Mayor Lenny Curry last week said the city could save as much as $40 million each year starting in fiscal 2017-18 based on a yet-finalized actuarial update on the city’s pension plans.
The study is finalized and Curry was short in his projection — the city could save as much as $57 million starting in fiscal 2018-19, according to the update done by the Milliman firm.
In return for those annual savings in present years, though, the overall pension costs for the city’s three plans over a 30-year timeframe will be higher.
The Milliman report factors in a couple of key elements in its analysis. The first is an amortization schedule that spans 30 years instead of the 24 years used in recent years.
The first part of reform undertaken by former Mayor Alvin Brown included the call for a 30-year schedule, which is now part of Florida law and in Curry's plan approved by the Florida Legislature.
The second is for employees in all three funds to increase their contributions from 8 percent to 10 percent, which public safety workers largely have done.
That increased employee payment, along with a required closing of the three current plans, also is part of the Curry plan state lawmakers approved this year.
The long-range forecast Milliman provides shows the city would annually save anywhere between $4 million (fiscal 2017-18) to as much as $68 million (fiscal 2026-27) through 2034.
From there, the pension payments would exponentially increase to as much as $381 million more in fiscal 2047-48.
There is some caution in the report. Combining and amortizing the plans reduces city contributions in the short term, “this should not be considered a savings, but rather a deferral of contributions.”
“Funding a pension plan is a ‘pay now or pay more later’ proposition,” according to the report.
However, city officials hope to match that expected increase with a dedicated revenue source — the half-cent sales tax extension voters will decide on the Aug. 30 ballot.
“This plan allows the City to match costs with dedicated pension liability revenues and relieves the substantial burden which currently rests solely on the city’s general resources,” according to a summary by Mike Weinstein, Curry chief financial officer.
The plan, he said, provides financial benefit to pension funds and the city without borrowing money or increasing taxes.
Weinstein said Tuesday the report projected pension reform to take effect in 2018-19. The administration is working toward making that happen sooner, but wouldn’t rush and jeopardize any potential outcome.
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