800 pound gorilla in the room

I listened to the presentation on the Union benefit crisis from home this morning and learned from an attendee that, the commission chamber was packed with employees who also spilled out into the hallway. They were all there to get first-hand knowledge presented by Pension experts. Most have had third party information that has trickled down to them from the Unions. The City Manager has declared a state of urgency and she wanted them to know that Jack Seddon, executive director of two Unions, was wrong when he said, “the City Manager is stealing your money for her pet projects.”

In a nutshell, according to Jim Linn, Pension attorney, revenue is declining and costs are increasing. This makes for the perfect Tsumani.

By law, the City is required to fund Pension Plans on a sound, actuarial basis and make the required contribution. We are at a point that the unfunded debt is 50% of asset value. We have had actuarial losses in 8 out of the last 10 years.

Saying that Lake Worth has a very generous benefit structure, there are a few options: freeze the benefits at the current date…current and future employees would join the new Plan. Go out of the pension business and join the Florida Retirement System. Set up a defined Contribution Plan which would be similar to a 401(k). Bill Thrasher, Finance Advisory Board member, recommended this. Close the Plan entirely and the deficit would immediately have to be made up through a bond or some other type of funding.

Most of the commission asked questions and wanted to understand certain key points wondering how we got to this stage of $60 million in unfunded debt. Commissioner Maxwell, funded by the Unions in his last campaign, was silent for most of the morning. He asked whether he could get a copy of the presentation and if the public could speak.

If the employees went away with any knowledge or understanding of this situation they would have to now realize that Lake Worth can not sustain pension benefits in place at the current levels. Something must be done or lay-offs will start. The Unions have finally agreed to sit down at the bargaining table.

As someone who was there told me, "Change is in the air for fiscal responsibility." They could feel it.