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Court hears arguments over 3 percent cut to employee retirement

The Florida Supreme Court heard oral arguments Friday in a case that could determine whether state legislators face another $2 billion budget hole next year, or state workers will see their salary cuts retained. 

The lawsuit, Scott v. Williams, was filed by the Florida Education Association after lawmakers passed and Gov. Rick Scott signed a 2011 law that imposed a 3 percent levy on 623,000 government worker salaries to offset the state’s investment into the Florida Retirement System.

Lawmakers argued at the time that the change was needed to fill a $3.6 billion budget gap and bring Florida in line with 47 states that require their government workers to contribute to their pension plans. The savings was then plowed back into the budget, not into the retirement fund.

But Leon County Circuit Court Judge Jackie Fulford ruled earlier this year that the pension changes were an unconstitutional because the changes impaired the contractual rights of the FRS employees, took private property without full compensation and impaired their collective bargaining rights. She ordered the state to halt the practice and reimburse workers with interest.

 Attorney General Pam Bondi and Republican legislative leaders immediately challenged the ruling, continued collecting money from employee paychecks. It is now up to the court to decide but a decision could take months.

If the seven justices uphold the lower court ruling, state and local governments will have to reimburse active workers in the Florida Retirement System and find a way to fill the resulting holes their budgets. The state and local government have already taken more than $900 million from from employees and are expected to take up to $2 billion by the end of the current fiscal year in June 2013. State economists have predicted that revenues appear to be meeting expectations and, for the first time in years, legislators may not face another year of belt tightening.

If the court upholds the ruling, employees could see a 3 percent increase in their paychecks and cost of living adjustments could be resumed.

Justice Charles Canady, appointed to the court by former Gov. Charlie Crist, seemed to sympathize with the state.

“The whole state budget will be thrown out of balance,’’ he said.  

The teacher’s union lawyer, Ron Meyer, replied that Canady was “making assumptions that are not part of the case here.” He argued that while the legislature had a right to proactively change the retirement system to require that employees contribute a portion of their annual salaries into it, it was unlawful for them to impose the change on employees currently working for state and local governments without winning approval for the change in collective bargaining negotiations.

"We believe you can't change the game in the middle of the game,'' he said.

Arguing for the state was former Supreme Court justice Raoul Cantero, now a lawyer from Miami. He cited a 1981 Florida Supreme Court case, Florida Sheriff’s Association v. Department of Administration, as the rationale for allowing it to change retirement benefits going forward and argued that if the lower court ruling is allowed to stand it “would handcuff the Legislature’s response to changing financial circumstances.” 

He argued that it would be practically impossible for the legislature to negotiate with 11 unions and their bargaining units.

Canady was not the only justice skeptical of the union’s argument, however, during the a 45-minute hearing. Justice Barbara Pariente also wondered how it could be lawful for the Legislature to increase retirement benefits without collective bargaining approval, as it has in the past, if it is now unlawful for them to reduce benefits without negotiations.

“Why would the legislature bind itself forever, no matter what the budget crisis was, to a plan that could not decrease benefits but only increase it?” she asked.

Meyer responded that it was a policy decision lawmakers made and “they can’t repeal a contractual right” retroactively but only can apply that to future employees. He also argued that the court should recede from the precedent in the 1981 court case.

“The contract says you have a right to a non-contributory system and you can’t take that right away,’’ he said.

The exchanges prompted Scott’s general counsel Jesse Panuccio to predict they will side with the state.

“We think pretty strongly the law is on our side and this change will be upheld and it’s a common sense pension reform so it won’t be an issue we’ll face,”  he said.

But Meyer warned that if the court upholds the law, it will violate the collective bargaining protections also in the constitution. “It’s well settled law that you can bargain over retirement systems,’’ he said, but the legislature violated workers rights when it imposed the 3 percent tax without winning approval from workers’ unions.

He rejected Cantero’s argument that it is impractical for lawmakers to negotiate with 11 state bargaining units and dozens more at the local level.

“Just because it’s difficult to implement a constitutional right doesn’t mean that you get away with not implementing it,’’ he said.

Comments

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Mindy

The fact of the matter is that the deductions of the 3% for the "pensions" were never halted.

Bob Jones

Justice Canady's concerns (disrupting the state budget) are academic and should have no bearing on the decision rendered by the high court. This case is about the unethical attempt of this state's elected representatives to fill a state budget gap by placing the vast burden of that shortfall on less than 3% of Florida's taxpayers...in order to lower or eliminate the tax burden to the state's private corporations. It's also about taking money away from hard working middle class Floridians, who are currently struggling to make ends meet and offering nothing more to them in return in the form of monetary benefits upon their retirement. How is that good for the state's economy? It only results in taking away those affected individuals' spending power now and later on after they retire. It's more of that tired, old trickle down economics garbage, which we all know only benefits the rich. Where is the logic in that? Where is the moral compass? Answer to both questions: Nonexistent.

Judge Fulford was spot on in all aspects of her ruling. Furthermore, the legislators of this state need to be taught a lesson: "Bad legislation is just plain bad legislation and it won't be encouraged (or tolerated), regardless of your political affiliations." The Justices need to seize the opportunity to drive that message home. To rule otherwise only encourages behavior that serves a minority, not the majority.

I work for a private corporation and do not pay into the Florida State Retirement Plan but, nonetheless, I will be watching this one very closely. I will also be counting the votes of those Justices who ascend versus those who descend. Those who ascend to the state's position need to understand that it's not only 560,000 state workers and taxpayers, who also help to pay their salaries, who will be surprised if they strike down the lower court's ruling. I truly believe most informed taxpaying citizens of Florida will think long and hard about the court's ability to rule objectively and impartially respecting high profile cases affecting the general public of this state.

Justice Canady's stated concern is mired in bias and, frankly, it came as quit a surprise to me. This is not about "what happens if we disrupt the budget?" Please focus, your honor. What is this case about? See lower court's ruling for the answers and clear you mind of the collateral fallout that results from making the right ruling in this case. Please remember what your parents taught you: Two wrongs do not, Your Honor, make a right.

whasup

Since the Legislature is the ultimate arbiter of impasses in collective bargaining negotiations between the state and the unions, this is really about very little.

Even if the Wookies on the Supreme Court agree with the union, the simple solution for the Legislature will be to reduce pay to state employees by an amount sufficient to put that money wherever else they want to.

So they will employees will not have to contribute to their retirement, but their future retirement--for all employees--will end up being less than it otherwise would be, because it is based on employee salary levels.

The cure the union bosses seek may well be worse than the disease.

Now ... about bias ... Mary Ellen you described the issue as "a 3 percent tax on 623,000 government worker salaries" as though that was gospel truth, rather than just the spin the union bosses and lawyers use to describe the required contribution. How about using just a little bit of objectivity in reporting?

The best description of the mandated contribution is not a "tax" but rather a "margin call" for employees whose retirements are not really fully funded. If the Supreme Court Wookies have any sense, they'll see it as such and let the contribution requirement stand.

Bob Jones nailed it

whasup, you don't understand the law. The contractual right language is in the Florida Constitution. No act of the legislature can take it away, either directly or indirectly. It could only be withdrawn by an amendment to the Florida Constitution.

Mary Ellen is right, and Bob Jones absolutely nailed it! It's nothing less than the theft of 3% of every government employee's paycheck - and that's both morally wrong and illegal.

Buck

As one of those workers who lost not 3% of my retirement benefit, but 15%. The 3% is of the total salary, the 15% is of what they have been paying in. And as far as that goes, they stole another 30% from those of us in the "investment plan" this past July. Yes, I can count. My FRS statement shows a 30% loss of payments into my retirement account as of July when they passed the additional HB5005 which stole monies only from those of us in the investment plan of the FRS. So don't think they will stop with just one hand-slapping, they are out to take away whatever they want. I got into this job knowing about the low pay but the benefits seemed to make it comparable to other jobs, and now they want to diminish the only plus we ever had working for the state. The benefit of 20% of our total salary being paid into a retirement package was given to us when we got these jobs, and now they are taking away 45% of that from those of us in the investment plan, and 15% away from normal FRS plans. That hurts when you are close to retirement and have to add on another 8 years to cover the loss of retirement funds.

govgirl

As a 30 year employee of a small local government who was paid meger wages because our budgets were tight, as stated before, I accepted those wages because the retirement benefits of drop allowed me to look ahead. I knew about drop, planned for 30 years to pay off my home, and have a retirement income. Then all of a sudden, my check decreased by 3%, and this legislation was adopted when we were already slashing salaries to an all time low so paycuts effected the final compensation calculation, and drop contributions were changed to almost non existent. I missed signing up for the drop 1 month before the change took effect. If you want to make changes then effect new hires, but not those of us who have dedicated our lives to teaching and public service all these years, just to have the rug pulled out from under with no resource. I am screwed, I have to sell my new home, and continue to work without the benefit of a decent drop paycheck that I had planned on using to pay it off.

terry Shaw

What the government is trying to do is outrageous. As stated we all knew the pay checks were not going to be the best, but the benefits out weighted the private sector jobs. My husband has been a corrections officer for the past 26 years. They have not had any kind of raise for the past 7 years. I would like to see one of our legislators live with that when everything has gone up ten fold. We the middle class are sinking fast. We also are looking at having to move into an apartment, as we can no longer afford our mobile home payments,insurance and gas. We do not live over our means but are paycheck to paycheck and that extra money they are taking out of us was the water bill for the month.

Disgruntled State Employee

I work for the State Dept of Rev. We make less than the average person out there working in the private sector. Less than 30,000 a year. Have not had a raise in 7 years. Gas prices go up, taxes go up, cost of living goes up - our paychecks have never gone up to match that cost of living and then to boot Gov Scott takes 3% of my paycheck away, makes us pay for parking at the State owned building we work in - we pay for parking regardless if we own a car, that also is automatically deducted from our paycheck. This sucks!!

County Employee

I've been with the school system for almost 30 years and if Scott didn't take this 3% away from me, I would not be struggling to make ends meet over the past year. He had absolutely NO consideration of those of us that are reaching the possibility of retirement and he will answer for that one day. Now, if the Supreme Court is supposed to rule in 3 months, why haven't we received their ruling yet? They could have been considerate and implemented the 3% contribution on NEW employees instead of those of us that deserve our benefits we've worked hard for all these years.

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