The Bay Health Foundation will not fully fund the pension plan it manages for Bay Medical Center employees, despite the urging of county commissioners to do so.
The foundation board unanimously passed a resolution Monday to maintain the current funding level. "There is no way in the world we're going to fully fund the plan... that makes no fiscal sense," said Don Connor, the foundation's chairman.
The foundation board reviewed the pension plan during a conference call with its consulting firm, Gabriel, Roeder, Smith & Company. Larry Wilson, the firm's senior consultant, said the Bay Medical pension plan's funding level of 84.6% is higher than that of nearly three-quarters of the 127 other Florida pension plans it reviewed. It also outperformed the Florida Retirement System on a market value basis, said Wilson.
"Ours is, we believe, much more conservatively managed," said Andrew Stein, a foundation board member and chairman of its pension committee. "The more conservatively it's managed, the more protection that's provided to the beneficiaries."
At the most recent actuarial valuation (as of January 1, 2012), the Bay Medical pension had a total of 2,298 members, assets of $84.8 million and accrued liabilities of $100.2 million. Projections as of March 22, 2013 put the pension liability at $18.1 million.
Each year, the foundation reviews the pension fund and adjusts contributions based on market performance, pensioner mortality and payout rates, said Stein. The foundation has set aside $1.9 million in the current year budget to keep pace with projections. According to the foundation's consultant, the pension will be fully funded in 13 years based on current assumptions.
But county commissioners want the pension to be fully funded right away. If so, the funds cannot be taken back out of the fund until the last pensioner has drawn their last benefit. "We believe that is not responsible stewardship of the funds that have been provided to us," said Stein. "I don't understand why it's an issue."
Commission chairman George Gainer said it's an issue because the county could be on the hook if the pension becomes insolvent. "If we should have to step in [the foundation's] shoes, then you could wind up having to raise taxes to get this done," he said. "We don't want to ever have to face this."
Gainer said the county and foundation consultants see things differently. "We have to check the accuracy of their report and check the accuracy of our report because they don't agree," he said. "We've got to make up our mind who we're going to believe and then move forward."
The county previously drafted an interlocal agreement related to the funding issue, but asked the foundation board to postpone discussion of it until Gainer meets with Connor.
Connor said he's open to an agreement that commits the foundation to ensuring the viability of the pension fund. "That's our own goal, anyway," said Connor. "I don't know why it needs an agreement [but] if they want one we may come up with one… but it will be written by our lawyer."
Stein said commissioners never questioned the pension's health prior to the hospital's 2012 lease to Sacred Heart Health System/LHP Hospital Group in 2012. "There was no attention paid to it whatsoever," said Stein. "The hospital was losing money and so if there was any time that [they] should have questioned whether there were funds available, that was it."
"Maybe in the past we didn't know a lot of things we should have known about that board because we weren't told," said Gainer. "I think that we're taking our responsibility a little more seriously in that regard now."
Gainer said he is willing to "move on" if he can be assured the county has no future financial liabilities related to the hospital. The county plans to ask the Florida Attorney General for an opinion.