Government

Unions vs. GOP in Pension Battle

Utah provides a model for Republicans to win on reform
By: Kenric Ward | Posted: January 24, 2011 3:55 AM
Dean Cannon and Rick ScottDean Cannon and Rick Scott
House Speaker Dean Cannon says state pension reform is "on the agenda." But the subject promises to be contentious, as public-sector labor unions have already ramped up their defenses.

The AFL-CIO dismisses critical reports about the retirement fund's "myths."

But across the country, states are reforming their pension programs to contain costs and bring them into line with private-sector funds, which require employee contributions.

As of Jan. 1, Florida is the only state that gives all its public workers a free ride. Amid rising budget deficits, a growing number of politicians and policymakers have concluded that Florida's old-style "defined benefit" program is a luxury that state and local governments can no longer afford.

Utah legislators made that determination last year when they replaced the state's defined-benefit pensions with a 401(k)-style plan for all new public employees. For the first time, local and state workers were required to contribute to their retirement fund.

Though the move promises to save taxpayers billions of dollars and put the state on firmer financial footing, union bosses fought the reforms. They staged public rallies threatening to defeat any lawmaker who dared to vote for it.

But when the November elections rolled around, not a single Republican who voted for the reforms lost. In fact, the Wall Street Journal noted, the GOP picked up seats.

Florida union leaders appear to be spoiling for a similar public-relations fight -- even as taxpayers clearly want their elected lawmakers to pass cost-saving measures.

While the AFL-CIO notes that state pension benefits averaging $16,000 to $23,000 a year cannot be considered extravagant, Gov. Rick Scott sees the Florida Retirement System as a $122 billion "ticking time bomb."

As of June 30, the fund had an unfunded liability of about $15 billion. Though that's a relatively low percentage of the assets, Scott and others see the liability level ballooning in the years ahead if changes aren't forthcoming.

Last year, the fund posted a $16.7 billion shortfall.

"Underfunded public pension liabilities are economic sinkholes waiting to collapse," said J. Robert McClure III, president of the James Madison Institute, a conservative research center based in Tallahassee.

Following the recent examples set by Utah, Virginia and Missouri, Scott wants all new state employees to start contributing to their pensions. Grandfathering existing employees could help to blunt union resistance and legal challenges.

But Florida's unions aren't conceding.

Florida AFL-CIO legislative and political director Rich Templin calls criticism of the existing pension system "political rhetoric and ideological posturing." Defenders of the status-quo say "defined contribution" 401(k)-style programs don't necessarily perform any better, and could do worse.

Unions tried those lines of defense in Utah, but they were routed at the polls. Floridians, who elected supermajorities of Republicans to the House and Senate, appear to be of like mind.

Cannon, in remarks on Wednesday, said the exigencies of Florida's budget require action.

“There is no doubt that the road ahead is difficult,” said Cannon. “We know that there is no secret stash of money; no hidden account, and no politically easy, pain-free magic bullet.

"Governing in 2011 is not about choosing between programs that you like and those you don’t like. With our current budget, all levels of government must responsibly make difficult choices between worthwhile ideas.”

In that vein, Florida faces a fork in the road. It can leave its retirement program untouched and follow states like California, New York and Illinois where rising pension costs are squeezing other services, shutting down parks and siphoning school funds.

Comments (11)

Michael Riley
10:47AM MAR 23RD 2011
This from former Republican President Dwight D. Eisenhower...
*"Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things, but their number is negligible and they are stupid."---Republican President Dwight Eisenhower
Ken Albin
10:04PM FEB 9TH 2011
I am a retired teacher living on an already miserable pension. I gave up 31 years of my life and half of my colon so your children could be successful in the world. Now I am losing my pension's COLA so less food for me. I am losing my health insurance subsidy so no health insurance. Is this Scott's sick way of trying to eliminate a large percentage of retirees from the pension plan. If it is, I think he will be quite successful. Write your legislators and tell them what you think about the King of Medicare fraud and his grand plan.
Larry Peoples, Sr.
3:30PM JAN 26TH 2011
I am a voter and a retired Correctional Officer Lieutenant from the Florida Department of Corrections. I am now receiving my pension from the State of Florida, so I am very concerned about the knee-jerk reaction of some legislators who are hell-bent to strip retirees of our "promised benefits" such as the Health Insurance Subsidy and COLA's.

Before we decide to retire, most of us sit down and calculate the amount of our Average Final Compensation, the yearly amounts of our 3 percent COLA's, health insurance subsidy amount and other factors. With this information we then make an informed decision to stay or retire, based upon the assurances we were given.

These benefits are what we were PROMISED and were used as an enticement to BEGIN employment and to REMAIN employed with the State of Florida. So when a public worker gets promised a pension, and if the correct value (based on best assumptions) is not set aside to fund that pension, then we have the equivalent of a theft of services.

To take away these COLA's and Health Insurance Subsidy would mean that our own future retirement calculations will be wrong and we will surely suffer down the road because of the shortfall that will inevitably occur.

The decisions that are made in Tallahassee are not just cold, abstract calculations. These calculations affect real flesh and blood people. I would certainly hope that my elected Representative will remember, that if a vote to strip retirement benefits were conducted - humanity will win out.

So in my mind the answer is simple. If the Legislature is an honorable body, then they must honor the covenant made to state employees by past Legislatures. To not do so would be a form of malfeasance in office and a breach of contract.
Shawn
10:47AM JAN 27TH 2011
I have been a fire fighter for five years. I have not received a raise in the last four years. Line one from my w-2 for 2010 reads $28639.63. I have a wife and two children and I work 56 hours a week. Do you think I am overpaid? If there was no pension why would I work for so little?
Ken
12:53PM JAN 26TH 2011
There's no "free ride" for these workers. We work for it. I took a salary cut for benefits. Anyone who wants to do away with unions must want to go back to the days of the robber barons. Child labor, no paid days off, no recourse for the little guy, no environmental regulation. We're on our way to turning into Mexico. A few wealthy families living behind guarded walls, and everyone else dirt poor.
will
9:27AM JAN 26TH 2011
I became a fireman 20 years ago and started at a salary of 19,500 a year. I was told if I sacraficed then and was patient that when I retired, (or was killed in the line of duty) that myself and my family would be provided a decent pension. Unlike most of americans, I was not greedy and did not need to make 50k right away. I put my time in and sacraficed along the way. I have since be diagnosed with cancer as a result of working 20 years in toxic enviroments. I continue to work. I chose this career because I was told that I would be provided a decent pension at the end. A private sector employee can leave the home every morning and know that he will return home that night to his family for dinner. A police officer or firefighter does not period. period!! Politicians and other private sector employees who make 110k plus easly and are given huge bonuses annualy is ok right?? but a cop or fireman is paid 60k a year and retires with 75% of his salary at best is not ok. WTF is wrong with this picture. When the economy was booming and the builders, realitors, investors were making huge profits....you did not hear one fireman or cop pissing and wining that those people were making too much money, while we were still making our measily 40-60k...we chose a secure career path instead of greed....now look who's pissing and wining....typical republican response...lets take it off the working men and women.....wake up america.!!!..these people do not have the interest of middle class families in mind.
m weldon
4:39PM JAN 29TH 2011
Amen brother firefighter! 19 years as firefighter. Middle class being destroyed at the will of the rich!! Smoke and mirrors! Third World here we come!
sherry
4:42PM JAN 25TH 2011
It's time the masses started paying attention to the political merry go round. Public employee unions, police, fire, teacher unions are working against the public. They are serving only themselves. How can government serve the best interest of the people when the unions they hire are working to insure the highest possibe pay and benefits for their workers? Oh, I forgot, the unions just funnel all their dues to the politicians who will keep rubber stamping those ridiculous contracts. And they are usually Democrats. Wake up people. Force our government to eliminate government worker unions. It is a clear conflict of interest.
RepublicanConscience
2:24PM JAN 25TH 2011
Two points:

First, the pension system for public employees, compared to private sector is extreme. It is out of proportion to the general public in Florida.

Second: How can you expect compassion for unions when they funnel so much taxpayers money back to elect Democrats? Every dollar in the public pension fund originated from the taxpayers.

I would pass legislation banning public sector unions and collective bargaining agreements.

You go, Scott!
Ken Albin
10:07PM FEB 9TH 2011
This is not "the Unions" vs Scott. This is Scott vs individuals who are facing the loss of their health insurance and possibly their homes.
Greg
8:10AM JAN 27TH 2011
I love how the average republican is ignorant and how they love to spew the rhetoric given to them by the media. First of all unions are funded by money given to them by workers that we pay in the form of dues and deductions. The public information campaigns set in motion by the governments fighting against us is tax payer money. Second, The elected officials have a better pension program that includes health care provided free for the rest of there lives, unlike ours that does not. We work an average of 25 years because we physically cant work longer at a job that takes so much out of someone. Instead of sitting behind a desk or keyboard and spewing that dribble, come and try my job. Seriously, come to my station, put on a uniform, take a cut in pay and do my job for 1 day.