Government

Rick Scott Proposes $2.8 Billion in State Pension Savings

Calls for ending DROP, double dippers
By: Gray Rohrer | Posted: February 2, 2011 3:55 AM
 RICK SCOTT 61710 CH07

Gov. Rick Scott

Gov. Rick Scott unveiled his plan to reform the state’s employee pension system in Naples Tuesday, promising $2.8 billion in savings over the next two years.

The savings would be achieved, Scott said, by requiring state workers in the Florida Retirement System to contribute 5 percent of their salaries to the system and have new workers join a defined contribution plan akin to a 401(k) retirement plan.

Workers are currently afforded the option of joining a defined benefit plan with benefits accruing after five years. Florida is one of the only states in the nation that does not require some form of employee contribution to state pension plans.

“We need to bring Florida in line with the private sector and nearly every other state in the country by requiring government workers to contribute toward their retirement plans,” Scott said.

Legislators have warned that employee contributions to their plans were likely to be part of any pension reform package, but other parts of Scott’s plan, like ending the Deferred Retirement Option Program, or DROP, reducing the annual service credit and phasing out the cost of living adjustment, have not been a central part of pension talks in committees.

Scott’s plan would close the DROP to all employees on or after July 1. The DROP program has come under biting criticism in recent years as some employees used it to “double dip,” or receive a pension benefit and a salary at the same time.

The annual service credit, or percentage of an employee’s salary that is paid upon retirement, would be reduced from 3 percent to 1.6 percent for most workers, and 2 percent for “special risk” workers like police officers and firefighters, under Scott’s proposal. The cost of living adjustment, or COLA, would be ended by eliminating it for work done after July 1. Current retirees would continue to receive their 3 percent annual COLA, but those who retire after July 1 would only get it for work done before that date.

Sen. Jeremy Ring, D-Margate, who chairs the Governmental Oversight and Accountability Committee that deals with public pension reform, said he understands the need for reform but that it was too early to discuss the specifics of Scott’s plan.

“I certainly support the idea of employee contributions to their own pension plans,” Ring said.

Other aspects of Scott’s plan, however, may not have Ring's full backing.

“I think (DROP) needs reform. I never heard a discussion prior to this about ending the program,” Ring said.

Yet Ring realizes Florida must fill its $3.62 billion budget deficit -- which could rise to $5 billion if proposals to increase the state’s reserves are followed -- and public pension reform is one of the state’s dwindling options. Public-sector unions, however, point out that they haven’t received a raise in five years and contend that changes to the FRS are not needed.

“While we need to be sensitive to the fact that they haven’t gotten raises in five years, we’re in a $4 billion hole,” Ring said, adding that a Senate bill dealing with pension reform will be filed in the next two weeks.



Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.


Comments (26)

taxiof2
9:36AM OCT 17TH 2011
Get rid of the DROP program. This is absolutely ridicious to pay people to retire. This people retirement with millions because of this program. Our money!
wellbutrin
12:21AM SEP 30TH 2011
Great post I must say. Simple but yet interesting and engaging. Keep up a good work!
michael riley
2:48PM AUG 5TH 2011
Isn't it amazing that Rick Scott as CEO for his heavily fined Health Care Corp. walks away with a $320,000,000.00 golden parachute and wants to reduce the public employees retirement which averages about $20,000.00 per year.
Been Lied To
9:44PM MAR 24TH 2011
The point is not so much who earns how much, public or private employees. The issue is we've been LIED TO our entire working careers. For 25 years I've worked for the State of Florida and been a member of the Retirement System. For 25 years I've planned my retirement based upon the yearly information they send us which included DROP retirement figures. Now, within months of entering the DROP program the rug is being pulled out from under me. I can understand closing DROP for new state employees but don't penalize those of us who have put in our time and BELIEVED in the system. Just another variation of the ENRON retirement scandal with a government twist. Could there be a class action suit against the state?
Mary
10:53AM FEB 23RD 2011
My husband has been a state employee for almost 20 years. He is a college graduate and had the opportunity years ago to leave his state job for a much higher paying private sector job. He chose not to because of the benefits and pension plan. He has not had a raise in over 5 years, never receives bonuses or any other perks a private sector job would offer. Now, the governor wants to change the rules of the pension plan. How is that fair to employees who have accepted a job and made a trade off by taking a lower salary. If you want state employees to contribute to their plans then you should give them something back, ie a raise, or raising the service credit, not lowering it. Also, we have already had our life insurance cut way back and have to supplement it ourselves. I feel like we were all dupped. How can you change it for employees who have already accepted a position, put in the years with the low salary. For some its too late in the game to change jpbs. The fact is State employees are paid LESS than private sector employees doing the same job, but the trade off is the benefits. Quit comparing apples to oranges. If you want to treat us like a private sector company PAY us like a private sector employee.
used to be a democrat
11:44PM FEB 23RD 2011
USA Today has a story today about how public employees are much better compensated than people in the private sector, with an average compensation of $40 per hour compared to $26 per hour.

It’s not so much their salaries that account for this, as their generous pensions and other benefits. As Americans live longer, their pension benefits can approach their salaries in value.

Some uninformed people claim that public employees are underpaid because they don’t benefit from “corporate profit and private wealth,” like this letter writer who believes that teachers can’t live on less than $100,000 per year.

But the reality is that even in wealthy, high-living cost areas, public employees’ overall compensation packages are better than most of their private-sector counterparts.
BattChief
3:02PM FEB 12TH 2011
The reason Police officers and firefighters have high risk pensions is because we deserve it. The retirement earnings on overtime are there because when you work overtime in a high risk occupation you are putting your life on the line. No different than regular duty. By the way may be someone should do some research on the post retirement morality rate of high risk employees. Not only do we risk our lives on a daily basis protecting your homes and family but then we get to retire, we get to die young at an alarming rate because of years of exposure and the constant sleep deprivation that effects all high risk workers. When you are all safe in your beds tonight, just give some thought to the fact while you are safe and sound a police officer may get gunned down or a firefighter enters a burning building to safe a child's life. Taxing hard working employees of any kind to pay for social programs or budget woes is wrong and should not be tolerated. I am a 32 year fire service veteran who has seen over the years lots of concessions made by high risk employees in hard times to forgo pay raises or be effected by budget cuts. Mostly because of fiscal miss management. So here we go again, those who live to serve others are being asked to the make deep deep concessions. Sound fiscal policy is one thing but to hurt our employees the way they are getting ready is a travesty of justice. There are enough city, county, and state workers to effect a recall of the Governor!!!
McGregah
8:30PM MAR 23RD 2013
BattChief, While I have the utmost respect for what you do, and agree with you wholeheartedly when you discuss the "high risk" involved in the job, I have to add something to this. First, NOBODY put a gun to your head to take the job. You took the job knowing full well the risks. And you are compensated for that job. The tax payers, pay you handsomely for the entire length of your career. For you and EVERY state employee to argue that it is not fair that you should contribute to your own retirement is a major league slap in the face the tax payers. We pay you while you are an active employee. We should NOT be responsible to fully fund your retirement also. To me, this is a simple matter of greed. Again I remind you, no one forced you into your career. You chose it freely, and the risks that come along with it, and for that, we the tax payers not only pay you, but afford you the opportunity to only work one week per month. Most in the fire service, have another job that they work on their days off. You really should try looking at it from the stand point of the tax payer. You will be getting something that most tax payers will never see, and yet, they helped fund yours. Now I ask you, do you actually think THAT is fair?
Rah
2:04PM APR 3RD 2011
Amem BattChief!
Scottlaw
10:59AM FEB 8TH 2011
Has anyone thought about the effect of cutting the salaries of 655,000 plus TAX PAYING citizens of Florida will do to the economy? These people don't just benefit from tax payers money, their are tax payers. Less money to spend means less sales tax revenue, means less money going into state coffers. "Robbing Peter to pay Paul" never made good sense. As to Drop, the money going into the Drop account is the workers retirement benefit they normally would get each month. Cutting out Drop will have little affect on savings. After 35 years of government service to the people of Florida I can't believe everyone is getting on this ill-fated bandwagon.
1:07PM FEB 8TH 2011
Funny how public servants posting hear think they are the only one's who work hard. I know many retiring at 50 and living good lifestyles while too many private sector workers have to fund their retirement at 15% using their own contributions and will need to work until 75. FL needs to focus on growing private sector jobs that contribute to GDP, not creating and saving govt jobs that are parasitic to the economy.
Dixie
4:56PM FEB 8TH 2011
How many private sector employees do you know who put their lives on the line EVERY day to protect others?? How many private sector employees do you know who leave spouses and children everyday not knowing they will come home safe. These "parasitic" govt jobs are what keep you safe at night! No one said these people are the only ones who work hard but a lifetime of risk and service to the community should be rewarded with a decent retirement.
dj
3:31PM FEB 10TH 2011
I couldn't have said it better!! The next time you have a heart attack, get into a car accident or someone is breaking into your home....call someone from the PRIVATE sector!
mjolnir
12:37PM FEB 10TH 2011
.... please catch yourself with this age old argument of " life on the line everyday " and leaving your children while they are eating their fruitloops and cherrios .... there are a VAST majority of government and state employees that fit the discription above .... with that said you made a choice as to the job you are in ... not drafted ... many people will take that job .. regardless of the risk ... when you tested did you not compete for the job? Did you not " hope " and pray you would get the job? Did you not think of people you knew and conections to get you into this " risk " job? So lighten up ... people want to vent .... you are too accustomed to having your way when " doing " your job ... here you do not have such authority ... and a decent retirement should be just that .. not double dipping because now you want more ... or you think I got to get mine ... work until a normal retirement age .... say 60 ... stay in shape .. don't drink and you'll make it ...
Rah
2:09PM APR 3RD 2011
You're the perfect example for why birth control was invented, idiot.
bayareafireman
9:11PM FEB 10TH 2011
@ mjolnir

First of all the number of double dippers is staggering and a lot of which are politicians. Also, politicians and judges receive "special risk" retirements (which blows my mind). You along with the politicians are focusing on the supposed over exaggerated pension funds we receive but do not focus on the people who are truly sucking this state dry which is able-bodied people on disability, welfare and medicaid. Now on to the work till you 60 comment. I started in the fire service when I was 19 so it is unrealistic to last in this field for that long. And, honestly do you really want a 60 year old man the one who has to save your family member from a house fire or would you prefer a younger firefighter. By the way I do not drink and I work out 4 times a week. With that said I have blown out my knee fighting a fire when I fell trough a floor, hurt my back while pulling the piece fallen roof off another firefighter, have lost a considerable amount of my hearing, came in contact with god only knows what communicable diseases and I am only 27. No matter how in shape you are there are risks that can end our careers and/or lives in the blink of an eye. I am not a greedy person and last year I made 45k and worked over 3,300 hours (around 13.50 a hour). Are you willing to risk your life for 13.50 a hour? My pension which is paid by my county (not by the state) is only 70% of my ending salary.
jason
11:50AM FEB 9TH 2011
Our risk are the same as the private sector. Going to and from work as you ys but in your everyday job you are not exposed to the risk that we are. Disease fire guns just the things that are unknown. Mine changes on a call to call basis. If you did these types of jobs where would your passion be. Remember I are paying these also I dont think I am taking money from myself.
John W. Stegkemper
1:33AM FEB 3RD 2011
All of the sudden the State employee is the target. While the public sector enjoyed large pay increases, bounses,perks, cars,entertainment packages and gas cards the State employee got nothing, absoulutely nothing (since the storms of 2004). The State worker has been in salary "limbo" for going on six years now which oddly enough is the same time the private sector was laughing at the lowly, stagnent State workforce. Proven fact-there are less State workers per citizen for the State of Florida than all but two other States.
The department I currently work for receives 3% per year for retirement. We do not pay into this account.Keep in mind that not all of the empoloyees enjoy the 3% but there are some that have their lobbiest speaking into the ear of lawmakers, for example, the State Pharmacist enjoys a 3% per year 'High Risk" retirement. He does not work with criminals who can injur him at any given minute, we do. There are too many so called professions that have somehow found thier way into the "high Risk" class which has crowded the pool. The pool however is fully funded and it is this readers fear that our government intends to utilize this :flush: fund to pay for pet projects.Not only are we subjected to daily abuse and violence, we now have to worry that our lawmakers want to save their precious money by placing the burden on the working man and woman in the great State of Florida. There are numerous ways available that need to be addressed as soon as possible to save budget monies:
Fuel efficient vehicles-The decisions made over the past year, possibly more have not been though out very well costing the tax payers much for for fuel than is necessary
Workers compensation: There are enough inspectors to take a good look at the staff out on workers compensation, find the ones who are abusing the system, fire them and get the thousands and thousands of dollars back to us, the tax payer.
Minority vendor-Buying an item from a minority vendor at an inflated price is morally wrong not too mention that it's an "anti-capitolistic" ideal.
It is difficult enough to recruit the best and brightest to work for our state, especially in the arena of Law enforcement that the reduction or manipulation of the pension fund would take the only selling point the State has,
The private secot pays their workers doing the exact same job at least 40% more across the board and in some cases, alot more than that (source,Indian River Sheriffs Department,St, Licie Sherifs Department).
As it stands right now, we have lost over 75% of our experienced staff. We are doing the tax payer oroud and we will continue to fight crime on a daily basis. The "SACRIFICE" is getting too great and the payoff exchange is not worth the cost, he cost of not going to a sons ball game, missing a dance recitle,working Christmas morning bbecause we never shut down.
We will faithfully continue to fight the good fight and protect the public. We simply hope that you will suppot us when it comes time to look at the propasals being presented.
Jen
7:19AM FEB 12TH 2011
I work for a small city and what Rick Scott is proposing is just another way to hurt the middle class. Our city hasn't seen any pay raise, not even cost of living for the past two years and now he want's five percent of our salary. Most of us already have to work two jobs to make it (yes one is the public sector) and there we still get our raises. So three jobs here we come!!!!!!! Maybe his plan would work for new hires but employees that have been there over 10 years and don't have to many years left should not be penalized.
v.m.v.
12:21PM FEB 6TH 2011
Typical government in action, go after the hard working people's retirement .
Our elected officials, have for to long been out of touch with Mainstream America.

Hope the Gov of Fla & Big Brother, wake up, before we have whats happening
in the middle east starts here in this country.

The Gov of Fla has loss my faith again in our government, for they have shown me " Politics as usual " from the start.

Good luck to us all, cause Gov Scott is out for our money that we work hard and throw it at another wasted government program.

Wait and see !
John Longacre
6:48PM FEB 4TH 2011
Does this include the Legislature, Judges, and Cabinet Members?
Joe Floatilla
12:38AM FEB 7TH 2011
No surprises here, Rick Scott's message is loud and clear: He plans on paying for his proposed tax cuts for businesses on the backs of those who can least afford it ... the hard working middle class. Cutting out pensions is just another way of taking money out of the pockets of the middle class. I have no issue with workers contributing to their pensions, but their employers should have to negotiate that with the workers ... employers don't give without something in return, workers shouldn't either. 401-K's have already shown that they are not a reliable means of saving for retirement ... just ask all of the retirement age folks who lost most of their 401-K savings thanks to the under handed dealings of Wall Street brokers and CEO's. Scott's cuts will only benefit his already too wealthy corporate executive buddies ... and by the way, this arrogant mega rich folks won't share their tax savings with their employees ... they will just stuff it into their already bulging pockets ... Rick Scott = Governor for the wealthy!
David
10:54AM FEB 7TH 2011
That 3% inflation pay increase is huge when spread over a person's retirement. My wife is a school teacher and her pension is about 1/2 of my corporate pension. Yet in some 20 years, after her inflation increases each year, it will equal mine. That, my friends, is a huge benefit, huge. Firefighters and cops, and perhaps others, who work all the overtime that they can get their last five years so that their pension is based on overtime, and not their normal salary. Not right.
bayareafiremanbayareafirefighter
9:21PM FEB 10TH 2011
You should know we have MANDATORY overtime. That is set by the federal and state governments to prevent units from going out of service due to staffing. By the way, that means a 48 hour shift.
smarty pants
6:24PM FEB 9TH 2011
After the cuts who are you going to call when someone enters your home and attempts to violate your family. I dont think many of you will rescue them your self, of course you will call the Police, right after making these cuts, i hope they respond like they used to.
pc
12:20PM FEB 12TH 2011
For the "tea partiers" and Sarah Palin idiots--Backlash is coming and it will be severe. Make no mistake.

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