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Local Pension Overhaul Moving Quick, State Pension Revamp...Not So Much

Florida lawmakers are moving ahead with plans to revamp local and state pension plans. But while there’s a lot of agreement that local pensions need help—the House and Senate are split on whether to change the state retirement plan.

First—local pensions. Used predominately by police and firefighters, many municipalities have found their pension plans underwater. A recent report by the LeRoy Collins Center—suggests the problem is widespread. The Florida Chamber of Commerce cited the study in its support for a local pension reform bill. The Chamber’s David Hart says the city pensions are more than $10 billion in the red.

Last year the LeRoy Collins Institute researched our local pensions and found that 11 percent of them ranked an 'F'. 35 percent ranked a 'D'.”

The bill lawmakers are considering is the result of a negotiated compromise between the police and firefighter unions, and the cities.  But the Florida League of Cities is catching flak for backing off its compromise support over a dispute about collective bargaining. The League doesn’t wants to limit bargaining, but that’s not the position held by all of them, says Ormond Beach Deputy Mayor Bill Partington:

“Recently we have negotiated significant benefit changes which have reduced our unfunded pension liabilities, including reduced retirement age for new hires, reduced multiplier for new hires…we’ve eliminated the availability of the DROP option for new hires," he testified before the House Government Affairs Committee Wednesday.

Still, the proposal has been sailing through House and Senate committees. It appears to be on a fast-track to approval. But while local pensions are riddled with problems—that’s not the case with the  Florida Retirement System. The FRS is stable, and actuarially sound—a term that means the state state has enough money to pay out its debts should a majority of people enrolled retire at the same time.   Getting changes to the system through the legislature, is largely an uphill fight between the House and Senate.

A few years ago Governor Rick Scott was able to get a change requiring current state workers to make contributions to their retirement funds. But the house hasn’t been able to get broader changes—like eliminating the pension plan all together and moving state workers into 401-k plans entirely—approved. That’s because the Senate doesn’t like it.

 “I think the pension issue crosses party lines. We have a lot of Senators that have a lot of state employees in a lot of rural communities," said Senate President Andy Gardiner. "I don’t think the votes have changed…its been 20-20, maybe a little worse. As we’ve said we’re open to dialogue, there’s always suggestions. if the House has suggestions, we’re open to looking at.”

And the House is planning to try again. House Speaker Steve Crisafulli recently told reporters his chamber wants to consider bringing back plans transitioning away from pensions, and into defined-benefit systems, like the current state investment plan option.

“We know the average state employee only stays employed for about six years in this program. So having something they can take with them like other folks in the workforce would be something that would be appealing to me," Crisafulli said on the opening day of session.

House leaders are waiting for the results of a study on the state’s current pension system. And Democrats are already at work figuring out ways to block any changes. While the House would prefer people be taken out of the FRS, the Senate, is trying to put people back in. In 2010, the legislature approved a move keeping retirees from re-entering the state retirement plans once they draw down benefits, then return to work. That’s called double-dipping. The Senate’s proposal would allow retirees who return to state employment to enroll in the state investment plan.

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Lynn Hatter is a Florida A&M University graduate with a bachelor’s degree in journalism. Lynn has served as reporter/producer for WFSU since 2007 with education and health care issues as her key coverage areas.  She is an award-winning member of the Capital Press Corps and has participated in the NPR Kaiser Health News Reporting Partnership and NPR Education Initiative. 

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