KILLER UNION PENSIONS: Miami Police Officer to get Pension of $125,000 a Year for Life…Paid by Taxpayers
Posted by FactReal on April 5, 2011
|Here are the details:3|
|By saving up his vacation and other time off, a former Coral Gables police sergeant was able to double his $81,000 annual salary in his last year with the department — the year used in calculating his annual pension. The result: taxpayers are now paying the retiree $125,000 — three quarters of his last year’s working pay — for the rest of his life.
The case illustrates why pension costs have become a major issue in the city’s April 12 election — and why they are likely to be an issue in political races in other cities in the coming months.
During the real estate boom, cities were flush with cash, and gave generous increases in pension benefits to employees — especially those represented by politically influential police and firefighter unions, which typically supply money and manpower to aid politicians’ re-election bids. […]
The upshot for Coral Gables: At last count, the city’s pension fund was $197 million short of the amount it needs to pay the retirement benefits that commissioners have promised to current and future retirees.
The Gables pension system covers more than 700 employees and 720 retirees…
In recent years, pension investments have not kept pace with hoped-for returns. Coral Gables depends on a 7.75 percent annual rate of return. But in the 2007-08 fiscal year, the actual rate of return was -15.7 percent. In 2008-09, it was -1.8 percent. In 2009-10, it was 9.18 percent, said Don Nelson, the city’s finance director. When investments lag, the city must make up the difference.
Such losses contribute to the $197 million pension hole, a figure cited frequently by Gables candidates this election season. That number dwarfs the city’s $139.5 million annual budget. To meet the shortfall, the city will need to either sharply cut pension benefits, sharply increase the amount employees contribute to their pensions, increase taxes, or use some combination of these options.
None will be easy. Even if city officials gathered the political will to cut pensions, they might not be able to do so unilaterally because they have promised the benefits to union members in written contracts. Even if officials found a way around the contract obligations, they could expect an aggressive political and legal fight from the unions, which, unlike City Commission candidates, don’t see a crisis. […]
Both the firefighters’ union and the police union, whose members contribute 5 percent of their salaries to their pensions, oppose further reductions in their pensions. […]
The police and firefighter unions have become involved in this year’s elections to support candidates, who will back their interests. […]
1 Coral Gables
2 City of Coral Gables Budget 2010-2011
3 Pensions the hot issue in city races
4 Coral Gables Police protest proposed pay cut
– Coral Gables Human Resources dept.
– Coral Gables union contracts: