Florida judge rules against state and for teachers in pay theft case

From the Orlando Sentinel

By Kathleen Haughney, Tallahassee Bureau

A Tallahassee circuit judge Tuesday overturned a requirement that public employees contribute 3-percent of their pay toward their retirement, a ruling that legislators said could cost the state more than $1 billion a year.

In a lawsuit brought by the Florida Education Association, Judge Jackie Fulford held that the requirement – imposed by lawmakers a year ago – violated both the collective bargaining rights of public employees and their employment "contract" with the state.

"The 2011 Legislature, when faced with a budget shortfall, turned to the employees of the state of Florida and ignored the contractual rights given to them by the Legislature in 1974," Fulford wrote, adding that the legislation passed last year "constitutes an unconstitutional impairment of plaintiffs' contract with the state of Florida, an unconstitutional taking of private property without full compensation, and an abridgment of the rights of public employees to collectively bargain over conditions of employment."

FEA President Andy Ford said he expected employees would continue to have to pay the 3-percent contributions until the case was finally decided by the Florida Supreme Court, a process that could take a year or more. But he hailed the ruling as a significant victory for public employees.

"The judge's ruling confirms that the Florida Constitution requires the state to live up to its promises, including those made to the public workers by the state itself," Ford said.

But Gov. Rick Scott, who strongly backed the pension plan changes, called the decision "simply wrong…This is another example of a court substituting its own policy preferences for those of the Legislature," he said in a statement. He said a "swift appeal" would be filed.

The 140,000-member statewide teachers union had argued that Gov. Rick Scott and the Legislature violated the state's contract with 572,000 teachers, correctional officers, nurses and other public employees last year by ordering that 3-percent of their pay be put toward their pensions. For nearly 40 years, Florida had not required workers to contribute to their retirement.

Last spring, lawmakers facing a $3.8-billion budget shortfall made other significant changes to the state's retirement system. In addition to mandating the 3-percent contributions, they increased the retirement age for some classes of workers and lowered benefits for employees in the deferred retirement system. Those other changes were not considered in Tuesday's ruling.

The contribution requirement freed up $1 billion – the amount employees paid in from their salaries – that state agencies, school districts and other public employers no longer had to pay into the pension fund on their workers' behalf. Employers were able to spend that money on other needs.

Senate President Mike Haridopolos, R-Merritt Island, who on Monday had said overturning the contributions would "cause chaos" and "blow a billion-dollar hole" in last year's and this year's budget, said after the ruling he expects an immediate appeal.

"This ruling is a radical departure from past precedent," he said, noting that 46 other states require employees to contribute to their pensions. He called Fulford an "activist judge who has no problem overstepping her authority and overruling the decisions of the state's elected representatives…"

FEA attorney Ron Meyer said the state has $2.8 billion in reserves, which he said could be used to pay for the effects of the ruling. And House Speaker Dean Cannon, R-Winter Park, issued a statement declaring that the ruling would have "no immediate impact" on the 2011-12 budget that the Legislature will pass on Friday.

The ruling does not affect public employees who came to work after the pension legislation took effect last July 1. Workers already on the public payroll, however, stand to get a refund of their contributions if Fulford's ruling is upheld on appeal.

The ruling produced a blistering statement from Mark Wilson, president and CEO of the Florida Chamber of Commerce, who called it "an affront to the taxpayers and voters of Florida."

"Once again Florida becomes the only state in the nation in which taxpayers must foot the entire retirement bill for state government employees and some local government workers that are part of the Florida Retirement System," Wilson said in a statement.

Fulford is also the judge who last year threw out the Legislature's attempt to privatize more than two dozen South Florida correctional facilities because lawmakers did so in language approved as part of the state's budget document. Fulford ruled that legislators instead needed to pass a separate bill – something the Senate was unable to do this session.

khaughney@tribune.com or 850-224-6214.

http://www.orlandosentinel.com/fl-judge-to-rule-on-pension-20120306,0,3180179.story