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Pension Bills Now Coming Together

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Florida Capitol Complex (Source: dms.myflorida.com)

Florida Capitol Complex (Source: dms.myflorida.com)

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TALLAHASSEE (CBSMiami/NSF) – Changes to retirement plans covering hundreds of thousands of public employees started coming together Thursday on both sides of the Capitol, raising the prospects of success on long-stymied issues.

But the receptions for the two plans were wildly different. While unions and cities backed an overhaul of the pensions for local police and firefighters, a proposed revamp of the Florida Retirement System used by many other public employees continued to cause clashes between Republicans on one side and organized labor and its Democratic supporters on the other.

The Senate Appropriations Committee unanimously approved the measure dealing with local pensions (SB 246) late Thursday, ending years of conflict over how to use insurance premium taxes that fund the plans for hundreds of cities.

Essentially, the new plan would repeal restrictions in state law on how the premium taxes are spent, so long as local governments and unions can come to agreement. If there is no agreement, the taxes would be sifted through a formula detailing how much should be spent on existing benefits and how much should be given to workers in a separate retirement account.

“What we’re trying to achieve here is to extract ourselves from this, and allow the parties locally to be able to use the premium tax revenues that they’re receiving in the manner that they negotiate,” said Sen. Rob Bradley, a Fleming Island Republican who helped craft a compromise.

Bradley and Senate Governmental Oversight and Accountability Chairman Jeremy Ring, D-Margate, have worked since the 2013 session to come up with a bill acceptable to both sides after the Department of Management Services reinterpreted a state law dealing with how much of any growth in premium taxes must go to new benefits.

Cities didn’t want to back off from the so-called “Naples letter,” which gave them a much freer hand in spending the funds. But unions resisted the new interpretation, and there were fears that the letter wouldn’t stand up in court.

Both sides said Thursday they support the new legislation, which is also expected to be included in a House measure that will be considered Friday by the State Affairs Committee.

“This is a good compromise,” said Matt Puckett, executive director of the Florida Police Benevolent Association. “It’s been a long time coming.”

Meanwhile, House and Senate committee both moved forward with changes to the Florida Retirement System on a pair of nearly party-line votes. That plan covers groups including teachers and employees of state agencies.

The bills would stop placing new workers who don’t choose a retirement option into the traditional pension plan. Instead, it would place those employees in a 401(k)-style investment plan unless they choose the pension. Both proposals would also increase the vesting period for the plan from eight years to 10.

The Senate plan would also allow workers who join the investment plan to pay just 2 percent of their income toward their retirement, instead of 3 percent in the traditional pension plan.

FRS officials said Thursday that they estimate the overhaul would dramatically increase the number of workers in the investment plan — boosting its share of employees from about a quarter of the plan’s members today to half of workers in the FRS, or perhaps more.

The Senate measure passed the Senate Governmental Oversight and Accountability Committee by a 7-2 margin, with Ring joining the panel’s Republicans in support. It now goes to the Senate Appropriations Committee.

The vote in the House Appropriations Committee was 16-10 along party lines. That measure (HB 7173) is ready to go to the floor.

Republicans say the new approach will save the state money and help shore up a plan that is not fully funded.

“We have made a lot of promises. … This is about saving the plan for those that are in the system,” said Sen. Wilton Simpson, a Trilby Republican who sponsored his chamber’s version of the bill (SB 1114).

But Democrats and unions fear that the change will actually further destabilize the pension plan, because fewer workers will be paying into it, and that the overhaul is the first step toward even more dramatic changes.

“This door is creaking open, and what’s on the other side?” said Rep. Alan Williams, D-Tallahassee. “Many of the state employees I represent are concerned about that.”

“The News Service of Florida’s Brandon Larrabee contributed to this report.”

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