Narrow Vote Grants Pensions More Funding

Key Biscayne Fire Rescue Department, Sept. 30 (Key News_Annali Hayward)

Fire and police pensions received $500,000 in Village contributions Tuesday in a tense 4-3 Village Council decision. The figure is a quarter of the $1.9 million earmarked for the purpose last year. The Council was divided on both the financial and moral implications of the move. 

“We committed funds we didn’t have,” said Council Member Ed London, a former pension board chairman who voted against the ordinance. 

But Vice Mayor Allison McCormick warned against setting a precedent of successive Councils “waiting it out” and amending previous decisions. “We voted 7-0 based on the information we had at the time,” she said. 

Council Member Brett Moss also voted against it, wanting more information on whether moving monies out of the Assigned Fire-Rescue Transport Fees fund would cause the Village to dip below a key metric required to maintain its current AAA bond rating.

The answer to that seemed to be no Tuesday night, but officials asked for further clarification from the Village’s financial analyst. 

An October 2018 Council ruling directed the entire $1.9 million in the Transport Fees fund to be transferred to the fire and police pension funds. But at the time incoming Village Manager Andrea Agha discovered a procedural issue that meant the item was pushed back for discussion again in this year’s budget. This created time pressure Tuesday night, as the Council had to make a decision in time for that evening’s budget hearing. 

Mayor Mike Davey agreed with McCormick, saying, “This was not carried out a year ago on a technicality. We have to honor what’s come before.”

But Council Members Luis Lauredo and Ignacio Segurola countered the point. “Now we have more information,” said Segurola, referring to an actuarial report released earlier this month.

The $500,000 Village contribution increases the pension fund’s  funding ratio (the amount of the plan that is paid for vs. the amount representing an unfunded liability) to 93.2 percent from the 89.4 percent confirmed by the report. 

Council Member Katie Petros was pleased that the Village’s unfunded liability had gone down, but wanted to continue that trend: “I want to be true to a component of what we talked about, which is getting over that 90 percent.”

However, as interim Chief Financial Officer Chris Wallace said, “The funding status of the plan is not as important as the contributions. In the end, you pay what you have to pay.”

Hearing conservative positions on the dais, Petros suggested reducing the amount but still contributing enough to reach 90 percent. All Councilmembers supported her motion to amend the funding ordinance to contribute $500,000 instead of $1.9 million. Voting against the amended ordinance were London, Moss and Segurola.

“If the plan was at 80 percent funding it would still be a great plan vs. other cities,” said London. 

According to the latest available data from the Pew Group, which has been tracking state pension plans since 2007, the average funding ratio in the state of Florida is 79.3 percent.

The Transport Fee funding source comprises reimbursements the Fire-Rescue Department receives either from insurance companies or patients when they are transported to hospitals or care centers in emergencies. The remaining $1.4 million may be allocated to pensions in the future, possibly reducing budget pressure in a given year,  such as during a recession.