Gov. Scott Signs Measure Overhauling Retirement, Granting State Worker Raises

Jun 19, 2017
Originally published on June 16, 2017 3:46 pm

State workers are in for a raise after Governor Rick Scott approved a sweeping measure earlier this week.  But the pay bump comes with a tradeoff.

The past few days haven’t been great for the Florida Senate’s priorities.  Senate President Joe Negron’s higher education overhaul is dead after Governor Scott chose to veto the measure.  But the governor did sign off on a package of state worker raises.

“Florida’s state employees and law enforcement deserve to be rewarded for their hard work,” Scott told a crowd at a Florida Highway Safety and Motor Vehicles event.  “And that’s why I’m proud to be here today to sign Senate bill 7022 which provides pay raises to state employees, state law enforcement and corrections officers.”

“Most state employees will receive either a $1,400 increase if their current salary is below $40,000 a year,” Sen. Jack Latvala (R-Clearwater) explained on the Senate Floor last month, “or a $1000 increase if their salary is above.”

The appropriations committee chair says the raises are even better for law enforcement. 

“Law enforcement will receive a five percent increase in salary,” he goes on.  “Most correctional officers will receive a $2,500 dollar bump in salary, which depending on how long they’ve been around could be close to 10 percent.”

But those raises come two significant caveats. 

The state group health insurance plan will begin moving toward a four tier system, and most public sector employees will default into a 401-k style retirement program.

“Up until the effective change of this bill,” Latvala says, “if you didn’t select one of the options within the first six months, I think it is, then you got put into the defined benefit plan—the traditional FRS, the pension plan.” 

“With the change in this language,” he says, “you now have nine months to make a selection.  If you don’t pick anything you get put in the investment plan.”

The pension plan is generally seen as a safer investment because benefits are guaranteed.  For instance, the bill carves out law enforcement and correctional officers—they won’t default into the investment plan. 

Under the 401-k style program workers vest more quickly, making it easier for short-term employees to carry retirement savings from job to job.  But the payout depends on how much an employee puts in, and that nest egg isn’t insulated from fluctuations in the stock market—which could be good or could be bad. 

It put Democrats in a tough spot—having to decide whether to accept trading the retirement changes for employee raises.

“Would it be fair to say that the House wouldn’t agree to changes on public employee pay raises without the inclusion of this language into this bill?” Sen. Jeff Clemens (D-Lake Worth) asked Latvala on the floor.  

“It would be fair to say that,” Latvala replied.

Clemens wasn’t willing to make the trade.  In the end only four Democrats were. 

Many fiscal conservatives look at state pension programs as massive and growing liabilities.  Moving public sector employees out of defined benefit programs is seen as an economic imperative for lawmakers down the road. 

But a 2016 report from legislative researchers shows the main pension fund generally exceeds expectations, and its long term returns are in line with funds from other large states like New York, Texas and California.  

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