Pensions questioned

Hollywood says extra checks violated state law because the city’s plans are underfunded

HOLLYWOOD— Retired cops, firefighters and City Hall employees sometimes get an extra payday known as the 13th check.

It comes each year the pension funds have robust earnings and has ranged from $200 to more than $26,000.

But it comes at a cost to taxpayers: The city’s three retirement plans are underfunded to the tune of $436 million, a liability Hollywood residents will be expected to fund.

This year, City Hall is seeking an opinion from the state as to whether the police and fire pension boards violated Florida law when they sent bonus pension payments in 2013: $19,000 checks were sent to 161 retired firefighters and $6,400 checks were sent to more than 300 retired officers.

Both unions say they sought and received permission from the state before sending the checks.

City Hall says the payments should not have been sent because the pension plans are currently underfunded.

Hollywood’s fire plan is currently 41.2 percent funded with $128.8 million in unfunded liability; the police plan is 54.7 percent funded with $137.6 million in unfunded liability; and the general employee plan is 56.2 percent funded with $169.6 million in unfunded liability, said Hollywood spokeswoman Raelin Storey.

Some city retirees fear the extra payouts — available for more than a decade— might be at risk.

“All of a sudden it’s a hot potato right now,” said Arthur Metzler, a retired Hollywood officer who pleaded with commissioners during a recent City Hall meeting to leave things alone. “I don’twant to see it go away. It just seems like another thing the city wants to take away fromus.”

Hollywood cut salaries after declaring financial urgency in 2011 in the wake of a$38 million budget shortfall. Later that year, voters approved drastic pension cuts.

All three of the city’s pension plans are rated an “F” for being underfunded at less than 60 percent, based on a grading system by the Leroy Collins Institute, a public policy think tank based at Florida State University.

If the State Division of Retirement rules in favor of the city, the retirees may have to return the pension bonus sent in 2013, Storey said.

Jeff Marano, president of Hollywood’s police union, said the union would fight it out in court before returning the money. Barbara Duffy, attorney for the general employees union, said the same.

Cities that send out bonus pension checks are taking a big risk unless their employees’ pension plans are 100 percent funded, said Robert Weissert, chief research officer and general counsel at the government watchdog Florida Tax Watch.

“If the pension fund doesn’t perform as well as expected, the taxpayers have to put in more money,” he said. “The best practice is not to distribute those moneys. It’s not an equitable system. And it’s unheard of in the private sector. The taxpayers bear all the risk and the employees get benefits above and beyond what theywere promised if the fund does well.”