But the Pension Fund was Just Sitting There
In the February 20 Biweekly, we reported that Florida State Senator Jack Latvala was warning the public that a plan proposed by Florida House Speaker Will Weatherford to "reform" the Florida Retirement System (FRS) would actually undermine the system.
When we were hired by USF, we had several retirement plan options. The primary option was a defined benefits plan organized by the FRS: take this option, and the state would kick in funds annually for investments that would be paid to retirees - payments fixed by the retirees' salary during their last few years. This was a defined benefits plan because the benefit (pension payment) itself was defined by the program. The state assumes most of the risk.
Many of us chose an alternative, offered either by FRS or by someone else (such as TIAA-CREF), in which the amount of money kicked in by the state would be invested and then returned, as a lump sum for an annuity, upon retirement. This was a defined contributions plan, since the benefit (pension payment) was not defined by the program, only the cost. The employee takes most of the risk. Incidentally, the state contributions to these plans tracks state contributions to the defined benefits plan, so cuts in state contributions to the defined benefits plan affects everybody (and pretty dramatically, too).
Unlike many states, counties, and municipalities, Florida has adequately funded the FRS, so there are no serious financial problems. But during the last few years, as Tallahassee has grown increasingly like a riverboat racket, the FRS has looked increasingly like plunder.
Like many other funds, the FRS took a hit in 2008. Subsequently, the state contributions were dramatically cut from $ 766 million in 2011 to $ 317 million in 2012. That's $ 450 million that Governor Scott and the Legislature decided to divert from our pensions and into boodle and tax cuts for campaign contributors.
Readers will remember how they shifted the burden of funding the FRS onto state and public employees. That is the 3 % of our pay that we now contribute. Governor Scott had originally wanted to tax state employees at 8 % of their salary, but lobbying by the Florida Education Association got it down to 5 % by the time it reached the Legislature and 3 % by the time it was signed into law. 3 % too high, but the difference between 3 % and 8 % is five times union dues.
Alert readers will notice that while the state contribution to our retirement was cut nearly 60 %, we are paying only 40 % of Scott's originally desired employee contributions. That leaves a deficit: like the State of Illinois and the City of Detroit, Governor Scott has decided to underfund Florida retirement. Since the FRS was well-funded until recently, the state has time to fix his mess.
So the question is: what to do about this artificial problem? And about House Speaker Weatherford's proposal to eviscerate the program?
A Third World Solution - and What We Can Do About It
The FEA and its allies managed to defeat Weatherford's plans last session, so this year, Weatherford tried to divide the FEA'a alliance by offering to keep the defined benefits plan for state and public employees represented by historically Republican-leaning unions (like those for the fire and police) while shoving everyone else into defined-contribution plans.
This tactic doesn't seem to be working. The Fraternal Order of Police came out against Weatherford's proposal, and Florida State Senator Greg Evers predicted that no pension bills will pass this spring.
Still, this is Weatheford's top remaining priority for his tenure as speaker, a tenure that ends this year. Meanwhile, FEA is hearing rumors about games with health insurance and other critical issues. Considering how weird the situation has been since 2011, the FEA is taking nothing for granted.
And neither should we. At tomorrow's Chapter Meeting, we will discuss not only retirement but also what we can do with a Legislature gone amok. That means developing the means for educating politicians. So here is a special appeal to political junkies to come to the Chapter Meeting tomorrow so we can get organized.
AFSCME and USF Resolve Impasse
During the last two weeks, three broadcasts - one from President Genshaft and two from UFF (on March 28 and on April 1) mentioned "impasse". But there was also a more poignant story going on, for unlike faculty, the staff's union was in impasse.
The union representing staff - the American Federation of State, County, and Municipal Employees - declared impasse on the issue of sick leave. Many employees don't use all their sick leave, and over the years, contracts across the country say that a longstanding employee who resigns or retires will receive some or all of the unused sick leave as a cash payout. At USF, both staff and faculty had sick leave payouts in their contracts. With salaries failing to keep up with inflation and the Legislature playing with our health and retirement benefits, sick leave payout was a non-trivial part of the compensation package. Bargaining between AFSCME and the USF Administration stalled over sick leave payout, and AFSCME declared impasse.
A crowd of staff came to the March 24 Impasse Hearing, and it was standing room only with staff overflowing out the door. Just before the hearing, AFSCME and the USF Bargaining Team reached a compromise: current staff hired before 2014 would keep their sick leave payout option, but new hires would not get it. While everyone waited to hear if the USF Administration would accept the compromise, AFSCME leaders told staff that if they wanted better job conditions and compensation, they needed to join the union. Many employees do not realize that in order to be a union member, one has to join; an employee is not automatically a union member.
The compromise was approved. Now the new contract has to be ratified by USF staff and the USF Board of Trustees. It includes a pay raise of $ 1,000 for staff earning over $ 40,400 a year, and $ 600 for those earning less than $ 40,000. We wish our staff the best.