Public Employees Lose as Florida Supreme Court Upholds 3% Pension Dip
FlaglerLive | January 17, 2013
Last Updated: 12:55 p.m.
The Florida Supreme Court, in a much-anticipated but very divided 4-3 ruling, today sided with the Legislature, and against public employees, by upholding a 2011 law that requires all public employees to contribute 3 percent of their pay to the Florida Retirement System, a pension fund.
In a majority opinion by Justice Labarga, the court ruled that the 2011 law was “facially constitutional,” and that it did not violate the contracts clause, the takings clause or the collective bargaining clause of the Florida Constitution. (See the full decision below.)
Justices Ricky Polston, Barbara Pariente, Charles Canady joined Labarga’s decision. Justices R. Fred Lewis, James E. C. Perry and Peggy Quince dissented.
“In my view,” Perry wrote in a blistering dissent, citing the relevant law, “the challenged provisions of chapter 2011-68, Laws of Florida, amount to an insufferable and unconstitutional ‘bait and switch’ at the expense of public employees who were members of the Florida Retirement System (FRS) prior to July 1, 2011.” Perry criticized the majority for “improperly considering” and misapplying case law it relied on.
The decision is a relief to local governments, particularly school boards, who would have had to find millions of dollars they have already cut or budgeted, based on the 2011 law, essentially making up for the reimbursements the retirement system would have been forced to make to public employees hired before 2011. The Flagler County School Board, for example, would have had to find $3.4 million. “We don’t have the money. The state would have the fund this, because they defunded us that amount,” Tom Tant, Flagler County schools’ finance director, said immediately after the ruling was handed down.
The statewide impact would have been $2 billion. As it is, there will be no budget impact now that the ruling leave matters as they have been since 2011.
“Certainly finance directors of cities that use the FRS as their primary retirement vehicle, it is a relief,” Chris Quinn, Palm Coast’s finance director, said. “It is going to save those entities a significant amount of money, not having to fund that 3 percent.” For Palm Coast, however, the impact would have been minimal either way, because only about a dozen employees of the city are part of the Florida Retirement System.
“Balancing the state budget on the backs of middle-class working families is the wrong approach for legislative leaders and the governor to take,’’ Andy Ford, president of the Florida Education Association, the teachers union that led the court battle, told the Miami Herald. “We’re disappointed that the state’s highest court said this approach was legal.”
In all, the decision affects 623,000 participants of FRS, almost half of whom are teachers. State workers, cops, county employees, college and university employees are also participants.
Today’s decision overturns a ruling by Leon County Circuit Court Judge Jackie Fulford who declared the 2011 law unconstitutional. In a ruling last year, Fulford ruled that the law had broken a contractual covenant with state employees, denied them property without compensation and violated their collective bargaining right, since the law essentially nullified what had been agreed to in collective bargaining.
Four justices disagreed.
“Ultimately,” Pariente wrote in her concurring opinion, “I recognize the frustration of State employees who have in effect experienced a 3% reduction in their net pay as a result of the Legislature’s changes to the retirement plan. Indeed, these changes affect judges and all judicial branch employees as well. However, this case is not a referendum on the Legislature’s policy decision. It is not this Court’s role to express any position on that issue. Instead, as the majority has ably done, it is this Court’s task to carefully analyze and determine whether the Legislature has acted within its constitutional limits. Because Florida Sheriffs and the preservation of rights statute necessitate the conclusion that the Legislature is not constitutionally prohibited from making prospective changes to the mandatory state retirement plan, I believe it is clear that the trial court’s judgment must be reversed.”
[This is a developing story. More soon.]
Florida Supreme Court Decision on 3 Percent Pension Contribution