Scott Wants Sweeping Overhaul of Pension Plan

By: John Kennedy, The News Service of Florida Email
By: John Kennedy, The News Service of Florida Email

Tallahassee, FL - Gov. Rick Scott proposed wide-ranging changes to the state’s pension plan Tuesday, demanding 5 percent contributions from 655,000 public employees and requiring all new hires to enroll in investment plans.

Scott, who said his plan would save Florida taxpayers $2.8 billion over the next two years, also would close the state’s Deferred Retirement Option Program (DROP) to new participants in July, a move that would likely push more senior government workers into the plan before the deadline, signaling their eventual retirement.

Scott has said he wants to reduce the state’s workforce by 5 percent this year.

“I want to make sure that the pension plan is something that anyone who’s relying on it knows that the money is going to be there,” Scott said. “Step two, I want to make sure that taxpayers are treated fairly. And I want to treat employees fairly.

“In the private sector, if you have a plan you generally participate,” he added.


State analysts have said the 5 percent contribution rate proposed by Scott would save $1.3 billion the first year – an amount which closely corresponds with a $1.4 billion reduction in property taxes – a campaign pledge Scott has said he will meet, despite drawing early oppositiong from fellow Republicans in the Legislature.

When asked Tuesday, however, if the two issues are linked, Scott had a one-word reply:

“No,” the governor said.

School board employees form the largest share of Florida Retirement System participants, records show.

But the wider pool of government workers affected by Scott’s contribution plan could help the governor, politically. In applying the hit to a broad group of employees, it could blunt criticism that the move unfairly targets state workers, who haven’t drawn an across-the-board pay raise since October 2006.

Teachers, though, haven’t fared much better, said Mark Pudlow, spokesman for the Florida Education Association, which endorsed Scott opponent, Democrat Alex Sink, in last fall’s governor’s race.

“Pay has been stagnant,” Pudlow said of teachers. “But if we’re going to talk about equity – making employees contribute like those in most other states – what about equity in salaries and pension benefits? Florida has been below most states in each.”

Doug Martin, spokesman for the American Federation of State, County and Municipal Employees (AFSCME), said the most jarring element of Scott’s plan is his proposal to close the traditional Florida Retirement System pension plan to new employees on July 1 – forcing new hires to join defined contribution plans similar to private sector 401 (k)s.

“You will wind up with a dwindling number of active employees who pay for an increasing number of retirees,” Martin said. “Employees will have to continue to contribute more or you will destabilize the system.”

Sen. Jeremy Ring, D-Margate, chairman of the Government Oversight and Accountability Committee, said lawmakers are also considering an FRS contribution plan. But the level will not be set until budget talks are further along, he said.

“Directionally, a few of the areas where he’s going, are also where we’ve been,” Ring said. “But we haven’t talked about getting rid of DROP. He may be a little more aggressive than what we’re looking at.”

Scott outlined his plan during a Tuesday visit to Arthrex, Inc., an orthopedic equipment engineering company in his Naples hometown. The location was intended to draw parallels between government employees and private industry.

Among other changes he proposed was ending an annual 3 percent cost of living adjustment on retirement benefits on service after July 1, leaving current retirees unaffected.

In another recommended change, Scott also takes on the annual accrual rate. When combined with an employee’s years of service – the accrual rate is a multiplier for calculating benefits. Scott would hold that rate at 1.6 percent for most employees, although senior management, judges and elected officials would be reduced from current levels ranging from 2 percent to 3.3 percent.

Scott also proposed cutting special risk class members – mostly police and firefighters – to 2 percent, from their current 3 percent level. The state’s largest law enforcement union, the Florida Police Benevolent Association, also backed Sink in last fall’s governor’s race.

“I think the police and fire unions will have a real hard time swallowing that,” Ring said of the reduction.

Sen. Don Gaetz, R-Niceville, part of the Senate’s leadership team, said Scott’s proposal largely expands on pitches he made during his campaign for governor.

“He ran on cutting spending and increasing jobs,” Gaetz said. “Pay and benefits are a big area of state spending.”

But Rep. Alan Williams, D-Tallahassee, said Scott’s proposal amounts to a 5 percent “tax” on state workers.

“I fail to see how the governor’s proposal concerning the Florida Retirement System can improve the economy,” Williams said.

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  • by molly Location: orlando on Feb 14, 2011 at 05:42 PM
    Governor Scott you are doing the right thing..State employees should save for their retirement the same way I have to. I have been with the same company for 33 yrs,and I don't get to double dip....
  • by Fred Crump Location: Navarre Fl on Feb 8, 2011 at 07:26 AM
    I totally disagree with Gov. Scott getting rid of the drop program for teachers as of July 2011.teachers have planned their retirement based on drop>I know several teachers in their 3rd year>What does this mean>Will they have to retire in July and miss the last two years of drop. This would make a considerable shortfall in their retirement plans> All teachers presently in drop should have the opportunity to fulfill their retirement plans> I hope Scott gives this more consideration!!!!!
  • by Joe on Feb 3, 2011 at 07:05 PM
    Like to see Rick Scott make it on 30,000 a year if that much.. Oh I'm sorry he just spent 85 mil to be appointed KING.. he thinks.. maybe the legislature will show sympathy and pass his God annoited Budget Cuts.. so that his kingdom will Bow to him everytime he shaves his head.. oh yea.. i hope he loses everything and has to rely on Medicare.. Like that will ever happen for he has paid for his kingdom.. then there is the answering to God thing.. MAYBE HE CAN PAY HIM OFF ALSO>> in gift cards perhaps..
  • by Lee on Feb 3, 2011 at 05:26 PM
    RS is rich. He doesn't worry about food, medical, housing. 5% is nothing to him. He doesn't get it. I'd like to see him try to live on what I bring home. 5% is a huge deal to alot of gov employees because of all the other cuts we have been dealt in the last 5 years. He wants to be a big "hero". If he wants 5%, he needs to reverse some of the other hits we've endured so we can afford it. How can you save for the future if you can't make it month by month. Hello!! The cost of living has dramatically climbed these past few years.
  • by Lee on Feb 3, 2011 at 05:04 PM
    I am a gov employee. I don't think I'm better than the "private" workers. But the state has already double slammed gov workers. Furlough days (unpaid days) and no pay raises in like forever. Higher ins premiums. Noone has 5% more to give. I would not mind if I had to start investing for my retirement but I can't take another slam in my take home pay. Make the "private" workers start giving 5%. They won't like it anymore than me to be told what to give. Or let the "private" workers have some benefits taken away that was theirs when they took the job. They won't be so happy about that either. The amount gov employees contribute needs to be left up to them and what they can afford.
  • by Lee on Feb 3, 2011 at 04:55 PM
    Ok, I am a gov employee. No pay raises in 3 years, have to take 11 unpaid days off a year and my insurance premium has risen the last 2 years. My pay is 8 years back in time. I do not have 5% more to give. If RS wants to cut down on my retirement I guess he can but I don't see how he can force someone to invest 5%. He isn't going after the private workforce for a forced 5% investment. Gov employees are not being treated as FL residents. Whats good for the goose is good for the gander. Every worker in FL should be forced to invest 5% of their income if it passes for gov employees. The economy is so bad right now most won't be able to make ends meet.
  • by john smith Location: boca raton on Feb 3, 2011 at 02:33 PM
    Dont worry, state employees will get a raise when they raise minumim wage next year.
  • by leon Location: TLH on Feb 3, 2011 at 11:41 AM
    GV: Don't gloat. If Tally catches the flu, So. Georgia gets pneumonia.
  • by GV Location: Ga on Feb 3, 2011 at 11:16 AM
    upset,the cost of living has gone up for everybody,and thousands of people have had to get second jobs.
  • by GV Location: Ga on Feb 3, 2011 at 11:14 AM
    Anonymous,let me explain this again.This is a free country still,so if you don't like your job,then you don't have to work there.
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