SB 2100 passes 2nd reading with amendments!

SB 2100 has passed its 2nd reading and is heading to the third and final reading.

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As best as we can decipher the myriad amendments, amendments to the amendments, and replacements to the amendments, SB 2100 has passed its 2nd reading and is heading to the third and final reading.  The changes would seem to indicate the following:

  • Employee contributions would be a graduated scale; 2% on the first $25,000, 4% for compensation between $25,000 and $50,000, and 6% for compensation over %50,000.
  • AFC will include up to 300 hours of overtime, and 500 hours of accumulated leave time.
  • The DROP will continue through July 1, 2016.  No new enrollees after that date.
  • The interest rate for DROP members entering after July 1, 2011 will be reduced to 2%, it will stay at 6.5% for those enrolling before July 1.
  • Vesting for the Pension goes to 10 years for those hired after July 1.  Only those hired in Special Risk may participate in the Pension Plan after July, all other new hires must participate in the Investment Plan.
  • Special Risk members retain the normal retirement date of age 55 or 25 years of service.
  • Accrual rates remain the same.

 

We have done our best to go back and forth with the language, and make the substitutions for all of the changes, and are cautiously optimistic that we have the proposals straight.  The bill goes next for the 3rd reading.  If approved by the Senate, it will then have to be approved by the House.  That would mean HB 1405 must go through a similar process and the terms would ultimately have to be identical to become law.

YOU ARE HAVING A POSITIVE AFFECT, KEEP UP THE CALLS!

 

  • A tired state worker!

    I see it asked, but I don’t see an current answer. As the bills stand now, does it appear that non special risk will move from age 62 to age 65. And if so, does it appear that will be effective June 30th. (I see special risk staying same as current)

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

    At this point, we can’t answer much of anything. The plans will most likely move to a Conference Committee, and what they negotiate is anyone’s guess.

  • Joe

    FRSO first of all thank you for being so comitted to helping us all stay informed. You really are making a difference.

    I also wanted to know if they are keeping corrections officers as part of special risk members with this bill? If the answer is yes, is there any bill out there currently that takes us out as part of special risk?

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

    The reality is, it doesn’t matter what is in the bills now, as the Conference Committee basically has a clean piece of paper to write what they want.

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

    Losing COLA would be, without a doubt, the biggest loss. If you retire at 62 with a $30k per year pension, and live to be 85 (as actuarial tables suggest), you Pension would double to almost $60k in those 23 years. It also is responsible for around 1/3 of the lump sum value. Lose COLA, you can count of dying poor, or roll over a significantly smaller lump sum.

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

    Wow, there is a smoking gun behind every grassy knoll!

    The Florida state budget runs from July 1 through June 30. Unless there is a compelling reason to start legislation in between, most bills and budget changes will fall in the June 30, July 1 date, for the simple reason the budget dollars start on July 1. This is a major budget year, so anything to do with money spent or revenues will be set to begin July 1. By becoming effective June 30th, all would be in place to start the new accounting according to the fiscal year and fiscal budget.

    In short, they are not shooting from a different angle, it is simply to correspond to the fiscal calendar and budget.

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

    Unfortunately, when emotions run high, as they are over these issues, human nature allows what we want to become what should be. Being vested means you are entitled to a benefit that has been earned up to that point, it doesn’t mean you are entitled to any thing that you have not earned yet. Just as the DROP was added as a benefit to entice people to NOT retire, likewise, it can be removed as that benefit is no longer needed by the state. If you are not yet in the DROP, then unfortunately you have not earned, and there for are not vested in that benefit. Many members are in the same boat, the benefit became an entitlement. If you don’t want the changes, then you NEED to contact your legislators and let them know how you want to be represented.

  • Delandry

    How is this cost cutting if COLA is paid out of the FRS? The state and local governments don’t pay the COLA do they?

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

    It is cost cutting for FRS, not the state. There are 2 issues in play. Keeping FRS sound, and balancing the budget. COLA has to do with keeping FRS healthy and financially sound. It is a trickle down thing. Anything that benefits FRS, makes the actuarially required contributions lower, so in the long haul it will help the state also. Think about it, any reduction in pay-outs is cost cutting, and any time you can cut costs, it is pretty much a good thing for those cutting the costs.

  • Delandry

    It may be a good thing for those cutting the costs, but that doesn’t mean it’s logical or fair. I’ve called and written my local representatives and senators to ask their logic behind the formula and I haven’t received a response. If they “NEED” to cut COLA to keep FRS sound, this formula makes no sense. I will retire five years before my wife, but she will receive a smaller COLA when our actual cost of living increases will be the same due to future inflation. People retiring 15 years before her will receive DOUBLE her COLA. Where is the logic?

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

    I guess the logic is there was not the need to cut state costs until recently. Now there most definitely is. Cutting COLA might be logical, but fairness doesn’t seem to enter into the equation. The reality is, trying to put fairness into economics is a sure path to insanity. Is it fair that those who sold their homes in 2005 made money, but those who didn’t lost money. Economic and tax policy is determined by the here and now, and has no memory, nor ability to look into the future. The legislators are charged with balancing the budget, and keeping FRS solvent – TODAY. The truth is, no policies, nor tax plans, nor legislative decisions are fair for everyone.

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

    Wow, that is a lot of beefs (or is it beeve’s?). Some are misinformed. As the bill was finally proposed, you would still be eligible for DROP until 2016, and you would not have had to make any contribution, let alone 6%.

    DROP members were not going to be required to make a contribution (and even if you were, it would have really been between 3 and 4%, as the 6 only kicked in after $50k on a graduated scale). Since you would not have to make a contribution, your beef about pre or post tax contribution is no longer a beef.

    The calculation for AFC is your highest five years of Gross income before taxes (that didn’t change) so you get the bigger number. Since that didn’t change, you really shouldn’t beef about that either.

    Your beef about the guy who is 62 but only has 15 years in doesn’t work either. The rule for DROP eligibility hasn’t changed since it was introduced in 1998, either age (62) or years of service (30), one or the other.

    That leaves me with your beef about not getting public sector credit for your private sector employment. As best we can tell, no private schools pay into FRS, so we’re at a loss as to why you feel you are entitled to credit for that. Maybe a Wackenhut guard who gets hired as a deputy should get credit for the Wackenhut days? We have to ask, where is the meat in that beef?

    We are in a stress-filled environment, and emotions are running high. Before anyone gets all cranked up, let’s review the facts and make sure we are getting upset for the right reasons. In this case, you need to find other beef’s (beeve’s) as these aren’t really so bad. Hopefully, in spite of my attempt at humor, this makes you feel better.

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

    If you die while working, you (or your heirs) are entitled to a refund of your contributions. If you die in retirement, those contributions become part of your pension, and the rules don’t change.

  • RFSarasota

    I have 27.9 years in the FRS. Reducing the DROP interest earnings from 6.5% to 2% is rediculous! That’s a reduction by nearly 70%! Isn’t there a way to graduately scale down the interest rate? For example, reduce to 5.5% in 2012, 4.5% in 2013…?

    Also, I understand “budgets have to be balanced”… whatever that really means? I also understand that the reduced tax revenue our state is experiencing is partially a result of decreased property values. Which are a result of the housing bust, which is a result of the housing boom, which was a result of Investment Banker and Wall Street Greed. Which were “bailed-out” some 3 yrs ago with over %700 billion of TAX PAYERS’ MONIES!!

    How many times do we need to pay for Wall Street Greed? Wouldn’t it be refreshing if we had Florida Leadership fight FOR the government worker, instead of placing economic burden ON that worker?

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

    A few things:

    The cut in the interest rate is 70%, but the interest is the smaller part of the DROP sum. On an AFC of $50k, the difference is about 2% per year. Your benefit goes from around $150k to about $134k. Yes it is less, and the amount is nothing to sneeze about, but it is still a viable program.

    As to your other comments, it could be argued the 6.5% rate (when a 5 year treasury only pays 2%) is the ridiculous one, and the housing boom wasn’t wholly Wall Street Greed, as Americans were buying all of those houses (and they weren’t from Wall Street). I would also suggest it was the banking system that was bailed out, and the US Treasury profited handsomely from that action. The Florida constitution requires a “balance budget”, which simply means the state can not budget to spend more money than the tax revenues it brings in. Unlike the Federal Government, the state of Florida doesn’t go into debt to meet its budget expenses.

    To your final comment, we agree. Leadership from our legislature would be fantastic, and if the state has problems like an unbalanced budget, it should NOT be the burden of just public workers and education. THAT IS WRONG!

    When all is said and done, we believe you will see the great majority of your benefits remain untouched. The burden will be shifted toward the new hires. We have little doubt, however, that you will be making a contribution, and if DROP is not eliminated, the interest rate will be lowered to a more reasonable one.

  • MBPD

    Been reading for the past few days with great interest, though I am not an FRS participant. I am a municipal police officer (Miami Beach). We have our own Police/Fire pension. We also have a DROP. Can you tell me if these changes being legislated will affect private municipal pensions and DROP programs? Good luck to all.

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

    Unfortunately, we don’t have the time to keep up with anything but FRS. I know there were Local versions of some of the legislation, but I don’t know.

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

    I think we would have the knowledge to help you, but would need more information as to your personal situation. I can tell you with a high level of confidence that, unless you can find a much higher paying job, it will be unlikely you can match the pension plan FRS offers, even without the DROP. Most other employers will offer a 401k , with some sort of match that won’t come close to the benefits you can accrue with FRS over the same 5 or 6 years.

  • Nsaugust

    If I retire By June 2011 will I receive a 3% cost of living increase each year with my benefit?
    If I retire after July 2011 am I correct in assuming that I will not receive this 3%.?

    It just seems wiser to retire now and receive the 3% rather than pay it to the state and hope that we will even get a pension when retirement age is reached.

    If I retire before retirement age do I receive money towards health insurance or is that only if one retires at age 62 or older?

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

    That is not quite it. Whenever you retire, you would have received 3% for each year you worked prior to July 1, and no credit for years served after July I. If you have 25 years before 7/1/2011, and 5 years after, you would get 25/30 (83.333) times 3% would give you 2.5 Cola. It is not a retire before this date or lose the benefit situation.

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

    Don’t jump yet, they haven’t done away with it. Wait and see what the final outcome is.

    As to the 2%, it is more realistic interest rate than 6.5%. There is no other investment in this country that will come close to 6.5% for five years with the states guarantee. The rate for that type of investment will be at that 2% mark.

    Likewise, we don’t know what is going to happen to the HIS, but it was intact when the bills headed for the Conference Committee.

    The higher ages were only for new hires, not current employees. At this point you have lost NOTHING, so don’t get too sad. Call your legislators and voice your opinions to them!

  • Accura100

    How can the legislature legally take money out of our salaries?

    The idea that we may or may not pay into the Pension plan based on it’s finances is scary as we have no good oversight and accountability is weak. In the past money went to Enron, Worldcom and a recent real estate fiasco….all things most prudent investors would have avoided in the fist place.

    I am in the Investment plan and also contribute to a 457b plan that I feel has better investment choices. I would rather the contribution to FRS be cut than reduce what I put in the 457b.

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

    I suspect the legality of deducting from your salary has a lot to do with it going into your pension plan, which ultimately means the money comes back to you.

    As to the investment prudence of FRS, they are top notch managers and have guided your pension safely through the biggest financial fiasco of our lives. There were a few million prudent investors that owned stock in Enron and Worldcom, including people way smarter than you and I, and Lord knows how many “prudent” investors were scooping up real estate in 2005. Apparently enough to create a boom. Maybe prudence is best judged in the absence of hindsight.

  • Bvanleer

    I chose education as did many members of my family. I am eligible for DROP in Dec 2011 and was planning for this to be part of my “promised” benefits. As with many educatiors I have had to work partitme jobs to make ends meet. Housing costs, gas prices, child care etc. have made the DROP one of our retirement benefits when we can’t “put away” all the extra money that the senate and house think we have. The legislators who think we have “cushy” jobs that we are overpaid for need to sit in my special ed class or now in my alternative class of students in detention, jail, drug rehab and shelters. They would have a greater understanding of what educators go through each day. We are not overpaid and it is not a “cushy” job. Without teachers there would be no govenor, president, senators, doctors, lawyers etc.
    Maybe we shoudl have the same retirement benefits that our elected officials have.

  • Lucy Maldonado

    I have worked for the Clerk’s Office since I was 19, am a single mother trying to make it, with little to no support, because I am employed, funny how when you are trying to make ends meat, you end up being penalized. For some 50 dollars every pay check is nothing, but for the working class Government workers, it means less food to put on the table. We have frozen positions, no raises in close to 4 years, every day expenses (gas and food) have increased, yet now are salaries are to decrease. Fair, hmm not so much, why dont the Government Officials stop taking from the poor to feed the rich.

    I am vested with FRS with 9 years of service, and have worked to be where I am in the organization today. How will we know what we currently have in our retirement accounts, is there anything there?

    I would like to know if the employer contributions will continue or will FRS only be employee based contributions.

  • Lucy Maldonado

    I have worked for the Clerk’s Office since I was 19, am a single mother trying to make it, with little to no support, because I am employed, funny how when you are trying to make ends meat, you end up being penalized. For some 50 dollars every pay check is nothing, but for the working class Government workers, it means less food to put on the table. We have frozen positions, no raises in close to 4 years, every day expenses (gas and food) have increased, yet now are salaries are to decrease. Fair, hmm not so much, why dont the Government Officials stop taking from the poor to feed the rich.

    I am vested with FRS with 9 years of service, and have worked to be where I am in the organization today. How will we know what we currently have in our retirement accounts, is there anything there?

    I would like to know if the employer contributions will continue or will FRS only be employee based contributions.

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

    It will be both. The total contributions will be basically the same, with your employer deducting your contribution from the total.

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

    It will be both. The total contributions will be basically the same, with your employer deducting your contribution from the total.

  • D_agent800

    Hi I started working for the dmv when I was 18 but was not a citizen for the first 3 years so they dont count, so I have 27 years with the FRS now they are telling that Im not eligible for the DROP is this true ? I make like $24,000 a year after 30 years of work for the State I was counting on the DROP to pay my house

  • Mcdowell

    I have been an employee with a combined College for both Universities here in Tallahassee for 21 years as of the first of May, 2011. I am loosing a lot of sleep over the fact that our DROP Program may be done away with. I have to work two jobs just to pay the bills and I have no savings to fall back on. I will turn 62 in August of 2012 and have counted on the DROP to help me when I retire. I have a lot of health issues and could probably retire on Disability, but would rather continue to work and not be a drain on the retirement fund in that manner. I feel that a lot of people will be forced to make decisions like this if the DROP is done away with. I rent an old mobile home and would probably be forced to seek housing for low income people. This again is becoming a further burden. Please don’t do away with the DROP at this time.

    Thank you,

    Susan

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

    Susan, please share this with the legislators!

  • NOT A HAPPY CAMPER

    The DROP will continue through July 1, 2016. No new enrollees after that date.

    The interest rate for DROP members entering after July 1, 2011 will be reduced to 2%, it will stay at 6.5% for those enrolling before July 1

    NOT FAIR- I go into DROP 1/1/2012 and I’m only going to get 2%, and it looks like I would have to pay 5% to a pension plan

    I don’t think this is right if DROP is extended to 2016 the intrest rate sould be extend to the 2016 date. then if they want to lower the interest rate do it, but don’t punish the one of us that won’t be able to make the July 1, 2011 date to enter drop.

    On July 1 2011 I will have only 6 months left to be eligible to enter DROP.

    To say the lest I’m not a happy camper!!

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

    That was one of the original proposals, but we don’t know if those are the changes that will be made. For what it is worth, the DROP interest rate cut is only about a 10% decrease in total benefit, which, while bad, is not the end of DROP as a viable benefit. With a 30 year treasury bond only paying 4.4%, it is really hard to rationalize 6.5% for a state guaranteed 5 year rate.

    It would also look more like a 3% contribution, as none of the proposals that had any support would do 5% (unless you make over 100k).

  • infor12years

    Why not cut benefits equally for everyone, even already retired? Since we were all promissed the same. This way one group dosn’t take the whole hit….

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

    There would be serious legal issues to cutting benefits for those already collecting. What types of benefits are you referring to.

  • Carol_randy

    I was hired in February 1999. The only change that I know was vesting went from 10 years to 6 years. Drop was already in place. 3% of my highest 5 years with a annual cola.

  • Carol_randy

    I hope your right and they don’t keep raising the percentage I will have to pay in.

  • Floridaretiree

    Retiree’s COLA and Health Insurance Subsidies should remain in effect!! We have lost our investments, we have lost tremendous value in our homes, both through lack of governmental oversight and regulations. Our health costs, gas & food costs are rising out of control. We did not get a COLA from Social Security in 2011, and are getting squeezed to the point where we have no place to cut in our own budgets and are no longer able to work to replace all those lost assets due to corporate greed. Why be concerned about the “Unborn” and not those “Already Born” who have devoted their lives to Florida state government, and the benefits promissed to them in the form of the 3% COLA, and the Health Insurance Subsidy. Without these things, Florida’s state retirees may face poverty and lack of health insurance, being forced to use the emergency room at the hospital for their care. How can we as a society care so little about the very people who drive this state and our country.

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

    It was certainly initiated to retain employees that were trained and qualified, but that was back when the state was having trouble hiring and screening to keep up. Since that is no longer the case, the costs are measured differently, and it is a relatively expensive benefit. The pension might work as you infer, since it is collected 5 years early, it is also collected 5 years longer, and that might work out to even. The problem is the employer must still pay your salary, the FRS contributions (even if you are in the DROP), plus still pay your healthcare, FICA, unemployment and other payroll taxes. While in the DROP your benefit also gets 3% COLA, plus an actuarialy expensive 6.5% guaranteed interest payment. The legislators are aware that DROP is expensive, and easy to manipulate to make it even more costly through triple dipping (pension, plus salary, plus you retire again and come back to work).

  • embarrassedtobearepublican

    Ok, so the DROP money and lowered monthly payouts are a wash. That leaves your observation that the State (District) still has to pay my salary and benefits. That, too, is a wash, as when I leave they will have to put someone else in my position and pay them salary and benefits. If the legislators are believing that they will make out on that proposition with the assumption that I’m old and tired and they can get someone younger (and cheaper) they are mistaken. The reason experience is worth the money is recognized in the private sector, as well, as older employees tend to work smarter and more efficiently. I will NOT be retiring and coming back to work and have no problem with them closing that loophole. The DROP program is a true incentive and keeps many good people in education who would quickly go elsewhere to escape the mounting frustration of teaching in today’s world. It is a foolish mistake to think its wise to discontinue the DROP program when the actual costs are considered.

    Thank you for your time and the opportunity to vent.

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

    To the best of my knowledge you will not be eligible if you have taken benefits.

  • dbldogdare

    I’m a little confused,  I will have 30 yr in Dec. 2011, and I am 53 yrs old.  Do I have to enter the DROP immediatley to get the full 5 years or is the DROP ending July, 2016 only for new hires? I would like to continue to work for another 4-5 years then enter the DROP. (If it’s still around).

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

    If you have 30 years in, you may defer entering the DROP until the year you turn 57. If you don’t enter by that year, you will no longer be eligible. You still have up to 60 months of eligibility, that did not change. The DROP is not ending, they simply reduced the interest rate from 6.5% to 1.3% to better reflect current interest rates.