Florida's $127 billion public employee pension fund is a national leader but the state's non-pension health care plan for retirees needs improvement, says a report issued Thursday by the Pew Center on the States.
It praises Florida's management of long-term pension liability, noting Florida is one of just three states with more pension assets than accrued liability, funding 101 percent of its total pension obligation. The other states are New York and Washington.
Florida is well above the 80 percent national benchmark that the U.S. Government Accountability Office says is preferred by experts, according to the Pew report.
"Florida should be applauded for its efforts to cover the long-term costs of pensions for the public sector employee benefits, but the state is coming up short in saving for retiree health care," said Pew managing director Susan Urahn.
She questioned the sustainability of Florida's pay-as-you-go approach to retiree health care due to uncertain stock market performance and a growing number of "baby boomer" retirees on the horizon. The report notes that Florida, though, has controlled health care costs by capping benefits.
Department of Management Services spokeswoman Lauren Engel said the agency, which oversees the retirement program, had no immediate comment because it had not yet received the report.
Florida is one of 40 states cited as needing improvement in health care and one of 16 long-term pension plans listed as solid performers.
Last year's 101 percent asset-to-liability ratio resulted in a $1.8 billion surplus for the fund that covers state and local government retirees, including teachers.
Some states use surpluses to reduce future annual contributions, but Florida holds surpluses of less than 5 percent of liabilities in reserve to pay for unexpected losses in the system, according to the report.
Even if surpluses exceed 5 percent, only a small part can be used to reduce the state's contributions.
"This policy has helped Florida offer a traditionally structured defined benefits plan while maintaining funding at sustainable levels," the report says.