TALLAHASSEE — Changes to local police and fire pension plans have widespread support from state lawmakers, but the changes aren’t necessarily being met with enthusiasm from local governments.
Naples officials have opposed the legislation, as has the Florida League of Cities, which has said the proposal (SB 172) reduces flexibility local governments have because of a 2012 Department of Management Services interpretation.
“My overall feeling is it’s a good starting point,” said Gary Price, a former Naples councilman. “It’s a place to begin a conversation.”
On Friday, the state House voted 112-4 to approve the proposal. The vote came just days after the state Senate voted unanimously to back the plan. It now heads to Gov. Rick Scott for his approval.
Police and fire pension plans are traditional defined benefit plans, which promise a fixed amount of benefits regardless of how investments perform. They are typically funded through employee contributions, as well as a state premium tax on property and casualty insurance.
Before 1999, the tax could be used however local governments saw fit to pay for police and fire pension systems. That changed when the Legislature froze how much of the premium money could be used toward pension costs. The freeze was based on the amount each agency received in 1997; any additional money had to be used to create new benefits for workers.
The proposal that is headed to the governor’s desk removes the requirement that additional dollars have to be used for extra benefits. Instead, it calls on cities and local unions to come to an agreement on how insurance premium dollars are spent. If no agreement is reached, the proposal lays out a formula for how insurance dollars can be spent.
Matt Puckett, the executive director of the Florida Police Benevolent Association, said his organization supports the changes. He said he expects the majority of the local governments and unions will reach agreement about how the dollars should be spent.
The measure might not be perfect, but he said it is a compromise that should be acceptable to all parties.
“It is a middle-of-the-road approach,” he said.
Roger Reinke, Naples assistant city manager, disagrees, saying the proposal “restricts us in our future bargaining options.”
The city has been at the center of the pension reform debate for several years, after it received an opinion from the Department of Management Services that insurance premium dollars could be used to cover minimum benefits. Once those costs were covered, additional tax dollars could go toward new benefits.
City officials have said that letter allowed the city to negotiate pension packages similar to the Florida Retirement System.
Reinke said the premium tax dollars don’t cover the cost of minimum benefits and adding in the requirement that both the city and the union have to agree on how to use the premium tax dollars could complicate the bargaining process.
Local governments across the state have used the Naples letter as a negotiating tool in recent years, and the proposed legislation allows those entities to use the interpretation until Oct. 1, 2018, or until the next collective bargaining agreement is negotiated.
In Naples, the contract with the city’s firefighters ends in April 2017; the contract with its police ends in September 2017.
Reinke said he does not know what the city’s next step will be, but local lawmakers will be watching to see whether Scott signs the legislation. If he does, Reinke said the city will work with legal counsel to make sure the city complies.
Price said while the measure might not be everything cities have hoped for, he is hopeful it will start a larger conversation at the local level about the future of pensions.
“These bills basically say, ‘Hey, we at the state level are concerned.’ They’re looking into the future, and they’re not going to ignore the fact that there are cities in trouble and they’re not going to sit idly by,” said Price, who has been active in pension reform discussions in the past. “I think that kind of healthy dialogue and open dialogue is really good.”
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