Financial Review Board

The City of Delray Beach Financial Review Board has submitted suggestions which they feel are necessary to drastically revise your current pension benefits. These members are part of a very determined group of people who feel they must attack your current benefits in order to find solutions to address a 2011 actuarial study that found an unfunded liability of 43%. Members are Christina Morrison (very vocal, very anti-police, motivated by greed and the affects City Hall decisions have on her real estate interests/business), John Hallahan, Brian Anderson, Rosa Tores-Tomazos, Luise Piane, Selma Snow, Brian Wood, Jeremy Office and Warren Trilling.

The method and basis for this unfunded liability number was not been included in their recommendation however, these members are making suggestions based on a much different economy (2011 and the immediate prior years that led up to the unfunded liability of 43%) than what the current trends indicate in the national, state and local employment numbers, housing and construction projects start ups (look at permits), interest rates and residential/commercial real estate values.

Years prior to the Great Recession, the unfunded liability was near ZERO...based on actuarial studies commissioned previously by the Pension Board. There were a number of reasons these studies were done by the P&F Pension Board, i.e.; affects of early window buy-outs on the pension, etc. Commission an other study, done on 2013 numbers and I would offer that these numbers are considerably lower and closer to 17%.

Incredibly, the FRB decided to use the Town of Palm Beach as a model from which they believe are best practices. The FRB held a meeting with the Town Manager of the Town of Palm Beach. Unfortunately, this Board believes that the issues applicable in Palm Beach somehow apply to Delray Beach. Colorful slides were presented by the Town Manager as he made his argument on how he coerced his employees into "mutual acceptance" of his plan. Twelve employees left that town to find other employment. I can bet they were newer employees as those who were vested had no choice but to accept the cuts and live with it. Considering our patrol force has an average of less than three years on the road, adoption of a similar plan will be disastrous for Delray Beach.

More to follow....

Question? Since there haven't been increases in salaries since 2008, over 5 years without a raise, have the flat contributions hurt the fund? If there had been raises, would the fund have more money?

1. Why is it when the politicians make these promises to give an employee benefits, they take them away? Who is to blame? The employee who signed on the dotted line because he was promised XYZ, or the prior politicians who failed to execute sound fiscal policies?

2. Aren't the problems with the pension a direct result of allowing over 22 officers to enter the" early buy out" window? There are ways to remedy this!

3. What about the fact that the prior Finance Director failed in his fiduciary responsibilities to collect CH 175/185 monies from the towns of Gulfstream and Highland Beach, for which we provide services?

4. A portable pension is just that...portable. I plan on finding the highest paying employer and hop-scotching throughout South Florida with my "portable pension". I have no reason to be loyal, except to the highest bidder. Thank you Delray for building up my credentials (with your money) so I can be a journeyman. How much will that continue to cost you?

5. Is there any reason to think that the housing/real estate bubble, Lehman Brothers collapse and subsequent recession had an impact on our pension returns? If the answer is yes, is there any reason to think that an improving economy can't help right this? All of the economic data points to an improving economy. Recent returns on the funds show drastic increases.

6.The Pension Board works within the Charter of the P&F pension system. Not at the will of any individual.

One guess who the "mouthpiece" for K. McNamee is on our Commission? I'll give you a hint...she's not African-American. Where does she come up with her crap? K. McNamee of course.

Shelly's "intimidated" (her words) by the presence of so many people who were at the meeting fighting to protect what's theirs...a pension, promised to them when they signed up as employees. Changing the rules in the middle of the game is WRONG! Period!

I have a novel idea. Instead of finding solutions to gut the pension, look at ideas on how to make the pension profitable again without changing the benefits. Have you tried that yet?

I have a novel idea. Instead of finding solutions to gut the pension, look at ideas on how to make the pension profitable again without changing the benefits. Have you tried that yet?

Simple - have the actuary use a higher projected return, maybe 10% - 12%, and the pension deficit will appear a lot smaller or disappear.

U.S. RETIREMENT ASSETS TOTAL ALMOST $21 TRILLION IN THE FIRST QUARTER 2013:

The key to the title is "First Quarter" assets!

Total U.S. retirement assets were $20.8 trillion as of March 31, 2013, up 4.6% from $19.9 trillion on December 31, 2012. Retirement assets accounted for 36% of all household financial assets in the United States at the end of the first quarter of 2013.

Assets in individual retirement accounts totaled $5.7 trillion, an increase of 5.1% from year-end 2012.

Defined contribution plan assets rose 5.7% in the first quarter to $5.4 trillion.

Government pension plans -- including federal, state, and local government plans -- held $5.2 trillion in assets, a 5.3% increase.

Private-sector defined benefit plans held $2.7 trillion in assets, and annuity reserves outside of retirement accounts accounted for another $1.9 trillion.

As of March 31, 2013, target date mutual fund assets totaled $529 billion, an increase of 10.0%.

Retirement accounts held the bulk of target date mutual fund assets: 91% of target date mutual fund assets was held through DC plans and IRAs according to Investment Company Institute.

So...the response is, "We want to work with you to solve this issue." Really, you want to work with us but come out of your corner with your hands already swinging, going for the knockout punch in Round 1? I wouldn't call that a true desire on your part or in any manner a good faith effort, Mr. Mayor and Commissioners, to show us that you want to “work with you to solve the issue”.

In fact, what you tried to do unsuccessfully was spread financial fear and panic in the community. Let’s be honest here…there are a great number of ways to solve this issue without resorting to bullying tactics. Who do you think you’re trying to bully for crying out loud? This is not how you garner support for your changes. Come to the table with an offer for once and stop your childish nonsense.

In fact, here are a few ideas that have been talked about and the obvious concerns will need to be addressed but, talk about them and don’t just dismiss them.

1.Tier System - A flat rate number based on your position, rank and time in service or a combination thereof over a specified period of time structured over 20, 25 and 30 years. For instance a maximum allowable rate of:
55- 65K Police Officers at 30 years,
65- 75K Sergeants at 30 years,
75-85K Lts at 30 years,
85-95K Captains at 30 years
Chiefs (negotiable contract

2.Go to FRS. This could allow officers who would be retiring to remain as they are out of one system and into another without the rhetoric of going green (PBSO). It accomplishes a number of issues on both sides, without losing your police department. Would also discourage people from leaving because they wold be going to the same FRS at any other agency. May as well stay at DBPD.

3.Float a 90 million dollar bond, like FLPD, to pay the UAAL. Better yet, get a higher bond amount and do some other improvements around the city while you’re at it.
Here are a few talking points. If you’re serious…come to the table with some ideas and stop the fear mongering.

PS. If anyone needs the facts on the morale of the officers and employees of the agency, just look at the last study done at the Police Department 2 years ago. The information is right under your nose. Look it up and do your own DD. We can’t spoon feed Ken McNamee everything.

OK. Some suggestions you should use when you come to the table, rather than using fear mongering and bullying tactics.

1. Increase employee contributions to the pension fund - We recently did this but it is something that can be explored again.

2. Adjust the calculation of benefits - This can be done in different ways, including decreasing the multiplier, capping accrued benefits, increasing the age/service requirement, changing the calculation of Average Final Compensation (AFC), and/or increasing the retirement age.

3. Make changes to the Deferred Retirement Option Program (DROP) - Why not explore increasing the years of service until you are eligible to DROP from 20 -25 years?

4. Offer a sizeable pay increase as an enticement to those who switch to a Defined Contribution Plan - Money in the "here and now" is a very convincing and persuasive carrot.

Consider becoming one of the highest paid agencies in the United States. It attracts more candidates who are better qualified, bringing the best to Delray Beach. Fund the salaries instead of the pension. Continue to suppress the benefits without some other attractive benefit will bring you the obvious and the consequences will eventually show. Ever hear, "Pay now or you can pay later"?

It's not cheap to "police" in America. An often overlooked fact...keep that in mind.

Each pension plan was graded on a scale from A to F based on their funding level. Table 1presents the distribution of pension plans among the five grade categories. Readers should note that these assigned grades represent a snapshot of funding levels as they were presented in each cities’audited financial reports for fiscal year 2009 (in some cases fiscal year 2008 financial reports were used when the 2009 report was unavailable during data collection efforts). The grades, therefore, do not include
important trend information. Some plans may be poorly funded, but are rapidly improving, and others maybe well funded, but are deteriorating quickly. Another important item to recognize is that these grades are not based on uniform actuarial assumptions.

Plans that received a “C” grade require even more careful and constant assessment of their health and may require corrective action, such as evaluating contribution and benefit policies to increase the funding ratio.

Delray Beach Police and Firefighters' Retirement System
Fund: Police and Fire
Date Analyzed: 2009
Grade: C
Cost per participant: $21,738

Source: Collins Institute from the Florida League of Cities.

Increase employee contributions to the pension fund - We recently did this but it is something that can be explored again.

2. Adjust the calculation of benefits - This can be done in different ways, including decreasing the multiplier, capping accrued benefits, increasing the age/service requirement, changing the calculation of Average Final Compensation (AFC), and/or increasing the retirement age.

3. Make changes to the Deferred Retirement Option Program (DROP) - Why not explore increasing the years of service until you are eligible to DROP from 20 -25 years?

I agree in making changes, but for those of us already half way there it would be unfair to increase the age/service requirement. Same as years of service to DROP. Let this apply to new employees from here on out.....not those that have the end in sight.