Facing the possibility of a $3.5 billion budget shortfall, some state senators see the state employee pension plan as ripe for the plucking.
The Florida Retirement System had more than 655,000 members and a payroll of nearly $27 million in the 2010 fiscal year. While some senators are looking to keep costs down by encouraging new hires to join cheaper pension plans, one senator was considering finding savings by retroactively changing the contracts of current employees.
I was under the assumption that it was an implied contract, said Jim Norman, R-Tampa, during a Thursday morning meeting of the SenateGovernmental Oversight and Accountability Committee. Id hate to change rules on people unless, of course, it was a voluntary agreement, he added.
The FRS currently offers two main plans: the defined benefit, or pension, plan, and the defined contribution, or investment plan. The pension plan pays out a monthly benefit upon retirement and is effective only after six years on the job. Employees are eligible for the investment plan after one year and can choose how they receive their balance after they retire. Neither plan has an employee contribution.
Stephen Wise, R-Jacksonville, said moving back the number of years required to qualify for the pension plan would prompt new employees to opt for the cheaper investment plan.
The defined benefit used to be 10 years, Wise noted.
For Jeremy Ring, D-Margate, altering the contracts of employees nearing retirement is off-limits and new employees should be given cheaper plans. Medium-term employees, however, are a more difficult proposition.
Where its going to be a little more challenging, and where we really dont have a good sense yet, is what do we do with some of those middle people, said Ring, who chairs the Governmental Oversight and Accountability Committee.
Controlling the costs of state employees is important, but cutting back on expenses paid to members of the FRS employed by local governments could prove more crucial to reforming the system. State employeesmake up only 18 percent of the members of the FRS, while school district employees make up 48 percent of the membership by themselves, constituting $11.9 billion in payroll during the 2010 fiscal year.
But the contributions from local governments to the FRS are eating into their budgets as well, and they are looking for more control.
We want some flexibility, we want to get out of the structural problems that have been created over the last 40 years, said Kraig Conn, legislative counsel for the Florida League of Cities.
Conn said numerous cities in Florida -- such as Pembroke Pines, Miami, Jacksonville and Hollywood -- send over 50 percent of their payroll to the FRS.
These cities are struggling with how to provide the current level of pension benefits, Conn said.
Ring cautioned that his committee will take it slow and hear from all parties before proceeding with legislation, but made it clear he was out to cut expenses.
This is a highly charged issue. I dont know what a reform package is going to look like. I dont expect to see a bill for quite a while, Ring said. I like to think were the committee thats here to save the government a lot of money, he added.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
