The Senate Appropriations Committee approved an overhaul of the Florida Retirement System Tuesday by a narrow vote that shows how sharply divided the issue is, in the closing days of the legislative session.
"We've got a good chance of defeating it on the Senate floor," Sen. Bill Montford, D-Tallahassee, said after the all-day meeting of the powerful budget panel. "If we can clearly lay out the facts and implications of this bill, I believe it can be stopped."
The committee's 10-8 vote for a bill (SB 1114) by Sen. Wilton Simpson, R-Trilby, could have gone the other way if one supporter had switched, resulting in a tie vote. That signals sharp division on the Senate floor -- while the conflicting House version remains at odds with the Senate plan.
Simpson moved closer to the House position on pension changes, with one vital difference. It does not combine FRS changes with proposed new regulations in the local government retirement plans for police and firefighters, a potential deal breaker.
He agreed to increase the vesting period from eight years to 10, as provided in the House companion legislation (HB 7173 / HB 7179) by Rep. Jim Boyd, D-Bradenton. He also went along with changing the "default" mechanism, so future employees who don't make a choice between the traditional pension plan and the investment plan will be placed in the market-based investment plan, rather than the traditional "defined benefit" system.
Simpson also gave up his proposal for financial incentives to get more employees into the investment plan. Under his original bill, employees choosing the "defined contribution" option would pay only 2 percent of their paychecks for retirement, rather than the 3 percent that legislators imposed in 2011.
Simpson said the Internal Revenue Service has not yet ruled on that change, so it was taken out of the package.
The House State Affairs Committee, chaired by Boyd, on Monday voted for its version of the controversial bill. The committee sought to improve chances of passage by combining Boyd's FRS bill with a local government pension plan, which changes the way cities can allocate revenue from insurance taxes for police and fire fighters.
Simpson said he doesn't like the House approach of merging the statewide FRS bill with the changes in the non controversial local government plan.
"We'll just see how that plays out," said Simpson.
The legislative session ends May 2.
He said his revised bill would let regular employees continue joining the traditional pension system. Elected officials, except for judges, would have to go into the investment plan. Judges were exempted because of their relatively shorter tenure on the bench.
The bill also gives new employees nine months to choose the pension plan, if they don't want the investment option. That's an increase from six months.
"When you look at the unfunded liability of $21.6 billion and the $582 million we've had to appropriate this year, which could have gone to other things if we didn't have to pay it to the pension, clearly there has to be some reform," Simpson said. "This reform allows all of our state employees to continue to have their defined benefit, while it saves some money."
Montford insisted that "we don't need to do anything with one of the best retirement systems in the country."
Contact reporter Bill Cotterell at email@example.com