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Ancient doc shows why state workers don't pay into their retirement accounts

A copy of the August 1974 Florida Retirement Bulletin, unearthed by a member of the Public Pensions Trustees Association, gives a glimpse into why the state stopped requiring employees to contribute a portion of their salaries into the Florida Retirement System: to save the state money. Here's the 36-year-old document:Download 1974 Florida Retirement Bulletin

Back in 1974, employees contributed 4 percent of their salaries to their retirement fund while special risk members (police, firefighters, etc.) contributed 8 percent. But if those employees left the state workforce, they were entitled to have their contribution return to them in the form of a refund -- costing the state that year a whopping $30 million and setting up an unfunded liability. "The primary purpose in changing FRS to a non-contributory plan is to help eliminate the unfunded liability documented in past actuarial studies of state retirement systems," the newsletter states.

The end result of the change was to increase the state's contribution from 4 to 9 percent for regular class members -- where it remains today -- and from 8 to 13 percent for special risk members.

Today, Gov. Rick Scott wants state and local government to withdraw 5 percent of its contributions and have employees make up the difference. He is doing it to save the state money again -- only it's the reverse of 1974, with the money flowing into the retirement system coming from employees, not employers. The governor gets a $1.3 billion savings to the state by withholding 5 percent of the state's contribution to the FRS or, in the case of local governments, from local government revenue sharing plans. It's not clear whether employees could withdraw that money if they leave the FRS, under Scott's plan, as they did in the past or not.

So far, the Florida Senate is considering asking employees to shift money from employee paychecks to their retirement accounts at rates of about 2 percent of their salaries, while the House has yet to propose a plan.

Comments

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Hector

Mary Ellen Klas writes, "only it's the reverse of 1974, with the money flowing into the retirement system coming from employees, not employers."

Employers? Employers? Why don't you call the employers here by their real name: TAXPAYERS.

The employers here are the TAXPAYERS who should not be shouldered with 100% of the pension burden. Government employees should contribute at least some of their own money for a defined pension benefit and 5% is small amount to pay.

joey sims

I guess the lives of our fallen Officers is a small price for us to pay for your security. We pay taxes too my dear, therefore, we do contribute to our retirement. just like your social security taxes guarantee you a end benefit. If it is so easy and your willing to lay your life on the line for a stranger everyday like we do, then we would welcome you to our fraternity. If not "HUSH". This world has turned into nothing but cowards wishing to fight from behind a locked steel door. Our military, our guns and our Law Enforcement Officers are what keeps this world safe.

Shawn

Read this:
Facts overshadowed in debate over union bill AP

"An April 2010 report by the Center for State & Local Government Excellence — a nonpartisan, Washington-based group with Republicans and Democrats on its board of directors — found that in 2008, state workers nationwide earned 11 percent less and local workers earned 12 percent less than private workers with comparable education levels.

The same study found that in Wisconsin between 2000 and 2008, total compensation for state and local workers was less than comparable private sector workers."
http://news.yahoo.com/s/ap/20110227/ap_on_bi_ge/us_wisconsin_budget_the_debate

Pat

my DEAR Joey, my husband is a police officer who has been willing to lay down his life for strangers every day for 30 years. He also pays his own retirement in every paycheck. PLUS he pays YOUR retirement. I think it's time all FRS employees paid their own percentage into their own retirement!!!! City police officers have been paying their own for years....

Jackson

On average, state employees or county employees make A lot less in income compared
to privets citizens. What the media and the Governor like to talk about is the emplyoyes
at the highest paid jobs in the state retirement system. Example, Jacksonville Sherrifs Officer with 6 yrs earns approx$56,000 just in base pay.
But to earn that same pay at most Sherrifs offices or local Police departments you would have to achieve the rank of a Captian or higher.


mick

like I said before we all make a choice.I went to work for the benefits not the lousy pay that we recieve. Just because your plans got messed up dont mean mine should be as well. Hit the freeloaders on welfare and medicaids

Taxpayer

Hector - State Employees are TAXPAYERS.

State Employees make a lot less money than you think and most work in horrible conditions. I bet you would not take $31,000 a year to stand behind a fence for 8 hours a day with 1,500 thieves, rapists, molesters, murders, and drug addicts.

johnson

Gee, lets see are the state employees pension taxable? Do not forget King scott has recommended that the state get rid of 10,000 employees fy 2011 and 2012. There is a freeze on state workers now. Do we really live in a democracy? Do the state employees really have a voice? If they do please do talk to loud. The inspector generals office might hear you.

johnson

You know maybe it is time that florida does go in the hole. Maybe this might be a lesson that needs to be learned. Please do not take anything for granted. Always ask why and u no that requires an answer especially from tallahassee. You think florida might become another illonoise? Stand up for what is right!

Toni Lolk

Dear Joey Simms: Do not dare compare the US Military to the Police they are 2 different worlds totally. Most cops do not live in the town where there jobs are located...They get free transportation to from work as well as uniform allowances as well as free cleaning as well as free insurance on there life, there car and there families...42 percent of a city's budget goes to pensions.....so stop the bs I have seen Cop cars in Publix, Home Depot, IKEA all over they are supposed to be to from work only so stop the nonsense we the taxpayers are tired of financeing your second home in Cape Coral....401K plans are fairest not a free ride teachers pay zero into there pension plans...Politicans take $500 checks at every election then vote on the union plan...They dont care they will never have to pay for it the dumb taxpayers will who sit at home watching the TV as Florida burns only 9% even vote.........sheep to the slaughter

Taxpayer II

FYI - I think ya'll missing the point dear friends. If it was a cost SAVINGS to the taxpayers in 1974 because REFUNDS we're draining the system and causing an unfunded liability, then what makes you think it will not reoccur again. With vesting at 6 years and no pay raises for the past 4 (and possibly ever), any intelligent person will NOT be retained, and thus the frequency of refunds will occur. My bet is that frequency/turnover will be at a much higher rate than we experienced in 1974! Oh and IRS code mandates refund of employee contributions if requested! As the prior Director said in the public hearing... the plan is one of the best in the nation and changes will only destroy its successes! Our tax structure is a more intelligent reform direction! Let’s not repeat history OR surmise to ignorant peer pressures but rather learn from our experiences! By the way... since when is life fair for everyone? I was raised with the understanding that decisions were made for the great good, not the greedy! If we run our GOVERNMENT like a business then you’ll get exactly what you deserve! Cost cutting measures that lower the standards because they are driven by higher returns! Become educated via research not headlines!

The Dude

Haters gon' hate. No worries, you Baby Boomers will be gone soon enough.

Peter Gibbons

I'm a 5 yr state employee in a high-demand job class and from the outset of my state career I elected to have the FRS Investment plan rather than the Pension plan. BTW the Investment plan does NOT allow me to participate in that double-dipping, DROP plan so you can save that argument. I chose the FRS Investment plan so that I could freely "cash out" and leave state employment at any time and move my retirement savings with me. With that in mind I could see how if everyone were in the Investment plan the state would have some big $ payouts from time to time.

The state DOES pay 100% of my contribution like everyone else, and I really don't care whether I contribute or the state does. High demand state workers regularly leave for the private sector anyway because state pay + benefits are just not competitive. The proposed state worker contribution changes will make it harder for the state to compete for workers but can't make it much worse than it already is.

You know I've always wondered - even with unemployment at an all time high and everyone complaining how unequal state vs. private sector employment is - why is it the state STILL doesn't get enough qualified applicants when they post a job vacany? If the jobs are so cooshy that the system needs to be corrected, why isn't there a waiting list to get into these jobs?

Phil Cook

The bottom line is this is all coming from the same pot of money - the actual cost to the taxpayer includes all costs to arrive at total compensation. If the retirement contribution is routed thru the employee, it will increase the employer and employee SS contribution. Money contributed by the employee is ALWAYS the property of the employee, and must be returned or rolled over on separation, regardless of vesting rules.

Currently most FRS agencies pay scales are less than comparable local plan agencies, but total compensation is about even because of the retirement contributions. If the plan is changed, eventually the pay scales of FRS employers such as Sheriff's Offices will have to increase to parity with those agencies already taking contributions from employees, in order to compete in tight labor markets. Total compensation will go back up. Same money, left pocket instead of right pocket.

Short term savings generated by shifting the contribution point will eventually be eliminated by pay scale increases, and the system will be left with the issues created by knee-jerk changes. FRS is one of the healthiest retirement systems in the nation because it is well managed and always fully funded. Past changes have been well thought out and well executed. But that large pot of meney is too tempting to leave alone... others in Tallahassee want to get their fingers in the pie. THAT is the real issue here that no one is looking at. Taxpayers are being aroused by emotional arguments and are not seeing the men behind the curtain pulling levers that we are not supposed to know about...

LEAVE MY RETIREMENT ALONE

I am a state employee and a TAX PAYER. I help pay for social security food stamps public assistance etc................LEAVE MY RETIRMENT ALONE Governor just wants the honey pot to reinvest for profit to bail out the big businesses. I'll pay 5% into my retirement whe the state of Florida brings my pay to above poverty standards!!!!!

colnomad04

Hmmmmm, I wonder what would happen if state employees refused to pay into the newly proposed retirement requirement for a year or so.

Chris

Pat, local police departments generally make more than state and county law enforcement agencies. Often, a lot more. For example, Orlando Police officers contribute to their retirement. If an Orange County deputy contributed 5% to their retirement, the OPD officer would still make several thousand more per year. Now, consider the starting pay of FHP is 34k, and FWC 32k, you can easily see that the situations are not at all similar.

R L Kita

I think Phil Cook has the right idea. Why are they trying to fix something that is not broken. Who really is going to benefit from State workers paying into their retirement. Scott won't have to layoff workers they will leave for the higher paying private sector. State run service quality will drop. I know some already think there is no service but there will be even less. They need to look at getting the higher paid employees to retire. I work in the private and the public sector so there are other places to look for funds. Scott is just going with what he thinks he can sell to the public that elected him. We have state workers on food stamps they make so little so if they force them to pay more look to having more state working on welfare programs.

ronald aponte

to miss klas statement if want you state is true, then police and fire already pay into the pension system as will as all other public employees because we pay taxese also.

ronald aponte

to miss klas statement if want you state is true, then police and fire already pay into the pension system as will as all other public employees because we pay taxese also.

Gerald Preston

Toni Lolk

The total percentage that goes to the pensions in the STATE budget is 2.2% (Thats it) most states its 2.9%...Police depts are not included in these cuts for the most part, and they already pay into the pension plan. In general PDs make significantly more money per hour then Sheriff Deputies, and retire 5 to 10 years earlier with a higher percentage. 80% percent of my agency work force live in the same county they work, please tell me what agency you know of that pays for an entire family medical plan (I pay and an additional $531 a month for dependant coverage and my coverage isn’t as good as it was when I worked in retail) The cops you see in the parking lots of businesses are being paid by the company to park in the parking lot to deter car burglaries (not the tax payer, this also puts more cops on the road free to the tax payer),..as far as shopping,.. yes if I’m on my way home from work and I drove by Walmart I can stop and pick up groceries. I have deputies on my squad the make $14 dollars an hour, two of which have been shot in the line of duty. 8 of the 9 deputies on the squad have college degrees. I could keep going but would love to read your reply first.

Drexler

tired of the whining

if the retirement funds were invested properly there wouldnt be any unfunded liability...if government employees totaled up the dollar value of all the benefits that they dont have to pay for and added it to their income itthen their total saleries are usually higher than an equivalent private sector job. Just because you pay taxes doesnt mean you cant provide for your own retirement. I pay taxes and pay for my retirement and currently have to pay for your retirement also. I believe Rick Scott has the best interest of ALL the Florida Taxpayers in mind and and since that is where Florida government aquires its funding , I feel it is a great plan

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