Issuu on Google+

FPPTA

December 2010

Florida Public Pension Trustees Association P r o v i d i n g t r u s t e e e d u c at i o n a n d i n d u s t r y i n f o r m at i o n i n a n e f f o r t t o p r o t e c t defined benefit plans.

Message from the CEO Raymond T. Edmondson, Jr. I would like to take this opportunity to wish you and yours a happy holiday season and a very safe and happy New Year. It’s a blessing to live in a country where one has the choice to celebrate the season in their own personal way. As for the FPPTA, 2010 was a good year as most have been. Our membership is growing. The services we now provide to our members are increasing with the addition of new programs, and membership dues have not been increased. While we have not increased membership costs, communication with our members has increased with efforts like the Town Hall Meetings that serve our members and local residents well. One very good sign is the increased activity of our members with the organization. I would like to see more attendance at our General Membership meeting and at the Board of Directors meetings. I also encourage your attendance and interest in committee meetings where members are always welcome. The membership is the life blood of this organization, so let’s keep it flowing. Did you ever notice that less popular legislation is always passed in a non-election year? Look at the frenzy to pass legislation in the lame duck session of the Federal legislature. If they can pass so much legislation in such a short time, why do we need a full time legislature? Now look at the Florida state legislature. Before they were sworn-in, they stated exactly what their intentions were, to destroy the public sector by doing away with public pensions, a system that has worked for over 150 years. Many now suggest we replace that successful model with a 401K type employee savings account – a weak retirement plan that has been proven to be a disaster to the economy. There has been no interest in attempting to work on cost savings, but rather just an effort to get rid of the defined benefit pension systems even though the defined benefit systems have been proven less expensive than the 401K type programs.

So lawmakers set up numerous committees and sub committees to take hours of testimony from people who will bolster their preconceived notions. Would you rather have a retirement system where the employer and the employee both contribute financially and where both have a voice, which costs tax payers pennies on the dollar, or a retirement system that resembles welfare where taxpayers pay the full cost of the program?

1


How about first responders that are on Medicare? Now follow the MONEY. Who would profit from a nonregulated 401K type retirement program? The answer is simple: people who sell 401K type programs. What does your legislator do for a living? The state of Florida has one of the best run defined benefit retirement systems in the country and the best managed individual city, town and municipal retirement systems as well. We have the most educated trustees, the most regulated financial management, and laws that have been developed over the years – mostly by employee unions who protect their members’ investments and their retirement security. If there are a few areas that need to be addressed, then let’s look at them. To just throw the baby out with the bath water makes no sense. Then again, follow the money. The state legislature should turn to the real professionals in the pension industry to find good solutions. They should turn to the educators, not political appointees or organizations that are anti-employee and who know nothing about the state and local economies. Let’s pull together in 2011 to help educate everyone about the stability, reliability and cost-effectiveness of defined benefit public pension plans. The FPPTA will continue to work hard to help you protect retirement security in Florida.

Raymond Edmondson, Jr., CPPT, CEO Florida Public Pension Trustees Association

FLORIDA LEAGUE OF CITIES LAUNCHES FULL FRONTAL ASSAULT ON PENSIONS Cypen & Cypen Newsletter - December 2, 2010 Stephen H. Cypen, Esq., Editor

Concluding that the Florida Legislature must act to help cities reduce “runaway” pension costs for firefighters and police officers before they “cripple municipal balance sheets,” The Florida League of Cities has released its 2011 Pension Reform Proposals. Here, with no editorializing on our part, are the eleven League Pension Reform proposals. Along with these proposals the League has published some general information about Florida defined benefit pension plans, including those for firefighters and police officers.

*Click on the title to view the entire article

2


Message from the COO

Kimberlie Ryals, Chief Operating Officer Are you ready to ring in the New Year? I can’t believe the end of 2010 is here already. The year has flown by. We have had two successful Trustees schools at Hyatt Jacksonville and PGA National along with a very well attended Annual Conference at the Naples Grande. As many of you know, we hold an FPPTA Fishing Tournament in August. This year we had the most participation ever! Let’s not forget the fantastic Wall Street Program in March. It was the first time the Intercontinental hosted us, and I think the hotel is a perfect fit for our program. Overall I think in 2010 we were very diligent with bringing our message of protecting defined benefit plans in the state of Florida. We have provided ample information on our website, along with adding the Legislative Broadcast to our Trustees Schools. We conducted six Town Hall Meetings which was a great educational experience for the attendees and resulted in preserving the defined benefit plans for those plans. Looking forward to 2011, your membership is due by January and those who renew their membership online before January 1st are eligible for our drawing. A pension board will receive 5 free registrations for the Annual Conference and an Associate will receive free Exhibit Booth space at the Annual Conference. We currently are working on the Trustees School being held January 30 – February 2 at the Renaissance Resort World Golf Village. We are also working on the Wall Street Program along with the Annual Conference. I know it seems far away but it will be here before we know it and we need to iron out all the details so it goes off without a hitch. Here at FPPTA we are looking forward to another successful year, with your help and hope that you and yours will have a wonderful 2011. Merry Christmas and Happy New Year!

Kimberlie Ryals, Chief Operating Officer Florida Public Pension Trustees Association

FPPTA 2011 MEMBERSHIP Please complete your 2011 membership renewal. Renewal is easy and can be completed on the FPPTA website in just a few minutes. Membership is due by January and those who renew their membership online before January 1st are eligible for our drawing. A pension board will receive 5 free registrations for the Annual Conference and an Associate will receive free Exhibit Booth space at the Annual Conference.

Please visit the appropriate membership page below: Associate/Service Provider Pension Board Individual Retiree Program

3


Preserving Retirement Security in Florida Susan Marden,

Public Relations Consultant

The FPPTA will focus on education during 2011, an effort that will draw upon the expertise of every department in the organization. Web content and media relations, Town Hall Meetings and Trustees School sessions all will be employed to help us educate municipal town managers, city councils, the press and lawmakers about the strengths of defined benefit pensions. The FPPTA will mobilize its forces in a coordinated plan to reach out to policy-makers who must know the facts before making decisions about altering their current defined benefit pension plans. “I think we are looking at a very threatening situation for defined benefit pensions,” said CEO, Raymond Edmondson, Jr. He believes the public has been bombarded with negative information about the cost of pensions and questions about whether taxpayers can afford them. He said there is a conservative economic mindset among lawmakers who want to impress voters with so-called taxpayer savings. In response, said Edmondson, “The FPPTA will lead the charge to enlighten people about the real strengths and cost efficiencies of traditional guaranteed pension benefits.” In 2010, the FPPTA focused its efforts on ‘communications’, organizing Town Hall Meetings, distributing newspaper op-ed articles across the state, publishing a research paper about the inadequacy of 401(k) accounts, and by developing a public service video reminding viewers that public servants are real people too. Those efforts will be continued in 2011 with even greater emphasis on grass-roots events and projects like the Town Hall Meetings and locally targeted newsletters. Nobody knows the intricacies of your city, town or municipality better than you do, but the FPPTA can help you organize to get your message across. The FPPTA also will prepare additional research papers for lawmakers, and will actively seek to provide assistance to local boards that want to publish and distribute persuasive facts supporting DB plans, and to reach out to local media.

Faces of Florida...real people, real stories

J “Scott” Bayne Ft. Lauderdale Fire & Rescue

Renee Lipton Founding member, FPPTA

Raymond Edmondson, Jr. Carol Knapp Ft. Lauderdale PD, retired Ft. Lauderdale PD Dispatch, retired CEO, FPPTA

The FPPTA is gathering testimonials that portray the real-life experiences of Florida’s public employees. It is designed to reveal the real people behind the public discussion about public employee benefits, and to strengthen the case for defined benefit pensions. The campaign is called “Faces of Florida….real people, real stories”, and we plan to share it with legislators, the news media, elected officials and the public. The FPPTA will begin highlighting a new set of interviews in each edition of the E-newsletter. Faces of Florida: http://fppta.org/FOF/FOF.aspx

4


News Clips Fred Nesbitt, Media Consultant

In private speech to business group, Rick Scott lays out agenda Miami Herald Blog, November 19, 2010 Republican Rick Scott largely ran through his campaign talking points tonight in his first speech since winning the election, according to a transcript of his prepared remarks. No press was allowed in to the speech delivered to a group of Florida business leaders, who Scott needs to help him deliver on a promise of creating 700,000 new jobs. In the speech, Scott called the state’s pension system a “ticking fiscal time bomb” and said state government “has more mid-level managers than it needs. At every level of government---local, state and federal,--public sector pensions are a ticking fiscal time bomb. Florida has to bring its pension system into line with other states’ plans by increasing employee contributions. Doing that will save almost 1.4 Billion dollars. Florida DB plan returns 14.03% for year Plan Sponsor, November 17, 2010 Florida Retirement System’s net return on investment was 14.03% for the year ended June 30, 2.53 percentage points ahead of its customized benchmark, according to an annual report Wednesday by the Florida State Board of Administration, Tallahassee, which oversees the defined benefit pension fund. In the previous year, ended June 30, 2009, the fund returned -19%. The pension fund’s estimated funding ratio was 87.9% as of June 30, when it was valued at $109 billion, the statement said. That’s down from 88.5% the previous year when the fund’s value was $99.6 billion and 107.1% as of June 30, 2008, when the fund’s value was $126.9 billion prior to the recent economic turmoil. Report says Florida’s state pension fund has recovered from recession St Petersburg Times, November 18, 2010 Florida’s State Board of Administration said that it beat its investment objectives last year, with its giant pension fund leading the way. Rebounding from the recession, the pension fund gained $9.8 billion after payment of benefits and was worth $109.3 billion in the year ended June 2010. Before benefits, the pension fund’s gain was 14.03 percent — well ahead of its earnings target, the SBA said in its annual report released Wednesday. Despite the recent investment gains, Florida’s pension system, the fourth-largest in the United States, still can afford to cover only 87.9 percent of its benefit obligation to 1 million current and future retirees. Police union offers to revert back to 1999 pension, benefits By Michele Dargan, Palm Beach Daily News, November 8, 2010 Representatives of the Fraternal Order of Police proposed a counteroffer to the town’s announcement last month that it would be slashing police pensions. FOP representatives to the town’s police department say department members will revert back to the pension and benefits plan of 1999 under the offer. In a last-ditch negotiation effort, FOP representatives also agreed to accept no pay increases for the 2010/11 budget year. If this plan is not accepted, the next step in contract negotiations is to go before an appointed magistrate, who will hear both sides.

/fppta.html

5

*Click on a title to view the entire article


Task force: Cut West Palm pension costs By Andrew Abramson, Palm Beach Post, November 16, 2010 In a cash-strapped city, requiring police officers and firefighters to serve more years on the force and eliminating overtime pay in their pension equation could save millions of dollars. The state requires a 2.5 percent multiplier for using salary to compute pensions. That means that a police officer or firefighter with 30 years on the force could retire with a pension of 75 percent of his or her average final compensation. But in West Palm, the police union has a 3 percent multiplier, meaning an officer could retire at 75 percent salary after 25 years. The fire department has a 4 percent multiplier -- firefighters can retire after 23 years, with as much as 92 percent of their average final salary for life. Adjusting the multipliers and treating police and firefighters equally could save more than $12.5 million. Another way to save is in how the city defines average final salary. Faso said the city could save $24 million through 2026 by basing a police officer or firefighter’s average final salary on his or her base salary. Currently a police officer can load up on overtime in the final year on the force, which can significantly raise the yearly pension payout. State workers will be sharing the pain Bill Cotterell, Tallahassee Democrat, November 8. 2010 Gov.-elect Rick Scott and a compliant, even-more-conservative Florida Legislature will probably not be able to realize the Republican dream of running government like a business. It’s not a business. But for state employees, working for the taxpayers is going to seem a lot more like having a job the private sector, over the next four years. Not that there’s anything wrong with that — a whole bunch of taxpayers don’t have benefits as good as state employees, and about 12 percent of them don’t have jobs. Even if the electorate wasn’t in an anti-government mood, some cuts in employee benefits would have to be on the table as legislators grapple with revenue shortages projected at $2 billion or more. It’s not a question of if benefits — not to mention jobs — will be cut. It’s a question of when and how much.

Proposal to Pull the U.S. Out of Debt Key recommendations by the leaders of President Obama’s bipartisan deficit commission, which they say would stabilize the national debt at 66% of the size of the economy, a level economists say is sustainable.

Social Security • Increase Social Security retirement age by one month every two years after it reaches 67. • Raise early retirement from 62 to 64 on the same timetable. • Lower cost-of-living increases. • Reduce benefits for higher-income beneficiaries and establish higher minimum benefit for poorer retirees. • Gradually raise threshold on amount of income subject to Social Security payroll tax. • Give retirees choice of collecting half their benefits early and the other half at a later age.

Individual and Corporate Taxes • Scale back child tax credit and mortgage interest deduction • Drop top income tax rate from 35% to 28% and the top rate for taxpayers making up to $210,000 from 28% to 22% • Increase gas tax by 15 cents a gallon • Reduce corporate income tax rate from 35% to 28 percent • Stop taxing overseas profits of US based multinational corporations.

Domestic Spending • Freeze Defense Department salaries and bonuses, noncombat military pay, and other federal salaries for three years. • Reduce overseas bases by one-third • Reduce Congress and White House budgets by 15% • Cut federal work force by 10% • Cut 250,000 non-defense contractors. • End money for commercial space flight • Eliminate noncompetitive spending bills known as “earmarks.” • End grants to large and medium-sized hub airports • Make airports fund larger portion of the cost of security. • Cut funding for public broadcasting.

Crisis has put scrutiny on unholy alliance of politicians, unions Kingsley Guy, Sun-Sentinel, November 19, 2010 If there’s an upside to the budget crises that face so many states and municipalities, it’s that they have put the spotlight on the unholy alliances Health Care between public employee unions and politicians. The racket is a simple one: The unions provide campaign contributions from members’ dues, and • Limit annual cost increases for Medicare and Medicaid to in exchange elected officials approve pay and benefit packages far out of no more than 1% above the growth rate of the economy. Phase out tax-free status of employer-provided health proportion to those available in the private sector. Floridians are a more •benefits. sober lot. Florida maintains a sterling credit rating and its pension system is fully funded. The state faces fiscal challenges, but not financial ruin. One method Florida has used to keep a lid on government salaries and benefits is privatization of state services, when it makes sense. Toll-road Source: National Commission on Fiscal Responsibility and Reform collections, billing for Medicaid, certain prison services, and technical support are among things that have been privatized, and the Rick Scott administration undoubtedly will be amenable to further privatization efforts.

*Click on a title to view the entire article

6


State Legislative Update Randy Touchton, State Legislative Consultant Legislative Committee meetings have begun. The House rather than holding traditional committee meetings, conducted a series of educational opportunities for its members ranging from topics such as economic trends and forecasts, insurance, education, unemployment compensation, medicare, protocol and procedures, just to name a few. The Senate on the other hand, held committee meetings and on Thursday (December 9th) the Senate Governmental Oversight and Accountability Committee met.

the following reform proposals: eliminate the “extra benefits” mandate and allow the cities to use insurance premium tax revenue to pay current or reduced benefits for police/fire; allow cities to transition into the FRS Investment Plan and continue to receive the insurance premium tax revenue for pension costs; when calculating the Average Final Compensation exclude overtime, unused leave time, or other salary additives; allow a local plan to increase member contributions without requiring a correlating or equal benefit for the increase; prohibit the majority of members of a local pension board from being a plan member; allow cities to meet the minimum benefit requirements of Chapters 175 and 185 by providing benefits that in the aggregate exceed those minimum benefit levels; allow cities to establish tiered pension plans and continue to receive the insurance premium tax revenue; require budget oversight of the local pensions boards of trustees and require detailed accounting of board expenses; allow cities the opportunity to purchase past service credit for special risk members at a 3% rate; restrain the Division of Retirement’s non-rule based administrative activities and restrict their broad statutory interpretations that result in an increase cost to the plan sponsor; eliminate the disability presumptions for fire and police; and, eliminate the statutory requirements that governmental entities offer subsidized health, hospitalization, or other insurance coverage to retirees.

It is this committee that has been tasked by Senate President Mike Haridopolos to tackle the reform or revisions to the public pension plans. This was shared with those in the audience by the Chairman of the committee, Senator Jeremy Ring. He likewise on several occasions indicated that “everything was on the table” and committed to allowing all stakeholder groups an opportunity to testify before the committee. According to his schedule, the next two or three committee meetings will be geared toward that happening, unless otherwise directed by the Senate President. “Transparency” seems to be the mantra for the membership of the Legislature. After a short introduction of the committee members and a description of the committee’s subject jurisdiction, the committee began receiving public testimony on both the public pension plans and the State Group Insurance Program. The Division of Retirement, the Division of State Group Insurance, the Florida Association of Counties, and the Florida League of Cities were invited to testify at this initial meeting.

The Florida Association of Counties, after their FRS overview and comments, recommended the following: oppose any FRS benefit change which would result in a contribution increase; require that all legislation be analyzed and evaluated to determine the direct impact on sate and local governments; support some level of grandfathering for current employees; and, estabDivision of Retirement Director Sara Beth Snuggs lead off, and lish a study commission to review the economic and practical provided the members with a very comprehensive overview impacts of changes to the FRS that would maintain competitive of the Florida Retirement System. Her presentation included employee benefits and create a more cost effective system for information on both the “Defined Benefit” and the “Investment employers. or Defined Contribution” Plans, current benefit levels, how a future pension benefit is calculated, statistical data on curUpon the conclusion of speakers, the committee members rent plan members (active and retired), and current employer discussed and provided their comments. Bases on those comcontribution levels. Also discussed were the Health Insurance ments, employee contributions will probably become a reality, Subsidy and the DROP programs.. and any benefit reductions or plan changes will be applicable to new hires. Stay tuned. The Florida League of Cities followed and provided the members with general information and a historical perspective of May I wish all a Safe and Happy Holiday. the local pension plans (Chapter 175 and 185) from inception to current status. The League concluded by recommending

7


FPPTA TRUSTEES’ CORNER ASK QUESTIONS, GET ANSWERS

The FPPTA encourages our members to reach out to us in times of need or curiosity. Does your board have an issue or question the FPPTA can help with? Please let us know. The FPPTA Trustees’ Corner is a new feature to the E-Newsletter in which we answer questions and offer advice to our membership. Trustees are encouraged to submit questions or ask for advice from the FPPTA. We are currently accepting submissions. The FPPTA will then consult with the appropriate professionals from our associate membership to come to a suggestion or solution. Your question and answer will then be featured in the FPPTA E-newsletter so other members can benefit from your experience and be better prepared should a similar situation arise for their board of trustees. To participate please send an email to fppta@fppta.org. The FPPTA respects the privacy of its members. If you would like to submit a question but prefer not to be identified just let us know.

FPPTA 2011 MEMBERSHIP Please complete your 2011 membership renewal. Renewal is easy and can be completed on the FPPTA website in just a few minutes. Please visit the appropriate membership page below: Associate/Service Provider Pension Board Individual Retiree Program

8


Board of Directors

Pete Prior, CPPT Chairman

Steve Aspinall, CPPT Treasurer

Joe Liguori, CPPT Director

George Farrell, CPPT Vice Chairman

Brenda Clanton, CPPT Director

Renee Lipton, CPPT Director Emeritus

Ann Thompson, CPPT Secretary

Gary Clark, CPPT Director

Ken Harrison, CPPT Director Emeritus

FPPTA Staff

Ray Edmondson , CPPT Chief Executive Officer ray@fppta.org

Kim Ryals , CPPT Chief Operating Officer CPPT Coordinator kim@fppta.org

Lois Edmondson Senior Executive Assistant Membership and Event Registration Specialist Lois@fppta.org

Peter Hapgood , CPPT Education Consultant Peterhapgood@fppta.org

Fred Nesbitt, PhD FPPTA Media Consultant fnesbitt911@gmail.com

Susan Marden Public Relations Consultant smard2@verizon.net

Randy Touchton State Legislative Consultant randyt@nettally.com


FPPTA Education Committee Peter Hapgood, CPPT, Chairperson FPPTA Education Consultant

Joe Liguori, CPPT, Director Delray Beach Police & Fire Pension Fund

Tim Olsen, CPPT Melbourne Fire Pension Fund

Ray Edmondson, CPPT FPPTA Chief Executive Officer

Ann Thompson, CPPT, Board Secretary Vero Beach Police Pension Fund

Mike Spencer, CPPT RBC Global Asset Management

Kimberlie E. Ryals, CPPT FPPTA Chief Operating Officer

Dennis Hole, CPPT Ft. Lauderdale Police & Fire Pension Fund

Jack Farland, CPPT Public Pensions, Inc.

Pete Prior, CPPT, Chairperson Hialeah Gardens Police Pension Fund

Steve Corbet, CPPT St. Petersburg Police Pension Fund

Grant McMurry, CPPT ICC Capital Management

Steve Aspinall, CPPT, Board Treasurer St. Petersburg Police Officers Pension Fund

Richard Grover, CPPT Pensacola Firefighters Pension Fund

Katie Byrne, CPPT DePrince, Race & Zollo

FPPTA Advisory Board Howard Bos, CPPT, Chairperson Richmond Capital Management

Grant McMurry, CPPT ICC Capital Management

Mary McTague Atlanta Capital Management

W.O. Bell, Vice-Chairperson Westwood Distributors

Tracy Musser Thompson, Siegel & Walmsley, Inc.

Chris Greco Sawgrass Asset Management

Brad Rinsem, Secretary Salem Trust

Joe White Saxena White, PA

Bob Podgorny Dow Jones Indexes

Michael Spencer, CPPT RBC Global Asset Management

Katie Byrne, CPPT DePrince, Race & Zollo

Tom Franzese Lazard Asset Management

Bruce Feiner, CPPT ConvergEx Group

Tom Capobianco Lee Munder Capital

Richelle Hayes, CPPT American Realty Advisors

Janna Hamilton, CPPT Garcia Hamilton & Associates

Chad Little Freiman Little Actuaries

Alison Bieler Cypen & Cypen

Joe Bogdahn The Bogdahn Group

Jerry Navarette The Boston Company

Allison Corbally State Street Global Advisors

Michael Smith JP Morgan

FPPTA

2946 Wellington Circle East Tallahassee, FL 32309 Phone: 800-842-4064 Fax: 850-668-8514 E-mail: fppta@fppta.org www.fppta.org


http://fppta.org/docvault/2010/12/354