House committee takes hurry-up action on pension overhaulby John Kennedy | February 7th, 2013
A House panel raced ahead Thursday with one of House Speaker Will Weatherford’s top priorities — closing the state’s traditional pension plan to new hires — over opposition from union representatives who warn the move could undermine the Florida Retirement System.
The hurry-up action by the usually conservative Republican House also comes a week before a study is expected to be completed aimed at gauging the legislation’s financial impact.
The House Governmental Operations Subcommittee approved the measure on an 8-3 vote, divided on party lines. Democrats critical of the overhaul sided with union officials who said that closing the defined benefit portion of the Florida Retirement System to new employees would jeopardize the plan for those now in the plan.
New hires seeking a pension plan would be forced to join a defined contribution, 401(k)-styled investment plan beginning Jan. 1, under the legislation. The bill also would bar new employees from eligibility for disability benefits — a restriction fiercely opposed by police and fire unions.
“There’s concern about the unknown,” said Matt Puckett, representing the Florida Police Benevolent Association. “That’s what this is all about. There’s risk in closing the plan.”
Chairman Jason Brodeur, R-Sanford, acknowledged lawmakers will have a better idea about the financial affects of the potential change when the state’s Department of Management Services completes a study next week. But it’s clear that Weatherford’s push for the change helped drive Thursday’s vote.
“These sensible reforms will offer a sound investment plan to future employees, while at the same time being realistic about the commitments our state government can continue to make,” Brodeur said after the vote.
The Florida Retirement System has 623,011 currently employed members, including teachers, state workers, police officers and firefighters. Another 334,682 are already retired and collecting benefits.
Weatherford, R-Wesley Chapel, has clamored for revamping the system, warning that state payments into the pension fund will continue to escalate. The $126 billion FRS currently is 87 percent funded — with Gov. Rick Scott recommending in his budget that state lawmakers add $552 million in taxpayer money to fund the state’s share of the fund’s liability.
It’s those payments Weatherford and other supporters of the plan would like to see reduced. Florida’s fund is currently considered strong by most analysts, with a minimum level of funding put at 80 percent.
But that could change, union officials told lawmakers.
“Without new people coming in, it loses its stability and loses more stability over time,” said Rich Templin of the AFL-CIO.
Florida’s pension plans have proved a target for Scott and the state’s Republican leadership.
Last month, the Florida Supreme Court narrowly upheld the Legislature’s decision in 2011 to require workers to contribute 3 percent of their pay to participate in the FRS. The $2 billion collected from those payments the past two years allowed lawmakers to have more cash to plug holes elsewhere in the state budget.
Unions unsuccesfully challenged the law claiming it violated contractual rights granted public employees in 1974, when the pension was converted to a “noncontributory system.”
While the House is focused on the FRS, the Senate is considering legislation aimed at revising laws governing hundreds of municipal pension across Florida.