Tuesday, June 19, 2018
Politics

House votes to close state pension to new employees; Senate unsure

TALLAHASSEE — House Republicans on Friday voted to close Florida's pension system to new state and local government workers, forcing them instead into 401(k)-style investment plans that would shift the financial risk away from taxpayers.

The proposal, a priority of House Speaker Will Weatherford, passed along party lines 73-43 after nearly four hours of debate Thursday and Friday. It now moves to the Senate, where members have yet to fully embrace the dramatic change.

The legislation, HB 7011, would prohibit government employees, police and firefighters and teachers across the state hired after Jan. 1, 2014, from enrolling in the state's pension fund.

It does not affect the Florida Retirement System's current 1 million members.

Weatherford, R-Wesley Chapel, said changes are necessary to prevent the $132 billion pension fund from going bankrupt.

"If we do nothing then the state of Florida will continue to spend money that should be going to education and health care, and it's got to be spent on things like a broken pension system," said Weatherford, who posted a message on his Twitter account saying that pensions have gone the way of Betamax, a defunct video cassette format.

Democrats, backed by labor groups, said that the changes are unnecessary and punitive, and that the pension system remains healthy.

"I understand we must get our fiscal house in order, but we cannot, and should not, do it on the back of our public workers," said Rep. Clovis Watson, D-Gainesville. "We will still have to take care of our citizens. It's a matter of which line item that will come from."

While the outcome of Friday's vote was expected, the fate of the proposal in the Senate is very much uncertain.

Sen. Jack Latvala, R-Clearwater, has called Weatherford's approach "ill conceived." A study by a Virginia actuarial firm, Milliman, was supposed to provide Weatherford with the rationale for the changes, but several senators say the study has only made the case for reform even more convoluted.

Senators instead are considering a different proposal, SB 1392, which would tweak the current system for most state employees.

Currently, public employees who now fail to choose between the pension system or a 401(k)-style plan are automatically steered into the pension. The Senate proposal would instead place them in the 401(k)-style plan.

The Senate plan, sponsored by Sen. Wilton Simpson, R-New Port Richey, also includes a carrot for workers: Employees who choose the 401(k) plan would contribute 2 percent of their salary toward retirement, while pension plan members would contribute 3 percent.

As part of the Senate plan, only high paid employees such as senior managers and department heads would be prohibited from joining the pension system. Weatherford said he doesn't think the Senate plan is "bad." "We think ours is better," Weatherford said. "But we certainly want to show deference to the Senate. I'm sure there will be some negotiations that ensue."

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