House Subcommittee Sets the Stage for Reform of First Responders’ Pensions
TALLAHASSEE – The challenge of finding a way to reform the pensions for police officers and firefighters topped the agenda when the House Government Operations Subcommittee met recently to preview what is shaping up to be an intriguing showdown in state pension reform.
Before a packed crowd of lobbyists, firefighters, and police union members, Chairman Jason Brodeur (R-Sanford) introduced a bill he said would fix Florida’s pension program with a sustainable future plan without jeopardizing the benefits of existing and retired participants.
“There is a way for us to have a more stable, less risky retirement plan for our government employees” said Brodeur, “The investment plan is a program that adapts to the mobility and structure of a 21st century workforce.”
The bill would make changes to the current Florida Retirement System (FRS) by eliminating defined benefit pension plans for new employees hired after January 2014 and offering them a defined contribution investment plan instead.
Brodeur said he believes that the changes could lead to significant savings for the state, as well as budget clarity for future legislators, while also providing employees a retirement plan that more closely resembles the overwhelming majority of private-sector pension plans.
“Now is the time to act on this issue, so that we may find a solution in a thoughtful, deliberate, and balanced way, before our state is put into a dire situation and struggling to meet pension obligations,” said Brodeur.
Currently the FRS includes 623,011 enrollees who are still working and 334,682 retirees who receive benefits under the current defined benefit plan. Under the proposed reforms, these groups would see no change to their benefits.
Although most current employees have the option to choose between a defined benefits plan or a contribution package, a majority of about seven-to-one among the FRS’s current enrollees have chosen to remain in the traditional defined benefit plan.
Studies by the LeRoy Collins Institute and Florida TaxWatch both agree that the state’s local defined benefit pensions are unsustainable. The groups recently released a joint study indicating that 62 percent of Florida’s 208 city pension funds received a “C” grade or lower. Members of the subcommittee also stated that 30 percent of local city budgets fund retired workers’ defined benefit pensions, and 40 percent of local county budgets do the same.
Michael Brown, Association of Florida Colleges CEO, estimates that nearly 85 percent of those employed full-time by Florida’s higher education system choose to participate in the defined benefit pension program.
Although the final figures concerning the proposed reforms’ fiscal impact on the FRS still aren’t fully known, The Department of Management Services was preparing a report on the issue, which is expected to be a major priority when the Legislature convenes on March 5 to begin its 60-day regular session.