Proposal defines pension meeting

Fiscally sound.

It’s not a phrase typically associated with any of the town’s three pension plans.

But the Longboat Key Firefighter Pension Board’s actuarial consultants said at the board’s Wednesday, May 23 quarterly meeting that it’s an appropriate description for the firefighter pension.

The town spends an amount equivalent to 60% of firefighter payroll on its required contributions to the firefighter pension.

However, Doug Lozen, of Foster & Foster, told the board that the required contribution for a new hire is only 16% of his or her salary and that the town’s required contributions would fall as its unfunded liability decreases. He estimated that half of the plan’s unfunded liability would go away within 12 years.

Joe Carter, of Morgan Stanley Smith Barney, told the board that its 8% assumed rate of return is, in fact, sustainable.

Throughout the four-hour meeting, discussion often turned to the proposal Town Manager David Bullock presented in early May to firefighters and general employees, to transition them to defined-contribution, 401(a) plans.

One key point included in Bullock’s presentation of the defined-contribution proposal, however, is that the firefighter plan hasn’t earned the assumed 8% rate of return for several years.

The board discussed the possibility of lowering the assumed rate of return to 7.75%.

Trustee Gerald Feder, one of two residents who holds a board seat, felt it was too significant of a decision to make that day without advertising it on an agenda. But the next quarterly meeting is scheduled for late August — just as the town will be finalizing its budget for the upcoming fiscal year. Decreasing the rate of return would have added approximately $60,000 to the town’s required contribution to the fire plan in a year in which the town is already bracing for a $350,000 hike in required contributions for all three plans.

“If you’re having thoughts about doing it for the forthcoming fiscal year, it’s only fair to the town to do that today,” special counsel Robert Sugarman told the board.

Ultimately, the board didn’t move forward with the adjustment.

Later in the meeting, board Chairman Keith Tanner, a firefighter/paramedic, said that he needed more information comparing town costs of defined-benefit and defined-contribution plans to members.

Earlier in the meeting, Lozen had told the board that the town’s costs would rise over the next five to 10 years if it adopted a defined-contribution plan, because the town would be matching up to 13% of employee salaries while also paying for benefits earned by past and present employees.

Bullock told the Longboat Observer earlier in May that solving the pension process will cause “short-term pain” for taxpayers and make a tax hike inevitable. However, he told firefighters when he presented his proposal that the town’s contributions are rising at a rate that would be unsustainable, even with a tax increase.

Lozen calculated cost differences between two similar plans under various scenarios last year for Venice firefighters.

Tanner wanted the board to authorize a similar study, which Lozen estimated to cost between $3,000 and $5,000 for Venice, saying he has a fiduciary responsibility to union members.

“We’re hearing this pension thing described as this monster,” Tanner said. “After listening to Doug and to Joel, they tell us that’s not the case. All anybody is getting is one side to the story.”

Feder disagreed, saying it was inappropriate for the board to insert itself into a collective bargaining issue.

Trustee Matt Taylor, a firefighter/paramedic who last year filed an ethics complaint against the town in its handling of the firefighter pension plan, worried that use of board funds could appear improper and suggested that the union use its own money — a suggestion that caused board trustee Shannon Gault, who holds a resident seat, to shake her head in agreement.

Tanner told the Longboat Observer that he will most likely ask union members next week to spend funds to obtain information about differences between the plans.