Senate could cap pension contributions at much lower rate than what Scott wants

The following article was published in The Florida Current on February 24, 2011:

Senate could cap pension contributions at much lower rate than what Scott wants

By Gary Fineout

Saying that state workers, teachers and firefighters should know now how much money they will be asked to pay, a top state senator on Thursday proposed capping the amount that employees would be required to contribute to the state pension plan.

Sen. Jack Latvala, R-Palm Harbor, wants to limit the contribution rate at 2 percent for rank-and-file state workers and those in special risk classes, while limiting the contribution rate at 4 percent for senior management and elected officials.

He said it was important to put people on notice as soon as possible about what lawmakers plan to do.

Latvala said he based his cap amount on what state workers used to pay back in 1974, the last time that state employees were required to pay into the pension fund. Latvala’s move is a far cry from the dramatic proposal by Gov. Rick Scott that calls on state workers to pay 5 percent of their annual salaries into the Florida Retirement System.

Latvala discussed his proposal on Thursday when a Senate panel went over its major overhaul of the Florida Retirement System. No votes were taken.

Sen. Mike Fasano, R-New Port Richey, went further than Latvala. He said that lawmakers should limit the contribution rate for rank-and-file employees to no more than one percent of their salaries.

Sen. Jeremy Ring, D-Margate and chairman of the Senate Governmental Oversight and Accountability Committee, had planned to not designate a contribution amount in the bill. Ring has said that will be determined by the Senate Budget Committee. Ring warned on Thursday that putting in a contribution amount could get changed later.

Latvala wants to make other changes, including allowing employees who make under $75,000 to still be able to choose whether or not they want to be the traditional pension plan or a private sector styled investment plan. The current bill – SB 1130 – would close the state’s main pension plan to new enrollees and instead shift them to an investment plan.

“I feel strongly that many people work for government for the pension they get,’’ Latvala explained.

Latvala also wants to use employee contributions to pay down any unfunded liabilities in the state pension plan, but he acknowledged that may be a long shot. But he said legislators ought to be “honest” that what they are doing is part of an effort to deal with the state’s nearly $4 billion budget shortfall.

The moves to blunt the potential impact of pension reform comes after hours and hours of sometimes emotional testimony from police, firefighters and other state workers who say that the pension is one of the main reason that they work for government and put themselves in harm’s way.

Ring, however, contends that lawmakers have been trying to do a “balancing act” and noted that so far the Senate has not embraced many of the reforms sought by Scott, including shutting down the Deferred Retirement Option Program.

“I think we’re doing a reform bill without being punitive,’’ Ring said.