Okaloosa County BOCC — August 28, 2013 — reading text

240,087,124 20,136,000 741 754 13 Clerk of Courts 1,261,964 1,406,319 144,355 15 16 1 Property Appraiser 2,998,207 3,277,365 279,158 39 40 1 Sheriff 27,980,890 29,998,890 2,018,000 328 375 47 Supervisor of Elections 1,580,753 1,600,966 20,213 15 15 0 Tax Collector 3,469,025 3,527,000 57,975 80 80 0 Total 257,241,963 279,897,664 22,655,701 1,218 1,280 62 Tax Collector Commissions 3,049,000 3,100,000 51,000 Tax Collector Operating 420,025 427,000 6,975 Board Funding 3,469,025 3,527,000 57,975 Tax Collector Budget to DOR 5,706,613 5,907,332 200,719 Packet Pg. 45 40  BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: September 5, 2013 TO: Honorable Chairman and Members of the Board FROM: Rick Owen SUBJECT: Cost of State Mandates DEPARTMENT: County Administrator BCC DISTRICT: All Supplemental information on the cost of FRS increases and other State mandates. RECOMMENDED BY: APPROVED BY: Ernie Padgett, County Administrator Packet Pg. 46 TALKING PAPER ON 2013 FRS RATE INCREASES FOR EMPLOYER CONTRIBUTIONS 1. Effective July 1, 2013 new rates for the Employer Contributions to the Florida Retirement System (FRS) program went into effect as passed by the State Legislature and published in F.S. 121.71, Uniform rates; process; calculations; levy. The key paragraphs in this Statute are (4) and (5). 2. Para. (4) gives the “Required employer retirement contribution rates for each membership class and subclass of the FRS for both retirement plans (Investment Plan and Defined Contribution Plan)”. These Employer Contribution rates did not change for any class from those effective July 1, 2012 compared to those effective July 1, 2013. Another way of stating this rate structure is that these are the retirement contributions coupled with the 3% employee contributions that are used in determining the employee retirement benefit rates. Thus, the rates in this section did not place any additional FRS funding burdens on the employer (County). [See attached F.S. 121.71 (4)] 2. Para. (5) lists the Employer Contribution rates for July 1, 2012 and July 1, 2013 “to address unfunded actuarial liabilities of the system”. [See attached F.S. 121.71 (5)] These massive rate increases are what has caused the County’s approx. $1,825,000 increase in our liability to FRS for the current year. Examples of these rate increases that impact Okaloosa County are: Membership Class Rate July 1, 2012 Rate July 1, 2013 Percentage Increase Regular 0.49% 2.02% 312% Special Risk 2.75% 7.03% 156% Admin. Support, Spec. Risk 0.83% 27.04% 3,158% County Elected Officers 0.32% 23.01% 3,052% Senior Management Service 0.32% 11.25% 3,416% DROP 0.00% 6.21% 62,100% 3. The increases in Employer Contributions as shown in para. 2 above do not add any additional retirement benefits (dollars) to County employees; they are used to “beef up” the “health” of FRS from the 87%-funded level of recent history to some percentage beyond that. Although many State Legislators claim that they did not increase any taxes in this past legislative session, they did pass on an unfunded mandate to Florida’s 67 counties to pay these exorbitant increases. This financial burden then falls on our local taxpayers as counties must find the required revenue to “pay the bill to the State”. Had the Legislature opted to beef up the FRS funding levels in smaller bites, e.g., limiting the increases in any single class to Packet Pg. 47 even 50%, the required funding increases perhaps could have been absorbed in our FY2014 budget. It should be noted that as the State Legislature taxed the County Governments to fund these FRS increases, this same Legislature added over $1 Billion to the State Reserves and had the State pick up the tab to fund these same FRS increases to the County School Districts. 4. I had Gary Stanford do an analysis of the FRS increases due to the F.S. 121.71 (5): A. County Enterprise Funds: $ 428,303 B. County General Fund: BCC Depts.: $ 671,209 Sheriff: $ 600,000 Clerk of Courts (Finance): $ 37,487 Property Appraiser: $ 74,172 Supervisor of Elections: $ 40,381 Total General Fund: $1,423,249 C. Total Budget Increases due to FRS Increases: $1,851,552 [This equates to an ad valorem millage increase of 0.1409 (4.3% increase to current millage of 3.2899) if that is the method to cover this unfunded mandate from the State Legislature.] 5. The above is only one of the unfunded mandates the County has received from the Legislature for 2013. In addition, we are required to pay $1.54 Million to the State Medicaid fund, and almost $200,000 to DJJ for juvenile detention, another State-run program. 6. It should be noted that in the FY2014 Budget, the Board has returned to the taxpayers $1.82 Million from the DJJ Reserves due to winning our lawsuit against DJJ, and net $900,000 from the Natural Disaster Fund Reserves. These amounts (total of $2.72 Million) have been applied against FY2014 Expenditures. Also, the employee COLA of $1,400 per employee is being funded via the health insurance Pro-Share refund of approx. $2.8M in addition to a 10% reduction in health insurance premiums for FY2014. These Pro-Share funds and the insurance premium reductions are a result of the relatively low claims history of our employees. During the time period since County employees last received a COLA (Oct 1, 2009), the cumulative Federal COLAs for Social Security, military retirements, and other Federal retirees have been a cumulative 11.5% (does not include any COLA for Jan. 2014). Dave Parisot Okaloosa County Commissioner, Dist. 2 Packet Pg. 48 1 121.71 Uniform rates; process; calculations; levy.— (1) In conducting the system actuarial study required under s. 121.031, the actuary shall follow all requirements specified to determine, by Florida Retirement System employee membership class, the dollar contribution amounts necessary for the next fiscal year for the pension plan. In addition, the actuary shall determine, by Florida Retirement System membership class, based on an estimate for the next fiscal year of the gross compensation of employees participating in the investment plan, the dollar contribution amounts necessary to make the allocations required under ss. 121.72 and 121.73. For each employee membership class and subclass, the actuarial study must establish a uniform rate necessary to fund the benefit obligations under both Florida Retirement System retirement plans by dividing the sum of total dollars required by the estimated gross compensation of members in both plans. (2) Based on the uniform rates set forth in subsections (3), (4), and (5), employees and employers shall make monthly contributions to the Division of Retirement as required in s. 121.061(1), which shall initially deposit the funds into the Florida Retirement System Contributions Clearing Trust Fund. A change in a contribution rate is effective the first day of the month for which a full month’s employer and employee contribution may be made on or after the beginning date of the change. Beginning July 1, 2011, each employee shall contribute the contributions required in subsection (3). The employer shall deduct the contribution from the employee’s monthly salary, and the contribution shall be submitted to the division. These contributions shall be reported as employer-paid employee contributions, and credited to the account of the employee. The contributions shall be deducted from the employee’s salary before the computation of applicable federal taxes and treated as employer contributions under 26 U.S.C. s. 414(h)(2). The employer specifies that the contributions, although designated as employee contributions, are being paid by the employer in lieu of contributions by the employee. The employee does not have the option of choosing to receive the contributed amounts directly instead of having them paid by the employer to the plan. Such contributions are mandatory, and each employee is considered to have consented to payroll deductions. Payment of an employee’s salary or wages, less the contribution, is a full and complete discharge and satisfaction of all claims and demands for the service rendered by employees during the period covered by the payment, except their claims to the benefits to which they may be entitled under this chapter. (3) Required employee retirement contribution rates for each membership class and subclass of the Florida Retirement System for both retirement plans are as follows: Percentage of Gross Membership Class Compensation, Effective July 1, 2011 Regular Class 3.00% Special Risk Class 3.00% Special Risk Administrative 3.00% Support Class Elected Officers’ Class— Legislators, Governor, Lt. Governor, 3.00% Cabinet Officers, State Attorneys, Public Defenders Elected Officers’ Class— 3.00% Packet Pg. 49  Justices, Judges Elected Officers’ Class— 3.00% County Elected Officers Senior Management Service Class 3.00% DROP 0.00% (4) Required employer retirement contribution rates for each membership class and subclass of the Florida Retirement System for both retirement plans are as follows: Percentage of Percentage of Gross Gross Membership Class Compensation, Compensation, Effective Effective July 1, 2012 July 1, 2013 Regular Class 3.55% 3.55% Special Risk Class 11.01% 11.01% Special Risk Administrative 3.94%