The Senate Committee on Government Oversight and Accountability approved a version of Senator Ring’s proposed Senate Bill 1130 today by a vote of 12 to 1. This was done on the heels of House Bill 1405 filed by Representative Workman from Brevard. We are not experts on the legislative process, but believe the bill will now go to the Budget Committee for their approval.
- The proposal eliminates the Pension Plan for all employees hired after July 1, 2011 that make more than $75,000 per year and mandates participation in the FRS Investment Plan for those employees. A last minute amendment has preserved the Pension Plan for those making less than $75,000, UNLESS you are in the Elected Officers Class, the Senior Management Class. Member those classes are required to participate in the Investment Plan is mandatory regardless of Income.
- A notable change is the proposal now allows 300 hours of overtime and up to 500 hours of accrued leave time in the computation of Average Final Compensation for service before July 1, 2011. It does away with all accumulated annual leave pay for service after that date.
- Employees will make contributions into their FRS Investment Plan. The contribution schedule is 0% on the first $40,000 of compensation, 2% on compensation from $40,000 to $75,000, and 4% on compensation over $75,000. They amended the original version to contain language that seems to limit the employee contribution to no more that 2% of total compensation for regular and special risk members, and a maximum of 4% of total compensation for those in the Elected Official and Senior Management Groups.
- There is also some new language amended to read that NO employee contributions would be required for years in which the plan is 100% funded. That amendment would raise more questions to us than it answers, but let’s hope it is as simple as it sounds.
- The vesting schedule for employee contributions is immediate, and for employer contributions vesting is on a graduated scale as follows:
Less than 3 complete years of service …………0%
Upon completion of 3 years ………………………..40%
Upon completion of 4 years ……………………….80%
100% vested after the completion of 5 years of service.
- Contributions made by the employer will be set at rates similar to the current contribution guidelines, but would be less the amount contributed by the employee.
- The Normal Retirement Age does not INCREASE to 65 for regular members or to age 60 for special risk, for employees HIRED after July 1, 2011. It appears the minimum years-of-service and the age requirements will no longer change.
- The bill does not reduce service credit for Special Risk from 3% to 2%, nor eliminate other classes or reduce them. The elected Officers Class and Senior Management appear to remain unchanged.
- Importantly, it does not appear to effect any changes to the Cost of Living Allowance (COLA)!
While we are aware that changes are not desired, these changes have improved considerably from the original proposal, and we are convinced your calls and letters, and voicing your opinions and concerns has played a role. With this small victory now is not the time to let your guard down. There is a long road ahead. HB 1405 lurks in the wings. We will have more about that and how these two bills might meet each other in a Conference Committee. We encourage you to now focus on the members of the budget committee, and make even more calls!
Representative Ritch Workman from Brevard has introduced House Bill 1405 to the Florida Legislature. While initially it appeared to mirror the Governors recommendation, there are several significant differences. As we read HB 1405, we believe it proposes the following important aspects:
- It does not do away with the Pension Plan for new hires after July 1. It seems the Pension Plan will still be an option, and the Investment Plan will not be mandatory.
- The service credit for Special Risk members appears to remain at 3%. All other membership classes are reduced to 1.6% after July 1, 2011. Service credit for prior years is maintained, but future service will be credited at the new rates.
- We can find no language that eliminates the use of overtime or unused leave time in the calculation of Average Final Compensation.
- The Deferred Retirement Option Plan (DROP) goes away after July 1, 2011 for those not already participating at that date. If you are participating in the DROP prior to that date, you can stay in it for your full 60 month term.
- COLA is prorated as in the Governors plan. You will get credit for Cola based on a calculation of years of service prior to July 1, 2011 as a percentage of total years of service, multiplied by 3%.
- Employee contributions are 5% of gross compensation for all employees across the board.
Obviously, the current proposals before the House and Senate differ substantially. In order for a bill to become law, it must be approved by both the Senate and the House of Representatives in the exact same language. If they are not the same, as these two are not, they could be forced into conference, where political deal making can happen (like the last minute interest rate cut for DROP that was proposed in conference last year).
“For a bill to become an act it must be passed by both houses in precisely the same words and figures. The second house frequently amends and returns the bill to the house of origin. In the case of bills with substantial differences, the shortcut of a conference committee likely will be taken almost immediately. Conference committees are intended to reconcile differences. This suggests a give-and-take process because if a majority of the conferees from either house refuses to budge, the conference would be stalemated and the bill could fail. However, this rarely happens.”
We reiterate our plea to contact your Senators and Legislators and make yourself heard! Let your house members know you do not support HB 1405!