Time to rethink retirement policy
January 12, 2011
To the editor,
Governor Rick Scott's policy initiative to assess the current status of the Florida Retirement System (FRS) is fiscally prudent and responsible. It is not only long overdue, but the governor is looking out for the future of Florida and its taxpayers. Many states and its local government bodies in the U.S. are in the process of assessing whether their retirement programs offered to their employees will be solvent and sustainable and what adverse impacts the benefit costs of their pension plans will have upon their current and future budgets.
California is broke other states are headed in that direction. The reality is that government employee salaries and benefits costs is the largest and most disproportionate piece of a government's budget. Many states, like Florida with its 67 counties, 411 incorporated cities and its other various number of governing bodies and taxing districts (i.e. fire districts), have had to grapple with reduced revenue streams. The vexing economic recession related conditions like unempoyment, foreclosures and the dramatic reduction in assessed values of real property have caused a fiscal funk, which means that citizens do not want increases in their taxes, which politicians have echoed in their election campaigns. It has caused governments to seek cost-cutting measures.
Yes, it is true that public employees in Florida have not had to contribute to their retirement plans. The state enacted that policy and funded it in order to offset its less than competitive salaries. However, it may be time to rethink that policy. I believe public employees would be willing to contribute to their pension plan instead of taking a significant loss in retirement income if the legislature voted to change the formula whereby a public employee's benefit would be based on the average of their beginning salary and their ending salary.
The real and rest of the story regarding the FRS is not only the percentage of state contribution rates to employees' pension plans but what the degree of disparity that exists amongst the classes (elected, special, senior management and regular) as to the percentage value for a year of retirement credit.
The Elected Class that includes Judges, Governor, part time County Commissioners and Legislators earn respectively the highest rate at 3.3 to 3.0 percent yearly; that means an elected official who serve just eight years in office will earn nearly 25 percent of their salary when they reach the eligible retirement age of 62. In order to "vest" in the FRS, the old requirement was that you had to work 10 years in order to become eligible to qualify for a retirement benefit.
When term limits of "eight years is enough" was passed by Florida voters, the Florida Legislature promptly voted to lower the vesting period from 10 years to six years in order for them to capture those elected officials who would not qualify with less that 10 years of service. The Special Risk (Fire and Police) and Senior Management Class earn 2 percent and the Rgular Class such as teachers earn 1.6 percent
I believe the Governor and the Legislature are right on by wanting to reassess, recalibrate and reduce the percentage value for a year of retirement credit and they should be establishing a uniform and equalized percentage value for all classes, regardless if you are an elected official or a public employee regardless of your title. Moreover, the DROP program must be eliminated. The program has been fraught with selfish intentions of those who used the system and its legal loopholes for self enrichment by retiring and returning to work and collecting retirement and salary incomes at cost of the Florida taxpayer.