Spiraling pension costs may send Hollywood over financial cliff, experts warn

Out-of-control pension costs will endanger Hollywood’s bottom line for years to come unless City Hall embraces drastic reform, financial experts warned Monday.

“I’m so glad we are finally biting the bullet here,” City Commissioner Patty Asseff said. “We all heard about Detroit. They couldn’t afford to pay their pensions. We don’t want to go bankrupt.”

Hiking the tax rate is not the answer, Finance Director Matt Lalla said during a pension workshop Monday morning that drew dozens of current and retired employees.

Hollywood employees mad at mayor for writing about city’s pension woes
Hollywood employees mad at mayor for writing about city’s pension woes
Even if the commission hiked the tax rate to the state cap of $100 for every $100,000 of assessed value, it would only bring in another $27 million in property taxes — not nearly enough to solve the problem, Lalla said.

“I know that our taxpayers would probably have a heart attack if we [raised the tax rate to the highest it can go],” Commissioner Linda Sherwood said.

Financial experts hired by the city warned of doom for Hollywood’s F-rated pension plans unless the city makes painful changes.

Barbara Duffy, attorney for the general employees union, said the workshop was merely a scare tactic to get residents riled up about pension costs.

“The vast majority of information that came out of Matt Lalla’s mouth was clear distortion based solely on assumption,” Duffy said.

Hollywood’s unfunded pension liability is $492 million as of Oct. 1, 2014, Lalla said. Each of the city’s three pension funds — for police, fire and general employees — are funded at less than 57 percent.

Possible solutions include moving all City Hall employees to the Florida Retirement System or moving police and fire employees to the state system and general employees to a defined contribution plan, Lalla said. Moving from a defined benefit plan — where the city carries the entire risk — to a defined contribution plan would shift the risk from the taxpayer to the employee, Lalla said.

City Commissioner Traci Callari complained that the pension actuaries were not invited to the workshop to tell their side.

“This isn’t my side or someone else’s side,” Lalla replied. “These are not Matt Lalla’s numbers. These are the numbers provided by the actuaries.”

To help cut pension costs, City Attorney Jeff Sheffel says he plans to seek commission approval to file a lawsuit against the police and fire pensions for issuing a so-called 13th check to retired workers even though the pension plans are woefully underfunded.

In years when the pension funds do well, Hollywood’s retired police officers, firefighters and City Hall employees are sent what has become known as a 13th check. The payouts have ranged from $200 to more than $26,000.

Two years ago, $19,000 checks were sent to 161 retired firefighters and $10,000 checks were sent to more than 300 retired officers.

City Hall claims the checks were sent in violation of state law because the pension plans are currently underfunded.

Pension officials dispute that claim and say they had state approval to send the checks.

Now Hollywood is considering a lawsuit to force the retirees to return the money.

Hollywood is one of 15 cities in the state of Florida that provide such a benefit, Lalla said.

Hollywood’s fire union negotiated the 13th check benefit in 1998. The city’s police union negotiated the same perk in 2000 and Hollywood’s general employees followed suit in 2002.

sbryan@sunsentinel.com or 954-356-4554

http://www.sun-sentinel.com/local/broward/hollywood/fl-pensions-hollywood-trouble-20150302-story.html