Pensions and the Budgets: How Will the Different Approaches be Reconciled?

April 13, 2011. Bills presently on their way to conference committee, Additional unfunded mandates

Both the Florida House and Senate have passed bills requiring state workers to contribute to their pensions. They have also passed their annual budgets. But in each case, the House version differs from the Senate version and those differences need to be worked out before final versions of each emerge.

Within days, both of these bills will be going to a conference committee, where selected members of both chambers will work out the details of the budget, including the pension provisions.

ON THE BUDGET:

The Florida Legislature will continue to work toward a budget compromise this week that will “lower the price” or slash additional money from school district budgets.  Our ability to provide quality education to Florida’s children is threatened by this thoughtless policy of budget cutting.

As we have previously commented, the House and Senate are similar in approach and overall reductions.

• Both decrease the Florida Education Finance Program (FEFP) by approximately $1.1 billion from last year (6.2%)
• Both lower per student funding to around $6,350, a loss of over $463 per child, a 6.8% decrease.
• While Class Size is funded at $2.87 billion, we know this amount is insufficient to cover the real costs of implementation.  We are working to maintain the integrity of the Class Size Amendment but also allow for flexibility at the local level.
• We know that ridiculous political promises have lead both chambers to attempt to balance the education budget on the backs of teachers and ESPs by forcing contributions to their retirement plan.

Both chambers end the .25 local property tax, which allows districts to raise much needed funds.  If this policy passes the loss per student jumps to over $500 per student — this is a significant loss.

• Both chambers cut school recognition funding
• Both chambers cut non-FEFP items like:

o   Decreasing ESE funding

o   Decreasing assistance to low performing schools

o   Practically eliminating Teacher of the Year and School Related Personnel of the Year.

Oblivious to the magnitude of these cuts, the legislature continues to pass legislation that is underfunded — or more likely unfunded.

• Passage of SB 736 was a mammoth unfunded mandate
• Charter School Bills SB1546/HB7195: by increasing enrollments, changing the requirement that students live within the district, requiring additional services of the district to the charter providers – another huge unfunded mandate
• Class Size SB1466/HB 5101 underfunded

More Unfunded Mandates:

• Digital Schools – HB7197 – changes the programs and requires high schools to take one course on line.  Requires all assessments online.  Technology funding is cut.
• New PE requirements:  appropriately adds PE instruction in K through 5 be delivered by certified teachers – no funding
• Public School Choice – SB1822/HB1331 – These bills expand choice based on flawed grading system but provide no recognition of Class Size compliance or transportation costs.  It’s unfunded!

ON PENSIONS:

The main differences between the House and Senate proposals are the elimination of DROP (Deferred Retirement Option Plan) and the employee contribution rate.  Both the House and Senate will require employee contributions to their FRS pension plans.  The House has a flat rate of 3% for all salary levels.  The Senate has a tiered payment approach: 2% on the first $25,000 of compensation, 4% on the second $25,000, and 6% on the third $25,000.   For example using $51,000 salary:

2% on $25,000 ($500) + 4% on $25,000 ($1000) + 6% on $1,000 ($60) equaling a $1560 employee contribution.

The House proposal would close DROP to new enrollment as of July 1, 2011.  The Senate proposal does not close DROP until mid-2016.

The Senate bills are:

SB 2000 – Appropriations

SB 2002 – Implementing Appropriations

SB 2100 – Retirement

SB 2120 – PreK-12 Education Funding

The House bills are:

HB 5001 – Appropriations

HB 5003 – Implementing Appropriations

HB 1405 – Retirement

HB 5101 – PreK-12 Education Funding