INFORMATION
Florida Retirement System - 3% Salary Contribution
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• When the Legislature mandated that active members of the Florida Retirement System must give up 3 percent of their salary as “contributions” to their retirement benefits, they impaired a contractual agreement with current employees in violation of the Florida Constitution.
• The Florida Retirement System is set up as a noncontributory plan and making unilateral plan changes violates the contract with employees.
• The Constitution also says that the government cannot take private property without full compensation. Mandating a 3 percent “contribution” does just that.
• FEA is also challenging the reduction in the cost-of-living adjustments for those retiring after July 1. Florida law requires a 3 percent cost-of-living increase during retirement regardless of years of service or dates of service. The changes made in Senate Bill 2100 violate this contract with current state employees in the Florida Retirement System and constitutes taking private property without full compensation.
• FEA is asking that all salary money collected from employees while this case is being heard be placed in an escrow account. If it goes into the Florida Retirement System, it may not be recoverable. By putting it into a segregated account, salary money can be returned to employees if our side prevails.
• The Legislature broke its promise and broke its contract with current public employees. Legislative leaders deliberately chose to flout the Florida Constitution and ignored constitutional law. The law says that the state had a contract with all current participants in the Florida Retirement System and could not just take away benefits from participants in the plan.
• The Florida Retirement System has been shown to be one of the most actuarially sound state retirement systems in the country. The money derived from the 3-percent salary cut is not needed to shore up the strength of the system, but was used by the Governor and legislative leadership to make up a budget shortfall on the backs of teachers, law-enforcement officers, firefighters and other state workers.
• These salary cuts – essentially an income tax levied only on workers belonging to the Florida Retirement System – compound the losses experienced by teachers and other public school employees. Over the past four years, they have seen no raises or minuscule raises, increased health insurance costs and layoffs. The stark budget cuts pushed by Gov. Rick Scott and the Legislature will only deepen those losses. The loss of 3 percent of their salary is pouring salt into their wounds.
• Teachers and other school employees entered into public service with few promises, but one was the security of their retirement. This action by the leadership of the Legislature and Gov. Rick Scott rips apart and dashes that promise.
• The leaders in the Legislature chose this irresponsible, reckless and unconstitutional way of balancing the budget instead of properly addressing the shortfall. Over the past decade, the Legislature has chosen to provide tax breaks to investors and corporations that have accumulated many billions of dollars. If those tax breaks had not been enacted, there would have been no shortfall this year.
• In fact, the Legislature approved further tax breaks for corporations without any public debate during the final hours of this legislative session, while they cut the salaries of hard-working families and enacted severe budget cuts on our public schools.
• FEA does not take this action lightly, but we must defend the rights of our members and the citizens of this state. We understand that with this legal action the Legislature may have to return to fix the problem that they created during the regular legislative session.
• FEA undertakes this effort fully realizing that legislative leaders may try to exact retribution. After all, this past session FEA was fully in their crosshairs with the profession-destroying SB 736, massive budget cuts to public education and a spate of bills designed to put our union, and other public-sector unions, out of business. Nevertheless, the importance of protecting the constitutional rights of our members trumps the fears of legislative payback.
• Legislative leaders have a number of avenues that they can use to address any budget shortfall – such as closing sales-tax loopholes, aggressively collecting sales tax on Internet sales, or repealing the tax breaks for investors and corporations. Those tax breaks were widely touted as ways to create jobs and grow the state’s economy, but after billions and billions of dollars worth of tax breaks over the past 12 years under Republican leadership, Florida has one of the highest unemployment rates and its economy is one of the weakest in the nation.
• This is a problem that was created by the leadership of the Florida Legislature and Gov. Rick Scott. When Scott proposed his budget, he called for a more than 10 percent cut in education while he campaigned on a platform that included no cuts to education. He did nothing to protect public education or teachers or state workers during the legislative session and only talked about putting more money into education when he signed the budget and issued line item vetoes to that budget.