TALLAHASSEE — The decision to cut state and local government workers pay 3 percent and shift the money to the state's pension fund broke the state's contract with employees, a Leon County circuit judge told lawyers for Gov. Rick Scott and the Florida Legislature on Wednesday.
But was the move illegal? That's the question Circuit Judge Jackie Fulford left undecided as she ended the day-long hearing on the lawsuit brought by the Florida Education Association and other state and local government unions.
The unions sued the state for changing the rules of the game on pensions for current employees when it cut worker salaries 3 percent, eliminated cost of living adjustments, or COLAs, for retirement benefits, and shifted the money into the Florida Retirement System to save the state $1 billion during the 2011 legislative session.
The state argues that it was entitled to make the changes, which it called "modifications," under its budgetary authority and denies it violated the collective bargaining rights of state workers when it made the changes without renegotiating employee contracts.
Fulford wasn't buying it. "The more you work, the longer there is a reduction in the COLA,'' she said.
In a dramatic move at one point during the hearing, Fulford left the bench and pointed to numbers on a spreadsheet projected on a courtroom screen.
"I disagree with you,'' Fulford told David Godofsky, a lawyer representing the Florida attorney general. Godofsky, of the Washington, D.C., law firm of Alston & Bird, had argued that the changes to the retirement system would not result in less money going to workers when they retire.
An expert witness, testifying on behalf of the state, told the court that despite the elimination of the cost-of-living benefits, workers would collect a smaller percentage in COLA benefits but their retirement funds would still increase — because the longer they worked, the more they would collect in savings.
Fulford countered. The employee "is paying more, getting less and, in fact, COLA does change,'' she said forcefully.
When Godofsky suggested that the employee's bank account would grow under the plan as long as the employee kept working, she chided him.
"Why are you arguing about the size of his bank account?'' she said. "You are punishing him for continuing to work and you want to use it against him for his bank account continuing to grow.''
FEA lawyer Ron Meyer urged Fulford to reject the benefits cuts and require the state to return the money to state and local employees.
"If the state can simply walk away from its contractual rights ... and spend it on whatever it likes, there would be no contractual rights,'' he said.
He told the court that the Legislature could have changed the rules for future employees, as it did when it altered the rules for police and firefighters, but instead, "the state got greedy. The state wanted more money."
Doug Hinson, arguing on behalf of the state, pointed to a 1981 ruling in which the Florida Supreme Court ruled in a case involving the Florida Sheriffs Association. That case said that the Legislature has the right to modify retirement benefits of active employees when it affects benefits they have not yet earned. "We're not going back and violating something they have already funded,'' Hinson said.
The judge said she did not know when she would rule on the case. In July, she rejected the unions' request to force the state to set aside the money it was collecting from workers for their retirement in the event the workers win the lawsuit.
This is the second high-profile case Fulford has handled involving the Scott administration and the Legislature. Last month, she ruled that legislators violated the state Constitution when they approved a plan to privatize 32 South Florida prisons in the state budget, rather than in a separate bill. The administration has not appealed that ruling.
Mary Ellen Klas can be reached at meklas@MiamiHerald.com or on Twitter @MaryEllenKlas