Some Lakeland city pensioners could see biennial bonus
LAKELAND — A quiet skirmish has been rumbling for at least a year between 1,100 city retirees and city staff over the city-run pension plan, which has had only one cost-of-living adjustment and two bonuses in 16 years.
To counter that stagnation, city staff this week proposed setting aside $150,000 per year from the city's general budget to distribute $300,000 every other year in the form of a bonus. The bonus would go to pensioners making less than $40,500 — the projected median income in Central Florida in 2020. Other restrictions apply: workers are only eligible if they retired before Oct. 1, 2004, and did not participate in the city's deferred retirement program at the end of their careers.
That comes out to 326 people, at the latest tally, and those bonuses would be paid based on their years of employment with the city — the cap would be $2,500. The number of eligible pensioners would decrease over time as members die.
“I was disgusted,” retiree Mike Melito said Monday after seeing the city’s plan for giving bonuses to only lower-paid retirees. Melito has been part of a retirees group negotiating for increases for all pensioners for the past year. “Their proposal is a total slap in the face.”
Between 1984 and 2001, the city paid out a cost-of-living adjustment, or COLA, by increasing payments between 2 percent and 4 percent per year. That mostly stopped in 2002, except for a 1.2 percent increase in 2008, a one-time bonus in 2013 and another one-time bonus in 2017, according to city documents describing the history of retiree pay raises.
The problem with that system was that it was easy for payments to go up but they never went down — good years for the pension's investments meant higher payouts, but bad years didn't reduce those payments, Assistant City Manager Shawn Sherrouse said.
“Previously, as you saw in the one ordinance, it was based on an annual performance,” Sherrouse said in an interview. “If you had one year that was good, then it provided an increase, but what it never did — it never offset for the years that it was bad.”
In 2004 and 2012, the City Commission changed the language in the pension ordinance to state that the pension's governing board would determine whether there were sufficient funds for an increase and approve or disapprove the increase. The City Commission would then have the final say on the increase, not to exceed 4 percent in any year.
Now, the rate of return on the pension investment fund is based on a five-year average, an attempt to "smooth" the fluctuations of the market and calm long-term expectations for the return on the investment. If over five years the average annual return is below 7 percent, there will be no pay adjustment.
Melito, who receives $4,559 per month as a retired Lakeland Electric planning specialist, says eliminating the COLA was illegal based on the language of a 1990 city ordinance. It shows that if the rate of return on plan assets exceeds 7 percent when calculated each September, “the pension board shall increase the amount of pension benefit payable to each benefit recipient effective on January 1.”
Melito said the retirees group may challenge the COLA cut in court. They may have a tough fight.
Gene Strickland, who retired in 2000 as city manager after 34 years of city employment, said he looked into getting retirees an automatic 1 percent increase each year.
“We had an actuarial study done and we couldn’t afford it, so we did not and do not have and have never had an automatic increase like the state,” said Strickland, who is among the top five pension recipients, at $8,180.84 a month. “Certainly, for some of the lower-paid pension people, something should be done. There’s a lot of us, such as myself, I’m still working. But some people aren’t able to do that.”
According to the city, 162 people are receiving less than $1,000 a month from their pension. But several city officials pointed out that these retirees might not have spent their entire working careers with the city and their pension might not be their only source of retirement income.
Because it has a pension, Lakeland and its employees do not pay into Social Security, and thus would not receive Social Security payments based on their time with the city. Many do not qualify for Medicare, and instead pay for health insurance through the city.
Pitch for upward nudge
City Commissioner Justin Troller said in this week’s task force meeting that he wanted to see the $150,000 annual contribution increased to $200,000 and the cutoff date moved up from those who retired before 2004 to those who retired before 2011.
“I would ask we go to 200 and make a commitment to include as many people as we can,” Troller said. “I don’t see what the harm is.”
He said taking care of the retirees shows businesses considering moving to Lakeland that the town appreciates the retirees in the same way as it does other things — like art, small businesses and education — “that enrich our community.”
Some retirees are also upset that the city has nearly $7 million in unspent general revenue funds. But current City Manager Tony Delgado said it is City Commission policy to keep a significant cash reserve as a rainy day fund — which bolsters the city's credit rating — and that money should not be considered free to use.
City Commissioner Michael Dunn wondered why funds from the city's red light camera program can’t be used for increasing pension payments. Currently, $2.1 million is sitting in a reserve account as the city tries to decide how to spend it. About $700,000 is expected each year from the fines.
“Will you never grant a raise for retirees as was expected upon our hiring?” retiree Jane Gschwender asked city commissioners in a recent email. Gschwender receives $4,432 a month. she is not eligible for Social Security or Medicare. “If not now, when? The good standing of the city was built, at least in good part, by those of us dedicated, long-term employees who seem to be brushed aside now.”
Kimberly C. Moore can be reached at kmoore@theledger.com or 863-802-7514. Follow her on Twitter at @KMooreTheLedger.
YEAR BY YEAR
City retiree cost-of-living increases
1984: 2 percent
1985: 2 percent
1986: 2 percent
1987: 2 percent
1988: 1.84 percent
1989: 1.4 percent
1990: 2.56 percent
1991: 2.15 percent
1992: 1.63 percent
1993: 0.3 percent
1994: .95 percent
1995: 0
1996: 2.8 percent
1997: 3.26 percent
1998: 4 percent
1999: 0
2000: 4 percent
2001: 4 percent
2002: 0
2003: 0
2004: 0
2005: 0
2006: 0
2007: 0
2008: 1.2 percent
2009: 0
2010: 0
2011: 0
2012: 0
2013: one-time bonus of $977 for those retired more than 5 years
2014: 0
2016: 0
2017: 0
2018: one-time, two-tier bonuses of $500 or $1,000 to those receiving below $40,000 and below $25,000
Pension plan investment return
Averaged over five years, with an expected return rate of between 7.25 to 7.5 percent
1996: 10.8 percent
1997: 15.2 percent
1998: 9.5 percent
1999: 12 percent
2000: 11.4 percent
2001: 4 percent
2002: 0
2003: 3.9 percent
2004: 4.7 percent
2005: 5.5 percent
2006: 8.6 percent
2007: 8.4 percent
2008: 2.3 percent
2009: -1.6 percent
2010: 7.7 percent
2011: 0.5 percent
2013: 7.2 percent
2013: 6.1 percent
2014: 6.4 percent
2015: 5.4 percent
2016: 5.7 percent
Top Five Pensions
Charles Garing, water utilities director: retired 2006 (37 years of service), $7,241.76 monthly pension
Alan Shaffer, deputy general manager: retired 2009 (37 years of service), $8,006.87 monthly pension
James Studiale, community development director: retired 2012 (37 years of service), $8,045.10 monthly pension
Gene Strickland, city manager: retired 2000 (34.5 years of service), $8,180.84 monthly pension
Roger Haar, city manager: retired 2004 (29 years of service), $8,527.96 monthly pension
Bottom Five Pensions
Kathryn Clark, administrative assistant: retired 2013 (5 years of service), $199.84 monthly pension
Kimberli Stephens, food service worker: retired 2017 (8 years of service), $216.70 monthly pension
Isidro Baylon, solid waste collector: retired 2016 (10 years of service), $280.40 monthly pension
Lisa Lovvorn, beverage service worker: retired 2015 (13 years of service), $285.52 monthly pension
Michael DuChene, computer specialist: retired 2015 (6 years of service-3 in plan), $288.83 monthly pension