A Florida House panel Thursday unanimously OK’d a proposal to boost the pensions of roughly a million state workers and retirees with an annual cost-of-living increase of 3%.
A pension cost-of-living increase, or COLA, was eliminated in 2011 during the Great Recession.
Members of the House Government Operations Subcommittee were unfazed by the measure’s estimated $2 billion price tag, saying it’s the cost of the Legislature keeping its word.
That lawmakers barely paused at the cost, and the warm reception the committee gave to the bill (HB 151) by Rep. Demi Busatta Cabrera, R-Miami-Dade, led one labor lobbyist to tell lawmakers he had little to say “because good things apparently happen when I shut up.”
The Florida Retirement System provides pensions for state, county and municipal employees. Last year it paid out $12 billion in benefits to more than 400,000 retired teachers, bus drivers, firefighters and office workers.
Previously:State pensions for public workers in Florida could be boosted under new legislation
To balance state and local governments’ budgets during the economic downturn, lawmakers eliminated COLAs after 2010, with a promise to revisit the issue five years later.
“Quick history lesson, folks, that never happened,” said Rep. Chuck Brannan, R-Macclenny. At the time that repeal was passed, he was a Baker County Sheriff’s investigator who called lawmakers in an effort to defeat it.
The legislation gives an immediate boost to the monthly pension of 151,000 retirees and pension COLAs to all current workers.
Pensions: Inflation erodes cost of living increases
Since 2011, inflation has eroded more than a third of the purchasing power of a dollar. For example, without a COLA, a 2011 average FRS pension of $18,625 would have lost about $7,000 in purchasing power by 2023.
Rep. Doug Bankson, R-Apopka, quickly endorsed the bill by telling his colleagues, “We can’t balance our budget on the back of those who paved the way for us.”
The James Madison Institute, a Tallahassee-based public policy think tank, and the Koch Network-affiliated Americans for Prosperity oppose the measure. AFP’s Christopher Stranburg told lawmakers that while his group values public employees and believes they should be appropriately compensated, Cabrera’s bill would jeopardize more than a decade of work spent to get FRS on track to full funding.
With $184 billion in assets, FRS has enough money to pay 82% of obligations if, hypothetically, all 629,000 working members retired at once. The remaining 18% represents what’s called an unfunded liability of $38 billion. Since people retire at different times, financial experts consider any pension plan at least 80% funded as healthy.
With the multi-billion-dollar liability in the equation, Stranburg warned, the bill for the revived COLA would continue to grow as more workers retire: “We believe there are other solutions to compensate our public servants that are more fiscally sound and do not bind future legislators to these costs.”
State agencies, counties, school boards, state universities, colleges and municipal governments would pick up the cost. Pension costs for counties would increase by $863 million, school boards by $796 million, and the state budget would absorb a $331 million hit.
Lawmaker: Where will the money come from?
Rep. Keith Truenow, R-Tavares, asked Cabrera where the money would come from.
“I know you are concerned about fiscal costs,” said Cabrera, as she flipped through a portfolio and pulled out a page that showed how much money the state distributed in sales tax revenues to Truenow’s home county of Lake. It showed an increase of 24% in 2020 alone — and a 45% increase since 2019.
Cabrera noted that various lawmakers and AFP’s Stranburg had showered public workers with platitudes about valuing them and being thankful for the work they do.
“But it doesn’t help someone pay the cost of inflation. It doesn’t help someone pay the cost of their rising property insurance, the rising cost at the grocery store, at the gas pump,” Cabrera said.
She pledged to maintain FRS as one of the healthiest pension systems in the country. And committee chair Spencer Roach, R-Fort Myers, promised lawmakers a thorough actuarial analysis before the bill’s next committee stop.
Brannan acknowledged to the committee that he collects a state pension and the 2011 change still irks him because it costs him about $300 annually. But he also mentioned how his father, a Florida Highway Patrol trooper, had to return to work in retirement, and his grandmother had made little money working at a state hospital.
“Let’s make it right,” Brannan said.
The bill’s next stop is the House Appropriations Committee. Its companion…
Read More: Florida House panel OKs multi-billion-dollar boost to state pensions