Committee Approves SB 1130, Rep files HB 1405.

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.

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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.


As we read the final version of SB 1130, and the myriad amendments we have pieced together we believe it proposes the following important aspects :

  • 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.

 

As with the Governor’s proposal:

  • 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!

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

    The calculation is based on percentage of employement prior to the change relative to the total time of employment for each employee. For example, 20 years in prior, and 25 total would entitle you to 80%. 20 years prior and 30 years total would earn you 67%.

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

    I apologize, but we aren’t that current on the insurance issues, as we try to follow FRS only.

  • Bamiller1947

    I will not have my 6 years of service in prior to July 1, 2011. How does the vesting as suggested in either bill affect me? Since I’m already enrolled would I be grandfatherd to keep the 6 years vesting or will it change?

  • Yvonne

    Thank you for your post about the article in the Sunshine News concerning the reduction in the COLA. I would encourage anyone who has not read it to do so as it seems COLA reduction is still an issue. As I read it in the article Senator Ring is trying to move the COLA reduction from a bill to the budget.

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

    As it stands, the language is confusing, but I think you will good at 6

  • Yvonne

    After reading the article in the Sunshine News where Senator Ring wants to make the COLA adjustment a ‘Budget’ matter my question is this. If you retire after June 30, 2011 and it is a ‘Budget’ matter rather then in a ‘Bill’ would it be easier for them to tamper with it now and in the future?

  • 30 years

    Do you think there is any chance that a decision will be made to lower the interest on DROP accounts from 6.5% to 3% and allow those of us who planned on joining in 2011 to do so?
    I will be eligible to join in Oct. of 2011.

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

    It won’t make any difference. If they adjust it, they will adjust it.

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

    At this point I have not seen anything that would indicate they are going to reduce the interest rate, but that could change. If it happens, we will try to stay on top of it.

  • Mike32934

    I would like everyone to just stop and think for just one minute. About six months ago everyone hated the politicans. It didn’t matter what party they were from. What did they do, they spun the facts and made the public employee the hated ones. Did you know that FRS is almost fully funded and self supportive. Ask yourself how much are your taxes going to go down from the cuts. Well we all know there not. It seems everyone is looking to hurt the person who may save your life one day and teach your children so that maybe we can have a better tomorrow. Have you heard anyone complain about forigen aid. Of course not. It’s not the public employee who is killing this country. It the billions of dollars we borrow and then give away to countries that hate us. I think we are all penny wise and dollar foolish

  • Yvonne

    I know you don’t get into legal matters but can you give me your opinion as to whether they can ever reduce the COLA on existing retirees or people who retire before July 1, 2011.

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

    I suspect the legislature can reduce just about any benefit going forward, which would include COLA. What they would probably having trouble doing is cutting anything already being collected. That is why most of the legislative changes are only made to future benefits.

  • 1dot61

    I’ve read all this and still not sure what is going on. I will have 30 years in Sept 2011, will DROP still be here if 1130 bill passes? Can I get leave payout ? What I don’t understand is why State workers are the ones being targeted for the Budget short fall? We are some of the most underpaid employees in the country. Maybe these Senators and House members along with the Governor need to try to live on what we make and then cut all their benefits and give no pay increases for 5 years. Why don’t they look at where the real problems are instead of attacking State employees?

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

    Sort of. You will only get credit for COLA for service up to July 1. The more time you have in before July 1, the higher the percentage of COLA you will receive. I suspect it is designed to punish long term employees the least, as they will have a higher percentage of service credit vs. newer employees who will get less. As bad as it is, it is better than losing it all!

  • JD

    I just entered the DROP on 02/01/11 after 25 1/2 years special risk in law enforcement. Exactly what do these proposed changes mean for folks in my position & are the politicians still attempting to terminate the DROP, even for those currently enrolled in it?

  • Ariztokat_921

    I believe HB 1405 is not fair to current employees. Many are already affected by the current economy and have not received pay raises to be expected to contribute.

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

    If you are currently enrolled in the DROP, the new changes will have very little or no affect on you as currently proposed.

  • J. B. H.

    I believe we have to o something with this economy . What I do not like is messing with the DROP , or the beginning date with no Grandfathering of any kind . When i came to work with the county , I came because I had been told of certain benifits available to me . If I felt I would work for 30 years , and then have almost everything pulled out from under me , I may have made another carrer choice . I ask the senate and goverment of Florida , to do the right thing , and not take away something , that a person has worked for , and that impact the way they able to take care of themselves in retirement . I encorage them to write in a grandfater clause for this bill . Jeff

  • DB

    I’m with J.B.H. Include a phaseing out scenario to the drop. I will have 30 years on July 31. Obviously, I was planning to begin DROP Aug 1, 2011. I have put in long hours and busted my tail for the State. I do not deserve this kind of treatment!

  • Srr868

    As an almost (Dec 2011) Special Risk Retiree with 24 years and 4 years how will that affect me?

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

    A few possibilities. You might lose the opportunity to DROP. You also could lose future
    COLA benefits after July 1. You would retain them for the time prior to July 1, and the rate would be prorated. Everything else looks to grandfather you in.

  • detabou

    What consideration is being given to employees who paid tens of thousands of their OWN dollars to join the FRS just three short years ago when the legislature offered a one-time option to move from ORP to FRS? Let me guess. None? What consideration is being given to those who were eligible for DROP right up until the governor announced his plan and are now ineligible to join DROP and become a retiree unaffected by the proposed changes. Let me guess. None? Even those who favor changing Social Security at least suggest a transition period for those close to retirement age. How about Florida? Nah…

  • Mike Harrell

    I paid the state $7000 to purchase military time with FRS and begin the DROP program in two years. The introduction of HB 1405 isn’t sensitive to those Teachers,Firefighters and Police officers that purchased prior service time enabling them to start the DROP. I voice the teachers disdain for this recent proposal. Regards… Mike Harrell Broward Co.

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

    DJ, I think the key to your statement is your last sentence. State employees have been hit from all sides like EVERYONE else. The real estate plummet isn’t limited to public employees, and Lord knows, with unemployment at 13%, and wages decreasing for most over the last 5 years, in addition to to everyone’s retirement taking a substantial hit after the 2008 panic, you are in the good company of most EVERYONE in the state. I suspect that with record bank closings your analogy probably came true for quite a few people, and AIG (the largest insurance company in the world) made hundreds of billions of dollars worth of promises they could not/did not keep. I agree it stinks, but unfortunately for ALL of us, public or private, things have changed for the worse.