IF CONSIDERING A CAREER WITH THE CITY…THOSE FUTURE EMPLOYEES NEED TO KNOW JUST WHAT TO EXPECT IN 25-30 YEARS…

    A SERIES OF “PROMISES”…AND LATER…A SERIOUS BIT OF AMNESIA .

    JUST MY THOUGHTS, BJ SULLIVAN…SPD-RETIRED

  •  
  • BJ SULLIVAN
    Mon 28th Feb 2011
    at 8:59pm
  • 3.
  • The police union president explains that the good reason for the $75K annual pension benefit is becuase they don't pay into the social security system. Does this mean that the rest of us will be receiving $75k a year for the rest of our lives after age 52? More like $30k a year after age 67. Okay, just a slight difference there. My bad. I say we should stop being greedy and forget about saving for our own retirements. Lets keep working until death, so we can afford to increase our property taxes. Beginning to understand more clearly the situation in Wisconsin.
  •  
  • bob clarke
    Mon 28th Feb 2011
    at 3:18pm
  • 4.
  • Apparently Pete Theisen doesn't know what a defined contribution plan is. In a defined contribution plan, the participants pay their own money in to the plan for their own retirement. The city does not have to contribute anything. In the current defined benefit, the city pays for everything, guaranteeing a retirement benefit at taxpayers' expense.

    And he is running for city commissioner???
  •  
  • Milan Adrian
    Fri 25th Feb 2011
    at 12:30pm
  • 5.
  • This sounds bad, but who is providing Bartolotta with his figures? The promoters of the 401 (k), of course!

    And, Ad Valorem is not the city's only income!

    We have a Defined Benefit plan for the Police. Right now the plan could cost more than usual because of market conditions BUT market conditions are improving and these things average out. Florida Law requires the sponsors of such a plan (us) to make the minimum contributions to keep the plan "actuarially sound" so it IS in good shape, by law.

    Can we get a little back out of it if we "Freeze" it? Perhaps, IF the fund is overfunded. But somehow, I don't think the fund is overfunded, at least not in "sail" amounts. Let's say we CAN'T.

    What about the proposed new Defined Contribution (401 (k)) plan? Will we save money there? Well, the covered individuals will pay for it "themselves" but if we want to actually keep them we will have to either match their contributions and/or give them huge raises AND pay Social Security in the case of Police. This will actually cost more than now.

    Defined Contribution is not as good for the employees, cops or otherwise. Why? Because such a Defined Contribution plan is almost guaranteed to go bust if a whole bunch of folks retire at once, like what is going to happen in the next few years as the "baby boomers" age. Not only that, we will still have to pay out the old plan so for the next half century we will be paying the old plan AND the new plan! Yep, the old plan doesn't just go away . . .

    WE WILL HAVE TO PAY FOR BOTH PLANS, AND WHATEVER WE BOUGHT WITH WHAT WE "SAVED"! Not only that, what we get won't be as good.

    If we do it ANYWAY who wins? Why, the promoters of the "new" plan, naturally! Why else would they promote it? Are we about to be taken? Not if I can help it!
  •  
  • Pete Theisen
    Fri 25th Feb 2011
    at 12:34am
  • 6.
  • Hypothetically, a police officer can be hired at age 22, work 25 years until age 47 and receive 75% of his salary for the rest of his life in addition to cost of living increases. And for the 30 year employee, all this at age 52. No wonder the City's in such a mess! The buffoons who created this very expensive and unaffordable situation through the years should be tarred and feathered.
  •  
  • Milan Adrian
    Thu 24th Feb 2011
    at 2:27pm
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