Florida pension reform looms large

With a larger Republican majority, legislative leaders are expected to try again in the 2015 session to revamp the Florida retirement system.

The House will be under the speakership of Steve Crisafulli.

House Speaker Steve Crisafulli, R-Merritt Island, said Wednesday he has an interest in picking up former Speaker Will Weatherford’s effort to shift newly hired public workers into an investment-type retirement plan rather than the traditional pension fund.

As of 2013, some 621,000 public employees in Florida, with the majority working for local school systems and county governments, were in the retirement system. Some 514,000 workers were in the traditional pension plan, with some 107,000 in the 401(k)-type plan.

About one in four newly hired workers already opt for the investment plan rather than the traditional pension, which requires workers to hold their jobs for at least eight years before they become vested.

Actuaries project Florida’s pension fund can meet roughly 86 percent of its future obligations. But it has an unfunded projected liability of about $22 billion.

Lawmakers who back the pension changes have argued the unfunded liability means they must set aside each year about $500 million in state funding, which otherwise could go for schools, roads, health care or other state priorities, to offset that liability.

Opponents of pension change say Florida has a healthy fund – exceeding the 80 percent mark that most public pension funds are measured against. They also contend if more future workers opt out of the traditional pension fund, their absence will increase the unfunded liability.

But efforts to reduce the scope of the traditional pension fund remain popular among the conservative Republicans who lead the Florida Legislature.

Crisafulli said he has heard from members that they are interested in reviving a pension change bill when lawmakers convene in their annual session in March.

Weatherford had little trouble moving a pension bill through the House in the last two sessions. And now Crisafulli has an 81-member “super majority” of GOP members who are likely to back a similar measure.

Yet, House leaders still face the same obstacle that has blocked pension change in the last two years: a coalition of Democrats and Republicans in the Senate who oppose a major revision of the retirement system.

Senate President Andy Gardiner, R-Orlando, supported the prior efforts to change Florida’s pension system. But the Senate membership remains unchanged, except for the departure of Sen. John Thrasher, D-St. Augustine, who was a supporter of pension reform.

Yet knowing the Senate position may not have changed with the election year, Crisafulli said lawmakers could try to find “common ground” on the issue.

“Obviously there are always new opportunities and always new ways to potentially compromise on the issue,” Crisafulli said. “And we would have to have a conversation with the governor as well.”

Weatherford did try to find a compromise on the issue. His initial plan would have moved newly hired public workers into the investment plan. When that failed in the Senate, he came back with a bill in the 2014 session that simply would have moved new workers who did not exercise their option to use the traditional pension plan into an investment plan.

Proponents estimated that roughly half of the new workers would have ended up in the investment plan and half in the traditional pension – which over time could still represent a substantial savings for the state in retirement costs.

Crisafulli said House members are ready to try again.

“If there is not an appetite for it in the Senate then it potentially won’t happen,” Crisafulli said. “But certainly in the House we have members who are talking about it.”

And in another development, Crisafulli said he does not see a link between an effort to reform municipal pension funds for police officers and firefighters with the effort to revamp the state pension fund.

The local pension bill died in the 2014 session along with Weatherford’s state pension plan bill.

“Last year we actually had bill that probably would have gone through both chambers on local pension reform,” Crisafulli said. “That’s a separate issue as far as the FRS (Florida retirement system) deal.”

Facts about Florida’s pension fund:
• Florida has the fifth largest state retirement system in the country.
• It covers more than 1 million active workers and retirees.
• School employees, including teachers, make up 49 percent of the 621,000 active participants, followed by county workers at 23 percent and state workers at 20 percent.
• The average worker is 45 years old, has 11.5 years of public employment and makes just under $42,000 a year.

Lloyd Dunkelberger is the Htpolitics.com Capital Bureau Chief. He can be reached by email or call 850 556-3542. “”More Dunkelberger” Make sure to “Like” HT Politics on Facebook for all your breaking political news.

http://politics.heraldtribune.com/2014/11/19/florida-pension-reform-looms-large/