The commission wants to raise taxes this year so that they can boost contributions to the town's supposedly underfunded pension plans. One supposes that our taxes will continue to be higher in coming years for the same reasonings. The commission's reasoning appears to go like this - we need to raise taxes so we will not have to dip into our overly rich reserves to pay for town operations. In turn we can take money from the same reserve fund and contribute to the pension funding mess. Do you get the logic? The only things missing are fiscal responsibility and reduced spending.
The two times I campaigned for commissioner, I railed against the town's current pension funding system; comprised of three small volunteer amateur pension plan committees along with too many over-paid lawyers, advisor's, actuaries and investment agents, who all have been spectacularly unsuccessful for the past decade.
Compare pension plan performance of our pension committees with the Florida Retirement System (FRS) and weep. We are in the bottom 10% of Florida pension plans when it comes to being underfunded.
This year FRS returns on investment have ranged between 14% and 28%. At the end of 2009 FRS was at 88% valuation, down from a 2008 valuation of 107%. Longboat's pension plan valuation has been negative since 2001.
For the past five years I have contended that Longboat should be in the FRS system, rather than relying on volunteer investment committees. The argument used against FRS membership is that we cannot afford to transfer into the FRS system, just because of our underfunded situation. I counter by pointing out that the longer we wait the more underfunded we become. Do you remember the parable of Sisyphus?
Assumptions: Making assumptions is the foundation to actuarial assessments of long-term investment strategies. The set of assumptions currently in use are more than a decade old. Lots has changed and the assumptions need to be reformulated before we make even more assumptions based on dated data.
Wage and benefit projections are no longer valid. Reassessing these assumptions might have sizable impacts on future pension plan liabilities, yet we continue to operate under the old projections.
When I was on the commission I advocated a re-assessment of the assumptions that are causing so much fear amongst the commissioners. How can our community make intelligent decisions when we do not have up-to-date information?
Perhaps the time has come to cease punishing the taxpayers of Longboat for the failings of the government.
There are causes associated with our current pension fund problems.
Most recent FRS audit - http://edr.state.fl.us/conferences/actuarial/2009%20FLA%20Valuation.pdf
Where can we get the information to permit us to "compare pension plan performance of our pension committees with the Florida Retirement System" as you recommend?
ReplyDeleteTo Anonymous:
ReplyDeleteThe town has detailed information about the town’s pension funds. Being in the bottom 10% has been published in the papers at various times.
How can we expect small volunteer investment committees to have the resources available to FRS?
I commend our boards while at the same time recognizing economic realities.
FRS is the third most successful state retirement fund in the country.
FRS also gives employees transportability which I believe might be an attractive benefit to offer new workers.
Every day we get further and further in the hole.
No one in the town has ever seriously worked out a detailed cost/benefit analysis. I chafe under anecdotal solutions to complex yet analytical problems.
I believe we need to be looking for long term solutions instead of politically expedient Band-Aids.
I have difficulty looking at a truly daunting global financial landscape with our three tiny investment committees at the helm of our financial future. Financially things can get even worse, a lot worse, quickly. Excuse the mixed metaphors.
I for one prefer to avoid endless tax contributions to unsuccessful fund management, for whatever reasons, if there is a viable long-term stable alternative.
GJ
They Shoot Horses Don’t They – the Apparatchiks on Longboat Key talk about this and that from a decidedly Patrician perspective. I am not sure the “haves” should be looking after the fate of the “have-nots” if their only words of advice are “Let them eat cake”.
ReplyDeleteThe seemingly eternal economic class war always comes down the those who are privileged and those who struggle to survive. In the first half of the 20th century, in a fabulously wealthy America, the working class gained a little ground. Now this nation appears more interested spending it’s resources killing people in other places in great numbers, while ignoring the needs of our own people. The privileged strongly object to the uppity working class and give them short shrift.
I prefer an approach that embraces fairness above political expediency that changes from regime to regime. Longboat Key residents enjoy, for the most part, well managed government. We spend about eleven percent of our taxes to provide terrific public safety, utilities, town management, parks and roads and a volunteer commission composed of well educated experienced dedicated individuals. I feel we are getting fairly good value for the tax dollars we give to our local government.
The rest of your tax dollars – 89% – go to greedy county governments who look at our paltry voter count and say “Let them eat cake”. Can you think of any srvices you get from your county government? Oh yes, public schools.
The town employees are not responsible for our pension plan problems. Those employees who have 401Ks have suffered an economic loss shared by tens of millions of other people around the world.
Let’s not punish our employees for the mismanagement of the pension plans by others. If we had been in the Florida Retirement Fund (FRS) all along I believe I would not be writing this comment.
http://en.wikipedia.org/wiki/They_Shoot_Horses,_Don%27t_They%3F_(novel)