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Senate committee pitches its pension reform plan

TALLAHASSEE — A Senate committee agreed with Gov. Rick Scott on Thursday to require state workers to shift a portion of their salaries into their retirement accounts for the first time in 27 years, but it sharply limited who would be required to make the payments.

By a 12-1 vote, the Senate Governmental Oversight and Accountability Committee voted to require teachers, firefighters, police and employees in the regular employee class, who earn more than $40,000, to pay into the state retirement fund. But the contribution would be limited to 2 percent of their salaries. And rather than imposing the payments indefinitely as proposed by the governor, payments would be suspended if the Florida Retirement System no longer runs a deficit.

"This committee was very sensitive not to demonize state workers," said Sen. Jeremy Ring, D-Margate, chairman of the committee and the bill's sponsor.

He said the committee conducted hours of hearings, receiving and answering more than 1,000 phone calls to reach a compromise that bases contributions on the level of an employee's salary. Sen. Gary Siplin, D-Orlando, was the lone dissenting vote.

Under the proposal, elected officials, senior administrators and any other state workers who make more than $75,000 would pay 4 percent of their salaries into the retirement system. Police, fire and "regular class" workers who make more than $75,000 would pay only 4 percent on the share of their salary over $75,000.

The committee had no numbers on how much the proposal would save the state, but the state personnel system accounts for 65 percent of all employees and three-fourths earn less than $40,000.

The measure is a sharp pivot away from Gov. Rick Scott and his tea party supporters who recommended state employees shift 5 percent of their salaries to their retirement accounts as a way to save the state $1.4 billion a year. Scott's proposal would require employees to pay into the Florida Retirement System no matter the financial health of the $127 billion retirement fund and would close the fund to new employees, moving all new hires into a 401(k)-style retirement plan.

"Unlike the governor, this bill does not balance the budget on the backs of state workers," said Sen. Mike Fasano, R-New Port Richey.

The proposal also requires all new hires who are paid more than $75,000 to join the 401(k)-style defined contribution program, but continues the traditional pension fund for all other new workers. The Senate plan rejects several of the governor's other proposals, such as reducing the rate at which most employees can be eligible for the pension funds, and limiting which classes of workers would get higher benefits.

The committee rejected an attempt by Fasano to reduce the rate at which employees — except police, fire and paramedics — can earn retirement.

David Murrell, head of the Police Benevolent Association, said he could live with the Senate plan, which has been scaled down from a proposal to require all workers to pay up to 3 percent of their salaries into the retirement fund.

"It started pretty ugly, but it ended up pretty nice," he said. "The true test will be how it does as it goes up the food chain."

Sen. Ellyn Bogdanoff, R-Fort Lauderdale, called the compromise "a good product" but warned that the exemption for employees earning less than $40,000 is likely to face trouble when the proposal goes through the Senate Budget Committee.

"It is a very difficult thing to say to the public, 'We're not going to touch pensions,' " she said. "We are in difficult times."

Sen. Jack Latvala, R-St. Petersburg, who helped craft the compromise, predicted a different final product to come from the House that is more closer to Scott's plan, saying the debate will continue "until the very last day of session."

Mary Ellen Klas can be reached at meklas@MiamiHerald.com.

Senate committee pitches its pension reform plan 03/10/11 [Last modified: Thursday, March 10, 2011 9:36pm]
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