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Wednesday, January 12, 2011

Teachers pensions, what's next to go

From The St. Petersburg Times

By Mary Ellen Klas

The war of words over reforming state and local pension funds heated up Monday as the head of one of the state’s largest unions said that the system is not broken and doesn’t need fixing.

“Information that continues to circulate is not based on verifiable fact,’’ said Rich Templin, political director of the AFL-CIO, which represents 600 local unions and 500,000 workers. He said, evidence shows, Florida'as state and local retirement system “is actually functioning quite well.”

But Sen. Jeremy Ring, D-Margate, the Senate committee chairman who is preparing legislation to impose new limits on cities and counties pension plans, said he disagrees with Templin that no problem exists.

“They can either come to the table and be part of the solution and offer suggestions or they can simply be obstructionist and say the system is fine and doesn’t need reform and they won’t be welcome at the table,’’ Ring told the Miami Herald/St. Petersburg Times.

Gov. Rick Scott has joined House and Senate leaders in calling for sweeping reform of state and local public pension systems in the face of increasing costs. Ring will continue hearing from stakeholders at a meeting of the Senate Governmental Oversight and Accountability Committee on Wednesday.

While the Florida Retirement System continues to remain underfunded because of stock market losses of 2008, Ring said he is especially alarmed by the poor health of many municipal pension funds.

“We’ve got cities paying close to 70 percent of their overall budget on pensions. It’s not sustainable,’’ he said.

Chad Little, a Merritt Island actuary that works with public pension systems, said at a news conference called by Templin that the average Florida city and county spends only 2.37 percent of its revenue from tax dollars on paying retirees, lower than the national average of 2,89 percent.

“The health of the pension fund has more to do with the willingness and the ability of the plans’ sponsors to make the contributions than it does whatever the current level of the funding percentage might by,’’ Little said.

Templin also tried to dispel the notion that public sector pensioners get a better deal than those in the private sector, receiving on average $16,000 to $23,000 a year. "Would anybody think that's a lavish amount to spend on your retirement and look after your grandkids?"

The James Madison Institute also released a report Monday that concluded that while the “Florida appears to be in better shape that the typical state,’’ many local governments have pension accounts that are severely underfunded.

Ring said he urges them help find consensus. Among his ideas: develop a model that bases an employee’s contributions based on the performance of the market. If the pension account is fully-funded, then participants pay less but if it is not then their contribution would rise.

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