Floridians will head to the polls in November to decide the next governor of Florida, but for state workers, including USF’s faculty and staff, the race may come down to a single issue: the future of the Florida Retirement System (FRS).
The debate over what should happen to the FRS and how new state employees should be compensated after they retire has caught the attention of the more than one million state workers currently enrolled in the system.
The $149 billion pension fund currently has an unfunded liability of less than 15 percent, a rate considered healthy by most experts, according to The Pew Charitable Trusts.
This didn’t stop Florida Governor Rick Scott from spending his last three years in office pushing to reform the pension system by cutting back the state’s employer contribution and attempting to force new state employees into the 401(k)-style “defined contribution” plan.
Opponents of pension reform, such as USF’s faulty and staff unions, have criticized Scott for what they see as an unnecessary attack on a relatively healthy pension fund. It was under Scott that state workers began contributing an extra 3 percent to the retirement fund in 2011.
The university’s faculty and staff unions, United Faculty of Florida (UFF) and American Federation of State, County and Municipal Employees (AFSCME), saw the forced contribution as, essentially, a 3 percent pay cut.
“The FRS is a sound, healthy pension fund and it should not be touched for any reason. The 3 percent that employees are contributing should be stopped and we do not, in any way, shape or form, support Governor Rick Scott,” said Hector Ramos, Region 3 director of AFSCME.
For UFF, the uncertain future of the state retirement fund is an impediment to their ability to attract talented faulty from outside the state, UFF Executive Director Ed Mitchell said.
“We don’t hire faculty from only within Florida; we are hiring faculty from across the United States and internationally,” Mitchell said. “If we are not competitive in terms of our salaries, our retirement benefits and our health care benefits, we are not going to be able to attract and retain the best.”
For many of the state’s lowest paid workers, Maria Peas, secretary treasurer of USF’s local chapter of AFSCME, said fighting back against future pushes for pension reform is less about hiring and more about survival.
“I know several people who had foreclosure start on their house within three months after that 3 percent pay cut …” Peas said.
Before the $2,000 raise USF staff received over the last two years, AFSCME said the staff had not seen a raise for nearly seven years. The average rate of pay for a staff member at USF is $15.50 per hour, according to AFSCME.
“I know the 3 percent cut doesn’t seem like a lot, but for workers who have gone a while without seeing a real raise, it hurts,” Ramos said.
Gubernatorial candidate Charlie Crist, who during his time in office made no effort to change the state’s retirement system, has already begun rallying the support of public workers unions.
In May, the Florida Education Association came out in support of Crist and AFSCME has signed on to a political action committee fund that has given over $1 million to Crist’s campaign. The former governor has also been invited to attend AFSCME’s statewide convention in Altamonte Springs this weekend.
“Florida needs a governor who respects public employees and the work that they do … Charlie is committed to keeping Florida’s public pension system strong,” said Crist’s Campaign Communications Director Brendan Gilfillan.
While Scott’s push for state pension reform has pushed many state workers into the arms of Crist, it has also won him the support of Republican legislators and interest groups, who say the $500 million Florida spends each year to cover future liabilities are better spent elsewhere.
Americans for Prosperity (AFP), a conservative interest group that has over 146,000 members in Florida, has been a long-time supporter of reforming the defined benefit system and of Scott.
AFP-Florida Deputy State Director Abigail MacIver said Tallahassee should encourage new state employees to invest in their own future through the defined contribution plan and end the defined benefit pension plan that is “not fiscally sound and puts the Florida taxpayer at a substantial risk.”
“Florida still ought to protect those who bought into the old system, but desperately needs to change the plan new employees are offered,” MacIver said. “A system that compensates retirees based on what they choose to invest in their own futures would attract talent to Florida without burdening the public with a tremendous, unpredictable liability.”
The Florida House of Representatives has introduced a number of bills over the last two years to try and close the defined benefit system or steer more new hires toward the 401(k)-style plan, but all of the pension reform bills have died in the Legislature.
While neither candidate has put the FRS at the forefront of their campaigns, the worry over the future of the pension fund is sure to hover above public workers and retirees ahead of the November election.
“(Scott’s) running against an ex-governor that was not considered a friend of labor, but that never went after employees’ benefits because there was an unspoken agreement: Public employees will make less than private sector employees, but we make it up in benefits,” Ramos said.