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Gov. Scott Calls For Big Changes In State Pension Plan
February 2, 2011
Gov. Rick Scott proposed wide-ranging changes to the state’s pension plan Tuesday, demanding 5 percent contributions from 655,000 public employees and requiring all new hires to enroll in investment plans.
Scott, who said his plan would save Florida taxpayers $2.8 billion over the next two years, also would close the state’s Deferred Retirement Option Program (DROP) to new participants in July, a move that would likely push more senior government workers into the plan before the deadline, signaling their eventual retirement.
Scott has said he wants to reduce the state’s workforce by 5 percent this year.
“I want to make sure that the pension plan is something that anyone who’s relying on it knows that the money is going to be there,” Scott said. “Step two, I want to make sure that taxpayers are treated fairly. And I want to treat employees fairly.
“In the private sector, if you have a plan you generally participate,” he added.
State analysts have said the 5 percent contribution rate proposed by Scott would save $1.3 billion the first year – an amount which closely corresponds with a $1.4 billion reduction in property taxes – a campaign pledge Scott has said he will meet, despite drawing early opposition from fellow Republicans in the Legislature.
When asked Tuesday, however, if the two issues are linked, Scott had a one-word reply:
“No,” the governor said.
School board employees form the largest share of Florida Retirement System participants, records show.
But the wider pool of government workers affected by Scott’s contribution plan could help the governor, politically. In applying the hit to a broad group of employees, it could blunt criticism that the move unfairly targets state workers, who haven’t drawn an across-the-board pay raise since October 2006.
Teachers, though, haven’t fared much better, said Mark Pudlow, spokesman for the Florida Education Association, which endorsed Scott opponent, Democrat Alex Sink, in last fall’s governor’s race.
“Pay has been stagnant,” Pudlow said of teachers. “But if we’re going to talk about equity – making employees contribute like those in most other states – what about equity in salaries and pension benefits? Florida has been below most states in each.”
Doug Martin, spokesman for the American Federation of State, County and Municipal Employees (AFSCME), said the most jarring element of Scott’s plan is his proposal to close the traditional Florida Retirement System pension plan to new employees on July 1 – forcing new hires to join defined contribution plans similar to private sector 401 (k)s.
“You will wind up with a dwindling number of active employees who pay for an increasing number of retirees,” Martin said. “Employees will have to continue to contribute more or you will destabilize the system.”
Sen. Jeremy Ring, D-Margate, chairman of the Government Oversight and Accountability Committee, said lawmakers are also considering an FRS contribution plan. But the level will not be set until budget talks are further along, he said.
“Directionally, a few of the areas where he’s going, are also where we’ve been,” Ring said. “But we haven’t talked about getting rid of DROP. He may be a little more aggressive than what we’re looking at.”
Scott outlined his plan during a Tuesday visit to Arthrex, Inc., an orthopedic equipment engineering company in his Naples hometown. The location was intended to draw parallels between government employees and private industry.
Among other changes he proposed was ending an annual 3 percent cost of living adjustment on retirement benefits on service after July 1, leaving current retirees unaffected.
In another recommended change, Scott also takes on the annual accrual rate. When combined with an employee’s years of service – the accrual rate is a multiplier for calculating benefits. Scott would hold that rate at 1.6 percent for most employees, although senior management, judges and elected officials would be reduced from current levels ranging from 2 percent to 3.3 percent.
Scott also proposed cutting special risk class members – mostly police and firefighters – to 2 percent, from their current 3 percent level. The state’s largest law enforcement union, the Florida Police Benevolent Association, also backed Sink in last fall’s governor’s race.
“I think the police and fire unions will have a real hard time swallowing that,” Ring said of the reduction.
Sen. Don Gaetz, R-Niceville, part of the Senate’s leadership team, said Scott’s proposal largely expands on pitches he made during his campaign for governor.
“He ran on cutting spending and increasing jobs,” Gaetz said. “Pay and benefits are a big area of state spending.”
But Rep. Alan Williams, D-Tallahassee, said Scott’s proposal amounts to a 5 percent “tax” on state workers.
“I fail to see how the governor’s proposal concerning the Florida Retirement System can improve the economy,” Williams said.
By John Kennedy
The News Service Florida
Comments
30 Responses to “Gov. Scott Calls For Big Changes In State Pension Plan”
I would like to let the Florida House and Senate know how much we appreciate them for letting Senate Bill SB 290 go as far as it has (with sarcasm). While our local and state Law Enforcement Officer, fire-fighters, teachers and others are facing a Pension reduction, this bill will up the retirement benefits for elected officials. This would amount to the best retirement for elected officials in the whole country. What a bunch of criminals we have elected.
One needs to realize that just because the state picked up the retirement contributions that it was not a gift. It, in fact, allowed the state to get by with paying its workers far less. For example in the University System it is well documented that pay for faculty is far less than their counterparts in other states.
The business of the state is just that, a business. Putting 5% back is money ahead when retirement comes along. It should be voluntary though with some type of matching incentive form the state.
Lets do the math:
Employee makes 40K a year and puts 5% in and the state matches it.
That’s 4K a year. Lets say the worker does 18 years of service. The total investment is 72K for the 18 years. In a minimum 4% interest bearing annuity ( I have on of these) In 18 years that 72K doubles to 144K. Keep that 144K in an annuity and the yearly interest alone is $5,760.00 .
This is based on 5%.
From The Army Patriot –The folks of Florida sure did themselves a disservice by electing the pro-business, anti-middle class, BS artist by the name of Scott. I left Florida Government due to the pathetic pay, untrained and uncaring managers at nearly every level, and the prospects of always being at the mercy of minor league politicians trying to win favor among voters discontent with life in Florida and always looking for an easy whipping boy (State Employees).
Knowing that real tax relief for homeowners would continue to be a mirage, after enduring failed State Government leadership for more than 30 years, the 25% reduction in State Employees during Jeb’s time. the probability that Scott would seduce the electorate with empty promises and probably make life even more unbearable for State Employees and most counties doing absolutely nothing to reduce their spending spree and ower their ever increasing taxes, our family sold our 3 homes and departed for greener pastures. I’m happy to report that all of us have managed to obtain very rewarding and high paying jobs in a more progressive state.
The real issue in Florida is not Florida State Government Employees enjoying anything but the lowest of pay so much as it is the impact of bloated county governments throughout Florida who never had any county commissioners challenging their budgets and curbing run-away growth during the 90’s until now. Perhaps counties might even be goaded into giving up their bicycle coordinators, their eagle monitors, siodewalk coordinators and their do nothing environmentalists collecting pay checks for doing nearly nothing so that taqxes might be lowered. It is the county taxes in Florida that are killing the middle class and resulting in annual property tax bills that exceed the average annual mortgage payments of residents.
Scott is merely a dilitant dabbling in government only when it became clear that he couldn’t continue to make millions off of Medicade. I have news for Scott – you can’t significantly impact local county property tax rates and to lie to your constituents that you can is simply fraud. Don’t you fellow Republicans realize that Jeb and Charlie wouild have gladly lowered our property tax rate if they could have???
My solution is what many other folks have chosen and that is vote with my feet. Leaving the sorry state of affairs created by bloated boss-Hogg type Florida county governments was the best thing our family ever did.
Leaving was the best alternative to staying and allowing our personal earnings to be erroded by ungrateful county governments bent on taxing the last dime from each citizen’s pocket.
Good luck Florida as I’m afraid that is your only hope to survive the greed and stupidity of Scott and his hip shooters who haven’t a clue as to the long term ipacts of what they propose.
Give it ten years and no one who does not make $100,000 a year will have medical insurance. The private sector has already started eliminating insurance and the public sector employees have stood by and watched it happen without a peep. What did you think was gonna happen next? Y’all should have spoken when we were losing ours.
Meanwhile, I hear people rail against a “public option” and “government controlled health care” and this from folks who are already “in” a government plan. It’s called Medicare. Or Medicaid. Hey,folks…are you ready to give it up? Guess what?
You voted Republican. Now reap the benefits. Starve.
Doug Martin, spokesman for the American Federation of State, County and Municipal Employees (AFSCME), said the most jarring element of Scott’s plan is his proposal to close the traditional Florida Retirement System pension plan to new employees on July 1 – forcing new hires to join defined contribution plans similar to private sector 401 (k)s.
“You will wind up with a dwindling number of active employees who pay for an increasing number of retirees,” Martin said. “Employees will have to continue to contribute more or you will destabilize the system.”
Sounds like a Ponzi Scheme…not surprising that AFSCaM and FEA want to keep it. There is something fundamentally flawed with government employees in a union.
My experience is from working in the private sector. My colleagues work to pay taxes in this state also and we all have to pay into our retirement systems if there is one available. The employer usually gives a small percentage match. No one gives it to us. My colleagues are just happy to have jobs during this though economy. Many of us do not have health insurance plans provided through our employers at all. We work nights weekends and holidays and summers just as law enforement and other state workers. Why should state workers feel entitled to more and better benefits than the rest of society? All of us have to pay for those entitlements. When you address salary issues, I know there are some state jobs that have minimal education requirements (2 years of college or less). People working in those positions are by no means rich but they make a decent salary for having a minimal time investment in education. I do agree there should be compensation for workers who are at high risk whether the compensation is through salary or retirement benefits. We need to look at the big picture in our country and see cuts to entitlements are are must. Every state and industry are moving in this direction. Governor Scott obviously is well informed about the state of our economy.
RICK SCOTT IS A CROOK WHO STOLE MILLIONS FROM MEDICAID NOW HE WANTS TO STILL FROM US SOMEONE NEEDS TO DO SOMETHING TO GET THIS IDIOT OUT OF OUR GOVERMENT ALL OF YOU WHO VOTED FOR HIM ARE IDIOTS ALSO FOR VOTING FOR A NONE CROOK
(chuckle) I bet in another year you won’t find a soul on this forum who voted for this joker.
We’ll all be wondering how he won with 5% of the vote. And none from North Escambia.
One term in office and that would be it. It will take years for the PBA to undo all of the damage.
Law Enforcement Officers and Prosecuting Attorney’s warned you jack waggons that voted for him.
Well I can tell you this, there is a large turnover with local government here when people get hired and see just how little it pays and they realize year after year no raise, Longivity is gone, leave time has been cut, and health insurance premiums are outragious. The FRS system is in the black., it makes its own money, if you are in the tradition pension plan and retire if you only live a year after retirement, that money goes back in the system, your retirement does not go to your family. 20 years ago it was a good place to work, but now, why dont you work a job for 5 years and then have someone walk in the door and make the same, I would be leaving, thats what new hires for the last 5 years have been looking at. Or work for 5 years just so you can get your lousy 2% and have it suspended. Now if your buddys with the higher ups you can be reclassified at a different title and get a raise but thats only for the people up top. Yep its just a great job…………Just like a contractor already.
Like I said in November, I can’t wait to see what you all ( the ones who voted for Rick Scott) will have to say a year from now. Well, I didn’t know it would be this soon!! LOL! And another thing, how do you create 700,000 jobs when you are talking about cutting the state work force by 5%. Makes a whole lot of since.
Thank you NWF for helping get this idiot The Gov. job wait see whats next from this clown!!!!!!!!
How many times have your heard someone say that teachers and law enforcement don’t get paid enough? One of the things that keeps many of them working in those career fields is the retirement system. Everyone knows that retirement planning is a long term plan that is developed a entire career. Does it seem fair to change the retirement system so it effects those that are about to retire? That is really a good way to say……Thanks for your service!!!!!!!!
William, since we all know Rick with that other paper won’t do this, you should do a public information request to see how many employees Morgan has hired back after retiring out of the drop plan. That plan has been a really nice retirement packet for state workers in the past. Thanks to all the double dippers, it’s getting ready to be done away with. You would be surprised at what he’s hired some of these people back at. One Captain that retired came back at $88,000. I guess no one else could fill his shoes. He just hired a mechanic back after coming out of the drop and lord knows who else is coming back. It’s people like that who hurt those that don’t want to be greedy. I wonder if the Governor knows how many he’s hired back.
I can’t believe this guy actually won the republican primary. At a time when the country (mostly conservatives) are demanding restoration of honor and integrity in our politicians, they go and nominate this crook, and then elect him.
I’m a republican, but I did my research, put party lines aside, and voted democrat. Shame on all republicans for not doing your homework on this guy.
Sara said it! Don’t complain now. Republicans are never for the working man.
“requiring all new hires to enroll in investment plans”
I thought the florida judge just said that being “forced to pay” was unconstitutional?
Don’t blame rep. for this mess.
Just like don’t blame 70 percent of the country for Obama.
Their ALL alike. They LIE, THEY CHEAT, THEY’RE CROOKS.
ALL THEY CARE ABOUT IT THE RICH AND BIG BUSINESS.
We are all Screwed!
If state jobs pay so little, why do so many want those jobs?
However, I do believe those already vested in pension plans should
get what is coming to them.
Not all private pay is as good as state pay and that is a fact.
You Republicans wanted him – now you got him!
You can add school bus drivers to the list of people that pay into FRS. I would not want to drive a bus full of undisciplined children, get very little pay, lousy hours, then have you renege on my retirement. My dad drove a bus for almost 20 years and he gets a whopping $251 a month in retirement. Not to be a smarty pants but someone needs a dose of reality.
Keep this up Scott and Tallahassee is gonna look like Cairo,Egypt!
Government employees are paid less than private sector employees…says so in the article…so why are they not entitled to benefits promised when they started their employment? The retirement plan was one of the reasons government employees could almost justify the pay difference. However, for those of you who are really educated, not only government employees have participated in FRS. My mom paid into FRS working as a NURSE at Jay Hospital in the late 70s and early 80s.
Irks me that I voted for this idiot.
They are entitled to it because the greatest percentage of government employees make a lesser wage than their private sector counterpart. It never fails to amaze me that when times are good and private sector employees are rolling in the money government employees are never mentioned as they keep plodding along, but when times get bad the first thing to spotlight are the retirement benefits of government employees. You want to compare them to private sector then pay them like private sector through good times and bad.
The greatest percentage of non-government employers have phased out
pensions. They let you participate in 401k and that’s it. That is what
this economy has brought us to. What makes government employees
think they are entitled to more?
They have spent the money, now they want to dip their hands into the retirement system. What a slap in the face to the public servants who place their lives on the line every sngle day for little money. Will he privatize the cops next? Email your legislature and stop this nonsense.
So the rich can take care of the rich.This will be a tax cut for the wealthy condo owners in south Florida and a 5% tax on state and county employees