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The funding of pension funds is causing a huge gap in budgets for municipalities across the country. Just recently, the PBPost reported that West Palm Beach is expecting an $8.4 million budget shortfall. Pension costs have risen nearly $7 million since 2009 with salaries up another $1.7 million. The small amount of ad-valorem received due to the rise in property values won't cut it. Even though city departments have stayed within their budgets, pension and salary costs continue to outpace property values giving us less means to operate.
Tonight, Lake Worth will have its second budget workshop...the May meetings were cancelled. At this meeting, they will be discussing certain enterprise funds, funds that make revenue for our city. We will find out if the costs to our residents will go up for water, sewer, refuse and stormwater. This blog, however, is about other issues including pensions. The pension costs are included in these fund discussions and some are truly incredible.
As management is extremely quiet on just about everything, we have no idea if they have been meeting with the unions and what is going on in that respect. There are a total of 320 police and fire pension plans in 200 Florida
cities. Kraig
Conn, a legislative counsel for the Florida League of Cities said of those plans, 180 are funded at a level below what experts consider healthy. Morningstar set a 70 percent threshold for fiscally sound systems, but other credit rating agencies peg it at 80 percent.
As of the last audit for the year ending September 30, 2012:
Actuarial funded ratios of the Pension Trust Funds as of October 1, 2011--
Employees Retiree System: 59.1%
Police Officers Relief and Retirement systems: 55.3%
Firefighter's Pension Trust: 51.7%
As of May 6, 2013, it was reported by our Finance Department that our Unfunded Liabilities were close to $85 million--
The Employee’s retirement $ 43,463,807
The Police retirement plan $ 22,548,900
The Fire retirement plan $ 22,605,192
These are a few costs of which we have no control. I'm not sure if it was just bad contract negotiations. The PBSO contract is an example of one that was not negotiated to our advantage as we pay more per capita than any other municipality serviced by the PBSO. As of April 2010, the PBPost revealed the following stats for some of the cities:
Cost per Officer:
Belle Glade: $57,815
Lake park: $73,067
Lake Worth: $106,470 (and that's when we had 134 officers supposedly on the streets. That number was negotiated down in subsequent years)
Mangonia Park: $84,467
Pahokee: $40,385
Royal Palm Beach: $66,601
South Bay: $20,686
Wellington: $70,130
We are one of the poorest cities and we pay the most.
The problem seems to be due to the failure of Lake Worth in making the necessary
contributions to the pension fund to maintain its actuarial integrity
compounded by less than stellar returns over the past several years. The market is now higher than it has ever been and this is a plus for us.
We have a $63 million road plan on the table; over one-half of our housing stock are rentals; current foreclosures number 2,155, current vacant properties are around 2,000; our children just can't learn having a mean SAT score of 791 at Lake Worth High School; and we have poverty numbers close to 30% in many areas of our city; public safety expenses represent 62.9% of our budget; total loans of $71.5 million in the Utility, with $56.8 million in a revenue bond that was just refinanced and other loans totaling $12 million. At the end of 2012 budget year, we had a deficiency of revenues of $10.326 million.
