South Florida Sun-Sentinel (Fort Lauderdale)
BYLINE: Larry Barszewski, Sun Sentinel, Fort Lauderdale, Fla.
FORT LAUDERDALE — While many people would feel lucky receiving a 4 percent or 6 percent employer salary contribution into their retirement accounts, 25 city workers are getting 27.71 percent this year.
The rate is more than triple the 9 percent salary contribution the city offers to most new employees — a difference this year that will cost taxpayers about $438,000 to cover.
The employees include City Manager Lee Feldman, some department heads, assistant city attorneys, assistant city managers, commissioner aides and others in the offices of the city clerk and city auditor.
The contribution for these non-classified employees has been increasing every year for a decade with little attention paid to it, tied to an old formula that sent the percentage soaring as city pension investments soured.
“It’s in a range I find to be kind of unacceptable,” said a surprised Mayor Jack Seiler, who wants the issue reviewed as the city prepares its new budget.
“In the past couple of years, we’ve reduced the overall compensation packages pretty much across the board,” Seiler said. “If they’re getting a contribution to their retirement that’s excessive, we need to re-evaluate it. Twenty-seven percent is a pretty high number.”
Retirement contributions vary among cities, depending on how generous they want to be, whether there is a city-run pension plan, if the city is part of the state retirement system or if it offers some other combination of retirement benefits.
In Miami, the city contributes 8 percent into similar retirement plans for its “executive” employees and requires a 10 percent employee match, according to its 2011 Comprehensive Annual Financial Report.
Dominic M. Calabro, president of Florida TaxWatch, said Fort Lauderdale’s rate was unjustifiable.
“These kind of excessive executive perks undermine the very legitimacy of public service,” Calabro said. “Twelve percent is pretty generous; 27 percent is ridiculous.”
Feldman said most of the employees are “at will” workers not covered by contract, civil service or collective bargaining. Many are management-level and the benefit is part of an overall package needed to be more competitive with the private sector, officials said.
“Is it something that we could look at? Absolutely,” Feldman said. “Is it something on top of the radar screen? Nope.”
Even if commissioners decide a change is needed, there may be limits on what they can do. Feldman’s contract, for instance, says the city cannot reduce any of his benefits without his written consent.
The contributions are placed in 401a retirement plans, similar to 401k plans that are offered in the private sector, where workers get a say in how their money is invested. Unlike a 401k, the city’s plans do not allow for an employee match. They can contribute to a separate, deferred compensation plan.
In 2007, the city negotiated with its general employees to eliminate pensions for all new hires, because the pension plan was an increasing burden on the city’s budget. The change did not apply to new public safety employees, who are under separate union contracts and who can still enroll in police and fire pension plans.
The 9 percent city contribution that replaced the general employee pension for new hires didn’t apply to non-classified employees. Instead, their rate continued to be based on the most recent five-year average of city contributions into the pension fund.
Because the city was pumping increasing amounts of money into that fund, the city’s retirement contribution rate for non-classified employees jumped from 10.8 percent of their salary in 2003 to 27.71 percent now.
Commissioner Romney Rogers said linking the contribution rate to what the city pays into the pension plan doesn’t seem to make sense.
“I think we have to re-examine that whole dynamic,” Rogers said. “Did this thing get out of control? No doubt.”
Feldman said a justification for different contribution rates is due to concessions general employees got during their contract negotiations. The union-represented employees received three years of 5 percent cost-of-living increases, which the non-classified employees did not get.
That’s why Rogers said the whole compensation picture has to be considered.
Vice Mayor Charlotte Rodstrom said the city should even look at the contribution rate general employees receive the next time their contract is negotiated.
“Nine percent seems to be a little extravagant also,” Rodstrom said.
Copyright 2012 South Florida Sun-Sentinel