AFL-CIO Questions Pension Reform

By: Kathleen Haugney, The News Service of Florida Email
By: Kathleen Haugney, The News Service of Florida Email

Tallahassee, FL - Florida lawmakers are intent on revamping state and municipal pension systems hoping for millions of dollars in savings, but some union members say they aren’t sure it’s a system needing a fix.

The Florida AFL-CIO, at a press conference Monday, cautioned that talk that states and cities would go bankrupt funding pensions was a “myth” and that hundreds of thousands of families could be affected by alterations.

“There are whispers of radically altering a system that evidence shows is actually functioning quite well,” said AFL-CIO lobbyist Rich Templin.

The state’s $124 billion Florida Retirement System is one of seven state pensions in the country that does not require employee pension contributions and has over the years been either fully funded or nearly fully funded, even as the state and national economy tanked.

But lawmakers and Gov. Rick Scott have questioned the pension’s future viability and promised to look at a variety of reform options that could save the state and local governments money.

A January 2010 look at the pension system by the Legislature’s Office of Program Policy Analysis and Government Accountability found that if lawmakers changed the FRS to a system where employees contributed 5 percent of their salaries, the state could save more than $1.3 billion. That’s attractive to a Legislature looking for change underneath the seat cushions as it tries to close a $3.5 billion budget shortfall and cut taxes, as Scott has proposed to do.

Scott promised to lower taxes to an average of $4.29 per $1,000 in assessed property values, a plan that would pull $1.4 billion from the state coffers that now go to public school budgets.

The Senate has begun to hold committee meetings on potential legislation that would make changes to the fund.

“Reform is coming,” said Sen. Jeremy Ring, D-Margate. “Now, in terms of what reform looks like, that remains to be seen.”

Ring held his first committee meeting on pension reform last month and is slated to hold another one this week. He hopes to produce a bill by February, but is still developing a plan and waiting for reports from various stakeholders before he releases any formal draft.

“Obvious things we’ll be looking at are contributions, defined contributions, multipliers…All the obvious things, we’ll be looking at,” he said.

Ray Edmonson, the chief executive officer of the Florida Public Pension Trustees Association, speaking to reporters at the AFL-CIO press conference, acknowledged that sometimes abuse of pension systems does occur, such as in cases where someone retires from a state job and draws a pension, but then finds a new job and simultaneously draws a salary. But, he said, all of these agreements have been negotiated between employees and a governing body.

Edmonson’s main concern, he said, was that the state or local governments fund what they are promising to in the pension agreement. And they are, he added.

“They are reforming something that’s not broken,” he said, referring to the Legislature.

While Scott has said he intends for the Legislature to make changes to the pension system, he has been vague in what he’d like to see done. He has said, however, that he wants changes to affect new employees going forward, and not those already in the pension system.

Ring disagreed with Edmonson’s and the AFL-CIO’s contention that the system was not broken. Though he acknowledged that he wasn’t worried about the state retirement system going broke any time soon, he said he is concerned about municipal retirement systems.

The Florida League of Cities and the Florida Association of Counties presented information at Ring’s committee meeting in December and made clear they don’t want a situation where the state government turns to local officials for more dollars. Representatives of several unions, including fire, police and teachers unions, have been invited to speak to Ring and other lawmakers on the Senate Governmental Oversight and Accountability Committee.

Dennis MacKee, a spokesman for the State Board of Administration, which manages the state pension fund, said lawmakers have not had discussions with the SBA’s investment professionals yet, and said that the board would likely not weigh in on whether lawmakers should change the system.

“At the end of the day, we’re really just the bank,” he said. “We do the investing.”

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  • by citizen Location: TLH on Jan 11, 2011 at 11:09 AM
    Gov't Motto: If it ain't broke, fix it till it is.
  • by Anonymous on Jan 11, 2011 at 08:22 AM
    Jerry, You are absolutely correct. There are many state employees who chose to work for less money, but with more benefits and a more secure job. The job security was taken away (mostly) when Bush was Governor. Other benefits are slowly being eroded away and soon there will be nothing to keep the good (hard working) employees.
  • by Jerry Location: Tallahassee on Jan 11, 2011 at 06:49 AM
    The obvious first place for retirement reform would be at the top! Let's start with deleting a badly broken system of legislators and senators drawing a check for life after only 4 years of "service". Now that is broken, I don't care who you are!!! State employees earn salaries a fraction of what the private sector pays for the same job. The only draw to a state job is the benefits, when they are gone, so will the better quality of employees!
  • by Anonymous on Jan 11, 2011 at 06:31 AM
    It sounds like the Union is wanting the status Quoe by saying that all is good and just peachy. But if it nearly fully funded then that funding should be throttled back so other ares can be funded a bit better.
  • by jusayin on Jan 11, 2011 at 05:31 AM
    The AFL-CIO only helps SOME state workers, it is not a level playing field. I used to work for the state a number of years,,,,not everyone is a good worker that actually earns their money. ALOT of lard bricks
  • by zzzzz Location: florida on Jan 11, 2011 at 04:36 AM
    Scott and the Legislature want state workers to pay into the pension fund so the citizens/tax payers don't pay for all of it. Well excuse me! I am a citizen and a tax payer AND a state worker which means that I already pay into MY pension fund. It also means that I pay part of MY OWN SALARY with the taxes I pay. Get real guys.
  • by Quest Location: Everywhere on Jan 10, 2011 at 08:41 PM
    Has anyone thought about the money that is paid into the account that is never collected by the dedicated unappreciated state worker? For instance, the money that is put in the retirement system and the poor worker works for 20 to 30 years to die without collecting a penny. If they are unmarried and have no children under the age of 18, the state absorbs the money in the pension fund. What about the people that this money is paid in on but they leave state employment before being vested. If you want to change it, change the vestment back to 10 years of employment or you are not eligible! Less money to be paid out but then you know that the employee is in for the long haul and doesn't quit providing a service when they have not had a cost of living adjustment in over 5 years. The economy has hit everyone hard, but imagine not having a raise in that long and never getting a raise above the minimum starting salary for new employees. Loyal state workers are not cherished.
  • by Anonymous on Jan 10, 2011 at 07:11 PM
    So the Legislature want to be like the US House & Senate,,,pass a vague law so they can access the millions that are sitting there earning interest for the fund so the politicians can 'spend it' on pet projects or even fund the voucher program. It sounds as if this is one of the few pension plans in the nation that is solvent and properly funded and the conservatives can`t stand that this money will go to 'poor working folks'. The question to the public and these retirees is do you want them to handle this like they have the state budget for the past 12 years? Maybe the Legislature will see to it that it too will become a deficit value.
  • by Betsy Location: Orlando, FL on Jan 10, 2011 at 06:30 PM
    Scott has one interest in the Florida employee's pension fund that is growing larger and larger so that he can justify taking pension money out to fund his friends business ventures in the state. Any use of pension monies for economic development should be prohibited, as should the risky hedge fund investments that Ash Williams has been making with his "friends."
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