How far will legislators go in revising state's pension plan?
Published: Friday, April 1, 2011 at 7:25 p.m.
Last Modified: Friday, April 1, 2011 at 9:48 p.m.
TALLAHASSEE — Showing up en masse and in uniform, firefighters, paramedics, police officers and sheriff's deputies packed the state Capitol for weeks seeking to dissuade Florida lawmakers from changing their pensions.
Teachers joined in arguing that the changes would hurt morale. Law enforcement officers called the plan insulting to people who risk their lives on the job.
But as lawmakers reach the halfway point of the 2011 session, there's no doubt that public employees will see their take-home pay drop as they help pick up some of their pension costs.
The only question is how far legislators will go in revamping Florida's massive retirement system in the name of saving money.
Gov. Rick Scott proposed his own sweeping pension plan in February, calling on public employees to pay 5 percent of their annual salary toward the state pension plan. Public employees enrolled in the state pension have not had to pay anything since 1975.
But the House and Senate have settled for now on a plan to require more than 655,000 county, state and school district employees to start paying 3 percent of their salary in July. For the average state worker that amounts to more than $1,000 a year.
Lawmakers, however, have packed much more into the pension legislation. Both the House and Senate are considering closing an alternative retirement plan that encourages older workers to retire by offering them lump-sum bonuses.
The House has a controversial proposal to push back the retirement age for all public employees who enroll in the system after June 30. Rank-and-file state workers would have to work 33 years or until age 65, while police, firefighters and other "special risk" employees would have to work 30 years or until they're 60.
The latest Senate measure goes even further. It would delay the retirement age from 55 to 62 for firefighters and police officers and eliminate future cost-of-living adjustments. It also would force new hires — except those in the special risk category — to invest their money in a plan similar to a 401(k).
Currently most public employees enrolled in the Florida Retirement System are guaranteed a retirement payment based on several factors including salary and time spent on the job. An investment plan instead would pay public workers based on how well their investments perform over the next 20 or 30 years.
"A contribution is one thing, but destroying one of the best retirement systems in America is another," said Doug Martin, the legislative affairs director for the American Federation of State, County and Municipal Employees.
The Florida Retirement System has nearly $130 billion in assets and is responsible for nearly 1 million active and retired employees throughout the state. The fund, invested heavily in stocks, has been battered by the Great Recession. Currently, it can cover 87.9 percent of its obligations to retirees.
But the health of the fund is not the primary reason lawmakers are pushing changes this year. Instead, they're hoping to help fill a nearly $4 billion budget shortfall without turning to tax increases.
The House plan would save an estimated $810 million for the state and school districts, while the Senate plan would save $1.1 billion. Counties and cities also would save hundreds of millions.
"At the end of the day, we have got to balance the budget," said Sen. JD Alexander, R-Lake Wales, chairman of the Senate Budget Committee.
Public employees — and most Democratic legislators — have called it unfair to balance the budget "on the backs" of workers, while some have suggested it is a payback for unions that backed Democrat Alex Sink in last year's governor's race.
Democrats also have tried to label the mandatory contribution an "income tax" and say it is wrong to force it on public employees, many of whom have not had a pay raise since 2006.
Republicans, however, contend that the budget plans so far have deep cuts in many areas, including health care, schools and in financial aid programs for college students.
"The fact is we have a real arithmetic problem," Sen. Don Gaetz, R-Niceville, told a group of public employees this week. "We can't spend more than we take in. There is no part of this budget where we haven't asked people to make sacrifices."
An initial Senate plan crafted after hours of testimony included a proposal to shield lower-paid employees from having to pay anything at all. Alexander said, however, such a plan would run afoul of federal tax laws.
But several senators — including some GOP senators — say that they still want to find a way to spare public employees at the bottom of the salary ladder.