The FRS COLA returns – NOT!

Florida Retirement System back in 2011, you may remember, The Cost of Living Adjustment (COLA) was put on hold for five years, until July 1, 2016.


We’re back!  We have been pretty silent for a while, but this woke us up!

When legislative changes were made to the  At that time, as the theory went, future credit for additional COLA benefits would return.  Florida Statute 121.101 Cost-of-living adjustment of benefits.—subsection 5 reads as follows:

(5) Subject to the availability of funding and the Legislature enacting sufficient employer contributions specifically for the purpose of funding the expiration of the cost-of-living adjustment specified in subsection (4), in accordance with s. 14, Art. X of the State Constitution, the cost-of-living adjustment formula provided for in subsection (4) shall expire effective June 30, 2016, and the benefit of each retiree and annuitant shall be adjusted on each July 1 thereafter, as provided in subsection (3).

It is now becoming apparent from our sources in Tallahassee that the key verbiage is the first sentence – “Subject to availability of funding and the Legislature enacting…”is the most important.  While identical bills have been introduced in both the House and Senate (HB 1011, and SB 1326) , it appears that both were allowed to die.  Equally apparent, is that the budget will not include funding, nor “sufficient employer contributions” to re-instate COLA for FRS members.  As such, we do not believe the additional credit to your Cost of Living Adjustment will return!

We can not help but believe the language was purposely put into the statute to provide the legislators with an out, and we wonder if there was any intent to bring back COLA.  We are hard pressed to remember, back when the COLA was eliminated, the “maybe” caveats being added.  We went back and reviewed news articles from early 2011, when the legislation was changed, and while all mentioned COLA being frozen, we could not find any that mentioned the “subject to the availability of funding” language.  Seems that was added in Legislative committee when the final statute was approved.  We will leave it to our readers to decide if this was a duplicitous move.

  • David Barker

    I am helping a relative who has been a school teacher for 30 years in Florida. I have been reading through the FRS documents for three days. How can anybody in this state’s FRS retirement system, plan retirement when the governor and legislature change the rules monthly? My cousin had 25.3 years of service before the Cola cutoff date, and now she get nothing? The Judges and Legislators have one of the best health systems money can buy. It is under the FRS. It is unbelievably biased toward the highest paid segment of the FRS participants. They pay pennies while my 30 year school teacher pays $1500 a month on health insurance. School teacher’s educate the young minds that will be responsible for the survival of this nation. The citizens of Florida had better wake up to what is happening to this very under-represented segment of public employees. Some day soon, Florida will not find anybody that wants to be a school teacher in this corrupt system. Would you want to be?

  • FRS Options

    That is not correct. Any COLA earned before the 2011 cutoff will still be paid out, there simply will be no further credit for COLA in the foreseeable future. If your cousin had 25.3 years prior to 2011, and a total of 30 years, they will get approximately 25/30, which is 83.333% of 3%, which is approximately 2.5% COLA in their pension payments.

  • JadedRabbit

    It’s common for the legislature to including funding clauses to give them an out. Should they decide later to withdraw support for something, they don’t need to go to the trouble of changing the law, they only need to remove funding for it.

    Take the Health Insurance Subsidy statute for example. If there is not sufficient funding, they can reduce or eliminate the benefit.

    112.363 Retiree health insurance subsidy

    (5) TRUST FUND ESTABLISHED.—There is hereby established a trust fund in the state treasury to be entitled the Retiree Health Insurance Subsidy Trust Fund. Said trust fund shall be used to account for all moneys received and disbursed pursuant to this section. Should funding for the retiree health insurance subsidy program fail to provide full benefits for all participants, the benefits may be reduced or canceled at any time.

  • FRS Options

    Yes , it is fairly common. We would stipulate that common does not make it right. If one passes legislation, one should have the appropriate funding behind it.

  • Rich

    We saw the writing on the wall when this was pushed through. I personally knew we would never see the COLA make a comeback, and I find that disgraceful. This is exactly why people need to review the candidates BEFORE they vote. Say what you want about Crist, he never messed with FRS. We knew what Scott was all about when it came to FRS. When the heat came down on him, he let his cronies do his dirtywork (Weatherford). Always resist ANY change to your pensions! I heard many Sheriff’s unions agree to the COLA and 3% because they felt these changes were relatively minor and “progressively necessary” to strengthen the system. Nonsense! As a result, many workers are stuck now with a stagnant pension after retirement, theoretically forcing them into the investment plan…their goal all along.

  • FRS Options

    We suspect you are correct. Giving up COLA was a huge mistake. Way worse in the long run than the 3% employee contribution.

  • Rich

    The 3% was something I could understand…after all, I reap the benefits of contributing when I retire, as it is still my money. Since then, the local economy has improved and raises are being seen. It was a financial hit for a lot of us, but it has balanced itself out as of late.

  • RLW

    Read a bit more. I am a teacher also with 25 years completed in July of 2011. The formula in the FRS guidebook says “number of years completed by July 1 2011 divided by the number of years completed at retirement date then multiplied by 3” gives you the COLA percentage that you will earn.

    I do agree that the health insurance cost is high especially compared to the maximum $150/mth coverage amount given.

  • Lee

    My prediction, the FRS COLA ***will*** return, in 20 years. That’s the amount of time it took when ‘they’ cut the special risk multiplier from 3% to 2%. It then took the PBA a year later to have a one time check cut to make all the retirees ‘whole’.

  • FRS Options

    Hopefully you are corrrect. When the quality of applicants start to suffer, changes will be made to encourage better people to work in government.

  • Lee

    Trust me, the quality of applicants is irrelevant. (My employer doesn’t care.) It’s strictly a math problem. According to he Florida PBA, the study that was commissioned will cost ONE BILLION DOLLARS per year to bring back the COLA in its original form. It immediately causes the underfunded actuarial liability to shoot up by $8 BILLION dollars and therefore LOWERS the funded status of the plan from 86.5 to 82.4%. We are going to have to wait for a period in the FRS similar from 1998 to 2007 when the plan became ***OVER*** funded by as high as ***118.1%!!!*** Although reimplementing the COLA would also lower the over funding, say (just as an example) to 114%, by then who cares, over funding is over funding.