Cypen & Cypen
January 9, 2014
Stephen H. Cypen, Esq., Editor
1. FLORIDA FOURTH DISTRICT COURT OF APPEAL RULES IN FAVOR OF HOLLYWOOD FIREFIGHTERS: Yesterday, the Fourth District Court of Appeal determined that the Public Employee Relations Commission (“PERC”) failed to apply the proper standard for determining whether a financial urgency exists. The firefighters’ union filed unfair labor practice charges against the City of Hollywood, challenging the City’s declaration of financial urgency and its subsequent imposition of benefit reductions pursuant to Section 447.4095, Florida Statutes. PERC found that a financial urgency existed and upheld the City’s unilateral modification of the existing bargaining agreement. On appeal, the Fourth District found that PERC failed to examine whether the City had demonstrated that funds were “available from no other source” as required by the Florida Supreme Court’s decision Chiles v. United Faculty of Florida, 615 So.2d 671 (Fla. 1993). Consequently, the Fourth District remanded the matter to PERC, and directed PERC to apply the appropriate legal standard for determining whether the City had committed an unfair labor practice. The Fourth District also certified to the Florida Supreme Court that its decision is in conflict with a decision of the First District Court of Appeal. Hollywood Firefighters, Local 1375, IAFF Inc., v. City of Hollywood, 2014 WL 51693 (Fla. 4th DCA, January 8, 2014). To read a copy of the court’s entire opinion:http://www.4dca.org/opinions/Jan%202014/01-08-14/4D12-2861.op.pdf.
2. FPPTA COMMENTS ON MAINTAINING LOCAL CONTROL OF FLORIDA MUNICIPAL PENSIONS: In The Palm Beach Post, Florida Public Pension Trustees Association’s Raymond Edmondson addresses an earlier commentary by Florida TaxWatch President Dominic Calabro. The latter asserts that many municipal plans are significantly underfunded, but not only fails to offer any specifics, but also reveals a lack of understanding about the difference between unfunded liabilities and underfunded plans. The majority of Florida’s municipal pension plans are very adequately funded, although some did experience a spike in unfunded liabilities relative to assets following the stock market collapse of 2008-2009. However, calling those plans underfunded is a deliberate ploy used to exploit public concern about their financial stability. In fact, liabilities-to-assets ratios have been reduced as expected with the market’s recovery. There certainly has been no massive pension underfunding in the vast majority of Florida’s 490 municipal pension plans. At the close of the June 30, 2013 fiscal year, government funds had a three-year annualized median return of 11.4%, with assets exceeding pre-Great Recession peaks. The median gain for state and local pension funds for the year was 12.4%. Mr. Calabro completely misstates that Detroit’s financial collapse was due in any significant measure to public pension commitments, even though former public workers will likely pay a big price for the city’s mismanagement. (See C & C Newsletter for October 24, 2013, Item 7). Detroit had been losing its population base for decades, and while the city’s capacity to raise revenue declined, elected officials continued to spend. Florida is not Michigan and Tallahassee is not Detroit. Mr. Edmondson concurs with Mr. Calabro’s assertion that unfunded state mandates are counter-productive to municipal budgeting, and that municipalities should enjoy autonomy in determining the terms of employment and benefits with public workers. Let local officials and voters determine the value of compensation for first responders willing to serve and protect the public even at the cost of their own lives, and let tax accountants stick to ledger sheets. Florida TaxWatch would better serve Florida’s taxpayers by scrutinizing not just the cost of public services, but the hemorrhaging of revenue resulting from corporate tax breaks that are supposed to yield new jobs. It is time to quit playing the blame game with the livelihood of our public employees. Forty-seven states and countless municipalities already have put in place pension reforms ranging from expanded retirement ages, to increased employee contributions, to caps on COLAs and reductions in benefits. Public employees should not be saddled with the entire burden of pension reform.
3. ISSUES THAT STATE LEGISLATURES WILL BE TACKLING THIS YEAR: For states throughout the country this year, there is a common theme: a climate of uncertainty coupled with a sense of genuine opportunity. Governing reports that amid worries about the federal government’s failure to boost funding for infrastructure, many states are taking steps to produce that funding on their own. Congress seems to have stalled, again, in its efforts to reform the immigration system, but states are enacting bills designed to grant new rights to some of their undocumented residents. And after a period in which higher education programs faced dramatic cuts, states are putting money back into those programs -- some of them more efficiently than in the past. Here are 10 big issues states will look to tackle in 2014, and six smaller ones they will also address:
4. RETIRED ILLINOIS TEACHERS CHALLENGE PENSION REFORM: On December 27, 2013, the Illinois Retired Teachers Association, along with the Illinois Association of School Administrators, filed suit in Cook County Circuit Court, challenging constitutionality of a new law that radically diminishes retired teachers’ pension benefits. Among other allegations, plaintiffs allege the new law represents a clear violation of the Illinois Pension Code, as it protects retirement benefits of all educators, both retired and currently active. Plaintiffs seek a declaration that new law is void in its entirety because it violates the Pension Protection Clause of the Illinois Constitution. IRTA expects other aggrieved parties will file similar challenges to the constitutionality of the new law.
5. CONGRESS COULD RECONSIDER MILITARY PENSION CUTS:A cut to military retirement pay has already triggered such a backlash that Congress may vote to toss it out, according to the WashingtonPost. Some lawmakers who represent districts with a military presence -- and who voted for the overall budget -- are vowing to overturn the pension change. Several House and Senate lawmakers of both parties, responding to heavy lobbying from advocates for service members and veterans, already have introduced bills that would restore full cost-of-living increases for military retirees of working age. One bill would restore the annual cost-of-living adjustment for about 800,000 enlisted troops and officers who retire in their early 40s, then take other jobs outside the military. In the budget just passed, the COLA for working age retirees was reduced by 1 percentage point; once the retiree turn 62, he goes back to receiving the full increase. The cut is expected to save the government about $6 billion over 10 years, and is set to be phased in over three years. Even lawmakers who support the COLA cut agree that the provision should be changed to exempt at least disabled veterans who were forced to retire for medical reasons, as well as survivors. The budget legislation also requires newly hired civilian federal employees to contribute more to their pensions.
6. CORPORATE PENSION FUNDING LEVELS UP SHARPLY:
8. A PERSPECTIVE ON RETIREMENT READINESS: Employee Benefit Research Institute says that approximately 44% of the Baby Boomer and Gen-Xer households are simulated to be at risk of running short of money in retirement, assuming they retire at age 65 and retain any net housing equity in retirement until other financial resources are depleted. Nearly one-half (49.1%) of Gen Xers have at least 20% more than is simulated to be needed; approximately one-third (31.4%) have between 80-120% of the financial resources necessary to cover the retirement expenses and uninsured health care costs; and about 1 in 5 (19.4%) are projected to have less than 80% of what is needed. Among Gen-Xer single females simulated to have no future years of defined-contribution-plan eligibility, nearly two-fifths (39%) are in the most vulnerable (less than 80%) category, although the number shrinks to only 8% for those with 20 or more years of future eligibility in a defined contribution plan. Getting old is not for the faint of heart.
9. HOW OBAMACARE COULD HURT FIRE DEPARTMENTS: The Affordable Care Act’s mandate that all large employers provide health care for their employees has an unintended target: the 26,000 fire departments across the U.S. that are either entirely or mostly composed of volunteers, according to governing.com. The health overhaul requires employers with more than 50 workers to provide health insurance, though that provision was delayed until 2015. The Internal Revenue Service considers volunteer firefighters to be employees for tax purposes because they often receive some benefit for their service, such as a small stipend (See C & C Newsletter for August 22, 2013, Item 6). Fire lobbying groups have pressed the agency to issue a rule clarifying how the health law relates to volunteers, but the National Volunteer Fire Council has yet to receive word, and its government relations director says he does not know when IRS will weigh in. Meanwhile, recently filed bills in both the House and the Senate seek to remove volunteer firefighters and emergency personnel from the tally of full-time workers calculated by employers as they prepare for compliance with the 2015 mandate. Under the Affordable Care Act, a full-time employee is anyone who works at least 30 hours a week. Both bills have wide bipartisan support, but neither has yet received a committee vote. Nationally, volunteers account for nearly 70% of the 1,130,000 total firefighters in the U.S. About 26,000 of the 30,000 total departments are either all or mostly volunteer-based. Some fire departments are part of a municipal or county government, but many are private nonprofits. Nonprofits could be hit especially hard, but even larger governmental organizations would feel the strain. If nothing changes, fire departments would likely limit hours for volunteers, cut positions, eliminate whatever benefits volunteers do receive or take other actions to avoid outright closure. Some departments are preparing for the worst. Burlington, Washington, has nine full-time employees and 30 volunteers on its staff. Full medical benefits for volunteers would cost the city $750,000, out of an entire budget of $1.6 million.
10. ENLIGHTENED PERSPECTIVE BY ANDY ROONEY: I have learned... that opportunities are never lost; someone will take the ones you miss.
13. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.
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