Oral Arguments for Case number SC12-50, Governor Rick Scott, Attorney General Pam Biondi and Florida Chief Financial Officer Jeff Atwater vs. George Williams et al. are on the Florida Supreme Court Calendar for Friday, September 7, 2012 at 9:00AM. At stake is the controversial law enacted by the Florida Legislature in the 2011 session requiring employees to contribute three percent of their pay into their retirement plans, and the discontinuation of the annual three percent Cost of Living Adjustment on FRS members pension benefits.
FRSOptions perused the Documents and Filings on the Florida Supreme Court website (something one should only do if they are extremely bored or have insomnia) and, in spite of a great deal of paperwork, documents, and filings, have simplified (we are certainly not experts at legal issues, so this might be an oversimplification) the case as follows;
The Plaintiff believes the law changes are a violation of the Florida Constitution as indicated in the Initial Brief. “Plaintiffs, public employees and members of the FRS, challenge the provisions of the law requiring FRS members to contribute 3% of their gross compensation toward retirement and reducing a cost-of-living adjustment for benefits earned on and after July 1, 2011. The circuit court found that the changes impaired FRS members’ contractual rights, took private property without full compensation, and impaired the right of public employees to collectively bargain.” This opinion is based on the following ruling from 1974.
In 1974, the Legislature enacted section 121.011(3)(d), Florida Statutes, the “preservation-of-rights” statute, which provides: The rights of members of the retirement system established by this chapter shall not be impaired by virtue of the conversion of the Florida Retirement System to an employee noncontributory system. As of July 1, 1974, the rights of members of the retirement system established by this chapter are declared to be of a contractual nature, entered into between the member and the state, and such rights shall be legally enforceable as valid contract rights and shall not be abridged in any way.
The State on the other hand, feels that (we have selected some highlights in lieu of the entire legal reasoning) “The circuit court’s decision violates the Court’s precedent and if left standing would handcuff the Legislature’s response to changing financial circumstances”… “The Plan Amendment is only the latest in a long line of legislative changes to the FRS”…”In particular, Plaintiffs’ expert testified that the change in the COLA formula would reduce future, unearned retirement benefits, and estimated the effect of the Employee Contribution Requirement by estimating employees’ total contributions under the Plan Amendment based on their projected annual compensation…”The Order’s conclusion that the Plan Amendment violates the Florida Constitution runs contrary to decades of precedent. The changes to the FRS are purely prospective. Plaintiffs did not have to make contributions toward their benefits until July 1, 2011, and no changes were made to their COLA for benefits earned before July 1, 2011. This Court has squarely acknowledged the Legislature’s power to prospectively modify the FRS.”
The State position seems to really come down to the previous Supreme Court ruling in 1974 that: “because FRS members do not have a contractual right to the FRS system itself, as opposed to the benefits they have earned, the Plan Amendment did not effectuate a taking of the property rights of FRS members. Membership in the FRS creates no rights to future employment.”
The Governor has expressed every confidence that the State will prevail, and FRSOptions will attempt to monitor and keep all members posted as to the progress of the case. Our information is the average ruling can take from four to six months, so the ruling may not be known for some time.
Unfortunately, whatever the outcome, we don’t feel it will necessarily be good for FRS members. If the Governor is victorious, we can only imagine that he will pursue his oft stated pledge to revamp the Florida Retirement System. On the other hand, if the Governor loses, it is very likely he will seek other ways to cut benefits and change programs within FRS to make up for the loss.
Stay tuned. We will keep you posted. We recommend you follow our Facebook page at http://www.facebook.com/frsoptions for more FRS pertinent information on a more regular basis.
The opinions and information on this page are those of FRSOptions.info only. While we believe them to be based on accurate information, there is no assurance it is so, and they are not warranted as such.