Pension reform showed its first visible signs of life in the House on Friday, as a compromise bill that would steer new hires away from the state’s guaranteed benefit system cleared its first committee, State Affairs, by a 11-6 vote.
While this should have been good news for Florida House Speaker Will Weatherford, who has made overhauling the state’s retirement system one of his top priorities, his prospects for passing the bill actually dimmed.
One reason why is that Sen. Jack Latvala, R-Clearwater, who announced his support for the compromise last week, backed off and downgraded its chances for success.
“It’s still in a state of flux,” Latvala said Friday. “Even if I support it, I’m not sure it has the 21 votes it needs. It’s going to be an uphill battle.”
That’s far different than what Latvala said last week, when he said he would support a bill that Sen. Wilton Simpson, R-Trilby, sponsored last year that would encourage, but not require, new employees to enroll in private investment plans rather than the state’s $135 billion pension system.
“It would not surprise me if I become a co-sponsor,” Latvala said last week.
“I’m not 100 percent certain I’m supporting the Simpson bill,” Latvala said.
It’s a setback for Weatherford, who ditched his own version of pension reform, which would have prohibited most new employees from enrolling in the state pension system, to pick up much of the language in Simpson’s compromise bill.
On Thursday, Weatherford told reporters he was changing course with no regrets.
“I’m extremely grateful to Sen. Simpson, Sen. Latvala and other members of the Senate who are working on a compromise package similar to what was filed in the Senate last year,” Weatherford said then. “I’m cognizant that the bill I tried to pass last year is not going to pass the Senate this year, so we’re working on a middle ground. And Sen. Latvala has engaged in that process, and I believe we can get a pension deal done this year that can save tens of billions of dollars for Floridians.”
Weatherford couldn’t be reached Friday, but House leaders were clearly promoting Friday’s passage of the compromise.
“The bill represents a fair compromise to pension reform that will encourage new employees to enter the retirement plan that best fits their needs,” stated a news release from Florida House spokeswoman Kristen McDonald after the bill passed.
But even without Latvala’s wavering, the bill’s path ahead looked uncertain. On Friday, it drew such heavy fire from union leaders and Democrats that even its bill sponsor, Rep. Jim Boyd, R-Bradenton, acknowledged that a key doomsday scenario used by Republicans to justify pension reform is unlikely.
Weatherford and other House Republicans repeatedly highlight that the fund has a $20 billion liability. But the pension is 87 percent funded, meaning if all state employees and teachers and county officials in the pension system quit, 87 percent of them would be covered.
“What is the reality of all employees retiring at the same time?” Rep. Ricardo Rangel, D-Kissimmee, asked Boyd.
“That would never happen,” Boyd said. “But if they did, we’d be $20 billion in the hole.”
“The only way that $20 billion comes up, and I think it’s used to scare people, is if every person retires on the same day and we have to write a check,” said Rich Templin, the legislative and political director for Florida AFL-CIO.
Rep. Kevin Rader, D-Delray Beach, reminded Republicans that even Gov. Rick Scott has vouched for the fiscal soundness of the pension system.
If that’s the case, Rader said, “What are we doing here?”