Senate backtracks, new bill proposed!

The Senate Budget Committee introduced a new Committee Bill today, SPB 7094. The bill reworks many of the terms of SB 1130 to the detriment of current members.


The Senate Budget Committee introduced a new Committee Bill today, SPB 7094.  The bill reworks many of the terms of Senator Ring’s SB 1130 to the detriment of current members, and brings the Senate version much closer to the House version.    The committee is headed by Republican Senator J.D.  Alexander.  As we read the new proposal, which is to be heard by the Committee on Wednesday, it proposes to:

  ·         Does away with the DROP program after July 1, of 2011.  It appears to read that you must enter the DROP prior to that date in order to be eligible.  (lines 1857 through 1862)

 ·         The Investment Plan will be mandatory for ALL new hires after July 1, 2011, and will not be eligible for a Pension. (lines 888 through 896

 ·         Members will cease to accrue COLA credit after July 1, 2011.  As in HB 1405 the COLA will be calculated using service prior to July 1 as a percentage of total service multiplied by 3%.  Therefore, it appears that if you have 20 years of service prior to July 1, and 10 years after, you will be eligible for 20/30 = .67% times 3% = 2% annual COLA.  Those hired after July 1 will not be eligible for the COLA.  (lines 1944 through 1963

 ·         Average Final Compensation for service prior to July 1 will include overtime, and up to 500 hours of unused leave time.  Service after July looks like it will not include overtime, nor can you add to unused leave time. (lines 471 through 513)

 ·         The Vesting Schedule in the Investment Plan for Employer contributions is spread over 5 years, with 20% credit per year.  You would be fully vested after 5 years. (lines 3141 to 3151).

 ·         Employee Contributions will go to a flat 3% of gross compensation for all employees.  (lines 4555 to 4557)

 ·         Normal retirement age for those hired after July 1 for Special Risk will have the normal retirement age increase to age 62 or 30 years of service. (lines 536 through 542).

 This new proposal will bring the Senate version of Pension Reform closer to the House version, and therefore closer to becoming law.  In order to become law, both houses must approve an identical version.  While they are still not identical, they are working that way. 


  • FRS Options

    Assuming you have no health issues and are insurable, that is a viable option. About 50% of Pension recipients opt for Option 1, for the maximum payout.

  • FRS Options

    As it stands the service credits are unchanged.

  • Yvonne

    Thanks for your advice. It is an excellent idea. Unfortunately there is major health issue and I am uninsurable.

  • Sue Baader

    Thank you for being there to answer our questions. Excuse my ignorance but how does the state save money by stopping DROP? Isn’t this money we would have received if we physically retired anyway? I would think our employer is the only one losing money by paying our salaries for 5 years. They aren’t contibuting anymore for us once we are in DROP so I can’t understand how they save money by stopping it. I think it would cost them more because they invaribly pay whatever as we work longer because we are not able to retire. I am 60, worked 25 years and have been depending on DROP money when I turned 62 to make my retirement check stretch. Also, what year did DROP begin, someone told me 1998 but I thought it was earlier. Thanks again for your help.

  • HDH3

    I am a law enforcement officer with 23 years in the FRS pension plan, my wife is a teacher with 24 years, we have always planned on retiring with the pension plan ,but the recent events make me question this decision. If we elected the investment plan option our combined starting balance at this time would be approx. 700k. My question is this, will the current proposed changes such as reduction in cola , and our required contribution, reduce our current beggining balance if we opted for the investment plan. My concern is that if we decide to stick it out with whatever changes are passed and stay in the pension plan with a goal of working the required minimum years, that we will be giving the legislators an opportunity every year to make additional changes and reductions to our pension plans, actually making it less valuable in the long run than our current begginning balance. We are trying to decide if we should opt for the investment plan prior to the new changes coming into effect.

  • Nas4d

    I’ve been in DROP for 4 years, and entered DROP because of the rules at the time. I had no intention of retiring after the 60 months, but hoped to be able to return to work after 30 days, according to the rules. Now I would just like to void my participation in DROP, give up the modest amount of payout and be able to continue to work. I’ve been told that I am already retired, blah, blah. There seems to be some vague procedure involving Form FR-23 just prior to the retirement date. Is there a way to void DROP, unretire, or whatever it might be called?

  • FRS Options

    The actual costs are pretty complicated, but the over-all is simple. You are still being paid your salary, and your employer still pays employment taxes, plus your contribution to FRS. In addition, FRS pays you your pension, plus 6.5% (which in this environment is a pretty rich guaranteed return, the 30 year Treasury only gets 4.5%, and a 5 year T-bond only 2.22). More importantly, a pension is meant to be collected after one quits working, nor while one is still working. It is a nice perq, and was originally to keep people from retiring at 30 years – which is no longer a factor. It might help if you look at it from a non-FRS perspective, which makes it a pretty rich sounding benefit. (don’t shoot the messenger, I am just trying to answer your question).

  • FRS Options

    Mathematically, your balance should not lose value, as what you have is already earned. Employee contributions won’t change that. What will affect it going forward are potential reduced overall contributions, and any cut in the COLA will be a negative. That said, those will impede future growth only. Call me if you have questions.

  • FRS Options

    Not likely. The decision to go into the DROP is a permanent one, and the rules of re-hire are even more strict. Unfortunately, what you want to do, is the primary reason DROP is on the cut list. Fundamentally it is irrational to collect a pension and continue to work, not to mention the DROP benefit on top of that. Back when the economy was rosy, it was a nice benefit to keep people on the job, but the “double-dipping” issue raises hackles.

  • Edugator

    Hello, I understand this latest version of the bill will require state workers to contribute 3% from each paycheck into the pension system. Will the same hold true for those in the Optional Retirement System?

  • FRS Options

    Most likely.

  • Nas4d

    “the decision to go into DROP is a permanent one”, seems to infer that it’s written in stone. The RULES were not permanent, the rehire rule of 30 days was changed. The whole thing is written on paper, and could be changed if there were an ounce of fairness. I didn’t create the DROP program. Considering all the amendments to the bills being submitted, you would think a few lines to allow a DROP decision to be voided would not cost anyone anything. Or is this just a “bait and switch”?

  • FRS Options

    Well I certainly can’t and won’t argue points of law with you. I have no familiarity with the 30 days you mention, but in looking at the DROP brochure and statutes, it is pretty clearly spelled out that the decision is permanent ( page 16, The rules of re-employment are also spelled out in a very cautionary measure, and don’t appear to be related to your decision to DROP (as in the decision to DROP should not be made with the concept of coming back to work), and that it is a permanent decision to retire. I would also guess that the IRA might have some rules in regard to changing your decision, as it is an IRA ruling that allows DROP to have the rules it has. That said, I don’t see the stone, only the paper (or computer screen if you will), so do your best. I’m not sure I follow the “bait and switch” line, as the DROP info is pretty specific about NOT considering coming back to work in the decison to DROP. Good luck! Please let us know if you have any success, as I am sure other readers might like to reconsider changing their minds also.

  • FRS Options

    Here is the link for form FR-23, and for DP-ELE, It doesn’t look like either will help you much. The form you signed very clearly stipulated that you would terminate all employment with FRS employers, and further that you could NOT work for an FRS employer past the 60 month period. I hope this helps, the frustration levels are probably high enough without beating your head against the wall, or worse paying an attorney, and getting nowhere.

  • Zbar200

    I disagree with your assessment about DROP. As a scientist who has worked for Florida’s government for 30 years, the DROP money is now finally paying me the salary I deserve given the lack of raises through the years especially during the times when Florida was flush with cash. I have watched my fellow scientists, who work for the counties and water management districts along with the federal agencies, make substantially more essentially doing the same work. Florida’s legislative branch has kept wages artificially low and has gotten a cheap bargain for its work force although the public doesn’t really care. If I could have left Tallahassee, I would have. But family obligations and ties kept me in the capitol city. Now, if I divide the drop money by the five years I have left working for Florida, my yearly income is now par with my colleagues. The loss of the future DROP money for talented young scientists will only spur them to leave state agencies ASAP as the economy improves resulting in a degraded workforce. Now you may say so what. Well, you are dependent on the government to ensure that your drinking water is safe to drink, your air is clean to breath, that your waste is properly treated and disposed of, that regulations are followed to prevent disease outbreaks, and Florida’s environment can still attract tourism that feeds the economy. Because of the changes that are now taking place, my agency will not be able to recruit talented new scientists who work tirelessly to help keep the public safe from unscrupulous business practices that endanger the public welfare.

  • FRS Options

    I can’t, don’t, and won’t argue with any of your points, as they all have great merit. It is/was a great benefit. My assessment is based on why it was started, and theoretically why it is being eliminated. I don’t support or desire to see it eliminated. I do however, see how it and the abuses it allows create a bad taste in the mouth of both legislators and the general public. DROP programs were designed to keep employees, and transformed into a recruiting tool, but I really don’t think that will get much support. The powers-that-be in Tally seem to think the unemployment situation is so bad that people will still be lining up for government jobs without the attractive benefits. Time will most certainly tell.

  • An7384

    PLEASE, ALL PUBLIC EMPLOYEES! VOTE “YES” to a Class Action Lawsuit, that States that when you signed on the dotted line for FRS, ALL OF THE THINGS WE WERE PROMISED, WE GET TO KEEP! Lets go after Gov Scott’s wallet, along with all of the Senators and Congreessmen who voted to change what we were promised.

    Next election, VOTE NO TO RE-ELECT these people.

    Thank you,

    IAFF Member from South Florida

  • FRS Options

    I suspect you will not like the official legal opinion as to a law suit.

    “The Florida Statutes provide that the rights of members of the FRS are of a contractual nature, entered into between the member and the state, and such rights are legally enforceable as valid contractual rights and may not be abridged in any way.
    37 This “preservation of rights” provision
    38 was established by the Florida Legislature with an effective date of July 1, 1974.
    The Florida Supreme Court has held that the Florida Legislature may only alter the benefits structure of the FRS prospectively.
    39 The prospective application would only alter future benefits. Those
    benefits previously earned or accrued by the member, under the previous benefit structure, remain untouched and the member continues to enjoy that level of benefit for the period of time up until the effective date of the proposed changes. Further, once the participating member reaches retirement status, the benefits under the terms of the FRS in effect at the time of the member’s retirement vest.
    40 The Florida Supreme Court further held that the “preservation of rights” provision was not intended to bind future legislatures from prospectively altering benefits which accrue for future state service.
    41 This bill does not change any benefits that a member has earned prior to July 1, 2011. The bill only makes changes prospectively. As such, it does not appear to impair the contractual obligation between the FRS employer and the FRS member.”

  • Guest

    This was in the analysis of SPB 7094.

    All membership classes in the Pension Plan permit enrollment in a Deferred Retirement Option Program (DROP) under which a participant may extend employment for an additional five years – eight years for instructional personnel in district school boards – and receive a lump sum benefit at a fixed rate of interest, currently 6.5 percent, for that additional service. Enrollment in DROP requires the participant to serve the employer with a deferred resignation from employment at the end of the period. The defined benefit plan includes a fixed, annual cost-of-living adjustment of 3 percent.

    Does this mean that teachers in DROP can stay in for 8 years?

  • FRS Options

    As the rules currently are, teachers were eligible to get a 3 year extension on DROP, for a total of 8 years. Like DROP in general, it was an addition to FRS in 1998 to attempt to keep members from taking retirement. Back then there was a shortage of teachers, and the DROP was added as a perq. to keep them on board. Apparently, we no longer have such a shortage, so we’ll see how that changes soon.

  • Jamba

    How did you let Bloomberg get by with saying that FRS is completely financed by taxpayers? (on your Facebook page). They are correct only in the sense that their own business is completely financed by taxpayers, since most of their subscribers pay taxes.
    There are agencies which produce income by various user fees, sale of recycled materials, sale of electricity produced, etc. It sounds as though Bloomberg has jumped on the bandwagon of scapegoating public employees.

  • FRS Options

    Unfortunately, Bloomberg didn’t seek my input before publishing the article. That said, 100% of contributions to FRS at this point ARE made by taxpayers tax dollars. Whether at the local, county or state level, all government funding is from taxes levied by that municipality and paid as taxes to it. It is taxpayer’s tax dollars that pay for all government spending, whether infrastructure, payroll or retirement. Whatever products Bloomberg sells are not from tax dollars, though you are right, most of their customers are probably tax payers.

  • Jamba

    You are as wrong as Bloomberg. There are entities which participate in FRS, but which do NOT depend “completely” on tax money. You need to do the research before you broadbrush.

  • FRS Options

    FRS has been 100% employer funded since 1974. You could be correct, but I believe the only employer participants have to be government entities, and seemingly funded by tax dollars.

  • FRS Options

    Ok, but It looks to be a government entity, and I would think the collections are payed for as a tax stipend on the property taxes? Again, I could be wrong, but it seems you are trying to pick a fight over a minor disparity. The SWA falls under the County Commissioners, and is funded by a non ad-valorem tax assessment on the Palm Beach County property tax bill. The physical plant and equipment were payed for from proceeds of Municipal bonds being repayed by SWA through the tax assessments. I’m sorry, I just don’t see the point you are trying to make (other than you are right, and Bloomberg and FRSOptions might be wrong?)

  • Jamba

    I just want facts rather than presumption to be presented.

  • FRS Options

    Jamba, we try our best to present facts that are researched and based on the information available. We are not responsible for the accuracy of information provided as a service to you by outside sources such as Bloomberg or anyone else. The intention of this website is to help people stay informed about what is going on within FRS, and any matters we feel pertinent in that regard. We do not claim to have all of the answers, nor are we, or think we are 100% correct. All positions made by FRS Options are solely the opinion of FRS Options, and we welcome information that will make our site better and more informed. We are a no-obligation site (free to you), and all input is done on a voluntary basis (meaning no income for us). There is no advertising, or revenue generation, and the site does not allow solicitation of any kind. I am sorry if what we post offends you. We try very hard to be objective and supportive of all those in FRS, and provide information as accurate as possible. SWA IS a entity paid for by taxes. You are certainly welcome to disagree with our assessment, but we would prefer you be constructive in your criticism and not just attempt to find information that is wrong without being constructive.

    If we could only post links to articles that have 100% accurate facts, we would probably not have any articles to post. The information we post is believed to be either accurate, or our assessment of the facts as best we can determine. All of it is subject to interpretation and personal view. Again, our intent is to help keep FRS members apprised of what is going on, nothing more, and nothing less.

    We appreciate your being a reader, and will attempt to keep our information as accurate as possible.

  • Yvonne

    Does this mean that if I retire before July 1, 2012 and the current COLA changes in SPB 7094 are passed and take effect July 1, 2011 that they will not be able to change my COLA again after my retirement?

    Also the following is taken from the analysis of the SPB 7094:

    Effective July 1, 2011, the bill eliminates accumulated annual leave payments and overtime from “compensation” and “average final compensation.

    Reading that makes it sound like as of July 1, 2011 my accumulated annual leave will not be calculated into my AFC but after reading your above posting I am beginning to understand why you are saying that any accumulated annual leave prior to July 1, 2011 (up to 500 hours) will be counted in my AFC and any accumulated after July 1, 2011 would not. Furthermore it sounds like the FRS will be contractually obligated to count them in the AFC.

    Am I understanding this correctly on both the COLA and the AFC?

  • FRS Options

    The law is pretty clear that benefits you are collecting will not be changed easily. Those already collecting should be safe. You are correct, as we read it, if you have accumulated leave and overtime pay that occurs in a year that would be counted in your high five BEFORE the law takes affect, you would get credit for it.

    I would be really careful thinking that statutes are contractual obligations. The legislature has a lot of power to “act in the best interest of the state”. Just as the are being changed now, I would think they can be changed in the future, except for those retired and collecting.

  • Concerned firefighter

    Please recosider your position on the drop i am a capt in the fire service and have been in the service for 24 yrs. I am eledgable for the drop next yr I feel that we do not make a lot of money in this profession but we have some benefits that help off set the low pay. Please keep the drop in place to help the guys that have worked their whole career take advantage of this benefit.thank you.

  • Muryfre

    Ive worked for swfwmd for 22+ years and my elligbility date IS July 1, 2011. It devastates me that myY drop pension that I have planned on for years is just being wiped away with the stroke of a pen. I cannot recoup that kind of loss. I stayed with the water mgmt district all those years because of the great benefit called drop. I am devastated that my elligibility date is the same day as no new participants. Please do not let this happen to a dedicated state employee. Stop screwing the little guys just because of a few bad ones at the top.change the rules for them not those of us who have little else. I was planning everything around my drop money. Please help a little old lady and vote no.

  • FL-exile

    Sick payout is employer dependent. My sick leave was paid at 50% up to 960 hours and did not apply to AFC. Vacation time was paid at 100% up to 960 hours and was factored into AFC. These rules are set by the employer, not the FRS.

    At my employer I could not carry over 960 hours of vacation time past Jan.1 each year. You either use or lose, but you could ‘sell’ up to 80 hours per year, thus increasing your AFC. I could also convert 80 hours sick to vacation on a 2 for 1 basis each year.

  • Wolfester

    I think everyone is missing the big problem. Pension systems need new enrollees in order to sustain themselves. By having all new employees enter the investment plan will be the end of the pension plan. Ultimately there will be people collecting and no one contributing. The question is in what decade will it be insolvent?

  • FRS Options

    Possible, but probably not. All of those current employees staying in the Pension Plan will continue to pay into the Pension Plan. The fact that there will be no new enrollees in the Pension Plan means that we have a finite number of future beneficiaries, with no additions after July 1. That makes the actuarial funding a bit easier, as the worst case number of recipients is a known. There is also language in the new proposals that would take any potential future funding issues into account, and allows for contributions to be made.

    The big problem is the politico’s are pretending funding is currently an issue, and it is not.

  • FRS Options

    I would question the wisdom of making any life decision based on what might happen. If you are eligible for the DROP, make the decision based on your life circumstance and financial needs, and not for potential political changes. If you are eligible, I would guess you had some idea of whether you were interested in the DROP prior to the potential changes, it might be best to stick to those ideas. Remember, once in, it is etched in stone and can’t be undone. There is also no obligation on the part of your employer to keep you in your position if you are in the DROP.

  • Biagio


    I’m hearing that Senator Alexander and Workman have agreed to bring DROP back to the table for discussion. Also, that it is possible they might extend the period to enter DROP for those close to retirement. I heard maybe 3 yrs (2014) and then eliminate it.

    What have you heard if anything?

  • FRS Options

    We have heard the same things from our sources in Tallahassee. It has been discussed at committee that a gradual elimination of DROP would be more fair than the arbitrary cut-off date of July 1. They seemed to understand that it could be overly punitive to those that are close. I guess we will see.

  • FRS Options

    While that is not an FRS issue, we really don’t follow it that closely, but I believe it remains unchanged.

  • Yvonne


    I would like to thank you for your posting as I was confused with the varying answers on this subject. After reading your post I went to the website of my employer and looked up their policy. My employer pays different percentages of sick leave payouts depending on the employees years of service. They also have unlimited days that you can accrue for sick day pay outs. In my case they pay 100% for all accrued sick leave.

    If anyone is looking to see what their amount is I would encourage you to find out for yourself what your employers policy is and I thank FL-exile for clarifying this subject.

  • Terry Sutherland

    I don’t understand why they are getting rid of DROP. They pay you 6% and anything over that is profit to the fund. The usual assumption is 8%. So if the invested monies earn 8%, 2% is profit and theoretically goes back into the pot to be shared among the members. Wonder if the politicians are planning to loot the fund? take profits? even though it is not permitted…

  • FRS Options

    It’s doubtful there is a conspiracy theory. The 6.5% is an extremely high rate in this environment, and it is guaranteed on money in the members individual account. While it might be possible for FRS to profit on the returns, it is not a given. I suggest the issues with DROP are it is hard to rationalize as a benefit any longer, as its genesis is no longer valid – to encourage members to NOT retire at the normal retirement age, and stick around for 5 more years. Apparently the legislators are not overly concerned with employee attrition now. The abuses of double and triple dipping also raise hackles. It was a great perq. while it lasted, but its days or years appear to be numbered. Despite the popular beliefs, the reality is it is not a cheap, nor really even cost neutral benefit. You get paid a pension and your salary, which is countintuitive.

  • Wolfester

    They used the argument that there will be more people collecting than contributing as a factor in their “reform” since it won’t be sustainable. The “reform” makes that a certainty. Do you really think taxpayers are going to want to fund a pension for the “select” group of retired public employees while no one else has anything like that? I would not want to one of the last remaining 2 decades from now.

  • phakes

    Could you please cite the source of your quotation?

  • FRS Options

    We’re sorry, could you tell us which quote you are referring to?

  • phakes

    The one in the comment to which I was replying that begins “The Florida Statutes provide that the rights of the members of the FRS are of a contractual nature . . .” and goes on to state “once the participating member reaches retirement status, the benefits under the terms of the FRS in effect at the time of the member’s retirement vest”. Is this from a preamble to one of the bills, from staff commentary, or a court decision?

  • FRS Options

    Ahh, Sorry. It is hard for me to keep up with the comments and what they are relative to. That is a quote from the House legal opinion on the analyis of the changes.

  • Just checking

    I have heard that by asking the state employees to pay into the pension plan, this opens a loophole. As I understand it, currently, the state CANNOT skim the interest earnings out of FRS. But somehow, with employees making a contribution instead of just the state, the state will be able to pull out money when FRS makes a profit about it’s required calculated liability. Is there any truth to this?

  • FRS Options

    Absolutely not. It would be just the opposite. Employee contributions are in-violate. All contributions to FRS must and will stay in FRS. There are a lot of conspiracy theories floating around out there, most probably not true.

  • FRS Options

    If you terminate prior to July 1, you will get a pension based on the law as of July, which means nothing will change for you. They did not change the rules for overtime and unused leave time. It can be a district policy, but the district probably did not change if the state didn’t. If you decide to keep on working, the only thing that would change going forward is a slightly less COLA for the next few years, or if you decided to DROP you will get the lower interest rate. Your benefits will still be higher if you work longer.

  • Ric

    My gosh!  In 1998 the FL legislature created a monster.  I am sure those legislative folks back then were not “babes in the woods” but rather knew exactly what they and there counterparts in states across the country were doing: creating a dedicated voting class of thousands of stateworkers who would help keep them in office forever.  And further, reward their many highly paid and campaign contributing government cronies a gravy train that would enrich personal coffers and, let’s say, soften the retirement landing.

    Now the government plebicites are up in arms.  “What, you’re taking away my gravy and leaving me with a normal pension?  This is cruelty beyond definition!”

    Hey government folks, now that we have your full attention it’s past time to realize that we, the tax payersthat you all proclaim to serve and love so much also pay your salaries.  12.2 percent of our state’s population is unemployed.  That’s about 8% more people out of work than in 1998 when this DROP boondogle was passed.  In real numbers that’s about 1,200,000 less people paying taxes (i.e contributing to your salaries) than in 1998.  And that’s also about 1,000,000 more Floridians collecting unemployment checks than those in 1998.

    My intention is not to verbally flog government types but I would like to see at least a little appreciation for current economic circumstances and some show of a little gratitude for how really good off economically most of your are.