Pension work nears finish lineby John Kennedy | April 29th, 2011
Plans to dramatically revamp Florida pensions at the state and city levels appeared headed Friday toward the finish line — far short of where Gov. Rick Scott and lawmakers had initially proposed.
House and Senate negotiators have settled on extracting 3 percent paycheck contributions from 655,000 teachers, police, firefighters and other government employees enrolled in the Florida Retirement System, part of an effort to pull $1.1 billion into the state’s recession-strapped budget.
But a plan to scrap the state’s Deferred Retirement Option Program (DROP) has been abandoned, House and Senate negotiators agreed. The House had wanted to bar the lucrative early retirement program to new enrollees in July; the Senate in 2016.
But what emerged Friday night from House lead negotiator Ritch Workman, R-Melbourne, was a proposal to reduce the 6.5 percent interest rate paid on DROP benefits to 1.3 percent. The move will save $81 million, if agreed to by Sen. Lizbeth Benacquisto, R-Wellington, the Senate’s lead negotiator on the Florida Retirement System.
Among other changes nearing agreement are a plan to increase the retirement age for new enrollees in the FRS from age 62 to 65. An existing 3 percent cost-of-living adjustment would be eliminated for service earned after July 1, with Workman saying the goal being that it would be reinstated in 2016.
That change save $404.8 million, analysts said.
Meanwhile, plans to revamp municipal pensions also have been scaled-back.
Cities had wanted lawmakers to rework a 1999 law that fattened the pensions of police and firefighters, spearheaded by former Gov. Jeb Bush, who had been endorsed by the Florida Police Benevolent Association and Florida Association of Professional Firefighters in the governor’s race.
Cities this year wanted authority to use the growth in dollars flowing to them from state taxes on property insurance premiums to go into existing benefits or easing municipal pension liabilities. The 1999 law requires the growth in these premiums go only to additional benefits.
Cities have responded with such pension sweeteners as cost-of-living adjustments, lower retirement age, or an increased “multiplier” used in determining pensions based on years-of-service, all of which have forced them to spend an additional $400 million on pension costs since 1999.
Instead, the only major city overhaul looking likely to surface this session is a provision that would limit overtime pay to 300 hours per year for benefit calculations, Ring said. The cap would block employees from what critics say is a common pension-boosting practice.
“The cities, counties and unions just couldn’t find much agreement on anything else,” Ring said. “There was no unified voice.”
In West Palm Beach, fire pension costs – if tucked into the city’s overall payroll – would absorb 31 percent of the dollars. Police pensions would take 29 percent, according to a Florida League of Cities analysis.
But some cities, particularly in Broward and Miami-Dade counties, are facing double those costs.
Although Gov. Rick Scott didn’t weigh into the municipal pension fight, he did have some strong opinions about the Florida Retirement System, calling for wholesale changes.
How he accepts what looks like modest change is an unknown. But earlier this month, Scott ridiculed House and Senate public pension proposals for not going far enough.
Flanked by business organizations supporting his push for almost $2 billion in tax breaks — while schools, health and social programs endure deep cuts — Scott said lawmakers needed to rework their plans for overhauling government retirement plans.
“The right thing to do is exactly what the private sector has done,” Scott said at the time.
Scott wanted public employees hired after July 1 to be forced into 401(k)-styled investment plans and barred from the standard pension providing guaranteed benefits through the Florida Retirement System.
But lawmakers appear to have backed off earlier threats to close the pension plan to new hires.