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3% Pension Contributions by Public Employees Begins as Judge Rejects an Injunction

| July 1, 2011

Thye Florida Legislature notwithstanding. (© Rick Neuhoff)

On the eve of hundreds of thousands of government workers being forced to contribute 3 percent of their paychecks to Florida’s pension fund, a Leon County circuit judge late Thursday refused to require the state to set aside the money during a pending legal challenge.

Circuit Judge Jackie Fulford issued the ruling shortly before midnight, just minutes before a controversial pension law kicked in to require hundreds of thousands of public-sector workers to contribute to the fund.

The Florida Education Association, which is spearheading a lawsuit that challenges the constitutionality of the law, sought a temporary injunction to require the money be set aside. It argued that such a move would ensure workers would receive refunds if the law is ultimately ruled unconstitutional.

Fulford acknowledged in an eight-page ruling that it is unclear what funds the state would use to pay back workers if the law is tossed out. But she also wrote that she must “assume that the state of Florida would comply with an order from this court to refund to employees any funds that have been wrongfully deducted from their salary.”

“The state (during arguments Thursday) … stipulated that should they ultimately be ordered to refund the 3 percent employee contributions, it was not a matter of whether the refunds would be given, it was only a matter of the state of Florida determining from what source it would make the refunds, in the best financial interest of the public,” Fulford wrote.

The law, a priority of Gov. Rick Scott and Republican legislative leaders, will lead to state and local government workers contributing about $800 million a year to the pension fund. Such contributions have not been required since the 1970s.

During a hearing earlier Thursday, Fulford repeatedly questioned attorneys about how the state could assure that workers would be able to recoup the money — especially during a time when the state is struggling with budget problems.

But Blaine Winship, special counsel in the Attorney General’s Office, said setting aside the money could threaten the actuarial soundness of the pension fund. Also, he said the pension fund could refund money to workers if the law is found unconstitutional.

“There’s not any reason for these plaintiffs to be insecure,” Winship said.

FEA attorney Ron Meyer, however, said workers need a “pathway” to get the money back if the law is rejected. Meyer said he fears that the state Board of Administration, which runs the pension fund, would argue in the future that it can’t be forced to give the money back.

“That’s what we’re going to get, your honor,” Meyer said. “I can hear it now.”

After Fulford’s ruling late Thursday, the FEA issued a statement saying it was disappointed. But it made clear it will continue to press the broader constitutional challenge to the law.

“While we are disappointed that the court didn’t take action to ensure the availability of funds to pay back to employees if we prevail in the lawsuit, this is a minor setback and cannot be viewed as a determination that our claims are not just,” Meyer said in the statement.

The FEA, backed by other labor groups, filed a class-action lawsuit June 20, arguing that the law violates contractual and collective-bargaining rights of employees.

The teachers union did not seek to block the state from collecting the contributions while the lawsuit moves forward. Instead, it sought the temporary injunction to require that the money be set aside and refunded to workers with interest if the lawsuit is successful.

Fulford on Thursday scheduled an Oct. 26 hearing on broader questions about the law’s constitutionality. Whatever she rules on that issue, attorneys say they expect the Florida Supreme Court to ultimately decide the case — a usually lengthy process.

The FEA largely pins the case on a 1974 law that says the rights of retirement system members are “contractual in nature” and “shall not be abridged in any way.” Meyer contends that lawmakers can only require future employees, not current workers, to contribute to the pension system.

“Employees were told, ‘If you work, you’re going to be paid X,’ and after tomorrow, they’re going to be paid X minus 3 percent,” Meyer said during Thursday’s hearing.

But Winship said the 1974 law does not prevent the Legislature from making changes that will affect current employees. He said it prevents lawmakers from making retroactive changes that would affect workers, such as seeking contributions for past years.

“Our Legislature must have the power going forward to change the deal,” Winship said.

–Jim Saunders, News Service of Florida

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6 Responses for “3% Pension Contributions by Public Employees Begins as Judge Rejects an Injunction”

  1. Atilla says:

    I never considered public workers public enemies, I think the,y especially teachers, do thankless work and deserve a fair shake come retirement. To that end, the system as it is today will not stand, police and fire at the front of the list with 20 and out. Their is a barrel of red ink to be funded (should the retirees live as long as expected). Change is needed to keep the retirements solvent going forward otherwise come the next recession the then Governor may have to be choosing whether to pay pensions or current employees.This has already happened in some communities, and just bumping it up to the next larger government to get a bail out may not be an option. Just thinkin’

  2. Binkey says:

    Where does the 3 % contribution go? Also is the current retirement fund underfunded? Or is the 3% being used to continue corporate tax breaks?

  3. Alex says:

    Well, there is an option, if you don’t like the 3% contribution to your pension, get another job.

    There are thousands of unemployed who would love to take your job with the 3% contribution requirement.

  4. William says:

    When he went to bed last night, Rick Scott was a piece of shit.
    When he got up this morning, Rick Scott was still a piece of shit.
    Many things change in life, but one thing will remain constant.
    Rick Scott will always be a piece of shit.

  5. dave says:

    Teachers have my vote, best of luck to all of you that work the countless hours on and off the clock, It’s was one of the reasons alot of people took those lower paying jobs so I say fight for your rights.

  6. Bob Z. says:

    There will always be unemployed people so bringing them up makes no sense. And you are correct in that there are always others that would gladly accept a job vacated by someone not happy about contributing 3% to their pension. But the point here is that people were promised a pension without having to contribute and that promise has been broken. Making new hires contribute is an option but not existing employees; it will be overturned as being unconstitutional.

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