Press Release: As part of Mayor Ashton Hayward’s 20 Solutions for 2011 campaign platform to address lingering pension problems with the City’s various employee pension funds, today the Mayor announced a seven-member Pension Advisory Committee to evaluate each pension fund and make specific recommendations for improving the long-term financial health of the pension funds, and reducing the burden on City taxpayers to fund the plans.
“Like many cities, states, and countries around the world, Pensacola is facing a revenue challenge. Markets are down, people are living longer, and pension plans are becoming a real challenge for local governments everywhere,” said Hayward. “This committee will be charged with evaluating each pension fund and recommending specific changes to our pension and retirement benefits plans to keep the City, the pensions, and our City employees and retirees on sound financial footing,” Hayward continued.
Hayward said the committee would be comprised of community business leaders as well as employee pension fund representatives. Of the seven-member committee, Hayward appointed four members, and each pension fund and employee group (Police, Fire, and General Employees) appointed one member also. Hayward noted this committee makeup would allow for a business-oriented approach to the pension fund challenges but still provide access and input by affected employee groups.
“The pension issue is one that our City has been facing for a long time. We won’t solve it overnight, and it is very personal for many of our city employees,” said Hayward. “But by involving employee groups on the committee, we are able to engage those most affected by any potential pension changes – our employees – and still look for ways to save the taxpayers money. Let’s face it – the citizens don’t want to be stuck footing the bill, and the employees don’t want the pension funds to go bankrupt. This committee will work together to minimize the risk to both the taxpayers and the employees,” said Hayward.
The goals of the committee focus on two key components. First, the committee members will assess each of the three CIty pension funds – general employees, police, and fire. For each of the pension funds, the committee will review and assess the current financial position, cost to taxpayers, cost per employee, and long-term financial health. The committee will also compare the current benefit plans to the Florida Retirement System plans, and private-sector retirement benefit plans.
Following the review and verification of the fiscal position of the funds, the committee will then identify, evaluate, and recommend potential reforms to the city pension plans to preserve the long-term financial health of the funds and reduce or eliminate the unfunded liabilities for the funds, which are currently being covered by taxpayers. The committee will look for alternatives to the current pension plans, given legal and state requirements governing the funds, and will recommend specific actions to the Mayor for his consideration to reform the pension plans and protect the taxpayers from further unfunded liabilities.
Hayward said this committee was another step in completing his 20 Solutions campaign pledge.
“I promised the voters that I would work to create jobs, restore confidence in city government, improve neighborhoods and take action on lingering problems. This pension issue has been a challenge for the City well before I was elected, and for several reasons. But I’m hopeful that this committee of committed citizens and employees will be able to help us find new solutions to this problem, and I thank them for their service,” said Hayward.
Members of the committee include:
Dave Penzone – Business Consultant and Former Southeast Managing Tax Partner, Deloitte Private Client Tax Advisors
Bill Rankin – Attorney and Partner, Law Firm of Kerrigan, Estes, Rankin, McLeod and Thompson
Rick Fountain – Attorney and Business Law Instructor, UWF
John Peacock – Financial Advisor, Edward Jones
Rodney Eagerton – Pensacola Police Department and Chair, Police Pension Board
Richard Grover – Pensacola Fire Fighter, member of Fire Pension Board
Kim Aguiar – City of Pensacola employee, head of local AFSCME union, representing General Employees
The committee will be subject to all Florida Sunshine Laws, and the first meeting will be announced next week. The committee will have 90 days to complete its work and submit a written report to the Mayor.
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Pension Advisory Committee Objectives
The scope of work for the Pension Advisory Committee is to review, evaluate, and recommend a course of action for the City’s defined benefit plans. In reviewing the plans the committee is to determine the integrity of the facts that have been presented, state if there is or is not a problem with the current plans. and provide specific cost reductions, if there are any, for consideration.
The City staff will provide a history of each plan
* What has been done
* What has been presented that can be done
Evaluate the financial viability of each pension fund (police, fire, general).
* Identify any unfunded pension liabilities for each fund.
* Quantify the annual taxpayer contribution to each pension fund, including any unfunded liabilities.
* Quantify the annual average cost per employee for each pension fund.
* Compare this data to similar private-sector retirement benefit plans.
Evaluate the future economic impact to the City and taxpayers under the current pension contribution and actuarial models for each pension fund. Provide a 3, 5, and 10 year projection for each.
Comparison of the city’s plans to the Florida Retirement System.
Review what can be done legally as long as the City receives the State Insurance Proceeds for Fire and Police Plans.
Recommend specific policy or management reforms to reduce the future unfunded mandates and taxpayer costs for all pension funds. Including but not limited to the following:
* Leaving the plans as they are currently
* Recommend benefit reductions that would save taxpayer money
* Closing the plans and moving to FRS
* Closing the plans and starting a 401A defined contribution plan