1. Update on Municipal Pension Plans & OPEBs David Matkin, PhD Assistant Professor Askew School of Public Administration & Policy Florida State University Research Fellow LeRoy Collins Institute October 27, 2011

2. Reports in Process Status of Pension Plans in FY2009 – Target: November “Best Practices” in Municipal Pensions – Target: End of Year Status of County and Municipal OPEBs – Target: Early 2012 Trends in Municipal Pension Plans – Target: Early 2012

3. Trends in Pension Funding

4. FY2009 Status Report Florida Local Governments – Largest 100 Cities (populations > 20,000) – 208 Unique Defined Benefit Plans Comprehensive Annual Financial Reports – Fiscal Year 2009

5. Pension Plan Grades

6. Grades & Participant Type

7. Plan Costs by Grades

8. Plan Costs by Participant Type

9. COUNTY AND CITY OPEB PLANS

10. The OPEB Concept Other Post-Employment Benefits – Retirement insurance subsidies (primarily healthcare) Explicit and Implicit Benefits Actuarial Liabilities – Benefit policies (qualifications & subsidy calculation) – Actuarial method – Assumptions (e.g., discount rate, payroll trends, trends in healthcare costs)

11. Accounting Standards Governmental Accounting Standards Board (GASB) Statements No. 43 & 45 Timeline: – Exposure Drafts in 1989, 2003 & 2004 – Statements issued in 2004 – Implemented in three phases (~FY’s 2008 – 2010)

12. Data Florida Local Governments – All 67 Counties – Largest 100 Cities (populations > 20,000) Comprehensive Annual Financial Reports – Fiscal years 2008 – 2010 – Basic Financial Statements – Notes to the Financial Statements – Required Supplemental Information

13. What Explains Liability Size? Consistent and Substantive Effects – Explicit v. Implicit benefits – Payroll Size – Actuarial Method – Household Income Levels Inconsistent Effects – Actuarial Assumptions – Form of Government – Public Safety Spending Per Capita – Republican/Democrat – Labor Unions

14. What did governments do? Increase Benefits?

15. What did governments do? Decrease Benefits

16. What did governments do? Fund the Liability – Explicit Benefits (n=67) Pay-as-you-go = 45 Prefund (Non-GAAP qualified) = 4 Prefund (GAAP qualified) = 18 – Implicit Benefits (n=83) Pay-as-you-go = 76 Prefund (Non-GAAP qualified) = 2 Prefund (GAAP qualified) = 5

17. What did governments do? Explicit Benefits, FY2010

18. What did governments do? Implicit Benefits, FY2010

19. Thank You & Questions