Florida lawmakers passed legislation this session that will extract a 3 percent contribution rate from members of the state pension system and that imposes other cost control measures, but advocates of pension reform arent satisfied.
Gov. Rick Scott is likely to sign the measures into law, but members of Floridians for Sustainable Pensions, a group of business interests and supply-side economics think tanks, want to see a move from defined benefit plans to 401(k)-style defined contribution plans.
The 3 percent contribution rate is projected to provide $954 million in savings for the Florida Retirement System, but because only part of the 655,000 members of the Florida Retirement System are actual state workers, the real savings to the state government is $168.6 million. The rest of the members are employees of county and municipal governments that participate in the system.
The changes came despite the efforts of unions and progressive groups, which packed committee meetings and staged protests at the state Capitol as lawmakers watered down calls for greater cost savings. Two weeks before the end of the legislative session, FSP members joined Scott to push for his original plan of a 5 percent contribution rate and closing the defined benefit option for new state employees.
FSP members are holding out hope that this session merely laid the groundwork for greater cost-saving reforms next year.
I think what happened in this session is the legislators were educated on the issues, said Dr. Carol Weissert, director of the LeRoy Collins Institute, a Tallahassee-based conservative think tank.
Weissert and other FSP members held a teleconference Thursday to highlight their calls for further reforms.
Those include state lawmakers taking a greater hand in preventing local governments from creating fiscally unsound pension plans. Several large cities in Florida have pension plans for their workers that are funded at less than 60 percent of their liabilities.
The FRS is currently funded at 87 percent of its liabilities, so legislators need to focus more on local pension plans, the FSP members argued.
While right now the FRS looks like it's in pretty good shape, its the local governments that are in trouble, said Dr. Randall Holcombe, the DeVoe Moore professor of economics at Florida State University.
Plans to reform local government pensions got lost in the shuffle of the session, and Scott never really pushed them as part of his pension reform plans.
Holcombe said the problem stems from local political leaders preferring to offer long-term benefits to police and firefighter unions in lieu of higher pay or increases in short-term costs, thus locking in long-term costs.
Its always too easy to offer future benefits to people rather than pay people now. The solution is to move to a defined contribution system, to eliminate the defined benefit programs, Holcombe said.
Yet Republican lawmakers, who make up more than two-thirds of each chamber in the Legislature, stopped short of imposing a defined contribution plan on new workers in the state FRS, so it's unclear how much, if any, new pension reforms will be enacted next year.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
