The Florida Legislature is poised to pass additional reforms to the Florida Retirement System, a public pension plan benefitting more than 40 percent of Baker County’s workforce.
Three week’s into the 2013 session, bills are making their way through both the house and senate to move the Florida Retirement System away from a “defined-benefit” plan to a more risky “defined-contribution” plan for new hires.
The existing defined-benefit system guarantees pension benefits based on a worker’s top annual earnings and years of service. The defined-contribution plan functions as a 401K-style investment plan that’s subject to the ups and downs of market forces.
The house bill (7011) filed in February by Rep. Jason T. Brodeur (R-Sanford) and pushed by House Speaker Rep. Will Weatherford (R-Wesley Chapel, FL), would automatically enroll government employees hired after January 1, 2014 into the investment plan.
The senate bill (1392) filed by Sen. Wilton Simpson (R-New Port Richey) takes a more flexible approach.
It would give new hires the option of enrolling into the investment, or defined-contribution, plan or the traditional plan. If they fail to make a choice, they’ll default into the investment plan, not the defined-benefit plan as they do today.
Sen. Simpson’s proposal would require elected officials and senior management employees to enroll in the investment plan, however.
The senate bill also includes incentives to attract workers to the defined-contribution plan.
In 2011 the legislature passed and Gov. Rick Scott signed into law a requirement that workers enrolled in the Florida Retirement System contribute 3 percent of their salaries to their pensions, which is saving the state an estimated $861 million per year.
The Florida Supreme Court upheld the law, which was challenged by the state teachers union, in January.
The senate bill filed March 1 would reduce the employee contribution to 2 percent for those who select the investment-style plan. It also extends the vesting period for the defined-benefit plan by two years, from eight to 10.
The vesting period for the defined-contribution plan would remain unchanged at one year.
In Baker County, 41.3 percent of workers are employed by government and earning $34,325 on average annually, according to county profiles prepared by the Florida Legislature’s Office of Economic and Demographic Research last year.
While the changes, if signed into law, would not effect current public employees, they would impact the workers who arrive in the state retirement system as current employees become pensioners in the future.
Small county funding secure
Beyond the pension reforms, county officials say there’s not much being debated in Tallahassee this year that would significantly impact Baker County. And that’s a good thing.
Following meetings with state legislators at the capitol last week, County Manager C.J. Thompson said three potential problems he was watching for all appear to have little chance of surfacing.
Mr. Thompson’s major concerns were job cuts at Northeast Florida State Hospital and the Florida Department of Corrections, and an effort to decentralize the Florida Department of Health, placing more of the financial burden for county health departments on county governments.
“They [legislators] are not in budget cutting mode and there’s been no mention of cuts at DOC [department of corrections] or the state hospital,” said Mr. Thompson. Regarding the health department, he said there’s “no momentum” for changes at this time.
Small counties like Baker County with low property values and a limited tax base are given additional funding by the state annually.
Mr. Thompson said he doesn’t anticipate reductions in those funding streams, either.
With the state projecting a surplus for the 2013-14 fiscal year, many government agencies, businesses and nonprofit organizations are competing for the additional money. But it’s clear budget issues will be less contentious this year.
Clerks concerned about unfunded mandate
Clerk of Courts Al Fraser said he’s hoping some of the projected surplus makes its way to the court system, which has been underfunded in the state budget in recent years.
That’s forced the state to transfer additional money in the middle of the fiscal year from other priorities to keep courthouses operating.
In addition, Mr. Fraser and his fellow clerks across the state want the legislature to eliminate an 8 percent service fee paid to the Department of Revenue on monies sent in by the clerks.
The fee amounts to $35 million statewide, said Mr. Fraser.
There’s also a bill proposed that would place the expense of hiring a magistrate to preside over Value Adjustment Board hearings on the county.
Today, the county is represented by an attorney and the county commission appoints value adjustment board members to hear appeals from property owners regarding their property tax valuations, which directly impacts the amount of their tax bills.