TALLAHASSEE — Changes by the Florida Legislature to the state's early retirement system appear to have prompted a surge in enrollment in the program.
Participation in the state's deferred retirement program doubled in the months of May and June from the same time last year, according to Department of Management Services figures released Thursday.
As of June 30, 8,418 public employees chose to enroll in the Deferred Retirement Option Program, or DROP, in the months of May and June, double the 4,157 people that entered that same time last year.
The DROP program is designed to incentivize early retirements by allowing workers to draw their pensions while still continuing to work for up to five years. While still working, the pension payments draw interest.
But the Florida Legislature made changes to the Florida Retirement System this year that include lowering how much interest a DROP account earns.
Under the new law, pension payments earn 1.3 percent interest, instead of 6.5 percent.
This change only impacts workers who enroll in deferred retirement after July 1. It also lowered the cost of living adjustment for new DROP participants after August 1.
Gov. Rick Scott signed a bill that put these changes into law in May, prompting a rush to enrollment by July for thousands of public employees before the benefits changed.
"Obviously everyone saw the economic benefit of going into DROP," said Rep. Alan Williams, D-Tallahassee, whose district contains a large number of Florida Retirement System workers. "A lot of them are fed up, they are not appreciated, their work is not appreciated, and they are not given the same type of benefits that Gov. Scott preaches about when he talks about running (the state) like a corporation."
The Florida Retirement System serves employees of state and local governments, including all public school teachers, county governments, and the state's universities and community colleges. There are nearly 1 million participants in the program, making it one of the largest public retirement systems in the country.
Most of the FRS participants are enrolled in the pension plan, which gives employees a set amount of money each month upon retirement, with the amount depending on years in service. DROP only works with the pension.
The retirement system also offers a 401(k)-style investment plan. The new law also requires employees to contribute 3 percent of their paychecks to their retirement, raises the retirement age for employees and reduces cost of living adjustments. Supporters of the changes, including Scott, argue that public employees were receiving better benefits than private sector workers and that requiring contributions was the right thing to do to protect taxpayer dollars.
Advocates for public employees say the state will see an exodus of experienced employees, with years of stagnant wages already, and now cuts to benefits driving them away from public service.
"We are going to have a brain drain on state government," Williams said. "Our state employees are retiring in massive numbers." Williams said that means a less productive, less knowledgeable workforce.
Doug Martin, a lobbyist for public employees, said last week the change in DROP interest is a blow to workers.
"For the folks that we represent, the average pay out would have been something like $72,000," Martin said. "That is going to go down to less than $60,000. That is obviously a very significant decrease."
This spike in enrollment was also seen last year, likely due to a bill approved by the Florida Legislature that enacted similar cuts to the DROP program. Former Gov. Charlie Crist vetoed those cuts, but not before nearly 3,000 more people chose to enroll in the program than in 2009.
More employees also chose traditional retirement this year than the same time last year.
About 10,100 FRS participants chose to enter retirement or exited the state's deferred retirement plan in May, June and July, an increase of more than 900 people from the same time last year.