Newspaper article The Florida Times Union

Lawmakers Eye Pension Plan Trims; Budget Has Few Roads to Revenue

Newspaper article The Florida Times Union

Lawmakers Eye Pension Plan Trims; Budget Has Few Roads to Revenue

Article excerpt

Byline: BRANDON LARRABEE

TALLAHASSEE - With a state shortfall likely to top $3.6 billion in the coming fiscal year and pledges from legislative leaders not to raise taxes to fill the shortfall, lawmakers are increasingly looking at the state's pension plan as one avenue to reduce spending.

"Reform is coming," said Sen. Jeremy Ring, the Margate Democrat who chairs the committee overseeing pension policy.

Legislative committees have already begun weighing changes to state and local pensions, which are also facing deficits after fund values were hammered by the stock market fall. And while the problems at the city and county level are worse, lawmakers say they want to address the issues with the state fund now. Gov. Rick Scott made overhauling the system part of his economic plan.

"I think we can make an honest discussion that it's more grave at the local level," Ring said. "But at the state level, you still have unfunded liabilities, you're still paying close to half a billion dollars for those unfunded liabilities, you're still paying for the retirement benefits."

There's no doubt that the state's pension system is in a tighter fiscal situation than it was a couple of years ago. According to the State Board of Administration, which oversees the fund, it had assets amounting to almost 107 percent of its liabilities on July 1, 2008. By the same date in 2010, that number had fallen to 87.9 percent.

Lawmakers are weighing an array of options, including pushing all new employees into a defined-contribution plan, like a 401(k), as opposed to a defined-benefit plan, like a traditional pension; forcing state employees to contribute to their own retirement; boosting the number of years it takes for the pension plan to vest; and revamping how the benefits are calculated to drive benefits down.

If the fund falls short on benefits, the gap would be filled with general revenue.

"Eventually, the taxpayers will foot the bill," said Sen. Mike Fasano, R-New Port Richey.

But even some GOP lawmakers are pushing for the state to proceed carefully, looking at ways other than deep cuts in benefits to help the fund's bottom line and worrying about using pension contributions to fill in budget holes.

"I just don't want to go out and try to, because of other ills elsewhere ... balance it on [employees'] backs," said Sen. Jim Norman, R-Tampa.

But changing pension plans could harm the state's efforts to keep its best workers, said Doug Martin, legislative director for the Florida Council of the American Federation of State, County and Municipal Employees, a public employees' union. An actuarial study commissioned by the Legislature and issued last July said forcing employees into a state defined-contribution plan would increase costs by $150 million each year.

"Doing so would exacerbate our problems, not help them," Martin said. …

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