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Politics

State Employee Pension Changes Keep Retirement Funding Stable

September 26, 2011 - 6:00pm

The states pension fund dropped $2 billion in terms of available funds, but experts say the numbers could have been worse without changes made by the governor and Legislature earlier this year.

The Florida Retirement System pension plan is 87.1 percent funded, down from 87.9 percent a year ago, according to Seattle-based firm Milliman.

This means the plan has a shortfall of $18.7 billion to pay all current and expected future benefits to participants and their beneficiaries. A year ago, the shortfall was $16.7 billion.

Robert Dezube, a Milliman consultant who gave a presentation to the system's board on Tuesday, considered those numbers good.

He noted the funding percentage could have fallen to 83 percent if lawmakers in the spring hadnt required state employees to start contributing 3 percent of their pay into the program and extended, through Senate Bill 2100, both the general retirement age and the number of years a state worker must serve in order to receive full retirement benefits.

Youre still one of the best-funded systems, said Dezube. That doesnt happen in a lot of states.

Amy Baker, staff director for the Florida Legislature's Office of Economic and Demographic research, said Floridas changes were needed to stabilize a system that had seen two years of massive declines in its funding.

She said overall numbers remain nearly even with a year ago for the fund, but the outlook a year ago was for the system to be in much poorer shape.

In some respects we were doing better this year than we had originally thought was possible, Baker said. It would have worsened if not for, primarily, Senate Bill 2100.

The fund was a target of Gov. Scott during his 2010 gubernatorial campaign as he sought to require employees to contribute 5 percent of their salary, by claiming the fund had lost $24 billion between 2007 and 2010.

According to Florida Retirement System Actuarial Asssumption Estimating Conference reports, the fund was valued at $136.4 billion in June 2007 and by Sept. 2010 stood at $117 billion.

Milliman actuaries are expected to complete a study with a recommendation on the state retirement system by December, before lawmakers return for the regular session.

Among the key assumptions they are working under is a 4 percent raise for state employees.

Contact Jim Turner at jturner@sunshinestatenews.com or at (850) 727-0859.

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