Florida Counties, Schools Face Higher State Pension Contributions
By Lloyd Dunkelberger, News Service of Florida
TALLAHASSEE — Florida counties will have to contribute an additional $66 million to the state pension fund in the new budget year, according to legislation that has started moving in the Senate.
As a result of a decrease in the assumed rate of investment return on the $160 billion pension fund, counties, school boards, state agencies, universities, state colleges and other government entities will have to increase their contributions in the 2018-2019 budget year to make sure there is enough money to pay retirement benefits in the long term.
The increased payments total $178.5 million, including $66.4 million for county governments, according to legislation (SB 7014) approved by the Senate Governmental Oversight and Accountability Committee last week.
School districts, whose employees represent about half of the 627,000 active pension participants, will have to contribute an additional $54.4 million.
State agencies will have to contribute another $31 million. Universities will have to contribute $11.8 million and state colleges an additional $4.8 million.
A handful of cities and special districts that participate in the state retirement system will face a $10 million contribution increase.
County governments, which face the largest contribution increase, will have to accommodate the added expense as they shape their 2018-2019 budgets.
Rep. Caldwell Outlines Long-Term Pension Goals
For a more competitive Florida, the Florida Chamber of Commerce believes that creating fiscally stable governments through modern and sustainable retirement programs will secure public pensions and protect taxpayers. Creating fiscally stable state and local governments through modern and sustainable retirement systems will help avoid a bankrupt future that too many state and local governments currently face.
“I think the thing to really focus on…is the way these are funded,” said Rep. Caldwell. “It comes out of taxes on our insurance premiums. So everyone in the state pays for these municipal pension liabilities. The debate in the legislature is about how those monies are allocated.”
The Florida Chamber believes our state needs to take action to create a local pension system that is sustainable for the long-term, but in a way that doesn’t place additional burdens on taxpayers.
“Our goal between the house and senate, at the ten thousand foot level, is to gain greater flexibility in how those premium tax dollars are allocated and how they are able to be used to pay for base benefits,” explained Rep. Caldwell. “There’s been, over the years, a buildup of commitments for extra benefits that are frankly, very expensive and unsustainable long term. We need to be able to allow the cities and unions to negotiate to a more realistic level.”
At a state level, the Florida Chamber continues to fight to reform the Florida Retirement System (FRS) into a program that is more sustainable- not just for the taxpayers, but for those in the system that will rely on their retirement at some point. While it’s true that Florida’s FRS is one of the best retirement systems in the nation at 86.6 percent funded, that still leaves more than $21 billion in unfunded liability. As it stands, Florida families are on the hook for $500 million each year for the next 43 years- funds that could be used for other important state priorities.
“This $500 million a year is money we could be spending on other big priories- education, healthcare- both of which consume a great deal of our attention each year,” said Rep. Caldwell.
And like the Florida Chamber, Rep. Caldwell believes long-term solutions will keep Florida moving in the right direction.
“When you read about scenarios where pensions go bankrupt and the pensioners themselves, the terrible stories of folks that relied on that retirement, then have nothing,” said Rep. Caldwell. “It’s a commitment not only for the taxpayers but for those people who are banking on that for their retirement. They need to be sure that they are going to have something that’s solid and existent when they are ready to retire.”
Visit our Pension Reform page to learn how the Florida Chamber is fighting to reform unsustainable pension programs.