TAB Legislative Wish-List – an Update

Since we published our “Legislative Wish List” last month, the outlook for the coming session has come into focus. Two of the 4 items appear to be off the table, while one of them – FRS reform, has been exceeded by the just announced proposal by Governor Scott. Here is an update.

FRS Reform

We support the county’s desire to require employee contributions to FRS, modify the fixed 3% COLA, reduce the DROP program, explore Defined Contribution plans, and tighten the calculation of AFC (Average Final Compensation), but consider their “things to avoid” as too restrictive.

The Governor’s plan on the other hand jumps to a full 5% participant contribution, ends the COLA on accruals after July of this year, drops the DROP altogether, and offers new hires a Defined Contribution plan only. Furthermore, the plan would cut the accrual rate for the “special risk” class from 3% to 2%. He estimates this plan will save the state’s taxpayers about $2.8B over two years. In TAB’s quick calculation, just two of these changes – the special risk accrual rate and the 5% contribution, would save Palm Beach County about $17M per year from Fire/Rescue pension contributions, and about $21M from PBSO.

We therefore much prefer the Governor’s proposal to the county’s agenda and hope that the county Delegation can support it against the significant opposition that is sure to come.

The opposition that will follow this proposal needs to be put in perspective. When the FRS statute was first introduced, the “special risk” class accrual was 2%. Meant to apply to police, corrections officers and firefighters whose physically demanding jobs required them to retire at an earlier age, the differential was to provide them with a roughly equivalent pension at 25 years that a “general class” employee would get at 30 years (approximately 50% of AFC). During 2000, Special Risk Class accrual rates were increased from 2% to 3% for all years between 1978 and 1993 for all members retiring on or after July 1, 2000; the Legislature funded this $696.8 million change from an actuarial surplus in the FRS trust fund over a three-year period.

The following is from 121.0515 FS:

LEGISLATIVE INTENT.—In creating the Special Risk Class of membership within the Florida Retirement System, it is the intent and purpose of the Legislature to recognize that persons employed in certain categories of law enforcement, firefighting, criminal detention, and emergency medical care positions are required as one of the essential functions of their positions to perform work that is physically demanding or arduous, or work that requires extraordinary agility and mental acuity, and that such persons, because of diminishing physical and mental faculties, may find that they are not able, without risk to the health and safety of themselves, the public, or their coworkers, to continue performing such duties and thus enjoy the full career and retirement benefits enjoyed by persons employed in other positions and that, if they find it necessary, due to the physical and mental limitations of their age, to retire at an earlier age and usually with less service, they will suffer an economic deprivation therefrom. Therefore, as a means of recognizing the peculiar and special problems of this class of employees, it is the intent and purpose of the Legislature to establish a class of retirement membership that awards more retirement credit per year of service than that awarded to other employees; however, nothing contained herein shall require ineligibility for special risk membership upon reaching age 55.

We think returning to the original intent of the statute is appropriate.

The following table illustrates the current FRS attributes, the county agenda, and the Governor’s Proposal. An excellent summary can be found in the Sun-Sentinel HERE.

Current FRS County Agenda Rick Scott Proposal
Accrual Rates 1.6% general
3% special risk
No Change 1.6% general
2% special risk
Participant Contributions None “Modest Amount”, indexed cap, sliding scale, “offsets” 5% across the board
Defined Contribution Plan Offered with few takers Incentives, but not mandatory Only option for new hires
COLA fixed 3% / year Indexed to inflation Eliminated for accruals past July 2011 (protects current retirees and accumulated benefits)
DROP Program Continue working for 5 years while pension accumulates, then lump sum Wait time lengthened, credit for federal employment Eliminated after July, 2011

Palm Beach County Sheriff Career Service Legislation

The county wants to modify this statute to allow changes to current benefits during collective bargaining. Currently, no existing employer-paid benefits and emoluments to all certified and non-certified employees of the Sheriff with regard to the pay plan, longevity plan, tuition-reimbursement plan, career-path program, health insurance, life insurance, and disability benefits may be reduced except in the case of exigent operation necessity”. We support this change, but have been told by county staff and several commissioners that it is dead in the water. As it is a local bill, unanimous support in the Delegation is needed and the politics are just not there for a measure that would have union opposition.

Neither this item nor the following one were discussed at the recent joint meeting between County Commission and staff and the Legislative Delegation.

Fire/Rescue Sales Tax Surcharge Fix

The county wants to fix 212.055 FS to enable a return of a ballot initiative to raise the sales tax in the county to fund Fire/Rescue. We would prefer to repeal the provision and save us the trouble of a ballot initiative fight. Fire/Rescue should have to justify their budget every year, just like other county departments.

A bill was introduced to limit the use of revenues so collected, but was withdrawn when it was pointed out that amendments could have enabled the tax. As far as we know, no further action is pending and no bill had been introduced by the deadline last Friday by any of the county delegation.

Local Accountablility

HB107, “Local Government Accountability”, was introduced by Representative Jimmie Smith, FH43, Citrus County, and is now in committee, along with the companion Senate Bill SB224. We like it for its provisions on budget detail to be supplied by the Sheriff. The bill does the following:

Revises provisions relating to procedures for declaring special districts inactive; specifies level of detail required for local governmental entity’s proposed budget; revises provisions for local governmental entity’s audit & annual financial reports; requires local governmental entity’s budget to be posted online; revises budgetary guidelines for district school boards.
Effective Date: October 1, 2011

This was brought to our attention by the Clerk’s Office and we believe it deserves support by the local Delegation.

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