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Judge Hears Florida Retirement Contribution Case

By: Bill Kaczor, Associated Press Email
By: Bill Kaczor, Associated Press Email

Tallahassee, FL (AP) -- October 26, 2011 --

A judge on Wednesday repeatedly challenged the state's defense of a new law that requires public employees to contribute 3 percent of their pay to the Florida Retirement System.

The Florida Education Association, other public employee unions
and several individual workers have asked Circuit Judge Jackie
Fulford to strike down the law. It also eliminates annual 3 percent
cost-of-living increases on any pension benefits earned after it
went into effect on July 1.

Fulford gave no indication when she'll rule. The case is
expected to wind up before the Florida Supreme Court.

The unions contend the law violates contract, property and
collective bargaining rights guaranteed by the Florida Constitution. A 1974 law that eliminated employee contributions to the retirement fund also says pension benefits are a contract right.

Doug Hinson, a lawyer hired by the state, argued the Legislature
had the authority to take that action under its constitutional
budgeting powers.

Hinson cited a 1981 Florida Supreme Court ruling upholding a
1978 law that reduced extra benefits for law enforcement officers.
The opinion in Florida Sheriffs Association v. Department of
Administration says lawmakers can "modify or alter prospectively
the mandatory, noncontributory retirement plan for active state
employees."

Fulford questioned Hinson's interpretation.

"It does not say you can gut it," Fulford said. "It doesn't
say you can do away with it. It doesn't say you can change it to
voluntary. It doesn't say you can change it to contributory."

Florida Education Association lawyer Ron Meyer similarly argued
the ruling does not apply to the current case because the
Legislature went well beyond modifying or altering, and instead
changed the retirement system's fundamental nature.

Hinson, though, downplayed the significance of those changes.

"They're not repealing the whole thing," he said. "They are
altering it."

The law had the effect of cutting pay by 3 percent for about
560,000 teachers, police officers and other state and local
government employees.

Hinson and co-counsel David Godofsky displayed charts on a large
screen showing employees' retirement benefits still will increase
based on additional time of service after July 1.

Fulford, though, stepped down from the bench and pointed to
other numbers on the screen showing an employee's benefits will be
less than what they would have been without the cost-of-living
change.

One example on the chart was for plaintiff George Williams, head
custodian for the Madison County School District. His projected
retirement benefits would drop by $26,536 and his contributions
would total $5,856 by the time he retires.

"He's paying more and getting less," Fulford said. "You are
punishing him for continuing to work."

Meyer said he was encouraged by Fulford's comments.

"She obviously gets it," he said.

The defendants include Gov. Rick Scott. He chairs a board that
oversees investments for the $121.6 billion pension fund. Scott had
asked the Legislature to make employees contribute 5 percent. He
said public employees should be treated the same as private sector
workers who in most cases must contribute if they have pension
plans.

Hinson acknowledged the retirement changes were made as a
cost-cutting measure, not to beef up the pension fund. Florida's
retirement plan is rated as one of the nation's strongest. Employer
contributions were reduced by more than $1 billion and that means
employees now are paying more than half of the plan's annual cost,
Meyer said.

"I personally, your honor, am not without concern for the
employees that have been impacted by this change," Hinson told the
judge. "But what the Legislature has done is spread the impact of
a fairly significant budget reduction across an entire population
of employees."

The pension changes were less onerous than other budget-cutting
options lawmakers had considered such as pay cuts and layoff, he
said.

Meyer, though, later said the budget could have been balanced
without changing the retirement system because lawmakers socked
away $1.2 billion in reserve funds.

He told Fulford the plaintiffs are not challenging the state's
right to require employees hired after July 1 to contribute or
eliminate the cost-of-living adjustments when they retire.

"But the state got greedy," Meyer said. "The state said,
`We're going to forget the contract and we're going to dip into
employees' pockets."'

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TALLAHASSEE 10/26/2011 -- The hearing on Wednesday is expected to just be the first step on a path leading to the Florida Supreme Court.

The Florida Education Association and other unions contend the law is unconstitutional. They say it violates public employees' contract, property and collective bargaining rights.

Defendants in the suit include Gov. Rick Scott. He chairs a board that oversees investments for the $121.6 billion Florida Retirement System.

Scott had asked the Legislature to make employees contribute 5 percent, but lawmakers approved only 3 percent.

Unions say it also amounts to a pay cut for teachers, state and county workers and some city employees.


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