From the HeatLightning.com
by Nicolette
Mary Ellen Tracy, an educator for over 24 years in Florida, is considering packing up her classroom at the end of this school year and turning in her keys – for good. This isn’t a decision Mrs. Tracy has come to lightly. Despite her years of service, numerous accolades and well-stocked certification, Mary Ellen may be forced to retire early, or else lose nearly half of her predicted retirement income.
In December 2010, Florida Tax Watch (FTW), a private, non-profit research institute with officers holding high-powered positions at AT&T, Verizon, Publix, PBS&J, and Prudential Financial, published a 233-page report containing many recommendations for reigning in the cost of state government. Amongst these recommendations, FTW suggested a number of changes to the Florida Retirement System (FRS) – the pension plan that all state, county, and city employees in Florida are privy to and automatically enrolled in. Interestingly enough, according to Florida Tax Watch’s website, the state of Florida has implemented three-fourths of FTW’s recommendations since the organization began in 1979. In this case, it is easy to see that these changes have a good chance of making it to Governor Rick Scott’s desk for approval in the coming year.
While it is possible that these changes will save the state of Florida a considerable sum of money (FTW estimates a savings of $1 billion annually), the savings come at the expense of so many of the state employees whose work maintains and improves our quality of life here in Florida – police officers, firefighters, and teachers.
Here’s a breakdown of some of Florida Tax Watch’s recommendations and how it can affect our state employees:
Require FRS members to contribute to their retirement plans
Florida is actually one of only a few states that do NOT require state employees to contribute to their retirement plans. This would simply mean that employees would have to pay into their pension plans, similar to private-sector employees paying into a 401K, however, another of FTW’s suggestions would include reducing or even eliminating the amount that the state pays towards the plan, thus potentially changing the pension plan to a state-sponsored savings-account and placing the entire burden of retirement savings on the employee, with little or no contribution from the state.
It is important to note that the national average for teacher pay and pay-raises lags far behind that of other professions which require similar education and training. Florida ranks 28th in the nation for average teacher salary. Additionally, teacher raises are on a set-schedule (Florida teachers get a 30% increase in pay over 10 years) which does not take into account inflation or cost-of-living increases.
Increase the FRS vesting period from six to ten years.
This will not affect veteran employees, but for younger employees, such as myself, this is a huge factor as to whether to stay in the system, or to even join in the first place. This would mean that an employee would not even be able to BEGIN earning/saving for retirement until s/he has completed ten years of service, ultimately reducing the time you have to save for retirement.
Change the calculation for average final compensation to include only base salary, and extend the averaging period from the highest five years, to lifetime average salary.
This brings us back to Mrs. Tracy. For a newer teacher like me, my salary isn’t going to change that much from the year I started to when I plan on retiring. (Which raises another issue of teacher pay-raises that although unrelated to this article, is still entirely frustrating.) However, when Mary Ellen began her teaching career in Miami-Dade, her annual salary was only $17,000. For a veteran teacher, less than five years away from retirement, to suddenly be told her pension wages will be determined from a career-long average, rather than her five highest-earning years, this results in a drastic reduction in payments, and turns her plans for retirement on their head. Must she retire to ensure a pension that is also a living wage? Most likely.
Increase the normal retirement age to 65 or 33 years of service for regular class members (state/county/city employees, teachers) and age 59 or 28 years of service for special risk members (cops, firemen, corrections officers).
Aw, come on! You want us to pay us less to work MORE? Give me a break…
Eliminate the health insurance subsidy for FRS members.
Speaks for itself. Let me just put in that on a personal note, M-DCPS teachers have to put up with a lot of ups and downs and changes of insurance providers, all at the whim of the school board and their idea of what plan best saves them a buck. And these plans aren’t the greatest. So now, after we have potentially provided 33 years of service to Florida’s children, you don’t want to give us a break on health care? Great. Great!
Reform or eliminate the Deferred Retirement Option Program (DROP).
DROP is a program where employees who are eligble to retire, either by age 65 or 30 years of service, technically retire from FRS, but can continue working, while their FRS funds are placed in an interest-earning account. Teachers can work up to eight additional years under this program. DROP participants also receive a health-insurance subsidy (which would be eliminated by the previous item), and an annual cost of living increase (which, under another item would be changed from 3% to be variable based on inflation, with a 3% cap).
These are just a few of the recommendations laid out in FTW’s December report. However, in a speech on November 18, just weeks after his election, Rick Scott said that Florida’s public-sector pension plans were a “ticking time-bomb” and that “Florida has to bring its pension system into line with other states’ by increasing employee contributions.” (Governor-Elect Rick Scott, Speech to Florida Council of 100, November 18, 2010) In December 2010, (the same month FTW published their report), Governor Scott’s “Good Government Transition Team” suggested performing “a comprehensive review of civil-service retirement and healthcare benefits and evaluating the cost-savings to consolidate plans or programs.”
What has Mary Ellen Tracy, and so many other teachers and state employees, worried is this streamlined point of view. It seems that Florida Tax Watch’s recommendations have a green light stamped on them that will inevitably allow them to speed through Florida’s legislature, especially if FTW’s track-record says anything about their chances.
The new legislative session is set to begin on March 8, and if any of these changes do go through, it could potentially spur a wave of early retirement by veteran employees fearful of a reduction in the pension they have worked so hard to earn. It could also potentially result in a draining of young, intelligent, dedicated teachers, taking their careers to other states with better pay and benefits for educators. On the other hand, this issue hopefully could prompt public outcry and hopefully protest in the event that enough people become aware and voice their discontent.
http://theheatlightning.com/2011/01/31/attention-educators-florida-tax-watch-takes-aim-at-the-florida-retirement-system
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