Renewed House Pension Reform Effort Mixed Bag For State Employee Unions

Feb 10, 2016

Rep. Matt Caldwell (R-North Fort Myers) is spearheading this year's pension reform proposal.
Credit Florida Channel

A renewed effort in the House to make changes to Florida’s Retirement System is getting some mixed reviews among public employee unions.

Pension reform has always been a top priority for House Speaker Steve Crisafulli. But, as in years past, an attempt to overhaul the state retirement system failed last session, in part because it didn’t have the votes needed to pass in the Senate. But, this year, Crisafulli says he’s not giving up.

“Obviously, the House has a position,” he said, back in December. “We’ve had a position on this, but for us, it’s about finding where we can work with the Senate to find common ground...You know, I think in the past we’ve taken big bites of the apple.”

Past Pension reform proposals have included eliminating the traditional pension plan, a popular retirement option known as the defined benefit plan.

Another idea also made the other retirement option the default for new hires. It’s known as the 401K style investment plan, or the defined contribution plan.

That’s included in a similar proposal spearheaded by Rep. Matt Caldwell (R-North Fort Myers), as chair of the House State Affairs Committee—who’s leading Crisafulli’s charge on pension reform.

“I’m sure you have heard or seen several different ideas as it relates to FRS and pensions making its way through the Senate in an effort to meet them on the issues that I believe that we can find agreement upon, you have the PCB [Proposed Committee Bill] in front of you that does three things,” he said, during Wednesday's committee hearing.

This year’s proposal also allows those who have left state employment to be able to renew their membership into the investment plan if they re-employed with the state. That’s currently not the case for either of the retirement options.

Caldwell says the proposal also creates new survivor benefits for members of the investment plan, who are killed in the line of duty. Today, that’s only offered in the pension plan.

“Today, if you were in the investment plan and you died in the line of duty, the surviving beneficiary would only get the value of whatever is in their investment portfolio,” he stated. “So, yes, if they worked a short time, there obviously would not be very much in that account. This is the most significant change, I think, in the bill. That is everyone who is in the investment plan would receive the same death benefit as you receive as if you were in the pension plan.”

“I think the survivor benefit is long overdue,” said Matt Puckett. “It breaks my heart. I actually know of a few folks that this is going to be a direct benefit to, and to be in opposition to the entire package is difficult for our organization.”

Puckett with the Florida Police Benevolent Association says while he likes most of the bill, switching the default from the pension plan to the investment plan is a major concern.

James Tolley representing the Florida Professional Firefighters had similar issues.

“The amount of money coming in is less…someone who defaults into the investment plan that needs to make a change,” he said. “This default is going to hurt a lot more, than defaulting in the pension plan and making the change the other way, but we do stand ready to work with you.”

Rich Templin with AFL-CIO also had issues with that particular provision, calling the pension plan the more secure and superior option. Plus, he says it will also cost the state more money, according to a study commissioned by lawmakers last year.

“Last year, when this concept was put on the table, Milliman did an actuarial analysis and the analysis clearly states that costs to the state will increase by making this default change,” said Templin.

Gail Marie Perry representing Communication Workers of America says she’s had a negative experience with the investment plan.

“During the 2000 period, in 2007, I myself one of my 401Ks, I lost 60 percent of my savings,” she recalled. “I could have retired. Oh, and then by 2007, I gained it all back. That’s what they say the stock market does! It helps you get it back. You lose. You win. But, then in 2007, I lost 40 percent of my pension again.”

But, Rep. Michael Bileca (R-Miami) had a different one.

“I do speak from a bit of personal experience with both my parents being teachers,” he said. “One was in an investment plan, one was in a traditional pension plan, and my Mom that’s now retired living off of it—the investments that were under my father was a teacher under the investment plan—far outstrip over time any of the benefits in the defined benefit.”

So, Bileca says he applauds Caldwell’s efforts.

“Allowing to come back to the investment plan is the first one,” she added. “The second one is creating the death benefit for the contribution plan, members. I’m really grateful that they made it into the committee bill. They are important provisions and meaningful provisions. I mean the third that is generating some angst, I really do think on the grand spectrum of pension reform this is a 2 or a 3. It’s providing a default to the contribution plan, it’s not forcing people into the contribution plan.”

But, Rep. Dwayne Taylor (D-Daytona Beach) disagrees.

“Representative Bileca, I know it may seem mild, but I liken this to the jelly donut,” he said. “It looks really good. It looks really scrumptious, and you put that poison pill on the inside of that, and it looks like it’s something that you can eat, it’s not going to do any harm to you, but it does.”

And, he says he intends to work with Caldwell moving forward to fix the default provision.

Still, the bill passed the House State Affairs Committee 10-8 with some Republicans joining Democrats in opposition.

For more news updates, follow Sascha Cordner on Twitter: @SaschaCordner.