Pension fund blues
At its March 25 meeting, the Boca Raton City Council reappointed two members of the board that oversee the city’s police and fire pension fund. Paul Lawless and John Girard were the only two applicants for positions on the eight-member board.
You can see why: the job requires knowledge of finance and investments. Topics such as “mortality assumption” aren’t exactly cocktail party talk. But even if few people want to serve, these unpaid positions are vital. That holds for pension boards in all Florida cities with their own police and fire departments, such as Delay Beach, because public safety pensions are big budget issues for cities.
Pension costs have been rising steadily since the Florida Legislature in 1999 forced cities to give higher benefits to police officers and firefighters rather than shore up the pension funds. (For text on municipal police pensions, click here. For text on firefighter pensions, click here.) Most experts believe that a pension fund must be at least 80 percent funded to be financially sound. According to city figures, Boca Raton’s police/fire pension went from being nearly 96 percent funded in 2002 to less than 63 percent funded in 2011.
In an interview, Girard says the 2013 report raises the figure to roughly 74 percent. One big reason is that the latest review looks back only four years, and thus does not include the stock market crash of 2008. Still, Boca Raton hired an actuary who has made recommendations for how the city can stabilize the pension plan. The recommendations come as a new mayor and council take office and the police and fire contracts come up for renewal Oct. 1, the start of the new budget year.
And important as the pension board’s role may be, however, the mayor and council make the key decisions. Previous mayors and councils have decided, for example, that public safety union employees can use overtime to calculate pension benefits. Previous mayors and councils have decided that firefighters can retire at 100 percent of their pay as early as age 50. (Police can retire at 87.5 percent of pay.) Previous mayors and councils have decided that police and firefighters will get cost-of-living adjustments in their pensions. Most private-sector employees get no such benefits. Indeed, most private-sector employees don’t get the guaranteed benefit pensions enjoyed by police officers and firefighters.
I can’t see Boca Raton going to the extreme that Palm Beach did—forcing all public safety employees into a 401(k)-style plan. The town council’s move led to mass resignations by public safety employees. But Boca Raton can’t sacrifice city services and the tax rate on behalf of overly generous pension benefits. If that goes to an extreme, the taxpayers will revolt.
When Mary Jane Saunders resigned last May as Florida Atlantic University’s president, the university said Saunders would stay on the faculty—at a salary of $276,000, just 20 percent less than she had made as president—to study the feasibility of a physician’s assistant program at the Schmidt College of Medicine.
I had been hearing, though, that Saunders wasn’t on campus. On FAU’s faculty/staff website, Saunders is listed as having an office in the Sanson Life Sciences Building. But a check of the faculty on all of FAU’s science and science-related departments doesn’t show Saunders. Nor does Saunders show up on the listing for the faculty of the medical school.
A university spokesman said this an email: “Dr. Saunders is still on study leave working on an assessment of the Physician Assistant Program. At the beginning of the year she completed a request for an Alternate Work Arrangement—allowing her to work from another location. So while she does have an office in the science building on the Boca Raton campus, she is not currently in the area.”
In fact, Saunders is working from Medina, Ohio, a suburb of Cleveland, and Pensacola. Saunders was provost at Cleveland State University before coming to FAU. Pensacola is nice most anytime. And Saunders, the spokesman confirms, is still making that $276,000.
Auburn Trace deal undone
Tuesday night, the new Delray Beach City Commission undid a foolish and dangerous action by the previous city commission.
That action had been to redraw terms for a loan made to developers of the Auburn Trace housing project. The new terms would have given Delray Beach about $1 million now but delayed any interest payments for seven years, allowed the developers essentially to decide whether they would pay after those seven years, and removed any rights Delray Beach had to the property.
This week, the interim city attorney reported that the developers were in default to their private lender. New commissioner Jordana Jarjura voted to rescind the decision. So did Mayor Cary Glickstein and Commissioner Shelly Petrolia, who were not at the March 18 meeting. Al Jacquet, who voted for the bad deal, wasn’t at Tuesday’s meeting. Adam Frankel voted to undo what he had done. The item was added to the March 18 agenda the day before, after Glickstein had asked that the item be delayed until he returned. Score one for Delray’s taxpayers.
Trash-hauling deal stinks
Delray residents also may win because of a court ruling issued last week.
Palm Beach County Circuit Court Judge Meenu Sasser found that Delray Beach violated its own rules when the city commission in August 2012 extended Waste Management’s trash-hauling contract for eight years at $65 million without putting the contract out for bid. If the ruling stands—the company could appeal—competitive bidding could result in lower rates.
To understand why Delray Beach was in court arguing that the city broke city rules, you must understand the political dynamic of Delray Beach in 2012. Former City Manager David Harden, who had been in office for more than 20 years, argued that because the money goes to Waste Management in fees, not property taxes, the contract —Delray Beach’s largest—was exempt from rules requiring bids on all city contracts of more than $15,000. Former City Attorney Brian Shutt agreed with Harden.
Palm Beach County’s Office of Inspector General, however, said Harden and Shutt’s argument was bogus. Sasser pretty much agreed, although she was addressing the argument as Waste Management made it. As Sasser wrote, “The Florida Supreme Court made it clear that competitive bidding requirements for public contracts exist to protect the interest of the public by preventing collusion and protecting favoritism.” Well, duh.
By awarding Delray Beach summary judgment, Sasser determined that there is no dispute about the facts. That’s not just a win; it’s a slam-dunk win. Though a quick rebidding probably would be best for Delray, one does wonder if a trial might provide answers as to why the previous commission decided to break its own rules.
About the Author
Randy Schultz was born in Hartford, Conn., and graduated from the University of Tennessee in 1974. He has lived in South Florida since then, and in Boca Raton since 1985. Schultz spent nearly 40 years in daily journalism at the Miami Herald and Palm Beach Post, most recently as editorial page editor at the Post. His wife, Shelley, is director of The Learning Network at Pine Crest School. His son, an attorney, and daughter-in-law and three grandchildren also live in Boca Raton. His daughter is a veterinarian who lives in Baltimore.