Florida weighs big changes to pension system

State lawmakers, Cabinet members, judges, school board members, county commissioners, sheriffs and property appraisers may not be able to join the traditional state pension plan if they are newly elected after July 2016.

That proposal is far from a reality but it is a distinct possibility as the House moves forward on a study aimed at evaluating potential changes in the $160 billion Florida Retirement System. The move to eliminate the option for a traditional pension for elected officials in the FRS is one of the proposals under review by House Speaker Steve Crisafulli, R-Merritt Island.

Crisafulli has called for a pension study that will be delivered in the first week of the 2015 session. Among the potential changes up for review:

• Ending the traditional pension benefits for the “elected officer class,” which includes elected officials in state government, county governments and school systems. The newly elected officials would receive their retirement coverage through a 401(k)-type investment that is now optional for them.

• Traditional pension benefits would also end for the FRS “senior management service class,” which includes upper-echelon state administrators as well as university and community college presidents and appointed school superintendents. Again they would receive their retirement benefits through the investment plan.

• If new public workers don’t opt to join the traditional pension plan, they would automatically be placed in the 401(k)-type investment plan. The current default for newly hired state, county and school employees is the traditional pension plan.

• Increasing the time that public workers would have to be employed before they qualify – or vest – in the traditional pension plan from eight years to 10.

Those proposals were outlined in the House State Affairs Committee this week. Rep. Matthew Caldwell, R-Lehigh Acres, who chairs the panel, said the study that will evaluate the financial impact of the changes will provide the basis for a potential bill from his committee.

The measures are similar to state pension changes advanced previously in the House. They would not impact current public workers. They are aimed at encouraging more newly hired employees to choose a 401(k)-type plan rather than the more costly traditional pension plan.

But whatever form a House pension bill takes, its passage remains in doubt in the Florida Senate, which rejected a similar measure last year and the Senate votes don’t appear to have changed.

Nonetheless, House leaders will likely continue to press their case, arguing that while Florida’s pension fund is among the most financially healthy state funds in the country – with the ability to pay 86.6 percent of its future benefits – it is still underfunded by $21.5 billion as of July 14.

State officials are obligated to set aside annual funding for that $21.5 billion “unfunded actuarial liability,” which amounted to $782 million this year. House leaders argue a less expensive retirement system would allow the state to use that money elsewhere, such as for schools or economic development programs.

Democrats remain skeptical about changing the state pension plan. Rep. Clovis Watson, D-Gainesville, said he wants to protect the ability of public workers to qualify for full pension benefits and would oppose any move to increase the contributions that workers must make for their retirement plans. Lawmakers changed the pension law in 2011, requiring public workers to contribute 3 percent of their salaries to the pension fund.

Watson said he might support a plan that would “save the state dollars” and reduce the actuarial liability, if it kept the pension benefits and did not increase the contribution rate.

http://politics.heraldtribune.com/2015/02/20/florida-weighs-big-changes-pension-system/