Delray pension reform update
Like Boca Raton, Delray Beach has gone big on police and fire pension reform.
Boca Raton proposed a series of major changes to the public safety pension system, whose unfunded liabilities represent the most serious problem for the city’s long-term financial stability. The city and the unions—the Fraternal Order of Police and the International Association of Firefighters—were so far apart that the city declared an impasse in September.
I have seen Delray Beach’s pension proposal to the Police Benevolent Association. In many ways, Delray is following Boca’s example. Currently, the “multiplier”—the figure used to calculate benefits for each year of service—is 3.5 percent. Delray proposes lowering that to 3.0 percent for current employees and to 2.75 percent for anyone hired after the plan changes.
Delray also proposed to end early retirement and to base benefits on the highest three years of salary in an employee’s final 10 years of service. Benefits now are figured on the highest five years.
Perhaps most important, Delray wants to end overtime as a factor in calculating pension benefits. State law limits use of overtime to 300 hours, but cities can end it on their own—and should. By steering the bulk of overtime to officers nearing retirement, unions can give employees a pension windfall at taxpayers’ expense. Cities should base benefits strictly on salary.
In one area, though, Delray Beach has gone beyond Boca Raton. Delray wants to withdraw from the state plan that funnels revenue from an assessment on insurance policies to city police pension funds. The Legislature created the program to encourage cities to establish their own pension plans.
With that money, however, come rules about who will oversee police and fire pension funds. Police and fire representatives dominate Delray Beach’s board, and some of the city’s elected officials believe that the fund is being badly managed. Supporting their case is a recent report from the LeRoy Collins Institute at Florida State University that rated the police-fire pension ‘F’ and named it one of the worst performing in the state. Meanwhile, Delray Beach’s pension for general employees got an ‘A’ rating. (Boca Raton’s police/fire pension fund got a ‘D.’)
There’s more evidence. Delray’s chief financial officer says the police-fire fund has had consistently lower investment returns than the general employee fund. Jack Warner estimates that the fund could have generated $2 million more over the last five years during the bull market.
If Delray Beach leaves the state program, it will lose the $500,000 from the insurance assessments, but the city would get control of the pension fund. Better management could save the city much more than it loses. And since the city is responsible for any pension deficit, Delray Beach also would get more accountability.
In an email, Mayor Cary Glickstein noted that $500,000 is about .03 percent of the pension fund’s value. He said leaving the state program also would save the city money— “travel and entertainment to seminars by board members, union and pension lawyers, management fees, duplicity of costs. . .” Delray also could stop waiting for the Legislature to undo what the Legislature did 15 years ago. It tied that insurance money to extra benefits, a big political favor for the police and fire unions.
Predictably, those unions resisted when Delray and Boca decided to pay police officers and firefighters based more on when they are working than when they aren’t. The union dispute involves wage/promotion proposals, not just pension changes. Not all of Boca Raton’s and Delray Beach’s public safety employees live in those cities. Resolution of these disputes must favor the taxpayers who do live there.
Boca pension reform update
Here’s an update on the pension negotiations in Boca Raton.
According to Mayor Susan Haynie, the city and the unions have agreed on two magistrates proposed by the Florida Public Employees Relations Commission. The magistrates will hear arguments from the city and the unions, and then issue recommendations. The recommendations are not binding, but the city council will have the final say if the two sides disagree on the recommendations. The commission will schedule a date and time for arguments on the two cases.
CRA head on her way out
Delray Beach is losing the other half of what for a time was the city’s leading power couple.
Community Redevelopment Agency Director Diane Colonna will leave Jan. 2. She is going to work for Redevelopment Management Associates, the firm co-owned by Chris Brown, whom Colonna succeeded at the CRA. The company has a contract with the Broward County city of Margate, and Colonna will be that city’s CRA director, just not as a city employee. RMA has a similar arrangement with West Palm Beach.
Colonna has spent 15 years running the CRA, and she was Delray’s planning director for eight years before that. Her time at the CRA overlapped that of her husband Jeff Perlman’s seven years on the city commission, the last four of them as mayor.
Speaking with me Monday, the 57-year-old Colonna called the move an “exciting opportunity” to do “something different.” She and Brown have stayed in touch, and he reached out when his firm got the Margate contract. Margate proposes to turn 36 acres into a city center, and Delray Beach offers no blank canvas that size.
In large part, that’s because the CRA under Brown and Colonna has been successful. Unlike Boca Raton, where the city council also acts as the CRA, Delray Beach’s agency has a separate staff and board, whose members the city commission appoints. The agency gets money from the city for operations and real estate purchases.
Structure, though, matters less than people. Boynton Beach has gone back and forth on how it wants the CRA to be run —part of city government, more independent—and the city still can’t get steady, positive results.
Delray Beach lawyer Herman Stevens chairs the CRA board. Of Colonna, he said, “I am sorry to see her go, and it will be a challenge to replace her.” The board’s next meeting is Dec. 11, at which time the board could name Assistant Director Jeff Costello to take over on an interim basis. “That would be my choice,” Stevens said, “but we are a body and will make a decision collectively.”
Colonna’s departure coincides with looming decisions on key redevelopment projects, notably Hudson Holdings on the old Worrell properties just southwest of Atlantic and Swinton avenues. Especially with a new city manager coming, Delray will miss Colonna’s institutional memory along with her skills.
Florida jobs report
Florida’s October jobs report came with a little more optimism than previous reports.
The state added 34,4000 jobs, with many coming in the health services and tourism sector that pay comparatively less than jobs in other parts of the economy. But there was a 3.4 percent gain from October 2013 in professional and business services, which tend to pay well. Construction employment is up 10 percent in the last year.
Florida continues to recover from the Great Recession. Unless more jobs pay more, though, not enough Floridians will feel that recovery.
You can email Randy Schultz at email@example.com
For more City Watch blogs, click here.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.
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