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With negotiations at an impasse, city employees seek public support

By Staff | Jun 2, 2010

Last Thursday, members of the City of Sanibel’s General Employees Retirement Plan sent out an e-mail to the public, offering details about the city’s finances, using information from the city’s current budget and most recent audited financial statements. A majority of the message was issued in question-and-answer format.


Q: Is the city in financial difficulty?


A: No. At Sept. 30, 2009, the end of its most recent fiscal year, the city had more than $18,000,000 in surplus and reserves in its general fund (the fund supported with your tax dollars). During the winter of 2010, the city hired an investment advisor to invest the excess funds. In April 2010, the city prepaid $2.2 million in debt.  Future savings from the prepayment are estimated to be $568,488.


Q: Why do I keep reading that revenues are down substantially?


A: According to the city’s audited financial statements and FY10 budget, total sources of funds in the general fund including taxes, intergovernmental revenue, charges for services, fines and forfeitures, miscellaneous revenue and fund balances are flat ($33,148,264, $31,703,702 and $31,453,112 in FY08, FY09 and FY10 respectively).


Q: What about expenses?


A: Operating expense in the general fund was 11.7 percent lower last year than the year before, again according to the audited financial statements ($10,979,805 versus $12,441,535).


Q: What about current year revenue and expense?


A: Both sources of funds and uses of funds are expected to be 1 percent less than last year, according to the FY10 budget.


Q: What about next year?


A: Estimates for next year’s revenue will be made after the Lee County property appraiser provides his estimate of Sanibel property values on June 1, 2010. The June estimate will be revised on July 1.


Q: Why do I keep hearing about problems with the General Employees Retirement Plan?


A: According to the board of trustees’ actuary the plan is funded better than most, having been fully funded since its inception in 1975. In 2008, the plan held $117,787 in excess prepaid contributions.


The City Council has enhanced the plan twice in recent years. Once was to include the city manager and city attorney in the plan, simultaneously giving them credit for years served while they were receiving contributions to a separate 401(a) plan; the other was to add a cost of living adjustment. Although the Council promised to fund these enhancements when they were enacted, no additional contributions were made to the plan.


The plan’s in vestments, like investments across the county, suffered losses in 2008 and 2009. These losses are beginning to be recouped. Additionally, in fiscal year 2009 the plan’s board of trustees elected to reduce the span of an actuarial calculation from 30 to 10 years. All of these events have accelerated the City’s contribution requirements to the plan in the short-term. At its actuary’s suggestion, City Council has already agreed to increase next year’s contribution, a substantial portion of which will be borne by the city’s enterprise funds and will not require tax dollars.


Q: Why do we have a Retirement Plan?


A: Sanibel incorporated in order to determine its own destiny. Our founders recognized that a strong city government was integral to that goal. The city offers a retirement plan because it is in its citizens’ long-term interest to do so.


Given Sanibel’s isolation and its continuing high cost of real estate most employees can not afford to live on the island. For those employees who do live on Sanibel, the financial sacrifice is significant.


Sanibel has always had a hard time attracting and retaining qualified people, yet loyal and long-term employees directly contribute to the city’s goal of self-determination, as well as protecting and increasing Sanibel’s property values.


The city offers competitive wages and benefits, including a retirement plan, as part of a strategic plan to retain employees and protect its government and citizens’ property values. This plan has succeeded; in 2006, Sanibel’s property values increased 21.9 percent from 2005 (from $4,092,905,540 to $4,990,360,370) because of city employees’ hard work in Charley’s aftermath.


Q: What’s wrong with reducing benefits in the current plan, as the City Council has proposed?


A: Currently, Sanibel’s retirement plan for its general employees is slightly above the state average. This was done intentionally, in order to build a strong, professional city government and to protect property values. If the proposed changes are adopted by Council, Sanibel will have the worst retirement plan in the State of Florida, according to a local expert. Long-time employees, with irreplaceable institutional knowledge will retire or look for work elsewhere.  Ironically, some of the same council members currently supporting cuts were members of the 2006 council that voted to enhance the plan as a retention tool for employees.


Using the code words “challenging economic conditions,” the city is proposing to reduce benefits for city employees and their families. The reductions are not necessary financially. They penalize the people who insure your quality of life on the island and penalize employees for their commitment to the city.


Q: Are city employees important to the "Quality of Life" on Sanibel?


A: Yes, because they are what protect citizens from the challenges and threats to our island that will always be there. In 2004, it was Hurricane Charley; in 2006 it was water discharges from Lake Okeechobee and red drift algae; in 2010, it may well be water discharges, red drift algae and an oil spill. History does repeat itself.


Sanibel is a unique and special place. Our long-term success and survival depend to some degree upon having our employees take care of our special needs and requirements. Sanibel employees have irreplaceable knowledge about the city and what is required for it to function smoothly. They have a sense of community; many have spent their entire working lives on Sanibel. When disaster strikes, as we all remember it can, we need long-term and loyal employees. The institutional knowledge necessary for successful rebuilding is crucial. After Charley, city employees were instrumental in getting us back on our feet.

Remember: At the end of the day, Sanibel offers competitive wages and benefits to its employees because it is good business to do so.


Q: Why we have written this letter


A: Recently, the City of Sanibel declared an impasse in negotiations with members of its General Employees Retirement Plan. The City Council is seeking substantial reductions in the existing plan, citing challenging economic conditions. Employees were still trying to negotiate changes with the city when the impasse was declared.


What You Can Do — We encourage you to think about Sanibel and consider what employees mean to your quality of life on the island. We urge you to ask your City Council member to reconsider the impasse. You may reach Council members at sancouncil@mysanibel.com.