A bill introduced by the Florida state senate seeks to raise the employer-paid contributions for the $153.6 billion Florida Retirement System’s (FRS) retirement benefits by approximately $178.5 million annually beginning in fiscal year 2018-2019.
The public employers that will incur the additional costs are state agencies, state universities and colleges, school districts, counties, and certain municipalities and other governmental entities.
Among employer groups responsible for the additional contributions, Florida’s counties would be expected to kick in the biggest share at $66.4 million. School boards and state agencies would be responsible for $54.4 million, and $31 million, respectively, while universities and colleges would have to pony up another $16.6 million combined.
The rates are intended to fund the full normal cost, and the amortization of the unfunded actuarial liability of the FRS. With the modifications to employer contribution rates, the FRS Trust Fund will receive roughly $178.5 million more in revenue on an annual basis beginning July 1, 2018. In October, Florida’s State Board of Administration (SBA) lowered the pension fund’s assumed rate of return to 7.5% from 7.6%
In its annual actuarial valuation of the FRS based on July 1, 2017, plan assets and liabilities, the state’s actuary Milliman, Inc. determined that the FRS had $28 billion in unfunded liability as a result of having total liabilities of $178.6 billion, and $150.6 billion in total assets.
“It’s an obligation of the state,” said Republican Sen. Rob Bradley, who is chairman of the Senate Appropriations Committee, according to The Palm Beach Post. “And we are comfortable with the current level of (pension) benefits in the Senate, with the understanding that when you change the assumptions, that requires more money to go to that area.”
For fiscal year 2017, which ended June 30, the FRS reported a 13.77% return on investments. As of June 30, the FRS consisted of 995 total employers, and had 637,643 active members.