Democratic Senator Jeremy Ring has finally introduced Senate Bill 1130 (SB 1128 for local governments) for the reform of the Florida Retirement. As we expected, contrary to statements made by Senator Ring prior to the Governors Proposal, this is a watered down proposal in comparison, but still makes substantial changes.
- The proposal eliminates the Pension Plan for all employees hired after July 1, 2011 (lines 727-731) and mandates participation in the FRS Investment Plan for those employees.
- The other most notable change is the proposal does away with the use of any and all overtime pay, unused leave or “any other form of compensation beyond the base hourly or annual salary” (lines 386-393).
- Employees will make contributions into their FRS Investment Plan (Lines 3975-3986). The amounts have not been determined, but our grapevine sources indicate that some legislators are looking for contributions in the range of 2 to 3% of member’s gross compensation instead of Scott’s suggested 5%. We suspect details of this will be forthcoming.
- The vesting schedule for employee contributions is immediate, and for employer contributions vesting are on a graduated scale as follows (lines 2565-2574):
Less than 3 complete years of service …………0%
Upon completion of 3 years ………………………..40%
Upon completion of 4 years ……………………….50%
And 100% vested after the completion of 5 years of service.
- Contributions made by the employer will be set (lines 4058-4061) at rates similar to the current contribution guidelines, but would be less the amount contributed by the employee. Regular members would get a 9%, and Special Risk Members would get a 20% of compensation as the total contribution into their Investment Plan. Assuming an employee contribution of 3%, the employer would contribute 6% and 17% respectively.
- The Normal Retirement Age INCREASES from age 62 to 65 for regular members, and from age 55 to age 60 for special risk, for employees HIRED after July 1, 2011 (lines 2062-2088). It appears the minimum years-of-service requirement becomes 30 years for both Regular Members and Special Risk members hired after that date.
Section 34 and 35 (lines 4299-4309) at the end of the document is similar to Governor Scott’s proposal with verbiage discussing that the changes are made within the parameters of the Florida Statutes and Constitution, and therefore fulfills an “important state interest”. We can only guess that this language gives the legislature the right of “eminent domain” over your previously promised benefits, and therefore can change them as they see fit in the name of “state interest”.
There is language in regard to line of duty death and survivor benefits and discussions of local governments paying down unfunded liabilities that will, hopefully, be clarified in the discussions going forward.
The bill does not reduce Special Risk from 3% to 2%, nor eliminate other classes or reduce them.
Importantly, it does not appear to effect any changes to the Cost of Living Allowance (COLA)!
This bill is a much diluted proposal in comparison to Governor Scott’s recommendations, and for the most part, only affects new members hired after July 1, 2011. That said, FRS members should not accept this without a fight either. If the legislature determines your jobs are worth less benefits going forward, it could be an open invitation for further changes down the road. Doing away with your Pension option is dramatic, as is losing credit for overtime pay! We urge you to contact not only Senator Ring, but your individual Representatives and Senators today. It looks like there will be a hard fight once the legislative session begins.