House-Senate split on pension hints at deal-making to comeby John Kennedy | March 14th, 2013
An effort by leading House Republicans to close the Florida Retirement System’s traditional pension plan to new employees cleared its final committee stop Thursday — after undergoing some changes that did little to ease overwhelming opposition from public workers’ unions.
Rep. Jason Brodeur, R-Sanford, endorsed an amendment that continues to make new hires eligible for disability and death benefits — a provision whose earlier absence had infuriated police and firefighter unions.
More than 60 opponents of the legislation — many police and firefighters in uniform — signed up to speak against the bill (CS/HB 7011) which cleared the State Affairs Committee on a 12-5 partyline vote. But restoring the disability and death benefits didn’t soften their criticism of the bill.
Democrats were locked in opposition to the measure.
“There’s no reason for it,” said Rep. Dwayne Taylor, D-Daytona Beach. “It defies logic. This is a bad, bad, bad idea.”
New hires seeking a retirement account would instead be required to join a defined contribution investment plan beginning Jan. 1.
The legislation is a top priority of House Speaker Will Weatherford, R-Wesley Chapel, who maintains that the FRS is underfunded and will command increasing millions of dollars from Florida taxpayers to keep it afloat in future years, a
stance disputed by many experts.
Republicans on the committee said it was important for the state to act swiftly.
“This plan will decrease the financial risk to our taxpayers,” said Rep. Jake Raburn, R-Lithia.
But opponents warned that the legislation is not only unnecessary, it’s potentially dangerous. The $126 billion pension fund is used by more than 623,000 state and local government workers and another 335,000 retirees.
The FRS is considered 87 percent funded. Most analysts acknowledge that 80 percent is the benchmark for a fund considered to be on solid financial footing.
Republican leaders, however, say that unfunded actuarial liability is $19.2 billion — a level they say is alarming.
Still, those defending the fund say the shortfall would exist only if every pensioner demanded their full payments at once, which analysts say would never happen.
While the measure could head to the House floor as early as next week, the Republican-led Senate seems to have little interest in going that far.
A more modest change, proposed by Sen. Wilton Simpson, R-Trilby, advanced Thursday in the Senate’s Governmental Oversight and Accountability Committee.
The bill (SB1392) would give new public employees an incentive by cutting their payroll contributions to 2 percent if they join the investment plan. If they choose the traditional plan, they’d pay 3 percent.
The only new workers required to join the investment plan would be senior managers, under Simpson’s bill. Senate President Don Gaetz, R-Niceville, has come in favor of Simpson’s proposal.
The division between the House and Senate makes it likely that some kind of compromise will have to be forged for any FRS changes to clear the Legislature this spring.
“It looks like we’ll have to sit down and talk to Sen. Simpson,” Brodeur conceded after the House vote.