Rival pension reform bills are moving through both chambers of the Florida Legislature. The House version closes the pension plan to new employees, while the Senate version still offers two options within Florida’s Retirement System. While both bills passed out of their respective committees Thursday, the road to get to that point was vastly different.
The House version of the pension reform bill is now on its way to the House Floor. But, it’s never had the support of Democrats or any of the state employee unions.
House Bill 7011 does away with the state’s defined benefit plan, or the pension plan, the most popular retirement option for employees, and forces all new employees hired after January 1st of next year into a 401K type plan known as the investment plan.
And, during its last committee stop, the House State Affairs Committee Thursday, the bill went through another change by including a disability and death benefit. But, unlike the benefits now given out, it would only be paid out over a 20-year-period. The bill’s sponsor is Republican Representative Jason Brodeur.
“What is being proposed is a benefit 10 times that of a member’s salary. This is something that’s been never offered to the members before,” said Brodeur.
The change in death benefits was a deal breaker for unions and lawmakers, including Republicans. Still, despite the change, many Democratic lawmakers and as many as 65 people opposed the bill.
“We’ve gone from being like public servants to public enemies all over night,” said Paul Brewer.
Brewer is one state worker who provided emotional testimony throughout the meeting. He’s been working for the state for the past 23 years, but he says he’s finally fed up with all the changes to the state’s pension system.
“I work at the Department of Transportation, matter of fact. As a current, I consider myself underpaid, I’m frustrated, and I have low morale. I think it’s a good time to tell you that in two weeks, I’m retiring, and I’m happy about that," remarked Brewer.
"My pension is only going to be about $800 a month, but because of those factors of frustration, I’ve had it with the whole system. I’m ready to get out, and you’ll probably lose a lot of other employees like that too.”
But, some like Republican Representative Ritch Workman, who’s the architect of the three-percent contribution law, defended the proposal with some emotional testimony of his own.
“Over the past two decades, hundreds of thousands of private sector employees, like my dad, received a certified letter from their employer that said ‘the defined benefit plan you’ve been in for 20 years doesn’t exist. Here are the terms of your 401K! Congratulations!’ We’re not doing that. We’re not breaking a promise to any of our employees,” said Workman.
Meanwhile, Democratic Representative Jim Waldman thinks there’s just so many things that don’t add up with the bill. He says despite what proponents say, there’s nothing that really shows that taxpayers will be on the hook for $500 million over the next 28 years if this bill doesn’t become law.
He says even with many unanswered questions, it’s already heading straight to the floor. He also pointed to the Milliman Study, the analysis commissioned by the House, to look into the financial impact.
“Even the writer questions whether there will be savings. We have nothing. We’re also missing what is going to be the protection for the governmental workers for their futures. And, lastly, what’s absent here is the showing that there’s any benefit for the people of Florida. In fact, there’s testimony that’s it’s going to hurt them,” said Waldman.
Meanwhile, unlike the House’s two-hour meeting, a Senate panel took about 15 minutes to tackle a pension reform bill. It’s a proposal that has bi-partisan support as well as the support of employee unions:
“I just came from the House and I’m still a little shell-shocked from what goes on over there on FRS reform,” said Gary Rainey, President of the Florida Professional Firefighters.
“We appreciate when someone pulls out a scalpel and not a chainsaw,” added Robert Suarez, Vice President of the Florida Professional Firefighters.
“I want to thank Senator Simpson for what we feel is reasonable legislation as opposed to what is happening in the House," added Rowan Taylor of the Miami Dade Firefighters.
The sponsor of the proposal is Republican Senator Wilton Simpson. He says his bill offers a key difference than the House’s.
“I think it’s about giving people opportunities that they would choose. It offers them a choice,” said Simpson.
Unlike the House Bill, Simpson’s bill allows all new employees the option of choosing between the investment plan or the state pension plan. But, if they don’t choose one, then they will automatically be entered into the 401K type plan.
It also would change the contribution rate to 2-percent for all employees in the investment plan, but all employees in the state pension plan would continue to contribute three-percent of their pay toward retirement.
Senate Bill 1392 passed unanimously out of its first Committee, the Senate Governmental Oversight and Accountability Committee. It has two more stops before it heads to the Senate Floor.
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