TALLAHASSEE | Florida counties will have to contribute an additional $66 million to the state pension fund in the new budget year, according to legislation that has started moving in the Senate.
As a result of a decrease in the assumed rate of investment return on the $160 billion pension fund, counties, school boards, state agencies, universities, state colleges and other government entities will have to increase their contributions in the 2018-2019 budget year to make sure there is enough money to pay retirement benefits in the long term.
The increased payments total $178.5 million, including $66.4 million for county governments, according to legislation (SB 7014) approved by the Senate Governmental Oversight and Accountability Committee last week.
School districts, whose employees represent about half of the 627,000 active pension participants, will have to contribute an additional $54.4 million.
State agencies will have to contribute another $31 million. Universities will have to contribute $11.8 million and state colleges an additional $4.8 million.
A handful of cities and special districts that participate in the state retirement system will face a $10 million contribution increase.
County governments, which face the largest contribution increase, will have to accommodate the added expense as they shape their 2018-2019 budgets.
“Counties are closely monitoring the FRS (Florida Retirement System) contribution but remain committed to a program that provides retirement security to our dedicated public servants,” said Cragin Mosteller, a spokeswoman for the Florida Association of Counties.
The bulk of the other contribution increases are part of overall budget challenges facing House and Senate members as they craft the 2018-2019 state budget, which takes effect July 1.
The $54 million increase for school districts, for example, will be in the mix as lawmakers address overall public-school funding. Lawmakers are already having to accommodate an increase of more than 27,000 new students next academic year, and the House and Senate remain at odds over using increased local property tax collections to boost school spending
Senate Appropriations Chairman Rob Bradley, R-Fleming Island, said the state pension fund in the Senate budget bill will be “fully funded with the new assumptions.”
“It’s an obligation of the state,” Bradley said. “And we are comfortable with the current level of (pension) benefits in the Senate, with the understanding that when you change the assumptions, that requires more money to go to that area.”
The Florida Retirement System Actuarial Assumption Conference lowered the projected rate of return on the pension fund’s collection of stocks, bonds, real estate and other assets from 7.6 percent to 7.5 percent last fall.
It was the fourth year in a row that analysts have lowered the assumed rate of return on the fund.
The decision came after new evaluations from independent financial consultants projected a 30-year rate of return for the pension assets in the range of 6.6 percent to 6.81 percent.
With a 7.5 percent assumed rate of return, the Florida pension fund is expected to be able to pay 84.4 percent of its future obligations, with a $27.9 billion long-term unfunded actuarial liability, according to the consultants.
Public employees who participate in the pension plan have been required to contribute 3 percent of their annual salaries to the fund since 2011.