The State Level Pension Crisis: Florida Edition
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Editor’s Note: This piece will be the beginning of an investigative series in partnership with Watchdog.org’s state-level journalists. Pension budget woes beset nearly every state in the union and cities and municipalities are also being hit with unprecedented pension debt. Baby boomers are retiring. Some state and local budgets allocate more funds for pensions for retirees than they use for actual services and current worker pay. Once again, the younger generation is saddled with debt from a previous profligate era.

 

According to the Florida Department of Management Services, there are 1,969 former government employees receiving annual pension payouts of more than $100,000.

The defined-benefit plans are almost exclusively offered to government workers, as 401(k)-style retirement plans have become the norm in the private sector.

As of June 2016, the total annual benefit for the group was $235 million.

In 2014, there were just 1,223 public retirees receiving six-figure payments from the Florida Retirement System. The two-year jump is a 61 percent increase.

The reason for the steep rise appears to be the 3 percent cost of living adjustment applied every year after a recipient’s initial benefit date. The purpose is to offset inflation. State lawmakers nixed the annual increase for new FRS eligible employees as of July 2011.

The annual adjustments have pushed 1,400 ex-employees who retired with an annual benefit of less than $100,000 over the six-figure threshold.

Spreadsheet data obtained by Watchdog.org does not reveal individual recipient names, but does show the public institutions where the recipients worked, as well as the initial pension payment date and the amount first paid at the time of retirement.

One Miami-Dade County employee retired in 1987 with an initial pension benefit of $41,073. As of June 2016, the former county government worker is receiving $105,060. The amount will increase by 3 percent next year.

The cost of living adjustment amount may be out-of-step with the actual rate of inflation. According to a federal Bureau of Labor Statistics inflation calculator, the adjusted rate of inflation for $41,073 in 1987, is $87,290 in 2016 – a potential overpayment of $17,770 this year.

Without including education-related recipients, Miami-Dade County retired workers account for one-third of current six-figure FRS pensions. About 76 percent of the 697 Miami-Dade County employees retired with less than $100,000 in initial pension benefits.

The highest paid recipient worked at Palm Beach State College, formerly known as Palm Beach Community College, and retired last year with an initial benefit of $310,000.

Fourteen individuals have pensions of more than $200,000 a year. The average overall six-figure pension is $119,000.

FRS members who worked in the state and local court systems are the second largest group with 365 recipients. County sheriffs’ department employees and other law enforcement personnel are next with 300 recipients. Education system retirees, and former county and city officials have 261 and 244 six-figure retirees, respectively.

“The two-year increase is certainly eye-opening,” said Bill Bergman, research director for the Chicago-based pension watchdog Truth in Accounting. “It is also the result of a choice that has been made by Floridians, including those that choose to pay attention and those that do not.”

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