Proposed Charter Amendment Puts $500k At Risk

One sentence in the to provide more powers to the city manager could place $500,000 in firefighter pension funds from the state in jeopardy.

The proposal assumed that the city's charter was set to be amended with updated guidelines for pension administration, but it has not, and the update contains errors.

Nonetheless, the City Commission was forced to approve Thursday the petition to be placed on the ballot with the language and summary written unless the group behind the petition requests a change later and the city accepts it. Vice Mayor Willie Charles Shaw cast the lone dissenting vote.

The city charter says the commission is obligated to place a petitioned charter amendment on the ballot, but if the commission would change language in a petitioned referendum, it could lead to legal issues, City Attorney Robert Fournier said.

"Opponents can make an issue out of it because it can result in a loss of money," Fournier said 

The petition says in Section 5, Item M that the city manager shall "serve as the pension administrator of General Employees' Pension Plan and any other City retirement plans."

That phrase neglects a second General Employees' Pension Plan and gives control as administrator over additional pension plans that the manager should not administer because of a financial agreement with the State of Florida.

That $500,000 is received from the state's Division of Retirement and goes back to the fire pension, called the 175 Plan, said Sarsaota Pension Administrator Benita Saldutti, and eventually is passed on to pension members. As part of the agreement with the state, the state dictates that the 175 and 185 funds have to be self-administered by the Boards of Trustees for the pension plans, Fournier said. 

Additionally, the sentence uses retirement plans and not pension. The city also has defined contribution and defined benefit plans that have their own rules that could create additional issues.

If the pension fund loses the $500,000, the city could lose more than that.

"Adopting an ordinance that would forfeit those funds, I think you would certainly would be looking at a suit from your retired firefighters and amending the plan would cause a loss of their benefit," Saldutti said.

Saldutti estimates that in about five years, the city could see the effect of that $500,000 as the pension plan is set up to retain state funds in the future.

“At this moment we have no choice in what was presented to us,” Commissioner Shannon Snyder said. “I do think we’re going to lose the 175 money when this is done.”

Additionally, the city could be named as a party in a lawsuit if someone files suit against Citizens For A Better Sarasota or an injunction to stop the referendum.

Considering all the factors and options, Fournier said he's unsure where to place the risk and likelihood of losing the $500,000, other than saying it's possible. The city could even write a letter to the state that the sentence is construed a certain way hoping the state accepts their explanation. Or if the city loses the money, a legislator has to agree to provide the money back to the city, Sarasota Finance Director Chris Lyons said. 

The issue doesn't stop with the Citizens For A Better Sarasota amendment. Section 5 Item M is taken verbatim from another proposed charter amendment that's backed by the City Commission, Fournier said, so the commission should correct that line when they approve the ordinance for the ballot language unless the city wants voters to unintentionally lose $500,000.

That city-backed amendment contains what officials are calling "housekeeping" items clearing up a variety of smaller issues in the charter. Five other proposed charter amendments are expected to appear with these to amendments on the Nov. 6 ballot. 

However, even if the city corrects that line in its charter amendment, the strong-city manager amendment would override that clause, Fournier said, and place the funds in jeopardy. 

The commission did not review the second reading of the "housekeeping" ordinance yet, Fournier said. The commission could review the ordinance at either the Aug. 20 meeting or the Sept. 4 City Commission meeting, Fournier said, or they could always schedule a special meeting if it desires.