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Providing trustee education and industry information in an effort to Protect
defined benefit Plans.
FPPTA Florida Public Pension Trustees Association
July 2010
beyond the yellow taperaymond t. edmondson, Jr.
You have all seen the yellow tape with “Crime Scene” printed on it, and wondered “what’s going on?” A life has been changed, usually not for the better. Yellow tape, traffic cones, the outline of a human silhouette drawn on warm pavement.
You hear about the story on TV, but you don’t really hear the entire story. This time it wasn’t a rapist, armed robber,
or murderer who was killed. It was two young police officers. Murdered. The call goes out “officer down”. The dreaded call. Now the search for the culprit begins, the ranks are formed, the wheels go into motion, as so many times before, too many times.
The culprit is captured alive; he/she is treated fairly, given rights that were not afforded the fallen officers, given free legal counsel, food, clean clothes, a place to sleep. The state will spend thousands on his defense, lodging, medical care and humane treatment. “Man’s inhumanity to man.” There are animals living in society that look just like us. The rest of the story – the story beyond the yellow tape – is about two young officers who were murdered, leaving behind shattered lives, four children without fathers, and two young mothers without husbands, now left with an unbelievable burden.
There are some among us who are working hard to eliminate the small survivorship benefits these women will receive, truly deserve and need to attempt to move forward. Some of the local and state politicians have joined with the “Florida League of Cities” to take away survivorship, death, disability and retirement benefits from public employees. First the local and state politicians have underfunded benefits for personal or political gain. I know it’s hard to believe, but it’s true. You may ask, who is the “Florida League of Cities?” Well, it is a taxpayer supported union of cities who travel the state attempting to do away with public pension defined benefit plans and replace them with a state run system or an employee saving account, both resulting in a more expensive way for the cities to operate in the long run.
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Can you imagine these two young women with a state plan that pays less benefits or a saving plan? Young people building families can’t save very much, if at all.
A strange thing is that the League of Cities administrates the “Florida Pension Trust”, a group of defined benefit plans. All the legislative changes proposed to do away with defined benefit pension plans do not include local and state judges, legislators, and upper management who have been placed in the high risk pool with first responders to ensure the highest possible benefits. It seems like we are looking at cutting benefits to the wrong people. We should be looking higher up the totem pole.
Raymond T. Edmondson, JrFPPTA Chief Executive Officer
26th annual conferenceKimberlie ryals
The 26th Annual FPPTA Conference at the Naples’ Grande Resort has come and gone. We’d like to thank the participants, speakers, and sponsors for a truly wonderful and informative conference. Speaker presentations will be available on the FPPTA website shortly. A total of 142 retirement boards were represented at this year’s conference - a sign that the organiza-tion is still growing and plays an important role in securing public retiree benefits throughout Florida. We have come a long way but there’s still much work to be done. We are looking forward to the second half of 2010 with September‘s Trustee school just around the corner.
I would also like to remind you of the FPPTA Annual Fishing Trip coming up this August 6-8 at Tarpon Lodge, Pine Island, Florida.
Please visit the FPPTA website for more information on the fishing trip and other upcoming events.
Kim RyalsFPPTA Chief Operating Officer
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Note to readers: Please consider signing and sending the letter below to your local paper. Letters to the editor are required to be very short – usually about 250 words, but this is a sub-ject that has received much negative press, and perhaps this letter will help clarify the facts.
Dear Editor:
There recently has been a steady stream of news coverage about public pension funds having significant ‘un-funded liabilities’. A February 2010 Pew Report titled “The Trillion Dollar Gap” further fueled this fire by citing large numbers of public pension plans with unfunded liabilities, but news reports routinely fail to fully explain the definition of the term “unfunded liabilities”. In fact, a pension plan that is 80% funded is actually pre-funded to pay 80% of its total obligations. If a customer applying for a bank loan and could demonstrate current assets worth 80% of the loan, certainly that loan would be approved, so public outrage over unfunded liabilities in a public pension plan is often misplaced anger.
Public employees are required to contribute a portion of each paycheck to their pension fund, but government employers often take contribution holidays when the stock market is performing well. This is legal, but not wise. The assumption is that extra earnings in a strong market will offset the missed employer contribution. The crash of 2008 has proven that assumption should change, especially for pension plans with larger than anticipated un-funded liabilities. The Pew Report recognized the state of Florida as having among the best funded pension plans in the country. Before taxpayers hit the panic button about unfunded liabilities, they should remember that a 20% unfunded liability is actually an 80% pre-funded plan, and that most pension plans are more than amply funded to provide payouts to retirees, especially when contribution obligations are met.
letter to the editorsusan marden, Public relations consultant
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faces of florida...real people, real stories
The FPPTA is gathering testimonials that portray the real-life experiences of Florida’s public employ-ees. It is designed to reveal the real people behind the public discussion about public employee benefits, and to strengthen the case for defined benefit pensions. The campaign is called “Faces of Florida….real peo-ple, real stories”, and we plan to share it with legislators, the news media, elected officials and the public.
Please take a moment to view the stories of Florida’s public emloyees and share your own experiences.Faces of Florida: http://fppta.org/FOF/FOF.aspx
news clipsfred nesbitt, fPPta media consultant
Cities need to make pension changesEditorial, Sun-Sentinel, June 29, 2010For the longest time, it has been the third rail of fiscal policy — don’t touch pensions.But with so many South Florida municipalities in dire financial straits, they not only are in a position where they have to touch pensions, they have to dive in and make big alterations in plans that have become un-sustainable. It’s that clear cut. The alternative? Some cities could very well have to prepare for bankruptcy. According to a Sun Sentinel survey, pensions account for approximately 10 percent or more of municipal
budgets. Because of shrinking tax revenues and investment losses, many cities are experiencing huge pension shortfalls — with taxpayers having to pick up the tab for the difference. The shortfall numbers are staggering: $353.3 million in Hollywood, $306.8 million in Fort Lauderdale and $90 million in West Palm Beach, just to name a few cities. The options aren’t pleasant, but cities have to make their retirement plans sustainable, with the biggest changes affecting new employ-ees. And cities that act now might be able to avoid even more drastic cuts and changes.
State’s pension fund changes are leading to disasterLetters to the Editor, St Petersburg Times, June 24, 2010Tripling hedge fund exposure and reducing allocations in more staid stocks and bonds is a short road to disaster. One can only hope that the Legislature can show a bit more common sense to protect the future of the pension system and quash this nonsensical “plan.” I was also amazed to read that the pension fund was relying on a return of 7.75 percent to “meet its pension commitments.” I am horrified that Bill McCollum, Alex Sink and Charlie Crist would approve increasing the state pension fund’s investment in hedge funds. This proves to me that these folks just don’t understand investment and risk. They also don’t understand that retirees need a fixed, dependable benefit every month. They should not be in positions where they can make this kind of decision.
Pay cuts for city workers not necessary, Tampa mayor saysBy Janet Zink, St Petersburg Times, June 23, 2010City Council members are asking Mayor Pam Iorio to consider offering the general employees union a 5 percent pay cut to avoid layoffs — a move the mayor said isn’t necessary. The biggest added expense: a $12 million increase in the city’s contribution to the fire and police pension fund, necessary because of stock market losses.
featured story
401(k) accounts are not retirement Plansan fPPta Publication
congress created 401(k) accounts in 1978 as a way to close a loophole on executive bonuses. they were never intended as a replacement for traditional defined benefit pension plans--but today that is how
they are often perceived, and as a result, many american workers will never have sufficient funds to retire as they would with a traditional or defined benefit retirement plan.”the failure of 401(k) accounts as a primary retirement vehicle can be attributed to three fundamental and incontestable shortcomings. 1. When saving for retirement becomes optional, the average american grossly under-saves or simply opts out altogether. 2. defined contribution accounts compel average americans, who are untrained and inexperienced in managing stocks, to become expert portfolio managers. 3. the 401(k) structure in its current form encourages financial failure.”
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Peyton warns against union-supported candidate for mayorBy Matt Galnor, Florida Times-Union, June 18, 2010The same man who rode the police and fire unions into the Jacksonville mayor’s office seven years ago told a political group Friday to be wary of any 2011 mayoral candidate with the backing of cops and firefighters. Peyton has been publicly feuding with the unions, unable to get a 3 percent pay cut and pension reform during labor negotiations. He said Friday the city has gotten to the point where the union’s agenda is not in the best interest of the taxpayers.
Titusville budget idea calls for staff cuts, furlough days, outsourcingBy Dave Berman, Florida Today, June 30, 2010The city plans to reduce its staff by 16 and furlough most remaining employees for three days without pay as it attempts to close a nearly $5 million budget gap. Requiring general employees to contribute 2.5 percent of their pay to their pension plans. Police and firefighters already contribute 6.5 percent of their pay to a separate pension plan. Continuing a wage freeze implemented a year ago. Abbate said the city council also will consider whether to have a “second-tier” pension plan, under which new employees would have less costly pension benefits than those already in the city’s general or police/fire pension plan.He said the city is working with its police, fire and service workers’ unions to gain support for some of the proposed changes. [Editor’s note: FPPTA held a town hall meeting before the city council on May 6 defending defined benefit plans.]
Florida ends employees’ double-dipping of pension and salaryBy Dave Weber, Orlando Sentinel, June 30, 2010Starting Thursday, it becomes a whole lot harder for Florida public employees to double-dip into payroll and retirement funds. Under revisions to retirement rules passed by the Legislature last year, state workers no lon-ger can retire, sign up for pension checks, sit out a month and then come right back to work and a paycheck. Now city, county, school-system and state employees must wait six months after retirement before trying to return to their jobs.
Fla. panel revises pension investment policyBy Bill Kaczor, Bloomberg Business Week, June 9, 2010A panel headed by Gov. Charlie Crist approved a revised investment policy for Florida’s state retirement fund to reduce its reliance on stocks and other equities while adding hedge funds. The State Board of Administra-tion adopted the changes recommended by a consulting firm, the board’s advisory council and its executive director, Ash Williams, a former Wall Street hedge fund manager. The changes are expected to reduce the $109.5 billion pension fund’s risk while increasing its return by $2.1 billion over a span of 15 or more years.
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fPPta fisHing tournamentaugust 6-8, 2010tarpon lodge, Pine island, florida
For more information or to register, please visit: http://www.fppta.org/View_Event.aspx?EID=12
This is a great event. Bring the kids, relax, fish and have some fun!
Should Florida sell BP stock?WINKNews, June 12, 2010The state is holding onto 170 million dollars worth of BP stock and bonds despite its falling value and the financial trouble the company is causing Florida. Dropping the stock will be one of the issues discussed when the state’s investment board meets again in September. One of the state officials charged with overseeing pen-sion fund investments is Chief Financial Officer Alex Sink. Sink says the board should consider selling. “It should clearly be on the radar.” Adding fuel to the fire is BP’s falling value. BP stock has lost 67 million dollars worth of its value since the oil rig exploded April 20th. The State Board of Administration isn’t worried about the falling value, because the state pension is valued at 113 billion dollars… and its investments are long term.
Florida state pensions remain untouched by recessionBy David Volz, Miami Labor Relations Examiner, July 3, 2010 Even though the Florida economy is suffering and the state’s unemployment rate is high, the state pension fund remains intact. Florida has a $110 billion retirement system and state legislators have insisted on protecting this fund. This week, Florida will increase by 10 percent the amount the state and local governments set aside for government personnel, po-lice officers and teachers. Florida is one of five states that don’t require contributions from workers. Other states have increased the retirement age and cut benefits. But Florida has not done so. The one million people who receive pensions or will receive pensions have not seen their pensions decline because of the weak economy.
SEC Ruling Curtails Political Contributions From ManagersAsset International, July 1, 2010 All five members of the Securities and Exchange Commission approved tightening restrictions against “pay-to-play” practices. Under the new rule, investment managers who make political contributions to officials with influence over public pension funds would be banned from managing those funds for two years. Additionally, the ruling sets limits on political contributions by an adviser, banning advisers from paying third parties, such as placement agents or family members, to make contributions for business.
/fppta.html
Quote of the Month
“A man who is good enough to shed his blood for the country is good enough to be given a square deal afterwards.”
-Theodore Roosevelt
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Pete Prior, CPPTChairman
George Farrell, CPPTVice Chairman
Ann Thompson, CPPTSecretary
Steve Aspinall, CPPTTreasurer
Brenda Clanton, CPPTDirector
Gary Clark, CPPTDirector
Joe Liguori, CPPTDirector
Renee Lipton, CPPTDirector Emeritus
Ken Harrison, CPPTDirector Emeritus
board of directors
fPPta staff
Ray Edmondson , CPPT Chief Executive Officer
Peter Hapgood , CPPT Education Consultant
Kim Ryals , CPPT Chief Operating Officer
CPPT [email protected]
Fred Nesbitt, PhD FPPTA Media [email protected]
Lois Edmondson Senior Executive Assistant
Membership and Event Registration Specialist
Susan Marden Public Relations Consultant
Tom LussierFederal Legislative Consultant
Randy TouchtonState Legislative Consultant
Howard Bos, CPPT, ChairpersonRichmond Capital Management
W.O. Bell, Vice-ChairpersonWestwood Distributors
Brad Rinsem, SecretarySalem Trust
Michael Spencer, CPPTRBC Global Asset Management
Bruce Feiner, CPPTConvergEx Group
Janna Hamilton, CPPTGarcia Hamilton & Associates
Joe BogdahnThe Bogdahn Group
Grant McMurry, CPPTICC Capital Management
Tracy MusserThompson, Siegel & Walmsley, Inc.
Joe WhiteSaxena White, PA
Katie Byrne, CPPTDePrince, Race & Zollo
Tom CapobiancoLee Munder Capital
Chad LittleFreiman Little Actuaries
Jerry NavaretteThe Boston Company
Chris GrecoSawgrass Asset Management
Jim SkesavageAtlanta Capital Management
David LeeDahab Associates
Bob PodgornyDow Jones Indexes
Tom FranzeseLazard Asset Management
Richelle Hayes, CPPTAmerican Realty Advisors
Alison BielerCypen & Cypen
Allison CorballyState Street Global Advisors
Peter Hapgood, CPPT, ChairpersonFPPTA Education Consultant
Ray Edmondson, CPPTFPPTA Chief Executive Officer
Kimberlie E. Ryals, CPPTFPPTA Chief Operating Officer
Pete Prior, CPPT, ChairpersonHialeah Gardens Police Pension Fund
Steve Aspinall, CPPT, TreasurerSt. Petersburg Police Officers Pension Fund
Joe Liguori, CPPTDelray Beach Police & Fire Pension Fund
Ann Thompson, CPPT, SecretaryVero Beach Police Pension Fund
Dennis Hole, CPPTFt. Lauderdale Police & Fire Pension Fund
Steve Corbet, CPPTSt. Petersburg Police Pension Fund
Richard Grover, CPPTPensacola Firefighters Pension Fund
Tim Olsen, CPPTMelbourne Fire Pension Fund
Mike Spencer, CPPTRBC Global Asset Management
Jack Farland, CPPTSalem Trust Company
Grant McMurry, CPPTICC Capital Management
Katie Byrne, CPPTDePrince, Race & Zollo
fPPta education committee
fPPta advisory board
FPPTA2946 Wellington circle east
tallahassee, fl 32309Phone: 800-842-4064
fax: 850-668-8514e-mail: [email protected]
www.fppta.org