District lags behind in pension fund; big raise may be partially to blame

There may be rough financial waters ahead for the Destin Fire Control District.

Bruce Nunnally, CPA of Carr, Riggs & Ingram, LLC, recently completed an audit of the department’s financial statements. While he gave the department a “clean opinion,” he also alerted them to the fact that they’re behind the curve when it comes to funding their pension liability.

“For some reason, Destin’s ultimate liability has grown faster than most other fire pensions in the state,” Nunnally said. “Therefore, the unfunded amount has grown to be a fairly large percentage.”

While the department is making all of its payments on time right now, only 42 percent of the total liability is currently funded. On average, fire departments in the state of Florida have about 80 percent of their pension liability funded.

Nunnally said several factors play into how much of the department’s liability is funded, including how investments are doing and the amount of pay raises that are given out.

Commissioner Kim Brown said one of the factors contributing to the unfunded portion of the department’s pension liability is a 26-percent pay raise that was given out in 2007. She said at that time, the department was one of the lowest paid in the state.

“I do think over the last five years that their payroll percentage increase has been higher than what the actuary estimated,” Nunnally said.

Commissioner Jimmy Neilson added that the department had several people retire early last year.

Just before several early retirees left the department, an amendment was negotiated into Article 46 of the Destin Professional Firefighter’s Association Union contract, which opened an early retirement window between Oct. 1, 2008, and March 31, 2009, for those with at least 18 years of service. Early retirees were given a 4-percent multiplier rather than the usual 3.5 percent.

The contract was also amended to allow those that have served for 20 years to retire with full benefits despite their age. Typically, retirees must be 55 years old and have at least 10 years of service or be 52 years old and have at least 25 years of service.

Neilson said the contract will be renegotiated in May or June.

“The board’s going to have to be real proactive in the future,” said Commissioner Kim Brown. “I’m not saying we should cut any raises. I don’t want to do anything we don’t have to do, but we have to take care of the taxpayers."

_______

THE COVERAGE CONTINUES

To read about a commissioner's outrage over the promotion process, click here.

To read about a whistle blower in the department, click here.