Though we continue to hear soundbites from state legislators praising Florida’s essential workers risking their lives in the face of COVID-19, many have shown themselves to be less interested in truly helping dedicated shift workers answering the call.
Unfortunately, the pandemic has spurred political opportunists to rush through disingenuous legislation, including Senate Bill 84, aimed at breaking our retirement plan for frontline and essential workers.
The Florida Retirement System (FRS) Pension Plan is the fourth-largest state retirement system in the United States, managing more than $162 billion in assets. Members of plan include firefighters, police officers, judges, school teachers, nurses, as well as a variety of state and county employees. SB84 jeopardizes the retirements for which they all worked so hard and on which they are depending when they are no longer on the job.
Of the 2.6 million FRS members throughout the state, as of June 30, 2020, the FRS plan’s vested members included 644,338 active members who were still working; a separate group of 33,593 members who must retire within the next five years; and 432,258 retired members, reliant on their hard-earned retirements.
But SB 84 would close the plan to all new hires, meaning no new member contributions, even as active members naturally progress into retirement. This is like intentionally cutting off the flow of water that maintains Lake Okeechobee, ensuring that farming and regional water use supporting our communities will drain the lake dry, leaving only uncertainty for every person and industry counting on that source of water.
The FRS is a defined-benefit retirement plan, a portion of each employee’s paycheck is deferred, throughout their entire careers, allowing for employers’ contributions to grow within the plan. The strength of any public retirement plan is its long time horizon, recognizing retirements as largely predictable events many years out. Its large pool of mutual supporters ensure a continuation of contributions into the plan to meet current obligations, such as making payments to members who’ve already retired.
Critics of such plans point to the Government Accounting Standards Board (GASB), a private group that sets the standards for accounting practices when assessing public retirement plans. GASB assesses unfunded liability, with the gold standard being a plan that is “fully-funded,” a private sector approach to responsible accounting principles.
For example, a business would need enough assets socked away assets sufficient to pay 100 percent of its obligations should that business close its doors. However, that same measurement is misleading when applied to the public sector. Governments virtually are never liquidated. One can’t simply dissolve the state of Florida and sell off remaining assets to creditors. And though grave financial hardships and mismanagement could result in a state’s bankruptcy, there is a certain permanence and stability that governments enjoy which is not afforded to the private sector.
Even after taking into account a more-conservative assumption for system funding calculations, the FRS is funded at more 82 percent. The boogeyman of “unfunded liability” can only be realized if every single member in the plan — every single firefighter, police officer, teacher, judge, nurse, state and county worker — were all to retire at the exact same time, a fear untethered from reality. As legislative responses go, this bill is a proposed solution to a problem of its own opportunistic creation.
As the president of the South Florida Council of Firefighters, representing 3,600 firefighters, our position is clear: There’s no appetite for this flagrant attack to close our public retirement plan to new hires. I have confidence in our union counterparts. I don’t speak for them, but I will have their backs in this fight.
Through clever messaging in this past election cycle, some of the prevailing political discourse centered stoking fears of defunding departments essential to public safety.
Legislators were re-elected and challengers unseated incumbents by casting themselves as champions of first responders. So their push to gut Florida’s retirement system is hypocritical.
Alleging an opponent’s desire to defund public safety might be acceptable as campaign rhetoric; but, SB84 will defund essential workers’ pensions, and that would be shameful.
John O’Brien is president of the South Florida Council of Firefighters.