Palm Bay staff warn of rising payroll and pension costs; pension bill for FY27 about $4.3 million

City budget staff told the Palm Bay City Council that contractual salary increases and a post‑FY24 rise in sworn positions are driving a material pension and payroll increase in the FY27 preliminary budget.

"The pension increase for FY27 is 4.3 million. It's approximately 39% increase," budget program administrator Jessica Henchman said, citing the actuarial method that leverages recent salary and FTE changes. Henchman said much of the jump reflects the roughly 35 sworn positions added in FY24, which raise both payroll and actuarial pension liabilities.

Staff presented contract-driven salary guidance for bargaining units: roughly 8% for fire units, about 7% for FOP officers (with a mid‑year merit adjustment noted), roughly 4% for sergeants and lieutenants, and about 5% for other bargaining groups; general employees were proposed at 5% to maintain internal equity. Henchman said the budget office will set aside a contingency to cover fiscal impacts from promotions such as newly added fire‑captain ranks.

As examples, staff gave illustrative pension impacts using current-step salaries: a police lieutenant at the highest step (salary shown as $116,575) yields an estimated pension impact of about $47,000; a fire lieutenant (salary shown as $113,960) yields roughly $52,400, per the actuarial percentages staff cited.

Staff said pensions are budgeted from actuarial reports that lag current payroll data by one to two years, which partially explains the sudden FY27 increase. Council discussion focused on ensuring staffing and training needs are balanced with retention measures and long‑term affordability, with staff promising more granular figures during June follow‑ups and the July proposed‑budget workshop.