mySowal Firefighters

Fire Fighters Association offers plan to cut South Walton budget

noreply@blogger.com (SoWal Firefighters) — Fri, 22 Apr 2011 13:56:00 +0000

Northwest Florida Daily News

SANTA ROSA BEACH — Few public safety agencies have escaped budget struggles in the slumping economy.
The trying question is how to keep cutting costs without decreasing the level of fire and medical services needed to save lives and property.

The struggle has finally caught up with the South Walton Fire District, which had been able to keep deep cuts at bay over the last few years, said Fire Chief Rick Talbert. He has been asked to cut $1 million from his annual budget on top of reductions last year.

The first cuts involved laying off two longtime administrative employees last week.
Seeing the inevitability of staff cuts, the South Walton Professional Fire Fighters Association and the fire district’s Pension Board have developed their own plan to reduce costs.

They announced the plan, which they say will save the district $850,000, late last week.

View a copy of the association's news release.

It calls for early retirement for six of the district’s most senior employees and for elimination of those positions, at least for the time being.

The department would lose one ambulance crew, which would bring it back to the level of service it had four years ago, said Henry Apfelbach, president of the Fire Fighters Association.

Apfelbach said the plan is a compromise that will reduce costs while also looking after the interests of employees who have given years of their lives to a sometimes life-threatening public service.

“We realize that the budgetary deficits are coming and we need to figure out a way to best save the district money with the minimum amount of service interruption as possible,” he said. “We want to give the taxpayers the most bang for their buck.”

The plan, which would be re-evaluated annually, also calls for pay freezes.

The association has discussed the plan with Talbert and the Fire Commission, but they are still working out details.
Apfelbach said Talbert was not responsive to the plan when he presented it last year.

Talbert said he welcomes any input and that the proposal is the only one that has been presented so far.

Deputy Chief Sean Hughes and Executive Assistant Diane Brown were laid off from the district last week because of budget restraints, Talbert said.

The layoffs were a disappointment to the Fire Fighters Association, Apfelbach said. Hughes would have been one of the employees eligible for the early retirement plan.

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FRS Legislative Alert, HB 303

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 17:14:00 +0000

THIS BILL WAS WITHDRAWN AT 4:28 THURSDAY, JANUARY 27, 2011. ONE WEEK AFTER IT WAS PROPOSED!!!!

by FRS Option News

House Bill 303 was introduced by Representative Fredrick Costello (click name for contact information)of Ormond Beach. It is a far reaching and devastating proposal for Florida Retirement System members, particularly FRS Special Risk members. The bill was filed just today, so we have had very limited time to study it. Please note also, that we are not lawyers, so some of the language is somewhat subject to interpretation, but as we read it, the bill includes the following changes:

Service credit would be reduced from 3% to a maximum of 1.6% for ALL employees for future service after June 30, 2011. Higher credits for previous years will be honored, but all future years for ALL employees will be reduced to 1.6% per year. (HB 303, lines 112-125)

Effective December 31, 2012 the Deferred Retirement Option Program (DROP program) is terminated for ALL members. Those already in the DROP will be paid out and terminated. (HB 303, lines 147-152)

Overtime, unused sick pay and vacation pay will not be used in the calculation of Average Final Compensation(HB 303, lines 161-165, and 207-211)

The minimum retirement age for eligible employees (special risk?) goes from 25 years of service or age 52, to a minimum retirement age of 55, regardless of years of service, and is vested after 10 years. (HB 303, lines 601-606 firefighters, and 1239-1241 police officers). For those in special risk that are approaching 25 years and under age 55, this could be a disaster.

There are two other changes of note. The statute language that doesn’t allow decreases in benefits is struck out and eliminated. Effectively, this would seem to potentially change the law, and preclude lawsuits about the changes that reduce benefits, which currently seems to be against the law.

Another change which is pertinent to the change in minimum retirement age is the penalty for early retirement goes from 3% per year to 5% per year. If you are 50 with 25 years in, and want to retire now, you would effectively be penalized 25% of your pension, as the new retirement age is 55, and not just 25 years.

I urge ALL members of the Florida Retirement System to promptly CALL Mr. Costello at the number above, write him, and email him, and then do it all over again. You need to become a royal pain to him. He, and all your representatives, needs to be overwhelmed with the outcry from YOU!

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An interesting discussion on the San Diego city employee retirement

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 17:10:00 +0000

Pension-plan change would seem like default

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 17:08:00 +0000

As people discuss the Florida Retirement System, they should differentiate between current employees and future employees.

by Stanley Smith

Gov. Rick Scott's proposal to change the FRS for current state employees is the same as defaulting on those obligations to the employees. Investopedia describes default as follows: "Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or are unwilling to honor the debt."

The state employees accepted, as part of their compensation, a financial obligation from the state identifying what payments the retirees would receive if they put part of their compensation with the FRS instead of in a defined-contribution plan with different investment companies.

Those employees who chose the FRS did not expect the state to default on its financial obligations to the employees when they were counting on those payments to have some dignity in their retirement years.

It is also important to recognize that part of the problem with FRS is that from 2001 to 2010 the state made much smaller contributions for FRS participants than for participants in a defined-contribution plan. The justification for those lower contributions for the FRS participants was that FRS's assets were greater than its expected liabilities.

In other words, when times were good, the Republican-controlled state government took advantage of higher investment returns to spend money on other state activities. Now that there is no overfunding, it doesn't want to honor its financial obligations.

As recently as 2008, they were encouraging state employees who were in the defined-contribution plan to buy into FRS. To those who bought into the FRS in 2008, the current proposals favored by Scott now sound like fraud.

If the conditions of the state of Florida are that bad, why is Scott not talking about defaulting on all of its obligations, such as state government bonds?

He is not talking about defaulting on those bonds because rich people own those bonds. He would rather hurt the people who have taught the children of Florida and protected their lives and property. This is what Scott and the other critics of the FRS think is ethical financial responsibility.

If the state is in that much trouble, then the pain of that default should be shared. If Scott wants to not honor the state's financial obligations to its current employees, then he should not honor its other financial obligations in the same manner.

If he wants to cut FRS benefits to current employees, then he should cut the principal and interest payments on the state government bonds by the same percentage. Until Scott and the Republican Legislature are willing to share the pain of defaulting on the state's financial obligation with all debt holders, then this just looks like they are trying to take advantage of many low-paid state employees so they can protect the rich bond-holders from any losses.

I hope we can count on some Republican leaders to honor their words by meeting the state's financial obligations to its current and past employees.

At the same time, they should be evaluating what is fair compensation for new employees relative to other potential employers.

I have analyzed compensation for the Florida State University System professors and have determined that their current total compensation, including retirement contributions, is within 1 percent of total compensation in Georgia, Alabama and South Carolina.

It is less than the national average and less than the private sector. So you can significantly cut compensation for new employees, but you may not like the quality of those employees.

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FRS Change Ahead

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 17:04:00 +0000

Judging from the amount of media coverage the Florida Retirement System is receiving, it is not a question of whether there will be changes made, but a question of what change and how much. Our newly inaugurated governor, Rick Scott, has made it very clear that he believes FRS is a “ticking time bomb”. Last year’s legislative session included over 35 bills introduced to make changes at FRS, and we can speculate that those proposals might simply be foreplay for this session’s action.

The Florida League of Cities has waged a full scale war against your Pension. Representatives and Senators from both parties, from Senate President Mike Haridopolis, a Republican, to Senator Jeremy Ring, a Democrat and chairman of the Senate panel that is considering the changes, are out to change the Florida Retirement System. Senator Mike Bennett announced his intention to introduce legislation to make sweeping changes months ago (See Is Florida Paying Former Employees too much). Florida Tax Watch has recommended far-reaching changes of the Florida Retirement System

Why is this such a major issue all of a sudden? As of the FRS Annual Report from June 30, 2008, the Pension Trust was slightly “overfunded”. When Lehman Brothers went bankrupt in September and created a financial panic, the assets in the plan dropped significantly, and the fund became “underfunded” for the first time in 11 years. As of the most recently published annual report, for the period ending June 30, 2009, the fund was only 87.5% “funded”, with some $96.5 billion. According to the MyFRS website, as of December 31, 2010, the FRS pension assets were up to almost $124 billion. That is putting the fund assets back on par with where they were in 2008 when it was fully funded, and is a gain of some $30 billion since the 87,5% funding report . According to the FRS and SBA Annual reports, the amounts are as follows:

2006 $116 billion overfunded

2007 $134 billion overfunded

2008 $124.8 billion overfunded

2009 $96.5 billion 87.5% funded.

2010 $123.9 billion ???

Obviously the financial markets rebound has had a positive impact on the fund. Lawmakers, particularly those claiming the fund is a ticking time bomb, should disclose what constitutes a fully funded FRS and be able to support the logic behind the number, because it is this number that will drive any change being considered. If the fund is close to being fully funded why not just let the markets continue to improve the fund without drastic cuts to those who relied on this benefit.

In order to influence decision making, it is essential FRS participants understand the various proposals, as well as the potential outcomes of those changes. The following is our best effort to outline the history, changes, and what it all might mean to you.

During the early 2000’s, the FRS Trust funds regularly had positive investment returns which exceeded the actuarial targets and the Pension Plan had surplus funding (over funded). During those years, the legislature kept contribution rates into the plan below the actuarially determined rates deemed necessary. Unfortunately, the decision to underfund the FRS Trust Fund by the legislature during better economic times has resulted in the need for more taxpayer dollars to be invested into the plan during this period of recession and hard economic times. In addition to a conscious decision by legislators to underfund the plan, they also expanded the eligibility in the “Special Risk” categories to job descriptions above and beyond the original jobs of Law Enforcement, Firefighters, and Correctional officers, further adding to the funding requirements (FRS Pension Summary Plan Description, pp 1-2).

In 2008, when the financial markets bordered on a meltdown, the assets in the FRS Trust funds took an extraordinary hit, losing almost 20% in one year. That downfall led to the plan being underfunded for the first time in many years. Now, two years later, much of that shortfall has been regained (See the SBA 2010 Investment Report), but it appears the legislature is using that underfunding as the catalyst to cut benefits to FRS participants.

Governor Scott has indicated in a recent interview that he believes the earnings assumptions the SBA uses are unrealistically high. FRS uses an expected return on its investments of 7.75%, which is down from 8%. We can track the returns FRS has achieved as far back as 1975 from the SBA Annual Investment Report. You will notice that in the 36 years shown, there have been 28 up years (a +14.25% avg.), of which 22 (or 79% of all up years, and 62% of ALL years) have exceeded the 7.75% target return (exceeded by an average of some 6.5%) , and only 8 years have had negative results (avg. -5.79%). 28 up years at 14.25% and only 6 down years at a -5.79% average. Thats batting .777, which looks pretty good to me! Is the newly elected Governor suggesting we change a long term, highly successful investment strategy because of one bad year.

FRS returns have averaged over 9% per year. That would seem to indicate the SBA is doing a darn good job of managing the assets for the FRS. It would also indicate that 7.75% is realistic, and contrary to Governor Scott’s opinion. The SBA reduced the actuarial return target to the current 7.75% last year from 8% to reflect the lackluster performance in the last decade. While the result of that move should make FRS investment returns achievable, it had the dubious effect of increasing the amount of underfunded liabilities in the short term.

The benefit to further reducing the actuarial target is difficult to understand. By reducing the actuarial target of expected returns FRS is able to achieve, as the Governor suggests, it would increase the amount of money that must be put into FRS, and the underfunding issue becomes more real. Funding of the Pension plan comes from employer contributions and investment returns. If actuarial targets for investment returns are reduced, the only way to keep funding inline would be to cut benefits, or increase contributions. In this environment, the legislature doesn’t want to increase contributions, so they are looking to benefit cuts. It is also important to consider that “funding” is a 30 year process. Perhaps the legislature should consider using longer term results for setting a realistic return rather than be arbitrary about setting a number too low and impacting the fund negatively. Decreasing the actuarial target will not solve anything. The chaos of the short term financial panic of 2008 doesn’t seem to be the best benchmark.

A bigger question that comes to mind is just why the legislators feel FRS is a ticking time bomb. Yes, after the financial crash of 2008, the previously overfunded plan became underfunded, at least for the time being. Much of that underfunding has been made up over the last 2 years. According to accepted criteria for a well funded pension plan, FRS is still in great shape, and is heralded as one of the best Pensions in the nation. Why is the legislature using short term issues to make long term remedies?

With that in mind, let’s take a look at some of the other proposals being tossed around:

Employees contributions of up to 5% of their paychecks into their FRS pensions. Contributing to your own retirement is not in and of itself a bad thing. Employee contributions may also have the added benefit of making your pension more of a contractual plan, a plan that might not be as easy to change from a unilateral position on the side of the legislators. Unfortunately an employee contribution is the same as a pay cut. Since there has been a lack of pay increases over the last several years, and the likelihood that there will be no pay raises in the foreseeable future, it is a change that will hurt. Furthermore, the contribution into FRS is by legal statute at 9% (regular 22% special risk). If the state reduces the amount of the employer contribution by an equal amount, it will provide some relief to the municipalities’ and state budget problems. It will not, however, despite the comments of some legislators, help any pension funding shortfalls at the state level. Employee contributions will simply transfer pension costs from the employer to the employee, and the net amount going to the FRS will remain the same.

“Smoothing” the calculation of Average Final Compensation (AFC). Currently, AFC is determined by the highest five years compensation, including overtime and sick pay. Last year a bill was proposed that would make the AFC calculation the average of all years of compensation instead of the high five years. Smoothing will reduce the average pension to every participant significantly, literally almost cutting your pension in half. Obviously this would have a significant impact on taxpayers and FRS participants. We have been unable to find any plans that use more than five years for AFC calculations, many use only three, so five years would appear to be a fair basis for the calculation. A change of this magnitude would be a direct conflict with the benefit package that you were promised when you went to work for the government.

Eliminating Overtime and Sick Pay from the AFC calculation. It allows an employee to boost their final compensation by concentrating OT in the last 5 years of employment. Eliminating the use of overtime and unused sick and overtime pay could have a dramatic impact on your Average Final Compensation. It might be a better practice if FRS were to “smooth” the overtime over a longer period of years. That way, credit would be given for overtime, but it would be calculated on a more realistic basis, by using the average overtime worked for every year, and then applied to the last five. It is confusing to me as to how compensation earned by working overtime should not be used in determining your Average Final Compensation, as it IS compensation. Again, this is a departure from the promises made upon employment.

Raising the retirement age from 60 to 63 (from 55 to 60 for special risk). In conjunction with this proposal, the years of service needed to retire could go from 30 years to 33, and 25 years to 30 for special risk. Obviously, this is not something FRS participants want to see happen, especially if you are on the waning part of your career. I suspect the legislative logic has to do with what has occurred with Social Security. When Social Security was started, you had to be 65 to collect, and the average life expectancy in the US was about 67. Now, it is still 65 (or 66), and the average life expectancy in the US is over 78. What was designed as a two year benefit has swelled to a 13 plus year benefit. Obviously the math won’t work. It is a similar situation for FRS. The average life expectancy is growing, but the number of years worked is not. If the legislators are going to raise the retirement age, it should be done on a long term, graduated scale, so that those of you who are looking forward to retiring in the near future, don’t have those plans crushed.

Drop the DROP (Deferred Retirement Option Program). This will not be a popular decision, but might be one of the few proposals that actually could make some sense. DROP was created to keep experienced employees from retiring when they hit their 30 years (25 for special risk). By offering the DROP, employees were incentivized to put in up to an additional five years. In the current environment, where downsizing is prevalent, it is an expensive option for FRS to offer.

A sister proposal would be to reduce the interest rate paid on the DROP account. As you know, this proposal was snuck in at the last minute for last season’s legislative session. The proposal may have been fair, but the way it was slipped in wasn’t, and for that reason, and due to public (you) outcry, Governor Crist vetoed the bill. With interest rates substantially lower than they were when the DROP was started, it makes sense to make it better reflect current rates. For additional info please visit (FRSOptions discussion of a rate DROP). If you started you employment with the government after 1997, the DROP was an option you were promised, and if they eliminate it, it is just another broken promise by the state.

Indexing the COLA (Cost of Living Adjustment). This will hurt, but also might make sense. Since (at least by government measure) inflation hasn’t been averaging 3% for quite some time, it is logical to index COLA to an index reflective of inflation, like the Consumer Price Index (CPI). The automatic 3% is one of the nicest perq’s in FRS. A $30,000 per year pension grows to over $50,000 per year after 20 years. While indexing will (theoretically) allow you to keep up with inflation, it could have a real negative impact on your pension over time. Indexing COLA will also have a negative impact on how your actuarial Lump Sum Present Value would be calculated, as currently the 3% per year ads considerably to what is actuarially paid out over your life time.

Eliminate Double Dipping. Once again, it is hard to argue the legitimacy of being able to retire, collect a benefit and then go back to work at the same or similar job and get paid. While FRS has cut back on re-hire time periods, it may well be tightened up even more. It might be tough to eliminate double dipping altogether, as many people may well need to work, and legislating away one’s ability to make a living in the best manner possible would be hard. Eliminating the DROP would go a long way to doing away with this problem, so you might see that proposed this session.

Narrow the definitions of service classes, and the service credit given. As mentioned earlier, the special risk category has been expanded considerably over the years. Originally, it was specifically Cops, Fireman, and Corrections officers. It now comprises a myriad of additional job descriptions. While it is not my place to make a judgment of who does or doesn’t deserve the credit, it was designed for those who “put their lives in harm’s way” and had a real threat of death. You might well see it revert back to those definitions. There has also been proposals that would reduce the special risk credit to 2% from 3%. Since special risk still only comprises 10 or 12% of FRS participants, the saving here would not be great, and the moral issues it might create would be great. As a tax payer, I would prefer special risk positions to be given a priority in order to continue to attract good people. Senator Mike Fasano has already proposed bill SB 290 that would reduce the credit for judges and elected officers to 2%. While it will make for good sound bites to say he cut his own pension first, it would be a safe presumption that the average legislator is not counting on his FRS pension to the same extent as you are.

Raise vesting requirement back to 10 years. There is not much to say about this one. The original plan called for 10 years vesting (when you have earned a benefit), and it was reduced to 6% about 10 years ago. It is one of the less painful changes called for, but also will save a smaller amount of money.

And the biggie, Eliminate the Pension (Defined Benefit, or DB) and replace it with a Defined Contribution Plan (DC) similar to a 401-K plan. This would be huge. It might not immediately save municipalities on the cost aspect up front, but it would totally eliminate any “under-funded” issues forever. Actuarial calculations would go away. Your retirement would be based on how much money was contributed over your career, and the investment returns that money earned over the years. It places all of the risk on you, and takes all of it away from FRS. In my experience working with FRS participants, it is fair to say that many of you took the job in large part because of the generous pension. The private sector has already embraced this change. 15 years ago, 78% of corporations offered a pension; that number is down to 21% today. After seeing the pension issues of large and old companies like GM, it is an easy change for a private company to make. Pensions in the private sector are a benefit, while most public employees view it more as an entitlement they earn in exchange for lower pay. Less pay, better benefits has been a public service mantra forever. Eliminate the benefits, and one can guess the quality of employee will suffer. Another Con is a defined contribution plan is primarily funded by the employee (read that as a smaller paycheck), with a partial matching contribution from the employer. Again, this shifts the primary costs and the responsibility for your retirement to you.

In summary, are all of the proposed changes being driven by fact or political pandering. I believe it is safe to say changes will be made, and your input and views will help shape how the change is legislated. It is questionable whether there is a need for any changes, but that might not matter. The legislators have some very tough budget issues to solve, and the Florida Retirement System is the low hanging fruit for their easy picking of money to fund other areas. Many of our readers question how these changes can be legal, and hint at lawsuits if the state changes their benefits. Florida statutes 121.011, paragraph 3, part a states

PRESERVATION OF RIGHTS.—(a) the rights of members of the retirement systems established by chapters 122, 238, and 321 shall not be impaired, nor shall their benefits be reduced by virtue of any part of this chapter,

I am not an attorney, so I can’t say for sure what that means, but it looks to me like the benefits were meant to be secure. A problem I foresee; the statutes are created, deleted, and changed by the Florida Legislature, so I suspect if the language prevents change, they will simply change the language. ERISA, established by Congress to protect pension plan participants, does not cover the Florida Retirement System.

Nationally, many states have significant problems – Florida is not one of those. Unfortunately, the media propaganda has worked overtime to paint a picture of public pensions leading to those financial problems. Public employees, particularly special risk, have been stamped public enemies for their high salaries, and “exorbitant” pension plans. The “millionaire Cop next door” is on everybody’s lips. Accuracy has never been the strong point of our media, nor our legislators (see FRSOptions posts “Is Florida paying former employees too much”, and “Fact or Fiction?”), but the reality is, if people hear it enough, they will believe it. The reality is, had the various state legislatures appropriately legislated and funded their spending, as well as funding pensions as needed, these actions would not be necessary. Governor Scott plans to run the state like a business (corporate raider??), which could be good for all of us as citizens and taxpayers. It may not be easy, as he will not have the autonomy he enjoyed as a corporate CEO. It most likely will not be good for FRS participants.

Last year you demonstrated, if you join together and bury the legislators with calls, letters, and emails, you will make a difference. You are 650,000 plus strong, and can be heard. Educate yourself, and don’t fall victim to rhetoric. Let your legislators know what you know and that you know, and TELL them how you want them to act to best represent you, after all, that is their job.

Question if the fund is really “underfunded”

Reducing the employer contribution and shifting it to the employee does nothing to make the fund more fiscally strong.

Changing benefits for those already in the system is wrong, unfair and unnecessary.

Whether you are willing to accept reasonable changes to such things as guaranteed rates of return when the market doesn’t support those conditions.

And most important of all, you want your legislator to address real problems not ones made up to support a political agenda. There is plenty of pork in the budget that could/should be eliminated before you start cutting earned pensions!

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Gov. Scott proposes workers pay 5 percent into retirement and end DROP

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 16:58:00 +0000

Florida Gov. Rick Scott announced his proposal to save $2.8 billion over two years by requiring state and local employees to contribute to their retirement accounts and eliminating other elements of the programs that he believes cost state and local governments too much money.

by St Petersburg Times

Scott wants employees to start paying 5 percent of their salaries to their retirement accounts. He proposes scrapping the defined benefit plan for new hires and requiring that all new employees get 401k-style defined contribution plans that they can take with them when they leave government.

Scott wants to end the Deferred Retirement Option Program beginning July 1, the popular program that encourages older workers to retire by allowing them to draw a pension check and return to work. He also proposes reducing the annual service credit to 1.6 percent for most members of the Florida Retirements System (special risk class members, to 2 percent), according to a press release.

Scott's plan also calls for eliminating the 3 percent cost-of-living adjustment for employees currently in the system but offering no cost-of-living adjustment to new hires. Scott predicts the program will save government $2.8 billion over two years, presumably a number derived from a government report that projected $1.3 billion in savings over one year.

Doug Martin, director of governmental affairs for the American Federation of State, Local and Municipal Employees said the proposal to end the pension plan for new hires and send everyone into a 401k-style program "is a catastrophically bad decision.'' It will causes employer contributions to soar, he said, because there will be fewer employees paying into the system as people retire. "So to pay for the increasing number of retirees versus active employees in a closed plan, those contribution rates are going to go up.''

Although the governor kept details sketchy, he told reporters at a question-and-answer session earlier today that the money expected to be saved is not linked to his plan to cut property taxes. He defended the plan, however, saying: "I want to make sure that the pension plan, that anybody that’s relying on it knows the money is going to be there. Second, I want to make sure that I treat taxpayers fairly, and I want to treat employees fairly. So, if you have a plan in the private sector, you are generally participating. So I think it’s only fair that those who participate in the pension plan contribute.''

Asked whether he considers the pension plan actuarially sound, Scott was not sure. "It all depends on if you are comfortable with the anticipated returns. None of us can see into the future. If you're uncomfortable with those returns, then we’re underfunded. … It’s something I have to look at and see where I’m comfortable."

Scott, along with the chief financial officer and the attorney general, oversee the State Board of Administration, which manages investments for the retirement system. State Board of Administration executive director Ash Williams began his report on the SBA by announcing that the Florida Retirement System continues to increase in value, now at $125.1 billion.

After the meeting, Williams said that the fund does not need employee contributions to remain solvent. "Actuarially, I think we are one of the healthiest funds in the country,'' he said. "There’s no question about that." He said that there remains a "broader policy debate about the sustainability" of the plan based on whether the governor can continue to sustain the funding level that now requires government to contribute 100 percent of the retirement costs.

Chief Financial Officer Jeff Atwater agreed that Florida's retirement system is actuarially strong. "From the SBA perspective, as to the funding of the pension plan, it is in good shape,'' Atwater said after the Cabinet meeting. He added that he supports reforming how the program is funded.

Scott has also hinted in the past that he may be supportive of replacing Williams. He said he has met with Williams, and "I haven’t made a decision.'' Williams said he has not been asked to step down.

During his campaign for governor, Scott approved an ad run by the Republican Party of Florida blasting his Democratic opponent saying that when she was responsible for the fund it "lost $24 billion ... gone.'' At the time of his claim, the value of the fund was $118 billion, $16 billion lower than it was before the Wall Street crash of 2008, not $24 billion.

Scott later defended the ad as accurate, explaining that "that money was lost because you made a new investment decision every day to hold things."

Disclaimer: Story comments are intended to provide a place for constructive dialog about issues and events in our community. Your input is encouraged and can make a positive difference. To achieve this, no obscenity, personal attacks, or racial slurs are tolerated. With freedom of speech comes the responsibility to be respectful of others.

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Battle shaping up over pension proposal

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 16:53:00 +0000

Gov. Rick Scott has picked a fight with more than a half million employees with his proposal to make them fund their own pensions.

by David Smiley

Hal Krantz says it has been years since he brought home a pay raise. After 16 years of teaching, the married Coral Springs Middle School instructor with a daughter in college is struggling to stretch his salary while meeting the soaring costs of healthcare, food and other necessities.

Gov. Rick Scott's plan to compel public employees like Krantz to kick in as much as 5 percent of their paychecks into their pensions is causing quite a bit of angst. This is particularly true of teachers, who traditionally earn modest salaries offset by a broad benefits package, but also state workers, many of whom have not received pay raises in years.

The proposal is included in the budget that Scott will unveil Monday at a rally of tea party supporters in the Lake County community of Eustis.

Employees say the pension measure is the equivalent of a pay cut.

``We give up so much because we love this profession,'' said Krantz. `Now they are cutting even deeper into our pocket.''

Around the nation, governments are reeling from the poor economy and falling tax revenues. Supporters of Scott's plan, which would affect not just state workers but school employees and many municipal workers in the state retirement system, say it's imperative to change gears to keep the state and the pension fund solvent.

They note that for many in the private sector, salaries have fallen, jobs have grown scarce and traditional pensions have long since been replaced by 401(k) accounts that require workers to sock away money for their own retirement.

They point out that other states have already taken the step Scott is proposing. New York, for instance, requires employees to kick in 3 percent of their salary toward funding their pension for a period of 10 years.

Scott estimates it will save the state, which is facing a multibillion-dollar shortfall heading into the legislative session, $2.8 billion over two years.

``It's only fair that if you're going to have a pension plan, you're going to do just like the private sector does,'' Scott said.

Florida's pension system is currently funded by state and local governments contributing the equivalent of between 9 and 10 percent of an employee's income toward retirement. In the case of high-risk workers like police and firefighters, the percentage is higher.

Scott has talked of a 5 percent buy-in by employees -- basically splitting the difference with the state.

How generous is a state pension?

For most employees, after 30 years on the job, the annual stipend is equal to 48 percent of the average of that employee's highest five years of pay, according to the pension fund web site. The average recipient retires around age 60, at which point he or she can begin to collect.

There are currently 655,000 active members of the Florida Retirement System and another 304,000 retired workers receiving benefits. Up until now, those enrolled have not had to contribute any money to their plan.

``It's a pretty radical thing when you start talking about taxing state workers 5 percent of their salary in one year, when the majority of state workers haven't seen raises in five years,'' said Daniel Reynolds, national president of the National Federation of Public and Private Employees.

``While we are all reading and hearing about pension reform proposals with great interest, we don't know what is going to happen,'' BSO spokesman Jim Leljedal wrote in an e-mail. BSO employees are in the state system, as are Miami-Dade police.

``Everybody is on edge right now,'' said John Rivera, president of the Miami-Dade Police Benevolent Association.

Rivera predicted Scott's plan, as well as the possibility that new hires could be forced to buy into a system resembling a 401(k), would make staffing the Miami-Dade Police Department problematic.

``They're going to make an already impossible job that much more unattractive,'' he said.

Some civil servants feel as though Scott's proposal vilifies them.

``This whole issue gets to be a cruel myth blaming state employees for the budget deficit,'' said Paul Hunt, a former Coral Gables social worker who retired in November after 17 years. ``These are people who have worked honestly in the community, giving good service, and often taking lower wages now so they could retire with a sense of security.''

Broward Superintendent Jim Notter said the cuts would not only affect the district's 15,500 teachers but cause more hardship for its lowest-paid employees, like bus drivers. ``I believe in a time of economic crisis, it borders on insanity to further take money out of good employees' pockets,'' he said.

In Miami-Dade County, a first-year teacher earns $38,500; a 22-year veteran earns $68,225. For that starting teacher, the 5 percent contribution would be about $163 a month.

Unions have already vowed to fight the proposal, said United Teachers of Dade President Karen Aronowitz. ``What Rick Scott is really saying is let them eat cat food.''

[source]

Florida lawmakers see big savings in state-worker pension cuts

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 16:46:00 +0000

Forced to plug a budget hole of nearly $4 billion, state legislators see pensions as a source of big-bucks savings.

by Bill Cotterell

But many of the employees and retirees who count on the Florida Retirement System see it as survival. Despite some big payouts to high-earning executives, many of whom stockpile pensions for five years in a lucrative deferred-retirement plan or return to work as double dippers, the average retiree draws less than $1,500 a month.

For some of the former police officers, teachers, county and city employees and state workers receiving benefits from the FRS, it's not enough to cover their health insurance costs.

"We're not living on caviar, I can tell you that," said Nancy Stewart of Estero, who retired last year after more than 36 years as an elementary school teacher. "I think our pensions are only being brought up right now because it's a symptom of the recession."

With the state facing revenue shortfalls, and Gov. Rick Scott agreeing with the Republican legislative leadership that no new taxes will be considered, a retirement system that paid $5.32 billion to more than 300,000 retirees last fiscal year is a fat, slow-moving target.

"Reform is coming," state Sen. Jeremy Ring, D-Margate, told employee union representatives at a meeting of his Senate Governmental Oversight and Accountability Committee. "Everything is on the table."

Ring is working on a package that will require contributions by employees, who now have fully paid FRS pensions. Ring's proposal will address annual accrual rates, minimum retirement ages and qualification for higher special-risk pensions.

In addition, the Legislature could do away with defined-benefit traditional pensions for new employees and could offer them only 401(k)-style defined-contribution plans that are now more common in the private sector and without any liability for the state and other governments when workers retire.

On the chopping block, too is the Deferred Retirement Option Program that allows employees to "retire" and continue working for up to five years -- eight for teachers -- while their monthly pension checks are banked and earn 6.5 percent interest.

'GOT THEIR ATTENTION'

Fred Costello fired a shot across the bow of employee and retiree advocates. The former Ormond Beach mayor, a first-term Republican in the House, filed -- then quickly withdrew -- what legislators call "a parade of horribles." House Bill 303 would have ended the DROP program, cut annual accrual rates, raised early-retirement penalties, allowed pension reductions and hiked some retirement ages and service requirements. Ending DROP would force 33,577 public employees out of their jobs next year.

"I pulled the bill because there's no need to hit a mosquito with a baseball bat," said Costello. "I think it got their attention and everybody will negotiate in good faith now. I'm a nobody; I didn't think a freshman representative was going to change the whole retirement system himself, but this got them talking."

'UNSUSTAINABLE'

The FRS has consistently been one of the nation's strongest, funded by an investment portfolio of $126 billion that posted market gains of 14 percent last year. State employees make up about 20 percent of the plan's 655,367 members, with school boards accounting for 48 percent and the rest spread among counties, cities, special districts and colleges.

State, county and local governments will pay about $3.6 billion into the fund this year -- roughly 9 percent of payroll for regular employees and 22 percent for the special-risk fire, police and prison officers.

"It's unsustainable," said Costello. "No pension was designed for people to retire at 55 and live another 30 years, which is what's happening. The actuarial accrual rate requires more dollars because we know people are living longer, and that's a wonderful problem."

But many employees and retirees feel they're getting stuck with the tab for that problem.

"I just think they're using the retirement system as something they can gut and use the money for something else they dig for themselves," said Dorinda Bain, 62, a booking clerk at the Santa Rosa County jail. She said she joined DROP last August and hopes to retire at 66, when she will have about 17 years in the system.

"I understand change needs to be made, but if you have a contract with someone, you can't just decide to change it for people," she said.

'PANICKY'

On paper, a regular-class employee with 30 years' service and an average final salary of $40,000 would have a pre-tax pension of $19,000 annually. That works out to $1,453 a month. Health insurance premiums are $549 for single employees and $1,243 a month for family coverage. There is a state insurance subsidy that maxes out at $150 a month, but lawmakers last year tried, but failed, to reduce that.

Doug Martin, lobbyist for the American Federation of State, County and Municipal Employees, said most employees don't stay 30 years and those who opt for survivor benefits have pensions scaled back accordingly. AFSCME calculated that the average FRS benefit for regular employees at an average $34,651 salary and average service of 21 years works out to a monthly pension of $970.

"I served 30 years as a Brevard County deputy sheriff," said Scott Trotter, 51, of Titusville. "I retired one year ago and my pension is $18,000.00 dollars a year less than I was making while working. My medical insurance cost is $905 a month; that's over $10,000.00 a year right off the top."

Trotter said he went back to work as a process server. He conceded "I'm doing pretty well," having compiled $210,000 in DROP, but he rolled it into an IRA because he is still far short of Social Security or Medicare eligibility and has a wife and daughter.

"When people who don't know the facts attack the FRS pension plan they seem to only want to include the high-end workers making six-figure-plus salaries," he said. "I personally had to go back to work just to pay the bills."

Linda Edson, 62, retired after 41 years in the Leon County schools last year with a pension of about $2,500 monthly. Now she attends House and Senate committee meetings to hear ideas from legislators and lobbyists, while awaiting Scott's Feb. 7 budget proposals. She said she wasn't surprised that Costello withdrew his bill, after he touched off a barrage of phone calls and e-mails among employees and retirees.

"People were getting panicky, so I know he was getting a lot of phone calls and e-mails," she said. "I don't know if these legislators know the power of the computer."

'NOT LARD BRICKS'

One thing that irks legislators, and their taxpaying constituents, is the "non-contributory" nature of the FRS. The Senate voted last year to make employees contribute one-fourth of 1 percent of salaries into the fund, but the plan stalled in the House.

Engineer Chet Grimsley of Tallahassee, who went to work for the Department of Transportation in 1964 and retired last year, said taking on the full cost of the FRS was the employers' idea. Before the FRS was created in 1970, teachers used to pay 6.25 percent into their pension fund and state and county employees chipped in 4 percent, both amounts matched by employers.

"Now, it's being portrayed like we're taking advantage of something," said Grimsley. "But the Legislature did it."

He also said Scott and legislative Republicans find government employees an easy target.

"I'm a registered Republican, always have been, but I don't like the Republican attitude toward state employees," Grimsley said. "It's not going to help, in the future, to recruit state employees."

Attorney William Porter of Havana, an attorney for the Agency for Health Care Administration who started as a Highway Patrol officer in 1972, said pension cuts will ripple through the economy hurting realtors, insurance agents, retailers, "and a slew of Florida businesses that profit from these programs."

"This isn't about lard bricks," he said, citing a term ex-Gov. Bob Martinez once upset state employees by using. "This is about promises and long years of working steady and doing the right thing, and being slapped and squashed for the effort."

[source]

The Impact of Public Pensions on State and Local Budgets

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 16:39:00 +0000

50 States in debt

noreply@blogger.com (SoWal Firefighters) — Tue, 08 Feb 2011 16:24:00 +0000

A snapshot look at 50 States in Debt Media Gallery

SWFD AirHeart-1 Remembrance

noreply@blogger.com (SoWal Firefighters) — Wed, 20 Oct 2010 11:52:00 +0000

On October 20, 2004 a crew of brave men made the ultimate sacrifice in their service to others in a fatal medical aviation accident. Wednesday, October 20, 2010 marks the sixth anniversary of that day, the day that SWFD members were notified that AirHeart-1 was missing. The AirHeart-1 helicopter was carrying Robert Heighton, SWFD Firefighter/Paramedic; Jack Chase, Sacred Heart Flight Nurse; and Tom Palcic, Pilot.

On October 20, 2010 at 7:50 a.m., SWFD will sound a general alarm and have a moment of silence to honor the memory of these dedicated public servants.

Please keep Robert, Jack and Tom and their families in your thoughts and prayers and honor their sacrifice.

“The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding, go out to meet it. With this tribute, we celebrate their lives, memorialize their sacrifice, and commemorate their service.”

Sandestin Hilton After Action Report

noreply@blogger.com (SoWal Firefighters) — Tue, 19 Oct 2010 20:15:00 +0000

As many of you may know, South Walton Firefighters mitigated a large fire at the Sandestin Hilton, on 3 October 2010.

Click Here to read the full report:

Sandestin Hilton After Action Report

Introduce Yourself & Share your experience(s) with YOUR SoWal Firefighters

noreply@blogger.com (SoWal Firefighters) — Fri, 13 Aug 2010 19:17:00 +0000

Here is a chance to introduce yourself with your South Walton Firefighters, and to share your experience(s) you have had with SoWal Firefighters, or tell us what you think of the how we are doing. Whether you are a SoWal local, or here on vacation, if your experience(s) was good, bad, or ugly, your feedback is appreciated, and we appreciate your support. Thank you for your positive comments as well as pointing out suggestions and areas where we can improve.