As legislators grapple with a $3.75 billion deficit, reforms to reduce spending in the state pension system are proving pivotal.
Because nearly half of the 655,000 members of the Florida Retirement System are school district employees, some state senators are worried that reductions to teachers' pensions will be construed as cutting classroom spending and placing the burden of balancing the budget on worker salaries and benefits.
"We really aren't changing the amount of money that's going to be put out for students. The press is going to change it that we are taking money out of the class. We're going to get whipsawed on this sucker because it says we're going to get rid of $443 per kid," said Sen. Stephen Wise, R-Jacksonville.
A proposal for education spending calls for $16.96 billion in education spending, more than $1 billion less than the current fiscal year. More than half of those cuts -- about $678 million -- in the proposal are derived from a 3 percent contribution rate from FRS members.
The House State Affairs Committee passed a bill Thursday that included a flat 3 percent contribution rate for FRS employees, but senators scoffed at that number, expressing their preference for a sliding contribution rate scale among state workers. A bill brought by Sen. Jeremy Ring, D-Margate, calls for a 2 percent contribution rate for most employees, while higher wage and senior management employees would contribute 4 percent of their salaries to the pension fund.
Gov. Rick Scott's budget proposal included a 5 percent contribution rate. But Ring said of the 5 percent rate, "That was never, ever in the plans of the Florida Senate. It never has been, it never will be."
The governor's budget proposal also included reductions in cost of living adjustments (COLAs) and annual accrual rates, as well as phasing out the Deferred Retirement Option Program.
The Senate bill leaves those provisions alone, but Ring said that COLA reductions will be key to providing the spending cuts needed to help balance the budget. Those COLA reductions will be taken up in budget discussions, which begin in earnest next week in the Senate, instead of in the pension bill. Ring said his bill would help save a maximum of $200 million, which he admitted was not enough to significantly reduce the state's budget gap.
"The COLA issue is where a lot of the big money comes from. It's hard to get big savings without addressing some part of the COLA," Ring said.
But other lawmakers, like Sen. Paula Dockery, R-Lakeland, questioned the intent and scope of the pension cuts.
Supporters of pension reform have warned that the FRS is only funded at 87 percent of its liabilities, and cuts are needed to make sure all members get their benefits. Union representatives and others opposed to pension reform have maintained the system is fiscally sound compared to other states.
For Dockery, the purpose of pension reforms was to fix the retirement fund, not to balance the budget mainly through pension cuts.
"We're doing this to strengthen the FRS sytstem. It seems to me when you put a line item like this in we're not strengthening the system, we're balancing the budget," Dockery said.
Given the $3.75 billion deficit, however, legislators say they are quickly running out of places to cut the budget.
"We've got a massive budget hole, and that's the biggest priority," Ring said. "You're not going to cut $3.6 billion from the budget by selling the state airplanes. There's only three real areas where you can go -- education, health and human services and retirement, pay and benefits," he added.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
