Pension Proposals Weeks Away

By: Michael Peltier, The News Service of Florida
By: Michael Peltier, The News Service of Florida

THE CAPITAL TALLAHASSEE, Jan. 12, 2011 --

Saying the upcoming battle over the state’s pension fund will be based on facts not emotion, a key senator said Tuesday it will be at least a month before a reform package is available for debate.

Sen. Jeremy Ring, D-Margate, and chairman of the Senate Government Oversight and Accountability Committee, told members it will be at least three weeks before actuarial studies become available regarding the $120 billion Florida Retirement System and other local governmental pension plans, many of which are becoming prohibitively expensive.

Until those numbers are analyzed, Ring said it’s premature to float any proposed legislation, which is likely to include an increase in employee contribution obligations and a possible transition from a traditional pension plan to a defined contribution, 401-K-style plan for new hires.

“We’re one of the last states in the country that doesn’t have a contribution,” Ring said. “While I think everything is on the table, I can pretty much feel confident that a core part of this discussion will be employee contributions.”

In addition to state employee contributions, the committee is also considering whether to assist cities and counties that have seen pension costs become up to 70 percent of payroll costs. Officials from Pensacola, Pembroke Pines, Jacksonville and St. Petersburg, for example, have said contracts negotiated with local employee unions by previous boards are breaking the bank.

Such financial straits have prompted a debate over whether the state should bail out local governments, which are now paying the price for generous contracts negotiated with police, firefighters and other municipal employees.

“They created the problem,” said Sen. Jim Norman, R-Tampa, a committee member who said he’d oppose any bailout measure. “They cut bad deals.”

On the statewide front, Florida is among a handful of states that does not require employees to contribute to their own retirement accounts. Backers of reform say state employees should mirror those in the private sector, where most employees fund portions of their pensions.

The upcoming fight pits cities and counties against the unions that represent employees. Earlier in the week, the AFL-CIO released its own study saying that pension benefits are not extravagant and account for a relatively small portion of most cities’ overall budgets.

“Our retirement system remains one of the strongest in the nation,” said Rich Templin a lobbyist for the Florida AFL-CIO. “There may be some isolated problems in municipalities, but there is certainly no systemic problem statewide… How do you reform something that is working quite well?”

Other groups, however, say a crisis is looming, not only in Florida but across the nation, as city governments find themselves strapped with lucrative pension systems approved by their predecessors they say they can no longer afford.

“While one might cite multiple underlying factors for underfunded pension liabilities, the bottom line is that these underfunded liabilities push the present cost of government employees into the future,” said a recent report by the Tallahassee-based James Madison Institute, a fiscally conservative think. “Any solution to the problem, therefore, must keep the cost of government employees contemporaneous with the time of their employment.”


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