June 2, 2010. Bill would have lowered annual DROP accrual rate from 6.5 to 3.0 percent for workers entering program after July 2010.
Gov. Charlie Crist vetoed HB 5607, a proposal to reduce the annual interest rate for those state workers who enter the Deferred Retirement Option Program on or after July 1, 2010. Crist said his decision to veto HB 5607 — which would have lowered the annual the DROP accrual rate from 6.5 percent to 3.0 percent — was because it surfaced late in the session and should not have been “rushed through the process.” The bill also contained two other provisions:
· revised payroll contribution rates for membership classes of FRS for state fiscal years effective July 1, 2010, and, July 1, 2011;
· required a state actuary to consider additional factors when conducting annual actuarial study of FRS (basically a study of the DROP system).
As you may know, participating employers in the Florida Retirement System must make monthly contributions to fund the FRS based upon rates that are set each year in a bill. That bill will generally have the current rates and a predicted or “pop up rate” for the following year. Since HB 5607 was vetoed and the future rates set in that bill were nullified with that veto, the employer contribution rates will be set to the “pop-up” rates effective in the 2009 (current) rate bill. Those rates are as follows:
MEMBERSHIP CLASS EFFECTIVE July 1, 2009
(current rate) Effective july1, 2010
(next year’s rate)
Regular 8.69% 9.63%
Special Risk
Regular 19.76% 22.11%
Administrative 11.39% 12.10%
Elected officers
Leg – Atty – Cab 13.32% 15.20
Judicial 18.40% 20.65
County Officers 15.37% 17.50
Senior Management 11.96% 13.43
DROP 9.80% 11.14%
The total payment as a percent of salary to FRS from school boards is as follows:
-
- FRS Regular Class Rate 9.63%
Administration and Education Fees 0.05%
Retiree Health Insurance Subsidy 1.11%
TOTAL to FRS 10.79%
For members in DROP, the rate is 11.14% plus HIS and administrative charges. Note: The DROP rate is a blended rate and is the same for all FRS classes.
Kevin W. Watson
Florida Education Association
213 S. Adams Street
Tallahassee, FL 32301
850.224.2078 Office