FRS Case goes to Florida Supreme Court

Oral Arguments for Governor Rick Scott vs. George Williams et al (FRS members) are on the Florida Supreme Court Calendar for Friday, September 7,

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Florida Supreme Court

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 BriefPlaintiffs, 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.

  • Captain36

    He’s not a Governor, He’s a business man seeking ways to screw others so he can profit. I feel for all the FRS employees who have been screwed out of money rightfully theirs. Why could this not be enacted to new hires after Jan. 2011. For employees already working 5, 10, 15 years, it’s a slap in the face. This is why he will be a one term governor. He is a disgrace to the FRS Employees.

  • Walter Johnson

    The Govenor and the elected officials who went along with the changes in the retirement system don’t understand how much this will hurt the little guy who isn’t making the big bucks. The employee who scrambles to make ends meet every paycheck Who hoped to retire and enjoy the years left to them instead of working into their old age. Who sees living costs increasing everyday. The costs for gas, insurance, to maintain cars and a home, utilities, to buy food, to afford some luxuries in life.
    It wouldn’t be as bad except that we haven’t had pay increases of any kind for 6 years. The money we pay into retirement isn’t even going there, but is being used to balance the state budget. Then there is less money for retirement because of no more increases. This pisses me off to no end. I’ve seen examples of this in other aspects of life, using funds for things they were not intended for. The end results are never good. It does no good to look back and say it all should have been done differently because by then it’s to late.
    I could kick myself for voting for Rick Scott, and you can be sure I will not do so again. He could care less about the employees of this state by his very actions. Certainly we are glad to have a job, but then again we would like to prosper also. Not gonna happen with people like him around. I say get rid of all of them while we can before they do any more harm. I can sum him up in 3 words… HE DOESN’T CARE. 

  • Clint Seeley

    I think this is accurate

  • Aaron K.

    I dont believe this case includes arguments to appeal the reduced employer contribution to Investment Plan members that went into effect September 1st. Does anyone know if there will be an appeal of that change? It is substantial with an overall reduction of 30% of our retirement if I understand it correctly.

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

    The reduced employer contribution was for the Pension and the Investment Plan, and was determined by the actuarial study for the year.  The contributions are determined yearly, and really were not associated with the changes that are being heard by the State Supreme Court.  The cuts to the contribution were about 30%, and were most likely dictated by the fact that the plan is in such good financial shape.

  • FloridaCopper

      I’m sure the Florida Supreme Court Justice are waiting until after the elections to make a descision on the FRS case, seeing that three of them are on the election ballet.  I’m torn in my descision to vote to keep them or loose them two reasons, 1) I think their vote should be on the merit of this case and legal presidence, not the fact that the Governor made a bad descision that will put Florida into a deeper debt if they rule in our favor. 2) the second point is that Scott pretty much threw them under the bus also, if they’re voted out Scott gets to name their replacements.  I’ve been an FRS member in Law Enforcement for the past 21 + years and am very upset about the changes just like everyone else.  We don’t want to bankrupt Florida, we pay the same taxes as everyone else and now we’re paying an additional three percent tax.  A compromised solution -return all benefits to employees hired prior to the 2011 change back to our original contract and leave the money we’ve already payed where it is.  Yes it would be nice to get it all back with interest, but will it kill me to loose the $1,600 to $1,700 ive already lost “no, it won’t”.  My last point is if we loose this case our hard earned retiement will become Governer Scott’s Personal ATM machine every time he needs money for another bad descision.

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

    Valid points and fears. We are not sure why pro-longing the decision by the Court past election day would benefit the Justice’s. We would guess that a significant part of voter’s (non public employees) are on board with the state and local governments saving money at FRS member’s expense. The propaganda and rhetoric seems to point in that direction.

  • nucleardeath57

    My fear is if the supreme court rules against us it will open the door for further cuts.
       How likely do you feel this is? 
    Has any state been attempted to cut the benefits of current retirees and if so, how have those court cases gone?
       Thanks for helping FRS members keep on top of this stuff. 

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

    We would guess the Legislature will attempt to make further cuts regardless of the Supreme Court decision. If Scott is rebuked and the employee contributions are not allowed, we feel he will try to make it up elsewhere. If the employee contribution is left to stand, it will most likley embolden the legislature to go to 5%, and to make other changes. Either way, the legislature and the Governor have made it clear that they believe FRS is an expense that needs to be reduced. Unless the state is on the brink of bankruptcy, we don’t foresee any changes to those already retired. The courts have been pretty cleat that those changes are unconstitutional.

  • http://profile.yahoo.com/XEKN2MSXHZKH4XLN6FU2P77EX4 Barbara

     Kudos to Judge Fulford for recognizing our illustrious governor’s attempt at confiscating our personal property without due process. Rick Scott has shown himself repeatedly to personally believe he’s a law unto himself and can do as he likes. I’m waiting for the Florida Supreme Court to explain it to him. The FRS was healthy until another of our illustrious governors, Jeb Bush, got his fingers into it and it’s been declining every since. There needs to be a mandate that keeps governors and legislators out of the system. I believe the Florida Supreme Court will be handing down that mandate. Let Rick Scott and his legislature get their hands slapped for not following due process and, hopefully, this will be just the start!

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

    While we appreciate your opinions as to Judge Fulford’s findings, time will tell. Unfortunately, it appears you have been grossly misled as to the progress of FRS during the administration of Jeb Bush. FRS had it’s most spectacular years during Bush’s time as Governor, and peaked at it’s all time high values and overfunded ratio’s during that time, even as the investment markets had some of their worst periods in history. The Investment Plan and Lump Sum payouts were implemented under Bush, as well as the lowering of vesting schedules from 10 years to 6 years. The increase for Special Risk to 3% also occurred during Bush’s Governance, as well as significant improvements to disability pay – from 42% to 65%, and disability vesting down to 8 years of service. It wasn’t until the Financial Panic of 2008, some 20 months AFTER Bush was out of office that FRS’ financial standing declined. The reality is, the Governor has no real ability to touch the money in FRS, and the Legislature is responsible by law, to keep the plan well funded and efficient for taxpayers. In the meantime, we all anxiously await the Florida Supreme Court findings on the matter.

  • FloridaCopper

    Any idea when the Florida Supreme Court will reveal their ruling ?????????

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

    Our best guess would be somewhere around January to March of 2013, but aren’t aware of the Supremes pre-announcing their announcements.