Tweak In State Pension Projection Comes With A Cost
October 14, 2016
State analysts agreed Thursday to lower the expected rate of return on Florida’s $144 billion pension fund, while warning that it may be the first in a series of annual downward adjustments.
The shift from a 7.65 percent rate of return to 7.6 percent may seem slight, but it has implications for the $82 billion state budget, which likely will be tight in the coming year.
A lower expected return on investments means lawmakers will have to increase the state contribution to the pension fund, reducing the overall amount of money the Legislature will have for other needs, ranging from public schools to health-care programs.
Milliman and Aon Hewitt, two financial consulting firms hired to advise the state on the pension fund, had recommended adjusting the long-term rate of return downward to about 7 percent based on economic trends that have resulted in low inflation and interest rates.
The median rate of return for the largest public pension funds in the country is 7.5 percent, according to a Milliman report.
Earlier in the week, analysts meeting as what is known as the Florida Retirement System Actuarial Assumption Conference were deadlocked over whether to lower the rate of return.
Don Langston, staff director of the House Finance & Tax Committee, and Amy Baker, head of the Legislature’s Office of Economic and Demographic Research, had pushed for lowering the rate to 7.5 percent. But they were opposed by representatives of the governor’s office and the state Senate, who wanted to maintain the current 7.65 percent rate.
Christian Weiss, economic policy coordinator for Gov. Rick Scott, said the governor did not support lowering the rate because there was a “wide array of uncertainty” in some of the long-term factors used to recommend a lower rate, including an assumption that interest rates would remain low during the next 20 to 30 years.
When the conference reconvened on Thursday, the members reached a compromise on a 7.6 percent rate, with Langston and Baker warning it is likely to be the first in a series of downward adjustments, although they also agreed that cutting the rate now to 7 percent would be too disruptive.
“It is a move in the right direction. It is a little baby step, not quite as big of a step as I hoped we would take,” Langston said.
But Langston said lawmakers and other state officials involved in the annual budget process need to prepare for a trend of lower returns on investments.
“Unless something radical changes in the world and national economies to turn the long-term outlook around, I think there is going to be continuing pressure on this assumed rate of return in the coming years,” he said.
Baker agreed, calling the move to lower the rate “a signal.”
“I think what we’re setting off is a series of annual changes as the pressure to reduce the rate continues to build,” Baker said. “Instead of giving ourselves any respite at all, we’re going to be looking at every single year for the next number of years revisiting it.”
Lowering the rate means the state will have less money to pay long-term retirement benefits for state and county employees, teachers and other public workers who rely on the fund.
Using the former 7.65 percent rate of return, Milliman had projected the state could pay 85.9 percent of its long-term benefits, representing an unfunded liability of $23.8 billion for the $144 billion fund.
With the new 7.6 percent rate, the report lowers the funded portion to 85.4 percent, representing a $24.9 billion unfunded liability.
As a comparison, lowering the rate of return to 7 percent would have yielded nearly a $38 billion unfunded liability, with the fund only being able to pay 79 percent of its long-term obligations.
In crafting the 2017-18 state budget during the spring legislative session, the Legislature will have to account for the larger unfunded liability in the pension fund using a complicated contribution formula.
Dropping the rate from 7.65 percent to 7.5 percent would have required an estimated $270 million increase in the state’s pension contribution, according to Milliman. A cut to 7.6 percent will still require a projected contribution increase in the range of $90 million based on the formula.
That’s a significant number given that lawmakers are looking at a meager $7.5 million surplus next budget year, followed by a projected $1.3 billion shortfall in the 2018-19 budget year.
The move to lower the rate of return was supported by State Board of Administration officials, who manage the investments in the $144 billion pension fund.
The fund’s investments gained less than 1 percent in the last fiscal year that ended June 30, but have outperformed the 7.6 percent rate over the last 25 years with an 8.39 percent rate of return, according a SBA report. Over the last 15 years, the fund had a 5.93 percent rate of return.
by Lloyd Dunkelberger, The News Service of Florida
Frontier Communications Local Office Closed
October 14, 2016
The Frontier Communications retail and payment office in Atmore closed permanently on Friday.
The office primarily offered payment services, often for cash paying customers. The closure, according to Frontier Communications Manager Don Osika, is simply a sign of the times./
With the proliferation of e-banking and online payment methods, in addition to the use of the USPS, there’s less need for our storefront as customers choose to do more business online,” Osika said. He said customer can arrange for auto bill pay through their bank or the company’s website.
“We apologize for any inconvenience this may cause our customers, but there are so many options available today, there’s should be one to meet almost anyone’s need,” Osika said.
All other Frontier operations in Atmore are remanding intact. Osika would not address the number of jobs, if any, that might be lost as a result of the office closure.
In the North Escambia area, Frontier serves local telephone exchange customers in Atmore, Walnut Hill, Bratt and Molino.
NorthEscambia.com photo, click to enlarge.
Ernest Ward Beats Escambia County Middle (With Photo gallery)
October 14, 2016
Ernest Ward Middle School wrapped up their football season Thursday night with a 28-26 win over Escambia County Middle School of Atmore in Walnut Hill.
The Ernest Ward Eagles are the only middle school football team in Escambia County, FL.
For a photo gallery, click here.
NorthEscambia.com photos, click to enlarge.
Northview, Neal, ECHS, Flomaton Dig Pink For Cancer Awareness
October 14, 2016
Northview, Flomaton, W.S. Neal and Escambia County High (Atmore) high schools held a Dig Pink volleyball tournament Thursday afternoon at Northview.
Northview won the junior varsity portion of the tournament. Complete results, including the varsity winner, were not available.
All proceeds from the gate will go to the Side-Out Foundation for cancer research. Northview also sold shirts for the event and all those proceeds will also be donated to the Side-Out Foundation. The schools hosted a hospitality room for survivors, referees, and coaches. Survivors present at the game were admitted free and received a special treat from the volleyball players.
The Side-Out Foundation funds breast cancer research and support with “cutting-edge clinical trials at renowned medical institutions. . . which has extended the lives of people with Stage 4 breast cancer.” In addition to cancer research, the Side-Out Foundation also provides support services for cancer patients and their families.
NorthEscambia.com photos, click to enlarge.
NorthEscambia.com photos, click to enlarge.
Camp Fire Century Holds Trike A Thon For St. Judes
October 14, 2016
The Children at Camp Fire Century held their annual St. Jude’s Trike-A-Thon Thursday, their fifth year hosting the event. The children learned about trike safety this week and have been raising money for St. Jude’s Children’s Research Hospital. They learned about being a community helper, volunteering and giving back to others in need.
NorthEscambia.com photos, click to enlarge.
Pursuit Ends With Fatal Crash After Contraband Tossed Over Prison Fence
October 13, 2016
A pursuit that began at an Atmore prison after contraband was tossed over a fence ended with a fatal crash on I-65.
At 12:05 p.m. on Wednesday, correctional officials at the \ Fountain Correctional Facility in Atmore reported a suspicious vehicle just south of the facility’s barrier fence with two unknown occupants inside. Officials said the vehicle fled the facility property after a male suspect tossed a package over the fence.
Investigators from the Department of Corrections pursued the vehicle along Alabama 21 and then onto I-65 southbound. Investigators said the suspects exited the interstate and was struck by a second vehicle.
Alabama Law Enforcement Agency reports that at 12:40 p.m. the suspects’ vehicle, a 1999 Toyota Avalon, collided with a 2003 Chevrolet Trailblazer on the off-ramp of I-65 at the intersection of Alabama 59.
Thirty-six-year-old Clint Travis Hunley of Foley, a passenger in the Toyota, was pronounced dead at the scene. The driver is identified as Jody Lynn Mikel, 26, of Trafford. Mikel was treated at a local hospital for minor injuries. The driver of the Trailblazer was taken to a local hospital for treatment of non-life threatening injuries.
The package that Hunley allegedly threw over the prison fence contained 25 cell phones, cell phone chargers, and 183 grams of synthetic marijuana.
Mikel was arrested for reckless murder and faces additional charges for prohibited activity on prison property, trafficking a controlled substance, and promoting prison contraband.
Alabama State Troopers are investigating the crash.
Cantonment Man Wanted For Rape Busted With Weapons And Drugs
October 13, 2016
A Cantonment man wanted out of Mississippi on a rape charge was arrested in Molino armed and in possession of drugs, according to the Escambia County Sheriff’s Office.
Robert Shane Boyette, age 34 of Williams Ditch Road, was charged with carrying a concealed weapon, possession of ammunition by a convicted felon, possession of marijuana less than 20 grams, possession of drug paraphernalia, possession of methamphetamines and possession of crack cocaine. He is also awaiting extradition back to Lauderdale County, MS, to face the rape charge. Bond on the local charges was set at $38,000.
An Escambia County deputy on patrol reported finding Boyette in a small green car with the driver’s door open parked next to a closed business on Molino Road near Jahaza Road. He was immediately detained after a records check returned the outstanding rape warrant.
When deputies searched Boyette, they reported finding a glass smoking pipe in his pants pocket, a .380 live round in a front pocket, and a small clear plastic bag with marijuana in his sock. He also had two knives, one of which was an automatic switch blade, clipped to his pocket.
Boyette gave consent to search the vehicle, and a K-9 was called and alert positively on the vehicle, according to an arrest report. Deputies searched the vehicle and reported finding eight .22 caliber live rounds in the floorboard. At the jail, deputies located two clear plastic bags in Boyette’s wallet one of which tested positive for methamphetamine and the other contained crack cocaine.
Gulf Power Seeks $106 Million Rate Hike
October 13, 2016
Gulf Power, which provides electricity to about 450,000 customers in Northwest Florida, will seek a $106.78 million increase in base rates, according to a filing Wednesday with the state Public Service Commission.
Gulf Power gave notice in August that it planned to request a rate hike, but the new filing provides details and sets the stage for what is expected to be a months-long regulatory process. The Pensacola-based utility is requesting that the new rates take effect July 1.
The average residential customer’s total monthly bill will increase by $10.22 per month or 7 percent — from $148.64 to $158.86, according to the utility. Gulf Power’s residential customers’ prices are less than they were in 2015, and the energy provider expects prices will be even lower in January mainly because of fuel cost reductions brought about by careful planning to take advantage of lower prices in natural gas and coal used to generate electricity.
“As the primary provider of retail electric service to the people of Northwest Florida, Gulf is obligated by statute to provide such service in a reasonable, ’sufficient, adequate, and efficient’ manner,” the filing said. “In order to continue to attract the capital required to provide that service to customers, Gulf must also offer a reasonable and fair return to shareholders. Without the revenue increase requested, Gulf cannot meet its obligations to either its customers or investors in the long run. If Gulf is rendered unable to meet its obligations to its customers and investors due to inadequate rates, both stakeholder groups will suffer. Customers will suffer from less reliable service and eventually higher costs of electricity, while the investors will suffer from an inadequate and confiscatory return on investment and will seek other places to invest their money.”
Stan Connally, Gulf Power Chairman, President & CEO, said the energy provider works hard to control costs while planning for the future and delivering the reliable services their customers expect.
“We have worked hard to manage our costs and have lowered prices over the past two years,” said Connally. “In fact, we plan to do that again in January where the average residential customer will see a decrease of $4.63.”
The last time Gulf Power customers saw an increase was in January 2015. In comparing 2015 prices to the proposed prices, the average residential customer’s monthly bill will increase by only $2.50 per month, or less than 2 percent.
“Securing our customers’ energy future requires a balanced energy mix that includes renewables and 24/7 energy sources like natural gas and low-cost, cleaner-than-ever coal,” said Connally. “Energy security also includes long-term reliability. Since 2010, Gulf Power has improved its reliability by 40 percent and we must continue that trend of improvement. This means our customers are having fewer and shorter power outages — continuous improvement in this area is critical.”
Along with the request, Gulf Power is also seeking approval of new rate options for residential customers.
“Studies show that our customers are happier when their energy bills are more predictable and when they have choices. These options are designed to give customers more predictability in monthly bills reducing the increases associated with extreme weather months. In addition, two new options will offer residential customers more rate plan choices based on the way they use energy.”
The energy provider is also putting into place new options for greater customer convenience, including an improved online experience, additional payment locations at popular stores, and payment kiosks in their customer offices.
by The News Service of Florida and NorthEscambia.com
Fields Of Faith: Community Worship Service Held (With Gallery)
October 13, 2016
The Northview High School Fellowship of Christian Athletes (FCA) sponsored a student led worship event “Fields of Faith” Wednesday night in the Tommy Weaver Memorial Stadium.
The service included music, testimonies and more.
For photo gallery, click here.
NorthEscambia.com photos, click to enlarge.
Judge Extends Voter Registration Deadline Until Tuesday
October 13, 2016
Florida residents will have until next Tuesday to register to vote, after a federal judge ordered an extension of the registration deadline because of Hurricane Matthew.
With lawyers for Gov. Rick Scott and Secretary of State Ken Detzner voicing no opposition to the extension, which was requested by the Florida Democratic Party in a lawsuit filed over the weekend, U.S. District Judge Mark Walker approved the move during a brief hearing Wednesday.
The hearing came a day after the state’s original deadline for registering to vote. Walker had already issued an emergency order extending that deadline to Wednesday while he considered the further extension to help potential voters who fled Hurricane Matthew as it lashed the eastern side of the state late last week.
“We are thrilled the court agreed to extend the voter registration deadline a full week (from the original deadline) following Hurricane Matthew,” Florida Democratic Party Chairwoman Allison Tant said in a statement Wednesday. “While we wish it had not taken a lawsuit to get the Scott administration to do the right thing, today’s ruling is a major victory for all Floridians and for the democratic process in the Sunshine State.”
Scott had initially resisted moving the date, saying “(e)verybody has had a lot of time to register.” But critics said that the 1.5 million Floridians who were under evacuation orders due to the storm deserved to have more time to return home, get their affairs in order and register — particularly after Scott urged residents to follow those orders.
“It came from him,” Cecile Scoon, second vice president of the League of Women Voters of Florida, said after the hearing. “It should have come from him to allow people to have the extension to register.”
Scott’s office issued a statement Tuesday that signaled he might back down and also suggested that the Legislature consider changes to the state’s voter registration law during the 2017 session. Florida has one of the earliest registration deadlines in the nation, and the law has no provision for what happens if a disaster strikes near the deadline.
Walker, while stressing that he wasn’t telling state lawmakers what to do, emphasized those points about Florida’s deadlines during the hearing — saying they contributed to his initial decision Monday to order an additional day for registration. That ruling also argued the state law was unconstitutional.
“That’s the entire point of this court’s (earlier) ruling — namely, it is that gap that creates the problem that brings us here today,” he said.
Arguing for continuing the extension through Tuesday, a lawyer for the Democratic Party said the additional time would make up for the weekend lost to Hurricane Matthew. That could help replace some of the voter registration drives lost to the storm.
“It’s terribly important to have a weekend. … Candidates and political parties take advantage of the weekend,” said Kevin Hamilton, the attorney.
Voting-rights groups that joined the Democratic Party’s lawsuit were already gearing up to push for changes in Florida law after Walker’s decision.
“The reality of Florida is that there are going to be natural disasters, and Florida needs to have plans and policies in place that account for this,” said Myrna Perez, a deputy director with the New York-based Brennan Center’s Democracy Program, which represented the League of Women Voters. “I hope that this is an opportunity for the Legislature to revisit Florida’s election practices.”
Ion Sancho, the outgoing supervisor of elections in Leon County, suggested that the problem could be at least partially addressed when the state moves to allow voters to register online following this year’s presidential election.
Walker also agreed to the Democratic Party’s request to allow counties to submit or change their plans for early voting by Monday. Those plans were originally supposed to be in Sunday — shortly after Matthew pushed past Florida for good.
by Brandon Larrabee, The News Service of Florida