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Judge Casts Serious Doubt on 3% Pension Contribution by Public Employees

| October 27, 2011

Look at that, Estragon: the retirement state turned on its own retirees.

A judge tasked with deciding the fate of an overhaul of the state’s pension plan voiced extreme skepticism about the plan Wednesday, endangering one of the key accomplishments of the last legislative session and threatening to blow a nearly billion-dollar hole in the current budget. Local governments’ budgets would also be affected, because they’ve all recalculated their revenue based on the decreased amount of dollars they must set aside for employee pensions.

In one particularly pointed exchange, Circuit Court Judge Jackie Fulford forcefully pressed a lawyer for the state on how the changes to the pension plan, including a requirement that employees contribute 3 percent of their pay to their retirement and the elimination of cost-of-living adjustments for any work after June 30, 2011, would affect one of the state employees suing over the revamp.

“He’s paying more, getting less and in fact, the COLA does change. … It’s like you’re punishing him for continuing to work,” said Fulford, who took the rare step of leaving the bench to point to a display on the wall while making her points.

The legal questions about the changes to the pension plan revolve around whether the changes to the program break a portion of the law declaring the system a contractual obligation between the state and its employees.

The employees and unions suing the state contend that the changes go too far. Attorneys defending the plan say it falls within the bounds of a 1981 Florida Supreme Court decision allowing the Legislature to alter pensions as long as it only does so with benefits earned after the law takes effect.

“It happens only in the future,” said David Godofsky. “It affects only the benefits earned in the future.”

But Ron Meyer, a lawyer for the Florida Education Association, argued that asking employees to contribute some of their income “went to the very heart and structure of the pension plan.” And the complicated formula for figuring out the cost-of-living adjustments essentially lowers the COLA percentage for current employees.

Meyer said the Legislature would have been within its rights to make those changes for new employees alone.

“But the state got greedy,” he told Fulford. “The state wanted more money.”

Under the plan approved by the Legislature earlier this year, cost-of-living increases will not apply to wages earned after June 30 — leaving those employees who worked for the state before then with a split set of benefits. The 3 percent COLA remains in effect for benefits earned before that date, but doesn’t apply for those earned after the cutoff.

The state will calculate the COLA for those employees by reducing the 3 percent threshold based on how long after June 30 an employee works. That effectively lowers the COLA for those employees, breaking the state’s agreement, Meyer and an expert witness for the plaintiffs argued.

The state and its expert countered that the annual COLA dollar amount employees receive will be the same as if they retired today; it simply won’t increase as much as it would if the COLA were applied to benefits earned in the future.

“The net effect is zero on the COLA,” said Paul Zeisler, an actuary who served as the state’s expert.

Fulford sounded skeptical. “The benefit from the COLA goes down period, right?” she pressed Zeisler, who denied that would be the effect.

She also questioned the notion that asking employees to contribute to the plan for the first time in more than 35 years could be compared to the changes in the calculation of benefits the Supreme Court was weighing in the earlier case.

“But you’re not changing their benefits,” she said. “You’re saying, ‘Give me money for it.'”

If Fulford were to strike down the changes challenged by the plaintiffs, it could upend a key provision of the state’s drive to slice hundreds of millions of dollars from the budget in a tough economic climate. Documents used by state negotiators in the last legislative session showed they planned to save more than $860 million from the employee contribution and the elimination of COLA, much of that from current state employees.

Meyer said after the hearing that lawmakers should dip into reserves if they have to find the money, though the sluggish economy has already eaten into those reserves and caused state forecasters to predict another shortfall in the fiscal year that begins July 1.

“The Legislature has demonstrated a willingness to be very creative in hurting the workers who are employed by the state of Florida,” Meyer said.

–Brandon Larrabee, News Service of Florida

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16 Responses for “Judge Casts Serious Doubt on 3% Pension Contribution by Public Employees”

  1. Kip Durocher says:

    If the corporations in America are so pure and just in looking after their employees why was the force of law necessary to have them pay even pittance wages?
    If the State of Florida cares deeply for it’s employees why was collective bargaining necessary to get a retirement program in the first place?
    Why do all these people from the north, who worked for much higher wages because of unions and collective bargaining, come to Florida and cry about “unions destroying jobs.”
    There is no such thing as a palm tree.

  2. Firebadge1 says:

    Don’t give me that stuff about .’up north’ . I did it ‘UP NORTH’ and paid 5% into my fire department retirement. I hold my head high…………unlike some people here ‘down south’ that love to bash………..they bash all public service as well as /\’ UP NORTH’ people. Give me a break………………and long live the IAFF.

  3. Jojo says:

    All these changes are the result of a Governor who ran on making drastic changes with complete disregard and hell bent on destroying workers’ rights, excluding Separation of the Powers Doctrine and violations of individual liberties. These man, Rick Scott is dangerous. Scott does things either ignoring the consequences of his actions for the sake of Tea Party loyalists.

    Does anyone notice that the courts are now rejecting Scott’s intrusions into the fabric of everyday citizens working and living in this State. I honestly don’t think the man has a clue to what he is doing. He just does it and then wants he’s legal staff to defend him and his edicts. So, now, Counties and Cities and even the legislature are running around like a chicken without a head to put a band-aid approach to this Governor’s run-amok approach if the court decides it is illegal to take money from Paul to pay Peter (giving the 3% deductions back to State employees) which will leave the legislature, Counties and Cities deeper in debt.

    New employees will be getting only 1 1/2% COLA when they retire rather than the current 3%. So, as you see, Gov Scott has singled out State employees to pay 3% toward there Pension and new employees will receive 1/2 of a yearly 3% COLA to balance the State budget on the backs of State, County and municipal workers.

    He has the ire of judicial scrutiny all over him which I wish would have happened before running for Governor and bilking 1.3 billion from medicare – the crook.

  4. Liana G says:

    See, other states have their union employees contribute to their retirement.

    …”“The Legislature has demonstrated a willingness to be very creative in hurting the workers who are employed by the state of Florida,” Meyer said.”

    Including you judge? You too are a public employee so forgive me if I am skeptical of your position. Members of the legislature are also employees of the State of Florida so this affects them too. Will be interesting to see how this plays out. Now would be a good time as ever to nationalize all too big to fail corporations and then everyone can benefit nicely.

  5. Kip Durocher says:

    Interesting name Firebadge1, is it Irish?

  6. palmcoaster says:

    Liana, in other states salaries are higher than in Florida are you aware of that? So those contributions are according to the double pay rate or more that those public workers receive…in other states. Our public employees have all my support from this small business owner and resident taxpayer in this county. And I am not wealthy…..just in case.

  7. state retiree says:

    The state has a ton of lawyers on payroll, but yet they outsourced to a New York firm to defend Scott and his actions. So just how much is that costing us? Could it be that the state lawyers were in the same boat as the rest of the state employees, and didn’t have the heart to defend this mistake.

  8. Mike says:

    Scott = Fail. Plain and simple.

    Now he can “attack” business money instead of the hard working educators, policemen, and firefighters. He brought this on himself. And now unfortunately we will all pay for his mistakes, miscues, and idiocy.

  9. palmcoaster says:

    Outsourcing services and manufactured goods is the name of the game in Florida and most of its counties and cities as tax payers paid contracts in government agencies as well as private organizations that serve Floridians like, Chamber of Commerce, Hospitals, Banks and other entities contracts for suppliers and services are assigned elsewhere.. Simply because some elite benefits from it, while we, the local services and supplier businesses are the real employers and tax contributors and endure the loss of work.

  10. PJ says:

    salary for Municipal employeee here in the south are lower so at the very least give them a better pension by not taxing these folks by forcing them to contribute. Scott your an idiot and don’t care about people as you say you do. I’m sorry I voted for you. Your a one term Gov, fool!!!!!!

  11. Liana G says:

    @ Palmcoaster

    But cost of living is very much higher in other states and those states do pay state taxes. I’ve Iived in NY,VA, TX, GA, and FL. Cost of living in these other states are very high especially when state taxes, heating, and housing costs are figured in. There is no state tax in TX and FL. but driving to get to places in TX took forever because everything was so spread out even in San Antonio where we lived. The winters were dry and brutally cold, and the hard water was murder on the pocket book. I love FL, and it is the cheapest state I’ve ever lived in. We were recently offered the opportunity to relocate to MD, but after comparing salary to cost of living expenses, I graciously declined. I am not giving up my southern comforts for high cost of living and long cold winters, even though they do have an outstanding public education system!

  12. Nadine Voelz says:

    Since state employees will be punished for the length of time they work for the State after June 30, 2011, maybe scott’s actual plan is to force all current employees to HAVE to retire in order to live, and then he can have the entire work force replaced by people who have to work two or three jobs like the people I met in Orlando. They need to work all those minimum wage jobs just to keep food on the table and a roof over their heads. By having to work several jobs, nobody from child welfare, let’s say, will be available to help abused children and their families after ‘business hours’ so just leave all children with their current families no matter what is going on and do away with foster care, etc. Right? Forget it!

  13. Lee says:

    You shoulda seen that one coming a mile away! Anyone wanna guess who is subject to paying the 3% ‘contribution’ as well??

  14. Deputy J says:

    I met a retired law enforcement officer from up north who recieves $4500 a month, and no he was not of rank. He stated he will recieved that monthly plus a 3% cost of living each year and health insurance for him and his wife. The average law enforcement retirement in Flroida is $17,400 per year…where do we go to retire on that?

  15. palmcoaster says:

    Liana I lived up north before I found the Palm Coast paradise, invited by friends and I am so blessed I did. I came here and bought a failing business and revived it and is still working. I created some jobs and hope I would have been able to afford more businesses to create more jobs.
    Florida is still to be discovered by many small business owners elsewhere, that could move their operations here…like happened with us…just need to let them know the advantages to make a move this way. Regarding our public employees they have all my support as they serve us well for the taxes we pay.
    Their pensions contracts should be abide by.

  16. JohnyEms says:

    When I started working as an EMT 8 years ago I started at $9/hour. My first month on the job I worked on a 4 year old drowning and a 16 year old stabbing victim. My job is extremely rewarding but it is also very emotionally taxing. When I accepted this position it was with the understanding that I would work treacherous hours, see things nobody should have to see, and earn a meager living with the hopes of living long enough to enjoy a few years retirement. There are those who are much older than myself who have 15-20 years of service and now legislators want to renegotiate the agreement? After families have planted their roots here with the promise of a brighter future? There is plenty of wasteful spending in this state/country but raping Teachers, Firefighters, Law Enforcement Officers, Paramedics, and other government employees is just plain wrong.

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