Amendments to SB 1130 FRS Reform

The biggest change as we see it would indicate the amended version will allow for up to 500 hours of overtime to be used in the computation of the Average Final Compensation

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Today the Florida Senate returned a “Strike-All” Amendment to Senate Bill 1130 which is meant to reform the Florida Retirement System.  The purpose of the “Strike-All” was to amend the language and stipulations of the original bill, filed by Senator Jeremy Ring.  There were also 5 additional amendments proposed changing other aspects of the proposal.

  • The biggest change, as we read it, would indicate the amended version will allow for up to 500 hours of accumulated leave payments to be used in the computation of the Average Final Compensation.  (lines 208-248, and 274-308).  And further appears that for service prior to July 1, 2011 overtime is included.

This seems to be a significant compromise to the original proposal, but excludes overtime after July 1.  It does not mitigate the fact that overtime is time worked for compensation earned, and therefore, as compensation, should be used for the AFC calculation.

  • Amendment 581812 to SB 1130 appears to stipulate that “employee retirement contributions for any member of the Regular Class or Special Risk Class may not exceed 2% of such member’s annual state compensation.  This line amends and addends the language mandating employee contributions.

We see this as meaning the employee contributions cannot EXCEED 2% of compensation, and allows room that the contribution may be less.

  • Amendment 641980 of SB 1130 looks to raise the vesting in the Pension Plan from 6 years to 8 years, but appears to allow for “grandfathering” in all those who would have been vested under the old law at as of July 1, 2011.

It would appear this is a compromise between the current 6 years, and Governor Scott’s proposal for 10 years for vesting.

The other pertinent points would remain basically the same as those originally proposed in Florida Senate Bill 1130, but the bill is still in the committee with no votes yet taken.  We consider it a battle victory for members of the Florida Retirement System who have called and written their Senators and made their feelings know.  Senator Ring acknowledged the high number of calls he and other legislators have received.  The war is still on.  Keep manning the phones!

  • bOBBE

    It looks like the 500 hour thing is NOT OT but payment for Annual Leave.

    ALL OT worked prior to July 1, 2011 is included in the “AFC” (LINE 209 -0211)

    After July 1, 2011 is a different story.

  • http://www.floridaretirementsystem.info FRS Options

    Thank You. I greivous error and has been corrected.

  • D Car;pcl

    When I originally hired on with Dade County (yes, it was Dade County then) in 1974, the employee and county split the the retirement contribution. Sorry, I don’t remember the percentage then – too many years ago! While I would prefer 0%, I think I can live with 2% for the remainder of my career. And, adding leave time (can’t figure out how OT could be added in-but if it is, I’ll be looking for more OT) to the final compensation will be nice. It might not make much difference, but it will make a difference. I also believe vesting used to be 10 years. I know I was well past vesting when it changed to six. Grandfathering is would be the right thing to do. Another option is to make 10 years to vest starting with all new hires after July 1. I can live with these changes.

  • Hbrook76

    4% contribution max for elected officials and senior management classes. Which would be OK except that the Senior Management class includes prosecutors and asst. PDs, many of whom make under $50K a year and often have huge student loan obligations to boot. There should be language included to protect those folks from being grouped in with the other members of the Senior Management class that make six figures.
    Also, there is an amendment saying that employee contributions can only go towards paying unfunded liabilities of the FRS. So my question is, if the FRS is fully funded (as it appears to be as we speak) are there then NO employee contributions?
    Also do they use the actuarial study from July 1, 2010 to detrmine any unfunded liabilities (when FRS was about 87.9% funded) or more current figures that have it fully funded???

  • Hbrook76

    Another question for clarification’s sake.

    I’m a current FRS member with about 3 years in. Do I vest in 6 years or 8??

  • http://www.floridaretirementsystem.info FRS Options

    A few observations. The 4% is a max. as we read it, so there seems to be room for less or graduated levels.

    We are uncertain about the language in Amendment 204962, but would be hesitant to interpret as NO employee contributions. The remaining language of SB1130 is pretty clear there WILL BE contributions. The amendment is in relation to the original language of Fl. Statute 121.011, section g, (which precedes the lines cited in the amendment) and has to do with employees terminated from FRS member employment and potential forfeiture of benefits. We would guess it means they will only be forfeited if there is unfunded liabilities in that plan. It seems to only deal with those “fired”.

    Actuarial studies are done each year, and the statutes require FRS to make contributions that would satisfy actuarial funding. This years contributions should be relative to the position last year, and so on. Keep in mind unfunded amounts are actuarially determined over a 30 year, forward looking, period, and not intended to be made up all at once (as the media and politicians would have you believe).

  • http://www.floridaretirementsystem.info FRS Options

    As we read it you would vest for the Pension Plan in 8, as you will not be vested prior to the July 1 deadline. If you opt for the Investment Plan you would be immediately vested for your employee contributions, and fully vested for your employer contributions after 5 years.

  • http://www.floridaretirementsystem.info FRS Options

    In the original text of SB 1130, the lines are 420 to 445, the amendment addresses it at lines 264 through 305.

  • JD

    A little off topic, but does the language SB1128 apply to city pension programs that are independent and not part of FRS? That’s how it reads to me, but I can’t fathom that the state would be able control the terms of individual city pensions. Or does SB1128 apply only to cities and counties that are FRS participants?

  • http://www.floridaretirementsystem.info FRS Options

    As we interpret 1128, it only pertains to non-FRS benefits. I am not familiar with the non-FRS programs. Sorry…

  • http://www.floridaretirementsystem.info FRS Options

    You’re confused? And well you should be :) ! OK, We would surmise that since the original language of SB 1130 struck the language in lines 274 and 275, and the amendment puts it back in, the intent is to give 500 hours, and they simply missed striking line 285. I’m sure they will catch it and correct it, and clarify it later. On the other hand, if they don’t, the lawyers can have a field day doing Abbott and Costello routines with whether it is in or out. We’ll keep you posted, as it is still in committee.

  • CSI

    I am 11 months away from reaching retirement eligibility in special risk class. Am I correct in my intrepretation that OT and On-call pay would still be included in the AFC calculations for service prior to 7/1/2011?

  • http://www.floridaretirementsystem.info FRS Options

    That is how we understand it. The bill is still in committee, so is still subject to change prior to voting.

  • Jcdeputy33

    I would prefer that any employees controubtions should be for new hires only, not us old dogs who are about ready to retire

  • jm

    I know the law now, and the amendment state that annual leave will be calculated into the AFC. I am in the special risk class and planning to retire early next year. What is included as annual leave. My agency has leave itemized into annual, holiday and comp time. I would think that all would be included into the umbrela of annual leave.

  • Hbrook76

    I understand 4% is only a max, but I just have a feeling that the budget committee will take whatever they can get, so if it’s 4%, they’ll take 4%… particularly if there is a belief that Senior Management represents only the six digit guys who “ride high on the hog”, forgetting that many of the SMS guys are prosecutors and PDs making half the amount that those guys make…

  • http://www.floridaretirementsystem.info FRS Options

    To the best of my knowledge, the language doesn’t change the definition. What is unclear yet is whether you get “annual leave” or not. One line of the amendment puts it back in, and a few lines later, it says it doesn’t count!

  • http://www.floridaretirementsystem.info FRS Options

    It is interesting that they lumped Senior Management in with Elected Officers.

  • Yvonne

    I must admit that I do not understand the ‘strike all’ process. With that in mind does this mean since there were no changes to the COLA in the original bill that this remains the same now?

  • http://www.floridaretirementsystem.info FRS Options

    As I see it, it allows the legislators to change any or all of a bill without the formality of a new bill. Go to this link for a better description:

    http://www.azcentral.com/arizonarepublic/local/articles/0423strike-everything0423.html?&wired

  • Igribis

    Is the DROP program still in tact?

  • http://www.floridaretirementsystem.info FRS Options

    So far!

  • dell

    Has there been any effort in committee to keep special risk contribution rate at 3%?
    Spending 8 hours per day with felons for 25 years has to be worth something.

  • http://www.floridaretirementsystem.info FRS Options

    At this point, no bill proposed has reduced it, it is still 3%. The governor wants to reduce it, but the legislators have not done it yet.

  • http://www.frsoptions.info FRS Options News

    From your mouth to the legislators ears, the 4% is for those with a base salary of $75,000 or more!

  • Anonymous

    Everybody better get on the phones this week and contact Senator Ring regarding their disapproval of his bill, SB1130, and forcing people into a defined contribution plan(DCP). A DCP will cripple the long term health and viability of the defined benefit plan causing it to become cost prohibitive for employers and it’s subsequent demiss. Do you want to run out of money later in life once your too old to go back to work? He will tell you he is fighting Gov. Scott’s devastating wishes but he and other senators are deathly afraid of not getting re-elected. They needs to here from all of the nearly 1 million FRS members!!! CALL SENATOR RING @ 954-917-1392 and or 850-487-5094. Go to flsenate.gov for info on all 39 senators. YOU MUST HELP SAVE YOURSELF AND YOUR FAMILY NOW!

  • Cthemasons

    I’m reading the bill and at line 292 it says that on or after July 1st 2011 afc does not include accumulated annual leave.

  • Cthemasons

    Have any of you considered the ammendment by Senator Fasano bar code 478338 it says “The retiree may not be reemployed with an employer participating in the Florida Retirement System” That means when your gone your gone. I dont think it will stay in, there has to be a constitutional issue as it is now. You could not retire and run for some pubic office since they(some) are covered by FRS.

  • Perry

    With 24 years of regular service (teacher) I planned on retiring in 2 more years (will be 60 this April). However, if the ACOLA is deleted along with my annual accumulated annuity and may have to pay 3%+ of retirement benefit, do you think it might be financially beneficial to retire now if the present amendments were passed into law. (assuming I live another 25 years).

  • http://www.floridaretirementsystem.info FRS Options

    That is a bit tough to decipher, One line says 500 hours, a few lines later it doesn’t count. It appears the intent might be to count 500 hours for service prior to July 1, and no accumulated leave after July 1. We’ll have to see how it ends.

  • http://www.floridaretirementsystem.info FRS Options

    We would speculate they can’t keep you from working, but they can keep you from re-entering FRS.

  • http://www.floridaretirementsystem.info FRS Options

    It doesn’t seem you will lose the benefits you have already earned, just those after July 1. If that ends up being the case, it does not seem retiring just for that reason will be financially beneficial. You won’t accrue benefits as quickly, but they will still accrue.

  • Anonymous

    Amendment 641980 appears to violate the contractual nature of employment for a person who started employment, say today. If I start employment today all the FRS paperwork available address’s a 6 year vesting period. That seems to me to be contractual. In spite of the fact that I don’t vest for 6 years the deal at the time I enter employment is a 6 year vesting. They can’t then change it to 8 years and say we can do this because you were not vested. Senator Latvala was asked by another Senator if the amendment applied to those who were not vested and Sen. Latvala said he believed it did apply to those not vested.

  • http://www.floridaretirementsystem.info FRS Options

    The language is peculiar, but it appears to indicate the 8 year vesting period is only for those hired after July 1. Whether it violates the contractual nature of employment is probably not an issue, as vesting has been changed in the past. The reality is, all new employees would be in the Investment Plan, so the vesting schedule for them will be the new 5 year plan proposed in the bill. Look at the language in lines 40-42 of the Amendment.

  • Anonymous

    Contractual Obligations
    FLORIDA CONSTITUTION prohibits the passage of any law
    impairing the obligation of contracts (Art. I, s. 10, Fla.
    Const.)
    FLORIDA STATUTES provide that the rights of members of
    the Florida Retirement System are of a contractual nature,
    entered into between the member and the state, and such
    rights are legally enforceable as valid contract rights and
    may not be abridged in any way [s. 12 1.011 (3 )(d), F. S. ]
    So I would think it is an issue

  • http://www.floridaretirementsystem.info FRS Options

    I’m not a lawyer (and I don’t play one on TV) so I am remiss to attempt and interpret what qualifies as a legally binding contract, and what is simply an offer for employment. We would caution against making guesses along that line. While I have seen quite a few of our readers venture their best guesses, to date no attorney’s have ventured their best guess in any of the media representations I have seen. I would, however, speculate that you are entitled to a benefit, but would not want to make any representations of whether the employer has the right to change that benefit or the terms of employment. One has to think that as an “at will” employment state, and since the employee is not contractually bound to perform, the employer may have similar rights. Whatever the case may be, we can be certain that if the legislature passes some of these proposals, the lawyers will be front and center if they are deemed to violate constitutional rights.

  • Dabel881

    I will have 6 years in as of 8/15/2011. Does this now mean I have to work two more years to be vested?

  • Pabel881

    Would the 2% employee contribution to the retirement plan be applied pretax since we will be taxed when we draw it??

  • http://www.floridaretirementsystem.info FRS Options

    I don’t believe so. As it is proposed, you will still get your vesting in 6 years.

  • http://www.floridaretirementsystem.info FRS Options

    Yes, any contribution to a qualified retirement plan will be pre-tax.

  • http://www.floridaretirementsystem.info FRS Options

    Coming soon!