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Beyond Pensions: Florida Local Governments and Retiree Health Benefits

Beyond Pensions: Florida Local Governments and Retiree Health Benefits. David S. T. Matkin , PhD Assistant Professor of Public Administration University at Albany—SUNY Research Fellow, LeRoy Collins Institute LeRoy Collins Institute Board Meeting October 2 nd , 2013. Agenda.

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Beyond Pensions: Florida Local Governments and Retiree Health Benefits

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  1. Beyond Pensions:Florida Local Governments and Retiree Health Benefits David S. T. Matkin, PhD Assistant Professor of Public Administration University at Albany—SUNY Research Fellow, LeRoy Collins Institute LeRoy Collins Institute Board Meeting October 2nd, 2013

  2. Agenda • Recent activity • Summary of our next report: “Beyond Pensions: Florida Local Governments and Retiree Health Benefits” • Recommendations in “Beyond Pensions” • Previous recommendations • Additional recommendations

  3. Recent Activity • 2013 Legislative Session • SB 458 – Ring & Bradley (Died on Calendar) • Premium tax dollars • SB 534 – Brandes & Bradley (Passed) • State liability • Actuarial Reporting Standards • August 2013 – “Doing it Right: Recognizing Best Practices in Florida’s Municipal Pensions” • “Recognizing and Responding to Retirement Obligations: Other Postemployment Benefits in Florida Cities and Counties” in American Review of Public Administration (Sept 2013).

  4. Retiree Health Benefit Primer • What is it? • Retirement Obligations (Healthcare Insurance Subsidies) • New Accounting Standard (Nos. 43 & 45) • Implicit & Explicit Benefits • Actuarial Projections • Where do we stand? • Size of liabilities • Funding status • Size of annual contributions

  5. Data • Annual Financial Reports • Fiscal Year 2011 • Two researchers • 100 cities with largest populations (>20,000) • Two cities do not report • All counties • Ten counties do not report

  6. Size of Liability as Percent of Payroll

  7. Governments with Liabilities > 100% of Payroll • Counties • Franklin • Monroe • Lee (Sheriff Plan) • Pinellas (Sheriff Plan) • Cities • Bradenton • Cape Coral • Hialeah • Hollywood • Sarasota • Titusville • Miami (Police Plan)

  8. Funding Approaches • Pay-As-You-Go • Unqualified Reserve Fund • Equivalent to Pay-As-You-Go from Accounting Standards • Qualified Trust • Similar to Pension Funding

  9. Funded Levels

  10. Who has a “Qualified Trust” • Counties

  11. Who has a “Qualified Trust” • Municipalities

  12. Size of Required Contribution as Percent of Payroll

  13. Percent Contribution Actually Paid

  14. Increase Necessary for Full Contribution

  15. Previous Recommendation (1) • Trouble Ahead Report in February 2011 • State agency oversight should be provided, in statute, to manage local retiree health benefit obligations. This agency should establish standards and provide technical assistance, if desired, to local governments.

  16. Previous Recommendation (2) • Trouble Ahead Report in February 2011 • Florida lawmakers should give much consideration to repealing current Florida law requiring the implicit subsidization of healthcare benefits for Florida local governmental retirees.

  17. Other Recommendations to Consider • State should require local governments to fund their retiree health benefits on an actuarial sound bases. • State should make the FRS Health Insurance Subsidy available to local governments, even if they do not participate in the defined benefit system. • State should establish a defined contribution health savings plan and make available to all local government workers.

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