PENSION NEWS CLIPS September 2017 ON FLORIDA PENSION ISSUES
Prepared by Fred Nesbitt, FPPTA Media Consultant – firstname.lastname@example.org
Social Security Changes for 2018
The Social Security Administration announced more than 66 million retirees and those on SSI will receive a 2% COLA in their monthly check beginning January 2018. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $128,700 from $127,200. Of the estimated 175 million workers who will pay Social Security taxes in 2018, about 12 million will pay more because of the increase in the taxable maximum. There is no taxable maximum for the Medicare tax of 1.45%. As of January 2013, individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly) pay an additional .9% in Medicare taxes. Medicare Part-B rates have not yet been announced.
Jack Latvala’s big get
By Peter Schorsch, Florida Politics, October 16, 2017
It surprised very few people who follow state politics when the Fraternal Order of Police endorsed Jack Latvala‘s bid for governor on Saturday. Latvala officially launched his campaign in August at a fire station in South Florida. The FOP’s future endorsement was foreshadowed by the strong presence of first responders who attended Latvala’s campaign kickoff that day. As a state Senator, Latvala has stood up for the retirement system as it pertains to first responders, as well as introduce legislation that helped create the Florida Law Enforcement Officer alert system, among several other initiatives. “It’s been a constant battle to ensure that we don’t reduce the pensions that they work for, especially in the middle of the game, as others have proposed doing,” Latvala said. “It’s important they get compensated for putting their lives on the line every single day when they go to work.”
State to determine back pay owed Miami’s cops after cuts struck down
By David Smiley, Miami Herald, October 19, 2017
The Florida Public Employees Relations Commission upheld a state hearing officer’s recommendation that the city restore the 2010 union contract that existed before city officials unilaterally slashed compensation and pension benefits under the Miami FOP collective bargaining agreement. The ruling follows the Florida Supreme Court decision this year striking down the city’s actions and remanding a legal challenge from the police union to the Public Employees Relations Commission. The next step is to determine the amount of the back pay owed.
Editor’s Note: Ronald J Cohen (Fort Lauderdale) and Robert Klausner (Plantation) were two of the attorneys representating the Miami FOP in the case.
Owed millions in back pay, Miami first responders attack mayor's campaign
By David Smiley, Miami Herald, October 24, 2017
A controversial solution employed by Miami’s mayor to solve a financial crisis that greeted him as he took office eight years ago may turn around to bite him on the way out the door. During his first year as mayor, Tomás Regalado filled a roughly $100 million hole in the city’s budget by pushing city commissioners to unilaterally slash pay and benefits for thousands of employees. Using a state statute known as “financial urgency,” the city opened collective bargaining agreements to make the cuts despite union opposition, spawning a wave of retirements and lawsuits seeking to overturn the cuts. Miami’s unions are waiting to learn just how much back pay and benefits they’re owed after a state commission ruled in favor of the Fraternal Order of Police. In the meantime, they’re lashing out at the mayor and his final, legacy-setting initiative: the Miami Forever general obligation bond. Florida’s Public Employee Relations Commission has yet to decide a back-pay figure. But citing projections by a union-hired economist, Lugo estimates the city owes its public safety unions more than $200 million in wages and benefits after the courts determined their contract should be restored to the agreement in place in 2010 on the day before the city’s cuts.
PBA, Tallahassee at impasse over collective bargaining
By Karl Etters, Tallahassee Democrat, October 17, 2017
Negotiations between the Big Bend Police Benevolent Association and the city of Tallahassee are at a standstill. The impasse was declared in a Sept. 22 letter from PBA President Steven Slade and City Manager Rick Fernandez. The same letter was forwarded to the Florida Public Employees Relation Commission in Tallahassee. The impasse was official Oct. 1, the first day of the city’s new fiscal year. Since March, the PBA and city have been negotiating a 3-year contract to include cost of living, pension and pay raises. The city’s pension changes include a continuation of 3 percent cost of living raises for police employees already in the deferred retirement option plan (DROP), an annual pension accrual cap of 81 percent for everyone not in the plan and no contributions to pensions once an employee enters DROP.
Slade said the city’s proposal asks officers to work longer before receiving retirement COLA —to age 62— and becoming vested — being eligible for a pension.
City to give Lakeland police pensioners bonus checks as part of emergency ordinance
By Christopher Guinn, The Ledger, October 3, 2017
Lakeland police pensioners will receive $425,192 in bonus checks — around $2,600 each — as part of an emergency ordinance that also attempted to solidify the City Commission’s authority over the pension fund. The ordinance, passed without a second reading under emergency protocols, attempted to serve enough whipped cream with each slice of cow pie to the three groups at odds over the pension: The City Commission, which said the bonus checks represented a new benefit to which it has final authority to pay out of the pension; The police pension board, which claimed it could issue the checks by previously granted authority and wanted it to happen quickly; and The LPD police union, which argued any changes to the ordinance had to be the product of negotiation. As a result, retirees will get their bonus checks, but current police and the city will see their contributions to the plan increase unless a new deal can be struck with the union that represents Lakeland Police Department officers, sergeants and lieutenants. The ordinance may be challenged by the union, which argued that because the original ordinance was created through contract negotiation, any changes would likewise need to be negotiated. The pension does not have a cost-of-living adjustment built into it, and it was important to give something to pensioners who haven’t seen a significant increase since the pension split from the general employee pension in 2009, Link said.
Florida Retirement System lowers assumed rate of return by 10 basis points
By Meaghan Kilroy, Pensions & Investments, October 6, 2017
The Florida Retirement System Actuarial Assumption Conference lowered the $140.8 billion pension fund's assumed rate of return to 7.5% from 7.6%. Further adjustments are expected in the coming years to bring the assumed rate more in line with current projections for future markets. The state's pension contributions are expected to increase by $124 million next year as a result of the change. The pension fund returned a net 13.77% in the fiscal year ended June 30. It returned a net 0.61% in fiscal year 2016.
Reduced state pension rate creates $50 million budget hole
Arek L Sarkissian, Tallahassee Democrat, October 5, 2017
Revenue analysts agreed to lower the assumed rate of return on a pension plan serving 900,000 people across the state, leaving a potential $50 million hole in next year’s state budget. The consortium of analysts from the state House, Senate and governor’s office decided to decrease the rate of return on the $144 billion Florida Retirement System pension fund from 7.6 percent to 7.5 percent. The lower expected return on investment means the Legislature will need to set aside an additional $60 million next year. The pension plan carries $24.9 billion debt, and lawmakers plan to reduce that amount after considering the assumed return rate established by analysts. But a study they reviewed showed that hole would grow under the previous rate. The rate could drop to 6.8 percent in coming years.
State targets pharmaceutical company in stock case
By Lloyd Dunkelberger, Gainesville Sun, October 17, 2017
In a rare move, Florida is considering taking on a large pharmaceutical company, alleging the state’s pension fund lost some $127 million in stock value because of federal security violations by the company.
The State Board of Administration will decide next month whether to hire a New York-based law firm to pursue a “direct action” case against Valeant Pharmaceuticals International Inc., rather than joining a class-action lawsuit against the company. Valeant has been accused of violating federal securities regulations by marking up drug prices and then selling the drugs through a pharmacy network, without disclosing the full scope of the transactions to the stockholders.
Editor’s Note: I came across several news clips this month about the upcoming November 7 local elections and saw that several of the candidates running for local office either currently serve on pension boards or have served on pension boards.