Eliminating the state’s pension plan option for new state employees is a priority of House Speaker Will Weatherford, and a bill doing just that went one step closer to coming up for a Floor vote. Florida lawmakers are expected to vote on the bill Friday. And, on Thursday, the bill started its vetting process on the House floor with many Democrats already showing their opposition to the bill.
The vetting process of House Bill 7011 started off with the bill’s sponsor Republican Representative Jason Brodeur repeating his rationale for the bill.
“Members, this bill greatly reduces the state’s risks. It saves the taxpayers a great deal of money. It keeps every single promise that we made to all our existing FRS [Florida Retirement System] employees, and it provides robust benefits to all of our state workers,” said Brodeur.
The bill essentially forces new employees hired after January 1st of next year to be placed into the defined contribution plan known as the investment plan, a 401K style retirement option within Florida’s Retirement System. New hires would no longer have the choice to go into the state’s defined benefit retirement plan, also known as the state’s pension plan—which has been more popular with state workers.
Thursday, lawmakers spent close to two hours asking Brodeur many questions regarding the bill, usually trying to phrase it in ways that bordered on debate, which is reserved for Friday.
Questions ranged from the fiscal impact of the bill to how it will affect current and future employees to asking the sponsor what the bill essentially does.
Some, like Democratic Representative Mark Danish of Tampa asked the question that opponents often ask—if the state is ranked in the top ten in the nation as a stable pension plan, why does the Legislature have to proceed with the bill?
“Is it true that being 87-percent funded, this makes it one of the stable funding plans in the nation,” asked Danish.
“It’s a rather dubious distinction to be considered one of the best when you have a 19.2 billion dollar liability and you owe $500 million dollars a year above your normal cost. I don’t want to be winning that," replied Brodeur.
Representative Michelle Rehwinkel-Vasilinda was one of the Democrats not satisfied with the answer, and asked the question again. This time, Brodeur countered with a response that drew applause from his Republican colleagues.
“It is has been touted as one of the best in the country, if not the world, can you tell us why that is," asked Rehwinkel-Vasilinda.
“It’s because our Legislature has the courage to make the right decisions before we go into a crisis mode," Brodeur replied, as his Republican colleagues cheered.
Still, backers of the bill, like Republican Representative Mike Fasano of New Port Richey asked questions that proponents hoped would show the benefits of the bill, drawing contrasts between the retirement plans of today and the plan they’re hoping to put in place:
"If they're in the defined benefit plan, and they were to pass away, whatever may have been invested in there is gone, is totally gone. However, if that same person is in the defined contribution plan, let's say they have no spouse, they were to pass away, what would happen to those investments in the defined contribution plan," asked Fasano.
"Thank you for asking. If they were not vested yet, and it was under a year, the employee contributions that had been made up to that point would then go to their beneficiary or beneficiaries. If they were vested, then all of both the employee and employer contributions, that they had accrued up to that point, would then go to their beneficiary," replied Brodeur.
House Bill 7011 was rolled over to third reading, and is expected to come up for a vote Friday, where it will also be debated by members of the Florida House.
Meanwhile, a Senate bill that keeps both retirement options, but would make the investment plan a default option for new employees is on its way to its last stop before it heads to the Senate Floor. Some Republicans in its previous stop in the Senate Community Affairs Committee say Senators should stand firm on their position before going ahead with the House’s pension reform plan.
For more news updates, follow Sascha Cordner on twitter @SaschaCordner.
