Controversial pension change surfaces in Senate

Bill would move more workers into a 401(k)-type plan.

TALLAHASSEE — With two weeks remaining in the legislative session, a Senate committee will take up a new bill that could move more public workers into a 401(k)-type retirement plan rather than the traditional pension program.

The Senate Governmental Oversight and Accountability Committee is scheduled Monday to take up a proposed bill (SPB 7030) that would move public employees who are hired after Jan. 1 into the investment plan if they do not actively opt for the traditional pension coverage.

Currently, newly hired s c h o o l worke r s , c o u n t y employees, college workers, state employees and some municipalities’ employees “default” into the traditional pension plan if they don’t opt for either plan within six months of their hiring. Only 22 percent of the new public employees opted for the investment plan in the last fiscal year, according to the State Board of Administration.

Workers defaulting into the investment plan is a major issue for House leaders, who have pushed similar provisions for the past half-dozen years. The issue is already part of the formal budget negotiations bet ween the House and Senate, although the Senate had backed only a bill (SB 7022) adjusting pension contribution rates for public agencies, while the House supported legislation (HB 5007) with the investment-plan default.

Rich Templin, a lobbyist for the Florida AFL-CIO, which opposes the proposed change, said the emergence of the new Senate bill with the House provision is an indication it is a part of the budget negotiations between the House and Senate in the final weeks of the annual session.

“We’re looking at it as a major threat,” Templin said. “The deal-making that happens on the fourth floor of each chamber (where the Senate president and House speaker reside), we’re not privy to, nobody in Florida is privy to, except for the people in the room unfortunately.”

Templin said it was “troubling that such a major policy change is going to largely be left up to the (budget) conference process.”

S e n a t e G o v e r n me n t a l Oversight and Accountability Chairman Dennis Baxley, R-Ocala, acknowledged the new pension bill is a “template” for negotiations on the issue with the House. He also said his committee will take up another bill (HB 7007) on Monday that would revamp health-insurance coverage for state workers and is another House priority.

But Baxley called the pension bill “a work in progress,” with the idea that the pension and health-care legislation will move to the Senate Appropriations Committee for further negotiations.

“I have no preconceived idea that this is anywhere n e a r t h e f i n i s h e d p r o d - uct,” Baxley said. “I think it’s important we get this up and into the process.”

Friday’s resignation from the Senate of Miami Republican Frank Artiles presents a possible complication for the legislation. Artiles was vice-chairman of Baxley’s committee, and his departure left the panel with three Republican members and three Democrats, who traditionally have opposed major pension changes. A tie vote would kill any legislation.

“I’m encouraging those who want to make some c h a n ge s t o k i n d o f h o l d those for the big discussion in Appropriations with Chairman ( Jack) Latvala,” Baxley said.

House leaders said they want to move more newly h i r e d wo r k e r s i n t o t h e investment plan because it would allow the employees to keep their contributions and investments if they left public employment before the eight-year vesting period, which is required for the traditional pension benefits.

Advocates for the workers say the change is unnecessary for the $150 billion fund, which is considered one of the financially healthiest public pension systems in the country with the ability to pay more than 85 percent of its future obligations.

“There i s no reason to make this change in the (pension plan) default. It is purely ideologically driven by those who do not believe in public pensions,” Templin said. “It’s an attack on retirement security for the public sector. There’s no way around it, no way to spin it.”