Scott proposes gov't workers pay 5 percent into retirement and end DROP

Florida Gov. Rick Scott returned home to Naples this afternoon to visit a medical device company and announce his proposal to save $2.8 billion over two years by requiring state and local employees to contribute to their retirement accounts and eliminating other elements of the programs that he believes cost state and local governments too much money.

Scott wants employees to start paying five percent of their salaries to their retirement accounts. He proposes scraping the defined benefit plan for new hires and requiring that all new employees get 401k-style defined contribution plans that they can take when them when they leave government.

Scott wants to end the Deferred Retirement Option Program (DROP) beginning July 1, the popular program that encourages older workers to retire by allowing them to draw a pension check and return to work. He also proposes reducing the annual service credit to 1.6 percent for most members of the Florida Retirement System (special risk class members, to two percent), according to a press release.

Scott's plan also calls for eliminating the three percent cost of living adjustment for service earned after July 1 for employees currently in the system but offers no cost of living adjustment to new hires. Scott predicts the program will save government $2.8 billion over two years, presumably a number derived from an government report that projected $1.3 billion in savings over one year.

“Government workers, like private sector employees, deserve the opportunity to save for the future, but taxpayers shouldn’t be asked to foot that bill alone,” Scott said in a statement. More details on the proposal are expected when Scott releases his budget at a Tea Party rally on Feb. 7 in Eustis, Fla. 

Doug Martin, director of governmental affairs for the American Federation of State, Local and Municipal Employees said the proposal to end the pension plan for new hires and send everyone into a 401k-style program "is a catastrophically bad decision.'' It will causes employer contributions to soar, he said, because there will be fewer employees paying into the system as people retire. "So to pay for the increasing number of retirees versus active employees in a closed plan, those contribtion rates are going to go up.''

Although the governor kept details sketchy, he told reporters at a question and answer session earlier today that the money expected to be saved is not linked to his plan to cut property taxes. He defended the plan, however, saying: "I want to make sure that the pension plan, that anybody that’s relying on it knows the money is going to be there. Second, I want to make sure that I treat taxpayers fairly and I want to treat employees fairly. So, if you have a plan in the private sector, you are generally participating. So I think it’s only fair that those who participate in the pension plan contribute.''

Asked if he considers the existing pension plan actuarially sound, Scott was not sure. "It all depends on if you are comfortable with the anticipated returns. None of us can see into the future. If you're uncomfortable with those returns then we’re underfunded…It’s something I have to look at and see where I’m comfortable."

Scott, along with the chief financial officer and the attorney general oversee the State Board of Administration which manages investments for the retirement system. State Board of Administration executive director Ash Williams began his report on the SBA by announcing that the Florida Retirement System continues to increase in value, now at $125.1 billions.

After the meeting, Williams said that the fund does not need employee contributions to remain solvent. "Actuarially. I think we are one of the healthiest funds in the country,'' he said. "There’s no question about that." He said that there remains a "broader policy debate about the sustainability" of the plan based on whether governor can continue to sustain the funding level that now requires government to contribute 100 percent of the retirement costs.

Chief Financial Officer Jeff Atwater agreed that Florida's retirement system is actuarially strong. "From the SBA perspective, as to the funding of the pension plan, it is in good shape,'' Atwater said after the Cabinet meeting. He added that he supports reforming how the program is funded.

Scott has also hinted in the past that he may be supportive of replacing Williams. He said he has met with Williams and "I haven’t made a decision.'' Williams said he has not been asked to step down.

During his campaign for governor, Scott approved an ad run by the Florida Republican Party of Florida blasting his Democratic opponent saying that when she was responsible for the fund when it "lost $24 billion...gone.'' At the time of his claim, the value of the fund was $118 billion, $16 billion lower than it was before the Wall Street crash of 2008, not $24 billion. 

Scott later defended the ad as accurate, explaining that "that money was lost because you made a new investment decision every day to hold things."

Comments

[LK]

The Legislators, Governor and Cabinet officers get 3% for every year they put in!!- the same as police and fire. I notice they did not mention reducing their pension percent or their executive staff's 2.8%! Do politicians think their doing high risk jobs? Tell that to the St Pete and Miami police officers wives and family. Shame on all state and local politicians who get high risk pay. We need cops and firefighters not politicians

[Judy Hogan]

When in the DROP program, you retire and you do not work AND receive a check every month!!!!! The amount that you would be receiving when you retire is put in an interest bearing fund so you have a nest egg when you do stop working!!!!!! Please clarify this in your reporting!!!!!!! Many of us (teachers) who had many years of funds in 403(b) accounts lost a great majority of their money in the recession.The DROP money is a good way for us to get a little for later in life.

[MC]

I am becoming so tired of hearing about how difficult it is for taxpayers to support public servants such as police officers, fire fighters and educators. Guess what!? As an educator, I am a TAXPAYER too! Politicians make educators sound like a drain on the system. I work hard for the money I earn and am grateful for every cent--even when I have to hand over a big chunk to pay for taxes.

In addition, though I have a Master's degree and would be earning almost double of my teacher salary in the private sector, I CHOOSE to educate the children of Florida (and for those who say "Well you get summers off," not really because I have to work summers and extra hours after school to make ends meet). With the current pension plan, it had been comforting to know that when I retire in another 20 years, the salary I exchanged for a fulfilling career would be returned through a secure pension. Yes, private sector employees do contribute to their own retirement in part--but at least they have a high enough salary to cover that and many empoyers match the contribution. Is the governer willing to match our contribution?

If this nonsense rhetoric about educators and other public employees being a drain on the state budget actually becomes state law, Florida will have lost an excellent, hardworking educator in the public schools. I will take my Master's degree, work ethic, and experience to the private sector. I am a taxpayer and have a family too. As much as it would pain me to leave elementary education, I have to do what's best for my family. There is only so much financial and emotional stress they can take being related to a public school teacher.

[Sam Robart]

I'm only a teacher of Social Studies and other subjects - but - I always thought the legislature created the laws, the executive - governor enforces them, and the judicial decides the legality of them. I wonder if the rookie governor has ever taken a civics or Social Studies class in school and he has an understanding of what his job entails. In our school system makes students take remediation classes for subjects in which students have not developed at least a basic understanding of the subject matter. I believe he should take a basic Civics class in a public school system - his voucher wouldn't cover the cost of the same class in a private school.
I have two questions. 1) Have the Florida Sunshine Laws been revoked and Scott is allowed to do ‘ever he wants and not tell anybody what he is doing? 2)Is Scott allowed to ignore a more than 60% majority decision regarding redistricting and do ‘ever he wants? If so I have to revise my lesson plans for my future students.

[Vince Sbardella]

It's been true since the days of FDR, and when my uneducated immigrant father told me so 55 years ago. Working people who support and vote for Republicans are voting against their won best interests.

[Vince Sbardella]

Sorry - "Own best interests".

[Faye Laton]

Leave DROP alone. Teachers with 20 or more years are counting on these funds to help them when they do retire. We choose this profession to help the students, not get rich. Any educator can validate that. Does the Governor want to discourage teachers to leave their jobs and/or college bound students to take other routes and/or not become teachers at all? Those of us that are in the system should not be forced to stress over what we will do to survive when we do retire. We have counted on DROP, have worked hard and deserve it. If you feel the need to stop DROP then start with the newcomers and leave us "oldtimers" alone.

[CB]

The governor want state employees to contribute to their retirement, as private sector employees do, BUT without the private sector salaries. State employees have not received a raise in several years, and whenever there is a deficit in the budget they are the first ones targeted for adjustment in a downward direction (salary cuts). I want Governor Scott to work for $1 a year to show us that he really cares for Florida and its citizens.

[Beth Ryan]

I teach in a very poor school district. We are paid the lowest in the state of Florida. I think Mr. Scott needs to come in the trenches and see what we do on a daily basis and have one of his family members become and educator and he might just change his mind on all these poor decisions he is making for our education system. I am MAD!!! If you want higher FCAT scores and higher performane you need to pay us more for the time and dedication we put in the education of our future leaders!!!!! LEAVE DROP alone. I really hope that in the future their will be a new Governer who will make things right for education and RESPECT teachers!!!!

[tbpcola]

You get what you ask for . . .

People wanted a change. Well we got it.

A corrupt businessman with no government experience whatsoever.

I just hope the next four years go by quickly.

[Sharon A.]

I have worked as a assistant in special education since the school year 1979-1980.
My starting pay was 4,826.77 a year. I work with students with emotional behavior disabilities. after all these years I am finally making around $20,000. I am looking forward to working till march 1, 2013 and hoping that I can make ends meet with the money I get from drop. I would have never been able to afford putting money in an account. I love my job but it is extremely difficult and stressful. How can anyone consider taking away drop? I know they say God will reward me for my hard work but I still need to pay my bills.

[Ric Phillips]

It's amazing to me after nearly 30 years as a teacher I am scared to think about retiring because of our government leaders trying to hack away at my income now, and the income that I might have after I hopefully retire. I don't see any of our lawmakers or leaders reducing anything except the real workers' income.
I love America, but I can't say the same thing about our fearless lawmakers and leaders. Have they stopped any crimes? Have they saved anyone from a burning house or cut a person from a crushed auto? Have they taught a child anything except not to trust our government?
Peace onto us,
A Teacher

[Brent Ougel]

Isn't it obvious to everyone that we as public servants are doing an awful job and because of that, we probably shouldn't get paid at all. Isn't this the message that's being sent to us and all of Floridians? I don't know about the rest of you but the hardest part of being an educator is having to constantly defend my profession and convince others of the great things we do and the successes we have with children that are never reported because they cannot be measured on standardized tests. I work hard for what I get and owe no one an explanation. It is a shame that the leader of this state is taking an attack stand at public workers (who he himself is). What were people thinking when they voted for him?

[chargus]

Thanks tbpcola. I agrre with what you've said and have been trying to get people to realize who Scott really is.
He's a corrupt businessman who frauded medicare and now he's trying to fraud the same knuckle heads who put him into office.

I guess they thought he was being a savvy businessman since he defrauded the goverment and got away with a small penalty by pleading the fifth. Well he's singing now, isn't he?
Some of the other posts were correct, private sector employees get paid more so they can afford to contribute into a 401K.
Let's see how many police officers, firefighters, and other police servants are feeling about "Sick Rott" now.

As for the teachers who get summers off, the truth of the matter is we only get paid for the 10 months that we work and we decide if we want our employers to spead those 10 months into 12 months pay. So in essence, we are getting paid less during the year so we can receive a paycheck during the summer. We get nothing extra, but we give more than we sometimes should.

[Yolande]

As you all have so eloquently said, We have a rough four years ahead of us. Why is it educators are the ones who are held accountable for everything that goes wrong. It is not our fault the country is in the economic problems it is in. Go after the banks and government waste. Leave EDUCATORS alone. I am so tired of this. What do I have to look forward to ........

[RM]

Hello Mr. Gov of Florida - when will you start to contribute to your own retirement plan. Oh, thats right you don't have to. Its so easy to recind on your promises to get into office. You just don't understand because you are not a Teacher, nor do you have to give anything up. You should take a hard look at what you are proposing. Give up your salary for a year of office and maybe someone might believe you are doing this for a good reason.

[JF]

okay Mr. Governor dump on the little people. We are the ones who support you and this is what you do. We are the lowest paid hardest workers. I guess we should all open a business like you did and run for office. Dump on the little people of Florida.....right Mr. Governor.

[Spmommy]

I hope everyone's happy who voted Rick Scott into office. He can and will do a lot of damage in the next 4 years to everyone across the board.

[Miriam Sawyer]

I am an educator and NO drain on this system. I am also a taxpayer and pay plenty. We NEED public servants, firefighters, police, educators. I wonder how Mr. Scott's secretary feels about him cutting HER retirement. I think he should enjoy his first and LAST term in office!!! This was Mr. Crist's demise in politics and will be Mr. Scott's. It's funny how the BIG politicians who make BIG money and will receive a fine and full retirement no matter if they only serve ONE term have the nerve to peck on the backs of all the folks who support the state of Florida. Seems we live in a tyranny state, not a democracy!!! As Benjamin Franklin once said...when people fear the government you have tyranny and when government fears the people you have democracy. It is time Floridians make government FEAR THE PEOPLE. We need to take ownership of OUR STATE AGAIN!!!! We built this state on the backs of hard workers and I intend to keep it!!!

[Cynthia]

Wow! It's amazing how some Republicans think that their candidate can bring about changes no one else can. So you vote for them, inspite of truths exposed during pre-election. Now what? You can't recind your vote, so you have put all of us on Poverty Row. That's what happens when a people can't see pass their party or think yours have not stepped up to the plate and you switched out. Now we have jumped out of the frying pan into the fire. Unfortunately, those of us who had the good sense not to vote for Scott, has to fry with those of you who did. The Republicans put us in this MESS and you think they can get us out? REALLY!!!! Yeah, by dipping in your pockets and every hard working Floridian trying to get through an already Republican Fiasco. "The grass is not always greener on the other side."

[Joe Momma]

Politicians think most people are stupid. And they are right. You old foggies don't want to pay for anything, so you vote in the medicrook. You republi-tards vote for whatever gypsy they get to spout the best sound bites. I'm surprized some of you Medicrook voters are not driving a horse and buggy on this "flat earth".

[Munchiniwa]

I have no problem with Scatt's changes as long as its ALL employees -- judges, mayors, governors, State staff at EVERY level, County and City at EVERY level. Why should anyone or any group get a break? If its good one its good for all.

[crusader]

How is it that cuts are headed towards the middle class which by the way teachers are the only ones children get thier education from .
Rick Scott most likely was not a student at all
in the school system of Florida .

[State Employee]

I am a state employee and my employer has to contribute 9.5% of my salary each paycheck to fund my pension. So in essence we do fund our pensions. It isn't as if we are just promised a fat paycheck when we retire and the state has to cough it up because it was never funded. My employer must factor that number into the salary during the hiring decision. In essence it is part of each employees salary costs and budgeted in at the hiring unit level. So if each division or hiring unit must fund their employees. If they feel the pension needs more funding then they should simply require each hiring unit to fund more per employee towards the pension. That way the state agencies will then have to budget for that and if the state doesn't give each agency any more funding it accomplishes the same thing.

The logic on Gov. Scott's plan is all wrong. Think about this. If you made 48K a year and made that same amount for all 30 years your pension would be 1.6 pension factor *30 years =48% of average of the highest 5 years salary. In this case that would be 48% of 48K which would be 23K a year assuming no spouse or survivor benefits etc. Options giving you that would lower it substantially to say 17k - 19K or less a year depending on the survivorship plan. 5% of a 48K salary put away each year for 30 years earning 7% a year would equal 244K. I would much rather have this amount than a small pension.

I would ask this to Gov. Scott, how much does each hiring unit contribute as a % to fund each employees pension? This is the real key and it needs to be appropriate. Currently the pension, while recently taking a pretty hard hit, is in OK shape and that is because it was funded properly. Why make drastic changes in Florida just because other states didn't fund their pensions properly.

[Lun]

Republicans are about the same thing they have always been about - letting the rich get richer and the poor, poorer. Government workers, who are largely middle and lower class people, get their benefits and salaries cut while Scott and his Republican cronies channel more and more money toward the private sector so they can get richer. Wait for the Union busting to begin - that's coming I'm sure along with more and more legislation to make it easier for wealthy interests to get more and more work out of workers for less pay and benefits.