Residents of Boca Raton are fortunate indeed. Beyond the semi-tropic climate, beautiful beaches, amenities, educational and economic opportunities and more, is the fact that our city is fiscally sound. Our City boasts a AAA bond rating, the highest score given by the rating agencies. Boca has maintained AA-AAA ratings for many years now and it is something City Officials can be very proud of.
Over the past few years there was quite a bit of noise over the Police and Fire Unions’ pension plans prior to contract renewals. Many of you, no doubt, received the blast emails that the “Citizens for Fiscal Responsibility” sent out regularly, warning of dire financial consequences for the City unless drastic pension reform was done immediately. This was a main topic of the 2014 municipal elections and with one candidate being a Palm Beach County firefighter, the political overtones were apparent. Fortunately, the union contracts were settled amicably this year through the appropriate process of discussion, negotiation and compromise.
Lost in the noise was any mention or concern over the City of Boca Raton Executive Employee’s Retirement Plan. Granted, this plan is a fraction of the value of Police and Fire pension assets but shares an “underfunded” status. Just like Police and Fire, the Executive Plan’s underfunded percentage has improved over the last several years thanks to a favorable investment climate. No imminent danger currently exists for the Executive Plan.
IT’S GREAT TO BE AT THE TOP
Digging into the details of the Executive Plan brings the discovery that the executives are divided into four divisions. The highest of these divisions is Division Four (D4). D4 consists of two employees; the City Manager and the City Attorney. Both of these highly regarded employees have salaries well in excess of all fifty state governors in the United States. According to the website, openthebooks.com, the 2013 total compensation was $294,507.34 for City Attorney Diana Frieser and $283,768.63 for City Manager Leif Ahnell. A Public Records Request for current base salary amounts indicates $231,171.00 for Mr. Ahnell and $226,330.00 for Ms Frieser.
What is striking about D4 are the numerous add-on advantages that exist within the pension plan over the other three divisions. For these two highest paid employees of the City, it takes just slightly over twenty-three years to earn the maximum payout of ninety percent of “Member’s Average Final Compensation”. All other divisions require service closer to thirty years. For those executives wishing to protect their spouses through a “Joint-and-Survivor Annuity”, D4 receives one hundred percent. All others are discounted by varying amounts. Another benefit to D4 is; Average Final Compensation can be calculated using a minimum of the last two years of employment versus a minimum of five years for other divisions.
Even Cost of Living Benefits are tilted to the advantage of D4. One might conclude that cost of living impacts all of us in a similar way. The pension plan, however, pays three percent annual increases beginning in year five of retirement versus two percent for all other divisions.
THE GOLDEN PARACHUTE OF RETIREMENT
There is no question that the City of Boca Raton prides itself in having “the best” and is willing to pay for that outcome. Our City Manager and City Attorney work hard and long hours and deserve “above average” pay for their responsibilities and titles. By comparison, the average salary for a City Manager with more than ten years experience averages $85,000 per year. The same source, payscale.com, claims a City Attorney with more than twenty years experience averages $109,000 per year. To put this in perspective our two key employees are rewarded handsomely during their working years with generous salaries and benefits but will actually earn much more in retirement if they are fortunate enough to live to normal life expectancy. In the case of Mr. Ahnell he will be able to begin his retirement with full benefits at the ripe old age of fifty five in just a few years.
I wish nothing but a long and healthy life for both our City Manager and City Attorney. If my wish is granted then each stand to make many millions of dollars from the pension in their retirement. Throw in an additional benefit in excess of $14,000 per year for healthcare, plus the three percent annual inflator and it’s quite a package. These are benefits that many in the private sector only dream of. Not a bad gig for employees in the public sector.
Why does any of this matter? Reasons one, two and three: Because it is taxpayer money. That means it’s your money. You should know.
Note: Certain benefits have been scaled back for executives hired after September 30, 2010. Information provided in this article was obtained from: “City of Boca Raton Executive Employees’ Retirement Plan, 2012 Actuarial Evaluation, March 2013”. “City of Boca Raton Executive Employee’s Retirement Plan, Financial Statements, for the year ended September 30, 2014”. Payscale.com Openthebooks.com