November 23, 2010. Attacks on FRS that FEA helped defeat last spring will be revived as 2011 legislative sessions revs up orlandosentinel.com/news/opinion/editorials/os-ed-florida-pension-reform-112010-20101119,0,6650836.story
Don't ignore pensions
Legislators should follow other states and trim government retirement benefits.
12:00 AM EST, November 20, 2010
A movement across the nation to lighten the load on taxpayers from
public-employee pensions got a boost at the polls this month. Voters in at least
a half-dozen states, including Florida, elected governors who vowed to reduce
pension costs. Voters in California and Illinois cut such costs on their own
through local initiatives.
In the 10 months preceding the elections, 19 states reduced their pension bills
by raising employee contributions or curbing benefits, according to a new study
from The Pew Center on the States. Last year, 11 states took similar measures,
and in 2008, eight did.
So far the pension reform wave hasn't washed over Florida, where state and local
taxpayers pour in more than $3 billion a year to fund public retirement
benefits. Even timid proposals to reduce pension costs died during the last
legislative session.
But with the state facing another multibillion-dollar budget gap, with many
local governments struggling to balance their budgets, and with basic services
still on the chopping block, lawmakers can't responsibly ignore benefits that
are often more generous than other states' or private companies'.
Some holdouts against reform in Florida argue that public employees are poorly
paid, but that notion is largely unsubstantiated by research. Others cite the
healthy balance in the state's main pension fund after its strong return on
investments last year. They're missing the point.
Members of the Florida Retirement System, which covers state, county and some
municipal employees, get a deal that many in the private sector would envy. Most
public employees choose a traditional pension plan that guarantees them a level
of benefits after retirement, an option unavailable to the many private
employees who are limited to 401(k) plans.
Florida public employees with traditional pensions can retire with full benefits
after 30 years. Once retired, they get 3 percent cost of living raises on their
pensions every year, regardless of inflation. And while working, they don't pay
a penny of their salaries toward their pensions.
Meanwhile, most other states require public employees to contribute an average
of 5 percent of their salaries to their pensions, according to Florida TaxWatch,
a business-backed think tank. Last year TaxWatch estimated that requiring new
Florida employees to pitch in at that level would save state government about
$250 million a year, and local governments $950 million.
TaxWatch also calculated that limiting cost-of-living raises to inflation, and
capping them at 3 percent, could save state and local governments $135 million
in benefit payouts the first year. And by slowing the growth of benefits, it
also would allow governments to reduce their annual pension contributions in the
future.
Gov.-elect Rick Scott has called for public employees to begin contributing to
their pensions. If this year's legislative session is any indication, he's in
for a battle. A bill to require government workers to put a measly one quarter
of one percent of their salaries into their pensions died.
Lawmakers who feel they would be reneging on pension promises made to government
workers could follow the approach taken in some other states, and aim the
changes at new hires. Colorado, for example, increased pension contributions
from employees and raised the minimum retirement age this year, but only for new
employees.
The only approach that legislators should rule out is to do nothing. In a time
of budget austerity, Florida can't afford to maintain more generous benefits for
public employees than for so many of the taxpayers who bankroll them.