1.
FLORIDA ADMINISTRATIVE LAW JUDGE UPHOLDS DIVISION OF RETIREMENT’S
PROPOSED “EXTRA BENEFIT” RULES:
By Final Order dated September 23, 2003, Administrative
Law Judge Don W. Davis has dismissed a challenge to the Florida Division
of Retirement’s proposed Rules 60Z-1.026 and 60Z-2.017 filed by Florida
League of Cities and five member cities. Florida Professional Firefighters,
Inc. and Florida Police Benevolent Association, Inc. had intervened in
support of the rules. Chapter 99-1, Laws of Florida, became effective March
12, 1999. “However, local law plans in effect on October 1, 1998,
shall be required to comply with the minimum benefit provisions of this
chapter only to the extent that additional premium tax revenues become
available to incrementally fund the cost of such compliance... .” The
rules seek to carry out Chapter 99-1's prospective application, by requiring
that “extra benefits” enacted prior to the effective date of
Chapter 99-1 be funded from premium tax dollars received prior to that
date. In other words, “extra benefits” means benefits greater
than those afforded general employees and in addition to or greater than
those benefits enacted prior to the effective date of Chapter 99-1. No
evidence was presented by the challengers of legislative intent that additional
premium tax revenues should or could be used to fund existing extra benefits
enacted prior to Chapter 99-1. Hopefully, this issue, which has caused
many cities to balk at their clear responsibilities, is now put to rest.
The Final Order can be viewed at http://www.doah.state.fl.us/ros/2003/03-1117.PDF.
An adversely-affected party is entitled to judicial review in the District
Court of Appeal within thirty days.
2. ACTION
BY TRUSTEES TO DETERMINE WORKERS’ COMP OFFSET IS QUASI-JUDICIAL:
Terry was a Pembroke Pines Firefighter who was awarded a service-incurred
disability pension by the Board of Trustees. Because Terry had received
workers’ compensation benefits, the Board sought to recover its
plan-required offset. Terry disputed the methodology used by the Board,
and sought review thereof by certiorari in the circuit court. However,
on its own motion, the circuit court determined that the Board’s
action was “legislative,” and thus unreviewable. So, without
reaching propriety of the Board’s calculation of the offset,
the court dismissed the case for lack of jurisdiction. Terry sought
further review, by certiorari, in the district court of appeal, which
held that the circuit court had jurisdiction and should have reached
the merits of the substantive issues. Because the Board did not adopt
a rule or ordinance of general application, but applied and interpreted
existing rules in order to decide the modified amount of benefits,
its actions were quasi-judicial. Interestingly, the appellate court
also granted both parties’ motions for attorneys fees -- each
contingent on that party ultimately prevailing. Finally a court understands
when a party is actually entitled to fees. Terry v. Board of Trustees
of the City Pension Fund for Police Officers and Firefighters in the
City of Pembroke Pines, 28 Fla. L. Weekly D2184 (Fla. 4th DCA, September
17, 2003).
3.
AMENDMENT TO POST-RETIREMENT BENEFIT PLAN NOT IN VIOLATION OF ADEA:
Prior to March 1, 2002, Ecolab’s post-retirement benefit plan provided
that Ecolab would pay a premium subsidy for retiree medical coverage based on
a retiree’s years of active service with the company. Effective March 1,
2002, Ecolab enacted a new post-retirement benefit plan, eliminating the retiree
medical coverage premium subsidy for all employees except for two “grandfathered” groups.
One such group consisted of employees who, as of February 28, 2002, were at least
50 years of age and had completed five or more years of eligibility service.
Plaintiffs, who were over the age of 40 but under the age of 50 as of March 1,
2002, filed suit, alleging discrimination in violation of the Age Discrimination
in Employment Act of 1967. In dismissing the complaint with prejudice, the federal
trial judge found that binding precedent in the circuit holds that ADEA does
not provide a claim of age discrimination where an employer treats older workers
more favorably than younger workers. In other words, ADEA is limited to discrimination
cases in which the comparator is younger than plaintiff. In addition, the court
denied a stay pending a decision by the United States Supreme Court in the decision
of another federal circuit court holding the exact opposite. Feigl v. Ecolab,
Inc., Case No. 03 C 2290 (N.D. Ill. September 9, 2003).
4.
FLORIDA OWES FEDS MORE THAN A QUARTER-BILLION DOLLARS:
Although the final audit is not as bad as the draft audit showing a debt of $500
Million (see C&C Newsletter for March 20, 2003, Item 3), federal auditors
have determined that the Florida Retirement System owes the U.S. Department of
Health and Human Services $267 Million. The Inspector General’s office
says the State, which receives federal funds to pay employees working in federally-funded
programs such as Medicaid, charged HHS too much for those employees’ pension
benefits between 1999 and 2002. The auditor has suggested that the State pay
the money all at once or over time by reducing future pension costs for the federal
agency. By all accounts, State officials will fight the findings, arguing that
HHS’s assumptions about what rates the State should charge would undermine
FRS’s long-term strategy for meeting its financial obligation to pensioners.
5.
START WORRYING ABOUT PENSION OBLIGATION BONDS -- BLOOMBERG:
According to Bloomberg.com, it’s time to worry about pension obligation
bonds, especially if you are a taxpayer. States and municipalities are going
to sell billions of dollars in bonds to help fill holes in their pension plans
caused by the stock market bubble bursting. Those market losses only started
showing up last year because of the way public pension plans smooth performance.
Using bond money to pay for future pension liabilities is not at all like refinancing
a debt you owe, says a report entitled “Pension Obligation Bonds or Bombs?” from
Sage Advisory Services. Since Los Angeles County sold the first pension obligation
bonds in 1986, a whopping $31 Billion of such bonds have been issued. Even Fitch
Investors Service, one of the big three bond raters, observes that “using
pension obligation bond proceeds to pay current and subsequent year pension contributions
is considered to be a type of deficit financing -- the use of borrowing funds
to pay for an annually recurring expense.” A top-rated municipality can
borrow money for thirty years at 5.85% taxable (the equivalent of 4.70% tax-exempt).
Issuers who sell POBs are betting that their investments will earn at least what
they are paying on the bonds -- say, 6%. However, if the bonds are to have any
kind of positive impact, the real number they have to hit is usually north of
8%. Four years ago, when some public pension plans were earning over 20%, 8%
was a pretty safe bet; today, it is decidedly ambitious. Most municipalities
that sold bonds are worse off than they were: they lost the money they raised
through the bond sales and then some. They have to make more contributions to
their pension plans plus pay debt service.
6.
A SUGGESTED DISCLAIMER FOR SPDs:
One of our more industrious trustees was browsing the internet and came across
FRS’s on-line brochure, which contains a pretty comprehensive disclaimer.
The following is an adaptation thereof, which trustees should consider adding
to their own summary plan descriptions: “As much as possible, this summary
plan description has been written in nontechnical terms, avoiding the formal
language of the pension plan. If questions of interpretation arise as a result
of the attempt to make such retirement provisions easy to understand, the pension
plan remains, as it must, the final authority. The information provided in this
summary plan description is based on the pension plan in existence on , and is
subject to modification based upon changes in the plan, subsequent interpretations
of the plan and changes in other laws that affect the plan. Individual trustees
are not agents of the plan. The board of trustees is not responsible for erroneous
information provided by an individual trustee or provided by any other person
purportedly representing the plan, except as specifically set forth in a writing
executed by the Chairman or Administrator.”
7.
HOW’S BAYOU?:
This just in from Court TV: two fake cops were arrested for trying to profit
from another couple’s restroom tryst. Tyson James Farkas and Tina Marie
Robichaux were charged with extortion and impersonating an officer after threatening
to jail a couple they caught having sex in the women’s bathroom of Boudreau
and Thibodeau’s Cajun Cookin’ Restaurant. (Please note that all people
in Louisiana -- and Texas -- are required by law to use two first names.) The
two allegedly told the ladies’ room love birds that they would be jailbirds
unless they handed over $100.00. According to the real law, a customer at the
restaurant discovered the entwined couple and told the manager, who asked them
to leave the premises and called the sheriff. Farkas and Robichaux, also customers,
then allegedly identified themselves as police officers and demanded $100.00
from the couple. The man actually gave the phonies $20.00 cash and a check for
$80.00 before the law arrived. (Question of the Day: To whom was that check made
payable?) In any event, the two Bayou bimbos will be arraigned on October 28. |
