Amid fierce opposition from Democrats, the Florida Senate on Thursday approved a proposal that would block future teachers and other government workers from enrolling in the state’s traditional pension plan.
The Senate voted 24-16 to back the change, which would take effect with employees hired as of July 1, 2022. Those workers would be required to enroll in a 401(k)-style plan — though what are known as “special risk” employees, such as law-enforcement officers, correctional officers and firefighters, would still be able to take part in the traditional pension system.
Lawmakers have debated such a move for years, as private employers have largely moved away from traditional pensions and shifted to 401(k) retirement plans. Currently, government employees can decide whether to enroll in the state pension plan or a 401(k)-style plan.
Senate President Wilton Simpson, R-Trilby, has made a priority of revamping the retirement system. He issued a statement after the bill (SB 84) passed, citing a $36 billion “unfunded actuarial liability,” which is essentially a measurement of whether the pension fund is projected to have enough money to meet its future obligations.
“We have seen examples in other states of how quickly conditions can change and a government can experience financial crisis under the weight of its future retirement obligations,” Simpson said. “Waiting until conditions worsen in Florida to fix these problems is like closing the barn door after the horses are out.”
But Democrats said the pension system is in solid financial shape and that many government employees make less money than they would in the private sector but are attracted by the prospect of pensions and good health insurance. Sen. Loranne Ausley, D-Tallahassee, said the state makes a “fundamental promise” to workers that they will have secure retirements.
“This bill is breaking that promise, and I simply cannot support it,” said Ausley, whose district is filled with state workers.
There’s no similar House bill
The Republican-controlled Senate approved the bill along straight party lines. The House, however, does not have a similar bill, making it unclear whether the change will pass before the scheduled April 30 end of the annual legislative session.
More than 1 million current and former workers take part in the Florida Retirement System (FRS), including state workers, county employees and teachers throughout Florida. About 74% of current employees were enrolled last year in the pension plan, while about 26% were enrolled in the 401(k)-style plan, according to a Senate staff analysis.
The pension plan is funded through money from government agencies and employees and investment returns, with assets that had an actuarial value of about $164 billion as of June 30, the end of last fiscal year, the Senate staff analysis said. Actuarial liabilities totaled about $200 billion.
The bill, sponsored by Sen. Ray Rodrigues, R-Estero, would not apply to current employees or retirees. He said the unfunded actuarial liability will continue to increase, and the state will have to put more money into the pension system.
“It is our duty to ensure Florida’s employees have retirement plans they can count on, and that requires us to ensure we maintain long-term solvency,” Rodrigues said in a statement after the vote. “Also, as policymakers we must recognize that the rising costs of pension obligations crowd out funding for other priority issues such as education, transportation, security and assistance to the most vulnerable among us.”
But Democrats said the proposed change would actually make the pension system more unstable because fewer workers would be paying into the system in the future. Senate Minority Leader Gary Farmer, D-Lighthouse Point, said Florida has a “sustainable” pension plan.
“This mousetrap isn’t broken. We don’t need a new one,” he said.