3% Pension Contributions by Public Employees Begins as Judge Rejects an Injunction
FlaglerLive | July 1, 2011
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.
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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