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Home My WebLink AboutHandouts_Workshop_11/05/2008 (2)Telfrin, Debra From: McWilliams, Lori Sent: Tuesday, October 28, 2008 4:35 PM To: Arena, Vince; Calvin Turnquest; jhumpage@tequesta.org; JRH33469@aol.com; Pat Watkins; pwatkins@tequesta.org; Tom Paterno; tpaterno@tequesta.org; turnquest@adelphia.net; Vince Arena Cc: Debbie Telfrin (E-mail); Michael Couzzo (E-mail) Subject: FW: Broward County cities face $1.1 billion pension shortfall Forwarding per Michael. -----Original Message----- From: mcouzzo@tequesta.Org [mailto:mcouzzo@tequesta.Org] Sent: Tuesday, October 28, 2008 2:38 PM To: McWilliams, Lori Subject: Broward County cities face $1.1 billion pension shortfall This story was sent to you by: mcouzzo -------------------- Broward County cities face $1.1 billion pension shortfall -------------------- As markets tumble, it is getting even harder to cover pensions that were sweetened during better times By Jennifer Gollan South Florida Sun-Sentinel October 28 2008 As the housing market surged and tax revenues poured in over the past decade, 19 municipalities in Broward used some of the extra cash to sweeten employee pensions. They boosted payouts, lowered the age to qualify or granted annual cost of living increases, according to a Sun Sentinel investigation. The complete article can be viewed at: http://www.sun-sentinel.com/news/local/broward/sfl-retireessboct28,0,7280720.stor1r Visit South Florida Sun-Sentinel.com at http://www.sun-sentinel.com ~ ~ ~~~t Broward County cities face $1.1 billion pension shortfall -- South Florida Sun-Sentinel.com Page 1 of 3 ~-_ S~unS~entinei.com Classifieds Place an ad Finn a jat> Find a car Autos A-Z Find ral estate F-ind rental properties Dating Pets Weather Hurricane HQ Traffic News Broward County (::]Gan UI t..l'eE`~r C:oop.r (:;rry C;orai Sprinns Dani;; Leach Davie Der6eld Beach Fart 1. a:~:.ierds{Ic ii„landalc F.',earh Hu!lyvr~oci [3~arn Lauderdale [;y . 4:ea Lauderdale Lakes Lauderhii! 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Then the housing market tumbled, followed by the economy. and mandated property tax cuts kicked in; leaving a gap of at least 51.1 billion between what those cities promised their current and future retirees and the money set aside in their pension funds. If the market fails to rebound significantly as those payments come due, these municipalities will have to cut public services; borrow or ask taxpayers for more. "In Broward; and the nation. [using tax windfalls to boost benefits] was a common phenomenon. You had tremendous investment returns," said Chris Wallace, who works for New Community Strategies, aDavie-based financial consultant for local govermnents. "They overlooked the long-term costs." -- --- --- --- --- Pensions generally fall mto two Related links categories. Search: Employee pensions offered by local governments in Broward County Broward County city-by-city pension details Cities with the largest pension shortfalls Ads by Google In one, the payout varies, depending on contributions made by the employee, municipality or both. plus gams or losses in the market. The other provides a guaranteed monthly payment based on an employee's salary, age.. service and other factors. In these; money is invested. and if the returns fall short. taxpayers make up the difference. The 19 municipalities facing shortfalls each offer some employees guaranteed pensions. They are Coral Springs, Cooper City, Dania Beach, Davie, Deerfield Beach; Fort Lauderdale, Hallandale Beach. Hollywood, Lauderhill, Lighthouse Point.. Miramar, Oakland Park; Parkland.. Pembroke Pines, Plantation, Pompano Beach, Sunrise, Tamarac and Wilton Manors. Their combined shortfall was 51.1 billion as of Oct. 1.2007, from the I most recent figures available, and `-~ -'-'--~° --°---•--~ doesn't even reflect the effect of the current market meltdown. Already, the gap id 30 times as great as what those cities faced in 2000 -driven by inflation, benefit enhancements during flush times, and poor market returns. It is too early to tell how the recent market gyrations will ultimately influence the problem. Unions have lobbied hard over the years for more compensation.. said Miramar Human Resources Director Phil Rosenberg, and "one of the focuses ofi the last decade has been increases in pension benefits." Pembroke Pines Mayor Frank Ortis blamed WaH Street, not the unions, for the problem. "A lot of it is about investments doing poorly." said Ortis, whose city faces a $156.$ .. n. r,r ;icier http://www.sun-sentinel.com/news/local/Broward/sfl-retireessboct28,0,7280720.story 11/5/2008 Broward County cities face $1.1 billion pension shortfall -- South Florida Sun-Sentinel.com Page 2 of 3 Multimedia Gallery million shortfall The Day in Pictures Sports Cutting back Miami Dolphins Some cities are taking steps to control benefit costs. For example, Mir Miami Heat became the first city in the state to negotiate a "two-tier" system with c r hired before October 2008 can work 20 years and retire on 80 percen s. Holiday Ho Officers hired after that date must work 25 years to retire on 75 perce salaries The city now intends to negotiate a similar deal with firefighte x opinion with city managers. ee p o s r'om Florida and around the world. Check out new photos now. obituaries "If you do nothing, then the costs are going to grow and grow," Rosen~er s id. Fo~u~ar photo galleries News Tips Hollywood, which is $311.3 million short of funding all its pensions, is ~hpierleaders: Which South concessions. Yet earlier this year it doled out 110 bonuses of $26,000 Florida team has the best? Topics firefighters under a provision of their contract that distributes extra pay the slogs pension fund performs well in a given year - in this case, last year, before the market tanked. Local mug shots: Broward Video County police booking blotter "The bonuses have definitely worsened the situation," said Hollywood er Get Local Beam Furr "I don't think everybody understood how expensive they were. Olympic Goddesses Newspaper services Fort Lauderdale, facing a $207.5 million gap, last year won union con lose Get home delivery the General Employees' Retirement System to workers hired after Oct. lead, Subscriber services they are enrolled in benefit programs that do not offer guaranteed pay n't `eacherresources Work at Sun-Sentinel happy," said John Sherman, who heads the negotiation team for the International Advertise with us Brotherhood of Teamsters, Local 769. "One of the attractions of city jobs are the benefits. Buy photos Now those have started to disappear." Buy back issue contact us Underpaid? Seli our paper Some cities argue they must increase benefits because "our salaries are not comparable Newspaper boxes to the private sector," said Lauderhill Finance Director Kennie Hobbs. "So pensions play ` +ii a large role in attracting and retaining qualified employees." Two years ago, his city introduced acost-of-living increase of 1 percent annually for firefighters, and up to 3 percent annually for managers. But there is widespread disagreement among benefits experts about how private and public salaries compare. In Florida, local government workers earn an average of $42,570 annually, compared -~5r with $38,945 for private sector employees, according to 2007 Bureau of Labor Statistics -,~ data. Digital Edition subscribe Now! In Parkland, commissioners last year approved a plan that increased pension payouts for four current and retired police officers. In addition, the officers now have to work only 20 Resources years instead of 25 to qualify. Receniarticles R:;S feeds Mobile services "This is a struggle for us, and we may have to borrow $1.2 million to fund it," said Newsletters/Alerts Finance Director Barbara Hastings, Florida Lottery Find a restaurant Nevertheless, Commissioner Jay Smith praised the decision because "these officers are Movie times out there putting their lives on the line for us." Horoscopes Calendar of events Wehcam Stuart Reinfeld, 49, an attorne who lives in Parkland, scoffed at that notion. y Site Map "The problem with the government is that when times were good, everyone took it for Metromix granted and pumped up their pensions," he said. "I have to subsidize my own pension. We are taxed so much as it is; I don't think the taxpayers should have to pay more." Jennifer Gollan can be reached at jgo.Llan@SunSentlne.l__co.m_ or 954-385-7920. G' E-rnail Share ~, Print Related topic galleries: John Sherman. Unions; Interior Policy, Wages and Pensions, Local Authority, State Budgets, Marketing All topics F_or the,.latest v_o..te.r_info an.d_w_.ho'saeadin.g._n the~olls click here, Copyright rJ 2o0S, Soutl; Florida Sun-Sentinel http://www.sun-sentinel.com/news/locaVbroward/sfl-retireessboct28;0,7280720.story 11/5/2008