More than half of Florida’s local government pension plans are less than 70 percent funded, a situation that will drive the Sunshine State to an inevitable catastrophe, according to the nonpartisan, nonprofit Florida TaxWatch research institute.
Robert Weissert, director of research and chief counsel for TaxWatch, warned a crowd gathered for a Republican Club of Central Palm Beach County meeting on Thursday, that the archaic “defined benefits plan” for municipal employees may fly under the public radar, but it is the Tallahassee watchdog group’s top priority.
“By law, these promises must be kept, yet Florida’s localities are underfunded to the tune of $4 billion,” Weissert said. “The Leroy Collins Institute at FSU rated 23 of Palm Beach County’s 29 pension plans at an ‘F’ or ‘D’ status, meaning either your taxes go up or your services go down, or a combination of the two.”
Weissert called the defined benefits mandate anachronistic, the type of system that led to the downfall of the steel, airlines and auto industries.
“It was devised by politicians and unions without any citizen input, and no business uses this anymore,” he said. “Everyone has switched to 401(k) plans and the like. But the obligations must be met.”
Weissert cited examples of how the retirement systems have been abused, including an instance where one 911 operator in Miami Beach engaged in “spiking” – piling up overtime in her last years on the job – to retire on her $55,000 salary, for a yearly benefit of $165,000.
He also noted that the million-member Florida Retirement System for state employees was funded at 87 percent, but it still received $500 million in contributions from taxpayers. By contrast, Illinois’ state pension system is $100 billion in debt, Detroit is paying its retirees 19 cents on the dollar, Puerto Rico’s pension plan is 6 percent funded, and municipalities in California, Kansas and Mississippi have declared bankruptcy due to exorbitant pension commitments.
“The actors in drawing up these plans – the actuaries, the union lawyers, the politicians – never left a chair for the taxpayer. They knew that today’s payments would be based on tomorrow’s promises, and that ‘government’ could legally reach into your pockets to pay for them,” Weissert said. “But other factors — voter apathy, bad collective bargaining laws, investment restrictions, insurance premium caveats and ridiculous employee benefits — also contributed.”
Weissert made a recommendation for how the state can get out of the mess it’s in.
“Reform requires action at the state level, with reasonable alterations to our constitution, at the legislative level with changes to Florida’s statutes 112, 175 and 185, and massive awareness programs in localities, with media coverage, homeowners and condo rallies educating politicians and talking to all types of civic groups,” he said. “People and communities must learn the liabilities they are shouldering.”
Otherwise, Weissert said, a fiscal tsunami will engulf every Florida community, leaving our children and grandchildren to bear the brunt of it all.
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