Compliance

FL Judge Challenges State Pension Contribution Change

October 27, 2011 (PLANSPONSOR.com) – On Wednesday a Florida judge challenged the state’s defense of a new law that requires public employees to contribute 3% of their pay to the Florida Retirement System, the Associated Press reports.  

By PLANSPONSOR staff editors@plansponsor.com | October 27, 2011

The Florida Education Association, other public employee unions, and several individual workers have asked Circuit Judge Jackie Fulford to strike down the law. It also eliminates annual 3% cost-of-living increases on any pension benefits earned after it went into effect on July 1.

According to the article, the unions claim the law violates contract, property, and collective bargaining rights that are guaranteed by the Florida Constitution. A 1974 law that eliminated employee contributions to the retirement fund also says pension benefits are a contract right.

Doug Hinson, Partner at Alston & Bird LLP, a lawyer hired by the state, argued the Legislature had the authority to take that action under its constitutional budgeting powers. Hinson cited a 1981 Florida Supreme Court ruling upholding a 1978 law that reduced extra benefits for law enforcement officers. The opinion in Florida Sheriffs Association v. Department of Administration says lawmakers can "modify or alter prospectively the mandatory, noncontributory retirement plan for active state employees."

However, Fulford said: "It does not say you can gut it. It doesn't say you can do away with it. It doesn't say you can change it to voluntary. It doesn't say you can change it to contributory." Florida Education Association lawyer Ron Meyer similarly argued the ruling does not apply to the current case because the Legislature went well beyond modifying or altering, and instead changed the retirement system's fundamental nature.

The AP article states, the law had the effect of cutting pay by 3% for about 560,000 teachers, police officers, and other state and local government employees.

Fulford gave no indication when she'll rule. The case is expected to go before the Florida Supreme Court.

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