Newspaper article Sarasota Herald Tribune

Fewer Problems with City's Pension | but despite Recent Recovery, Big Unfunded Liability Remains

Newspaper article Sarasota Herald Tribune

Fewer Problems with City's Pension | but despite Recent Recovery, Big Unfunded Liability Remains

Article excerpt

SARASOTA

SARASOTA -- The stability of Sarasota's municipal pension plans is improving with the economy, but taxpayers continue to be on the hook for $137 million in unfunded liabilities, according to data presented Monday to city leaders.

The worst-funded of the three plans -- the one covering all employees except police and firefighters -- is projected to have just 72 cents in assets for every $1 owed to current and future city retirees when updated calculations are finalized later this year.

The general employee plan will cost taxpayers $6.4 million next year, and 77 percent of the money will go toward paying down the unfunded liability. The city is aiming to have the plan 100 percent funded in 22 years.

City leaders have closed that plan and one other to new employees and cut some benefits to limit costs.

Improved investment returns also have helped reduce the unfunded liability, and the city has been devoting more tax money to the plans in recent years to close the gap.

Yet the pension funds all were given a "C" grade or lower by an independent research institute last year, and there appears to be little appetite to pursue further reforms that would reduce benefits.

No changes to the current benefits were discussed Monday by the City Commission.

"I think the state of our pension plans overall is healthy," Mayor Willie Shaw said after the workshop.

Shaw noted that the city's unfunded pension liability looks worse because the stock market's strong performance in recent years is not fully represented yet because of an actuarial "smoothing" formula that evens out investment gains and losses over time. And he pointed to the overall trend of each plan getting stronger.

"We're definitely on the right track," he said.

At least two of the plans have funding ratios below the average for similar plans statewide, but all of the ratios improved from 2014, and none are below the 70 percent threshold considered by some as the benchmark for determining whether a plan is critically underfunded.

The firefighters' plan -- closed long ago when the city's fire department merged with Sarasota County's -- is the best funded at 82 percent this year, while the police plan is 77 percent funded, and the general employee plan is 72 percent funded. …

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