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A bill lets local governments modestly change pension accounts

TALLAHASSEE — Despite warnings that many Florida cities face deep deficits in their retirement accounts, legislators are allowing local governments to make only modest changes to their local pension accounts this year.

Lawmakers rejected a call from Gov. Rick Scott to require all local governments to abandon the traditional defined contribution pension plans and put all employees into 401(k)-style defined contribution plans, a move many feared would cost more money in the short term than it would save.

They also refrained from changing a 12-year-old law that allows them to use the money they receive from the state's insurance premium tax to help close their pension fund deficits.

Instead, the Senate has passed and the House is expected to approve SB 1128. It imposes new restrictions on how retirees calculate their pension benefits but leaves in place a provision that requires local government to use revenue from a state tax on insurance premiums to pay for additional benefits. The compromise won the support of both cities as well as union representatives, who feared deep cuts to benefits.

"It's a start on the road to reform, and I wouldn't be surprised to see some of these issues coming up again next year," said Kraig Conn of the Florida League of Cities.

Although cities wanted lawmakers to give them more tools to roll back pension benefits, the senators balked. Many legislators argued that cities should be forced to renegotiate their benefits packages on their own and not rely on the Legislature to bail them out.

The scaled-back compromise passed the Senate last week. The House it took up Tuesday and is expected to give it final approval as early as Wednesday. Under the legislation:

• Employees will no longer be able to include unused sick or annual leave in calculating their total retirement benefits.

• Overtime may be included in the calculation for retirement benefits but it is capped at 300 hours.

• Money from insurance premium tax dollars will continue to be used to pay for benefit enhancements, not to fill the deficit in pensions accounts.

• The state will post a five-year history of each local plan's funded ratio and local plans must link to the state Division of Retirement website.

• Local plans are eligible to enter the Florida Retirement System only if their retirement plans have no unfunded liabilities.

• A task force will be created to study and make recommendations about the practice of allowing certain disabilities, such as hypertension and heart disease, to be job related.

Mary Ellen Klas can be reached at

A bill lets local governments modestly change pension accounts 05/03/11 [Last modified: Tuesday, May 3, 2011 10:20pm]
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