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Legality of State Workers’ 3% Retirement Tax Now Before Florida Supreme Court

| September 9, 2012

Florida used to care. (Simone Cento)

With hundreds of millions of dollars a year hinging on their decision, Florida Supreme Court justices Friday began deliberating about whether to uphold a 2011 law that requires government workers to chip in 3 percent of their pay to the state retirement system.

A Leon County circuit judge this year found that the contribution requirement violated the rights of state and local workers who had been hired before the law took effect on July 1, 2011.

But some justices appeared skeptical about one of the key underpinnings of the lower-court decision — that a 1974 law created contractual rights shielding such workers from the retirement-system changes.

Justice Charles Canady said government workers can lose their jobs and questioned why they also can’t be forced to pay into the pension system.

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“I have a hard time understanding how when someone does not have a continuing right to employment, (how) they have a continuing right to a particular benefit of employment,” he said. “That strikes me as anomalous.”

Similarly, Justice Barbara Pariente questioned why the Legislature would “bind itself forever, no matter what the budget crisis” to a law that would only allow increased benefits and prevent benefit cuts or mandatory employee contributions.

But Justice James E.C. Perry appeared to agree with opponents of the 2011 law who contend that lawmakers could only require the contributions from workers hired on or after July 1, 2011.

“You can prospectively change it, but not to those employees that were there,” Perry said.

Despite fierce political opposition from unions and government workers, the Republican-dominated Legislature and Gov. Rick Scott pushed through the pension changes as they dealt with a $3.6 billion budget shortfall. The mandatory contributions apply to far more than state workers, as school districts, county governments and many cities also are part of the Florida Retirement System.

The Florida Education Association and other groups filed the lawsuit last summer, but that did not prevent the state from starting to collect the contributions — a fact that could force it to refund money if it ultimately loses the case. Ron Meyer, an FEA attorney who argued before the court Friday, said the state could face giving back roughly $900 million.

Circuit Judge Jackie Fulford struck down the pension law in March, and the state’s appeal was fast-tracked to the Supreme Court without having to be heard in the 1st District Court of Appeal.

As a sign of the stakes involved in the case, a crowd filled the Supreme Court chambers Friday to hear the arguments. The audience included representatives of state and local unions, the Florida Association of Counties and the Florida Chamber of Commerce, which has been an outspoken supporter of the decision to require pension contributions.

Justices typically do not rule in such cases for months. Scott did not attend the hearing but released a statement saying the case was about maintaining a “responsible and sustainable” state budget.


“In 2011, the Legislature passed, and I signed, common-sense public pension reform, which requires public employees — like private-sector employees throughout Florida — to contribute to their retirement plans,” Scott said. “Prior to this reform, Florida was one of only three states that did not require public employees to contribute to their pensions.”

The Supreme Court arguments centered, in part, on the 1974 pension law and a 1981 court opinion that the state contends allowed it to require contributions from employees, regardless of when they were hired.

Raoul Cantero, a former Supreme Court justice who represented the state, said the 1981 opinion made clear the Legislature needs to have “flexibility to react to changing financial circumstances.” Responding to questions from justices, Cantero said the state could even eliminate the pension system, so long as it didn’t retroactively affect benefits that had been accrued before such a change took effect.

But Meyer said the 1974 law set up a system in which employees would not be required to contribute to their pensions. Meyer said Fulford, the circuit judge, found a “very clear contractual right” for workers hired before July 1, 2011.

“You can’t change the game in the middle of the game,” Meyer said.

Another issue in the case focuses on whether the law violated workers’ collective-bargaining rights, with Meyer arguing lawmakers passed the 2011 changes without allowing employees to negotiate them.

“The facial problem with this statute is, there is no room for any collective bargaining,” he said.

But Cantero said it would have been unworkable to negotiate the changes because workers in the retirement system are in hundreds of state and local bargaining units.

–Jim Saunders, News Service of Florida

Ron Meyer speaks to the News Service of Florida:

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40 Responses for “Legality of State Workers’ 3% Retirement Tax Now Before Florida Supreme Court”

  1. Former Teacher says:

    As a former teacher in an urban public high school, I can honestly say that I was threatened and sexually harassed by students all the time and I did not have a bullet proof vest, gun or any other form of protection. When a student became violent in the classroom, I had to pray that security would get there quick enough and that didn’t usually happen. Several of my students were arrested for armed robbery and one even shot and killed a pizza delivery woman. I did all that I could to help the kids that I knew were troubled but, as teachers, we have our hands tied behind our backs and there is only so much we can do. When I was hired, I knew that, even though I had a college degree and would have to go through continuous training that I would never earn much more at the end of my career than I did at the beginning but at least I had good benefits and a good retirement. Now, there are really few reasons to go into teaching. What is everyone going to do when no one wants to be a teacher anymore?

       4 likes

  2. JohnyEms says:

    I’m disgusted by many of the comments on here. I chose this career because of the benefits and I spent the first two years of my career continuing to go to school to help me advance. I was offered at that time an “Investment” plan or a “Pension” plan. I understood that the down side of staying in the pension plan was that I would have to work 25 years or more for this decision to pay off. Now nearly 10 years later they want to change the rules on us. All of the proponents of Rick Scott’s cuts need to understand that I chose longevity, I chose to plant my roots and raise my family in Florida. My co-workers who chose the investment plan currently have THREE TIMES the cash value in their retirement over me because I made a decision to be a long term public servant, while many chose the flexibility and quicker earnings of the investment plan. If the Florida Supreme Court sides with Scott it will be a tremendous slap in the face.

       5 likes

  3. Steven Bidelman says:

    I work f or a school district also. I am not a teacher. I am well aware of the salaries of most every department in our district. Some are very skewed, but that’s because we have been caught up in a very corrupt administrative system for at least ten years. The teachers’ however, don’t get paid very well, considering everything they put up with. That’s across the board from K to 12. I have 25 years in the FRS, not all in one place, but a 25 year total. I considered the terms of my employment with FRS contractual in nature, benefits-wise. As many others have voiced, you don’t change horses in midstream, when have you have such an agreement. I have not received a step-pay raise in years, not an increase for 3 or 4. The level of our benefits changed, years ago starting with elimination of flex-spending $$ which was given (yes given) to use toward some of our health care costs.

    The next thing to occur was our self managed health insurance. It was taken over by a group, that I was told gets about 25k a month to manage now. Our levels of care went backward with this move.

    The administration privatized our entire custodial staff, with the exception of each sites Facility Manager.
    Nice job of cutting many employees throats from FRS who were close to vesting. In turn, this company over the course of the last two years, cuts the hours to their employees, levels of services dwindling.
    Not to mention, many of the loyal ones, had to leave to find better paying jobs again.

    2 years ago, our district implemented the “furlough day” program. Starting with only certain admin/management. This worked its way into most, if not all of the non-instructional staff now. My benefits took another dive, in addition to Rick Scotts unlawful treachery. All 250 day workers were forced to take 3 furlough days, all 230′s took 2 days, unpaid leave per year. Looks like the Instructional staff and other lesser day contracts were spared. But then again, many of them don’t get paid any better anyway.

    In the summer of 2012, prior to the 2012-2013 school year, a bunch of very good employees in varying positions were terminated. This was to help our own fiscal cliff, strange but the big corrupt admins didn’t suffer any of the cuts.

    So don’t think you’re alone on the other coast, we on the west feel this the same way.
    It sucks and somebody has to put a stop to it.. I would prefer it be mankind that does. But in the end, we all fall under an authority who is letting this happen as part of fulfillment of prophesy. I would like to spend the final years on this earth in a better way though, despite how the story will end eventually.

       7 likes

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