Print Story Email Story Discuss Story (6)

Recommend ( 0 )

New-Sun photo by CHRISTOPHER TUFFLEY (From left) Avon Park city manager Julian Deleon, police union representive Sgt. Nathan Coogan and fire fighter Lonnie Shields take part in a discussion of pension issues before the board of trustees for the fire and police pension funds and police and fire union representatives. The pension find lawyer Scott Chriatiansen took part in the discussion by telephone, which is why Shields holds up a cell phone.

Related Links

advertisement

published: Wednesday, June 20, 2012

Pension discussion in Avon Park sparks disagreement

By CHRISTOPHER TUFFLEY

christopher.tuffley@newssun.com

AVON PARK -- Thursday, June 14, City Manager Julian Deleon, Director of Administrative Services Maria Sutherland and City Councilman Parke Sutherland, in the role of city council liaison, met with the police and fire pension board of trustees to discuss issues that arose during the city council's regular meeting on June 11.

The main topic of discussion, which raised considerable disagreement, was the presentation Deleon used during the regular meeting regarding the cost of the pension plans to the city.

The board of trustees strongly disagreed with Deleon's presentation.

In an e-mail communication following the meeting, Deleon was given an opportunity by the News-Sun to make sure his position was understood.

"Since 2004 the fees for administering the city's pension contributions the funds have continued to rise every year, causing greater and greater hardship for the city to meet the required funding obligations," Deleon wrote. "The membership has a fixed 5 percent contribution, the city's obligations have increased every year since 2004.

"The contribution for fire was at $45,000 in 2004, it has more than tripled in seven years to $175,000 annually.

"I have concerns over the long term sustainability as the city's obligations have continued to increase yearly.

"There is another increase planned for 2013."

During the special meeting, board members told Deleon they agreed with his number figures, but that he was wrong when he told the council administrative costs of the fund amounted to 43 percent of the fund's value.

The state contributed funds toward administrative costs, and the union membership, which is only mandated to contribute 1 percent of it's payroll, voluntarily contributed 5 percent. Deleon was told those contributions covered administrative costs.

Captain Warren West, president of the fire union, said Deleon's presentation was inflammatory. "Nobody is paying 43 percent into the fund, that's ludicrous. The majority of the funds come from investments.

"You're telling the city," West added, speaking to Deleon, "the costs are too high, but you do not sit on the board. It is the first time you have been here. You do not know how we go about it."

In fact, the board told Deleon, administrative costs only amount to 2 percent of the pension fund, a percentage well in line with the industry norm.

"It's a lot less than the city pays you," West said to Deleon.

According to Deleon's presentation to the council Monday, administrative costs for the city are 4 percent of the general budget.

Robert Flores, a member of the board of trustees, said the city's contribution actually fluctuates because it is tied to the stock market.

"In a good year there is no cost to the city," Flores said. "It's kind of a Rubik's Cube regarding cost.

"The issue of rising costs was directly tied to the weak economy and volatility of the market. When the market turned around, the city's contribution to administrative fees would go down. "

There are other factors as well, several board members said, including recent disability payouts.

West said no one should forget the board's fiduciary responsibility. "My guys can sue me," he said, if the plan does not produce enough to meet it's responsibilities.

As reflected in the low administrative costs, 2004 was a good year. Those conditions will eventually return. In the meantime it is comparing apples and oranges, Flores said.

Speaking to the meeting via telephone, Scott Christiansen, the board's lawyer, said, "The last 10 years the investment market can't keep on an even keel."

Deleon continued to point out the rising costs, and their effect on the city.

"We looked for savings and reducing administrative fees is one way to save. I urged the board to re-examine the rates paid and service received," he wrote in his follow-up e-mail.

At the meeting Deleon wanted to know why the board did not send out bids for more effective consultants and why the board did not use the same three-bid process the city did.

"To my knowledge, the pension board does not have a procurement policy in place," Deleon wrote in his e-mail.

In fact, board members and administrator Carol Knapp told the city, there is a procurement process, but it is mandated by state and federal statute and different from the city's.