The LeRoy Collins Insitute continued to take on the notoriously sticky wicket of local governmental pensions on Tuesday with the release of the seventh installment of the think tank’s Tough Choices series of policy papers, entitled “Beyond Pensions: Florida Local Governments and Retiree Health Benefits.”
In the new study and an accompanying webinar held Tuesday morning, the institute’s director Dr. Carol Weissert and study author Dr. David Matkin of University of Albany spoke about the need to “get out in front” of the issue of health insurance assurances and other retirement benefits — termed “other post-employment benefits” in the study — the same way the state legislature has addressed issues with the Florida Retirement System and other structural state debt issues.
Matkin, who has penned all seven of the Collins Center’s recent studies on long-term problems in Florida public policy, specifically advocated for recommendations related to two areas of the entanglements surrounding the fraught relationship between state government, unions and local governments: transparency and the level of time and effort involved in obtaining reliable numbers; and secondly, the actuarial unsoundness of a significant number of county and local government pension programs.
Unlike the FRS, most municipal governments fund their pension on a “pay-as-you-go” basis, meaning that they appropriate money to pay for benefits in each year’s the budget. The problem, according to the new academic paper, lies in projections that more than half of local governments will have to increase funding for pension-related areas the budget by more than two percent, including a significant portion that will have to increase it more than ten percent.
Worse still: “They’re not even going to be paying for current services” with those budget increases, said Matkin. “Benefits covered in these projected increases are for already completed work. What will happen as a result is they’ll create more budget problems for taxpayers that didn’t benefit from the work that was done, but have to pay the bills.”
Past installments of the series of scholarly articles have been cited during legislative debate on the issue, including last year during the nearly-successful efforts of the bipartisan due of Sen. Rob Bradley and Jeremy Ring. Their latest iteration of their bill will be taken up this year in the Senate, but potentially faces new opposition from the Florida League of Cities in wake of Gov. Rick Scott‘s reelection.
The LeRoy Collins Institute, founded in 1985, is housed at Florida State University in Tallahassee.