Attention: All FRS Employees!

[mod 167]

Please read the following information!!

Although SB 1902 and HB 1319 are not gaining support, the following SB 2022 is on its way to become law effective July 2010.

We have all tightened our belts with reduced budgets and no pay raises for the past few years. The future does not look any brighter and now our State Legislators are FORCING us to take a pay cut by means of contributing towards our own retirement

This means that effective 01/01/11, the FRS will take ¼ of a percent from your pay. This does not sound like much but if you make $72,000.00 gross income, you will now be paying $180.00 a year out of your own pocket towards your own retirement.
(For now,It's not the money but the principal)


SB 2022 Relating to Florida Retirement System (Alexander)

03/25/10 SENATE Favorable with CS by Policy & Steering Committee on Ways and Means; 15 Yeas, 8 Nays

Some of the bills that accompanied the budget drew fire and SB 2022 would require that all employees begin contributing .25 of 1 percent of their salaries starting in January. The move drew sharp criticism from Democrats who said it was unfair to state employees who have gone several years without a pay raise. Sen. Al Lawson, D-Tallahassee, unsuccessfully asked his senators to "show a little love" to state workers. The bill passed by a 15-8 vote.

From the 95 page bill:

(h) Effective January 1, 2011, this system shall require employee and employer contributions as provided in s. 121.071 and part III of this chapter. As of January 1, 2011, the rights of members of the retirement system established by this chapter are declared to be of a contractual nature, entered into between the member and the state, and such rights shall be legally enforceable as valid contract rights and shall not be abridged in any way.

(3) Required employee retirement contribution rates for each membership class and subclass of the Florida Retirement System for both retirement plans are as follows:

Membership Class Percentage of Gross Compensation, Effective January 1, 2011
Regular Class: 0.25%
Special Risk Class: 0.25%
DROP: 0.25%

(4)(3) Required employer retirement contribution rates (percentage of gross) for each membership class and subclass of the Florida Retirement System for both retirement plans are as follows:

Class Effective 7/1/10 Effective 1/1/11
Regular: 9.76% 9.54%
Special Risk: 22.15% 21.92%
Admin Special Risk: 11.24% 11.02%

(5) In order to address actuarial liabilities of the system, the required employer retirement contribution rates (percentage of gross) for each class and subclass of the Florida Retirement System for both retirement plans are as follows:

Class Effective 7/1/10 Effective 7/1/11
Regular: 0% 1.58%
Special Risk: 0% 5.97%
Admin Special Risk: 0% 15.97%

Please read the bill for yourself at:

http://www.flsenate.gov/cgi-bin/view...billtext/html/


LINE: 2313 begins this rediculous legislation

Thanks Mod for the update.
Isn't it funny that the democrats are the ones looking to protect our pension.
BASH THEM NOW COWBOY

Mod are you sure your math is right on the example? I think it might be $180. This bill also locks your FRS in as a contract- does this mean they cant screw with your benefits further?

[mod 167]

The FRS has always been a contract between the state and its employees; since the begining (1970's). All they are doing is modifying the current contract to benefit the state. At the bottom of this legislation you will see a statement that says that this modification is the states intent to benefit the state and its employees.

It is a catch-all statement that will always be used to allow the state to modify the contract between its employees and the state. This same tactic will be used in the following years to increase the employee contribution amount. The current projections is that the FRS is $400 million behind where it should be. Passing this law in July will only yield about $80 million its first year. There is no way that employee contributions will correct the problems unless the amount of employee contributions are increased. This will only be the beginning of increses until a percentage is reached that mimics other states; anywhere between 2.5% to 10%.

The point being that 1/4 of a percent is a small number now but it is a way to open the door without taking a lot of heat from the FRS membership classes. Today its a quarter of a percent and next year it will be more; they can not make up the shortfall without increasing our contribution amount. Remember in the 80's when the Lottery was suppose to fund extra money into public education? Well it passed overwhelmingly "For the kids" and after all that money started rolling in the state started reducing its own budgeted funding towards public education. Now the lottery is the majority source of funding public education and the state only contributes a little "for the kids." There will be no difference, the state will eventually try to eliminate itself from financial costs in managing the FRS system.

Regarding the math: You are correct, it is $180 dollars not $1800 dollars. In my haste to post this I hit one too many zeros; I will go back and correct my original post (Thank you)

As for Democrat or Replublican it makes no difference, pick your poison, they ALL will disappoint you at some point in their career.

[mod 167]

Here is another article I just found.

http://www.tallahassee.com/article/2...s-pension-bill

The vote came over strong objection by employee representatives.

The employee contribution would be one-fourth of 1 percent of gross earnings — about $75 a year for a worker making $30,000 — but Senate Ways and Means Chairman JD Alexander said the state can't continue an entirely employer-paid pension plan. He said very few states don't require employees to chip in something to the pension pot, with contributions ranging from 2.5 to 10 percent.

"I wish there were some other way, I truly do," said Alexander, R-Lake Wales. "I take absolutely no pleasure in this. I have a great respect and admiration for our public employees, particularly those in public safety who stand to protect us."

Lobbyists from the Florida Police Benevolent Association, Professional Firefighters of Florida, Florida Education Association and the American Federation of State, County and Municipal Employees united in opposition to the bill (SB 2022).

Apart from pensions, the powerful budget chairman has repeatedly said this year that he wants to make all state employees pay for health insurance. About 27,000 Selected Exempt, Senior Management, legislative and other employees now have employer-paid insurance.

There are also some pending budget proposals for pay cuts in the budget, which will likely require layoffs in the fiscal year starting July 1. Separate House and Senate work on the budget will be completed in the next few weeks.

"We really don't think a quarter-percent from employees is going to help the Florida Retirement System; it's got a lot more problems than that," said Don Teems, a lobbyist for the PBA. "But I do think it's the camel's nose under the tent. I do believe that you'll come back year after year after year and impose increases on the employees. I think that's the intent.

Alexander estimated the employee 0.25 percent would add up to about $41 million initially, if implemented Jan. 1 for half of the fiscal year, and $83 million over a full year. The $400 million-plus funding gap he cited is borne largely by city, county and special districts that make up about 80 percent of the FRS membership, but state government, universities and community colleges bear about half.

The budget committee voted 14-8 for the pension contribution. Only one Republican, retired educator Evelynn Lynn of Ormond Beach, voted against Alexander's bill.

Senate Minority Leader Al Lawson, who has represented Tallahassee for 28 years in the House and Senate, said the money may be small but that this is the wrong time to tap employee paychecks.

"We're going on five years without a pay raise for state employees," said Lawson. "This amounts to a reduction in pay for their families."

[Curios George]

The Florida Retirement System is using figures based on current market standings for their justification to enact by law employee contributions. This tactic is without merit and should be fought tooth and nail by every FRS member.

Below is information obtained from the FRS website showing the real dollar figures within the system.

The FRS system is down, but not as bad as they would want you to believe. Furthermore, when the market rises again (Some analyst believe it will top 12000 by years end) the FRS system will be funded as it was before the market crash of 2008.

If you click on the link and scroll to the bottom you will see that the money in the FRS is based on investment market cycles:

This is only a ploy to relieve the states responsibility in funding the management of the FRS system and placed the burden upon the employees at our expense. As others have stated, we have all suffered and have done our part with reduced budgets and lack of pay raises; as the economy suffers so does our working environment.

Taking money out of our pocket to fund something that I was told 25+ years ago would be a benefit for working a low paying job is not acceptable…

[Curios George]

From the words taken directly from FRS:

http://hr.fiu.edu/uploads/file/BEN/B...s_03-23-09.pdf

Florida Retirement System Pension Plan Funding Status

Over the last several weeks the media has reported a projected deficit in the Florida Retirement System Pension Plan Trust Fund. The purpose of this flyer is to provide you with information to help answer questions you and your employees may have.

First, and foremost, your FRS Pension Plan benefits are guaranteed in accordance with the benefit formula in s. 121, Florida Statutes. The FRS Pension Plan is a defined benefit plan qualified under s. 401(a) of the Internal Revenue Code. Article X, Section 14, of the Florida Constitution, and s. 112, Part VII, Florida Statutes, require that all benefit improvements made must be funded on a sound actuarial basis.

Pension Plan benefits are funded over a member’s career to take advantage of investment gains over a long period of time. These gains help reduce the cost of providing benefits to all FRS members.

As you may be aware, the State Board of Administration (SBA), the agency responsible for investing the Pension Plan contributions, compiles an Annual Investment Report (AIR) each year that is available in January for the preceding fiscal year. The 2007-08 AIR was completed in late December 2008, and indicated that as of June 30, 2008, the FRS was 106.7% funded. This figure was taken from an actuarial analysis by the consulting actuary to the Division of Retirement.

Each year, a high level Executive Director’s Report (a summary of the AIR) is sent to all FRS members along with their annual Personal Forecast Statement (PFS). You should have received an email with the PFS and Executive Director’s letter from the SBA’s Walter Kelleher on March 5, 2009 asking you to forward it to your FRS-covered employees.

The AIR is an in-depth look backward at the investment performance of the SBA over the previous fiscal year. As the financial managers of the FRS Pension Plan Trust Fund, it is also important and prudent for us to look forward to determine if any corrections to our investment strategy are necessary. To that end, every year as part of our planning, the SBA contracts to have an informal independent asset/liability analysis report done of the FRS. This year’s report was recently completed by Ennis Knupp & Associates and reviewed by our Investment Advisory Council (six investment professionals appointed by our Board of Trustees) on March 12. Our Trustees (the Governor, Chief Financial Officer, and Attorney General) reviewed the report on March 24.

Ennis Knupp & Associates projects that the FRS Pension Plan Trust Fund will be 93% funded on June 30, 2009, down from 106.7% on June 30, 2008. However, this 93% estimate is based on a number of assumptions. The official actuarial analysis will be conducted by the consulting state actuary to the Division of Retirement, (i.e., Milliman USA) as of June 30, 2009 to determine the actual funded status. Their findings and report will be forwarded to the Legislature for consideration during the 2010 Legislative session.

Click here to watch a video from FRS stating this information: http://www.myfrs.com/present/player.html

according to the graph the frs was over 100% funded for 11 years. That equates to being 123% surplus. My question is where is the surplus from those 11 years. It would stand to reason that the surplus in monies would carry us through the tough times until the economic cycle reverses itself. Why make us contribute to our retirement fund when the system is not broke. my finance guy tells me to disregard what the market is currently doing and to focus on the long term of the market. I suggest that the folks in Tallahassee do the same thing!!

State pension in the red
By Kris Hundley, Times Staff Writer

Published Tuesday, March 23, 2010


--------------------------------------------------------------------------------

On March 1, the state agency that invests public pension money issued a news release bragging about a 16.3 percent rebound in its portfolio in the second half of 2009.

Two days later, the State Board of Administration sat down with its advisory council and revealed the rest of the story:

Even with those gains, Florida's public pension fund slipped into the red in 2009 for the first time in a dozen years. And the fund's shortfall is projected to be even bigger this year. That news has not been as widely publicized.

While past surpluses in the pension fund kept a lid on local contributions during boom times, now the bill is coming due. And plugging the multibillion-dollar deficit will require about a 40 percent hike in contributions from local governments stretched by declining revenues.

Though checks will still be in the mail for Florida's public retirees, by July the fund is expected to have just 87 cents for every dollar in pension promises made. Like a tiny leak, this unfunded liability can grow into a gusher if not addressed quickly. But none of the fixes will be too palatable with either the nearly 1 million public employees and retirees covered by the plan or taxpayers who foot the bill.

The options include:

• Raising more money from local governments.

• Trimming benefits for retirees.

• Making public employees, who now pay nothing toward their pensions, chip in.

Variations on these themes are already bubbling through the Legislature, with limited success. Under one proposal, the state's pension plan would be closed to new employees; another would make new hires pay 1 percent toward their pensions. A less-ambitious proposal by Republican Sen. Mike Bennett of Bradenton, which would affect benefits of employees with less than 10 years' service, was watered down in committee Tuesday. It's the first pension reform proposal to get a hearing this year.

Miami Republican Rep. Juan Zapata has put forth the most far-reaching changes, including limiting payouts to higher-paid "special-risk" employees like firefighters.

Zapata, who is not running for re-election, knows tinkering with benefits is unpopular.

"I took it upon myself to kind of take one for the team to, at the very least, have a conversation about it," he said. "Because nobody's talking about it, and it's an incumbent problem."

State law requires government contributions be set at a rate that covers a year's benefits, but the state doesn't have to fully eliminate the long-term deficit. Last week, a House committee proposed taking this route, which still translates into a $460.8 million bump in local contributions.

But, barring a meteoric rise in investment returns, ignoring the pension deficit means watching it grow. To adequately address the gap, the fund's actuary said, governments will have to pony up even more money — more than doubling the contribution for some elected positions.

The House is proposing to postpone the full increase until after the fall elections.

• • •

While lawmakers tinker with the funding side of the equation, the SBA is exploring ways to increase investment returns on the $116 billion fund. The strategy? Put more money into higher-risk but potentially higher reward alternatives like hedge funds, private real estate and even timber land.

Dennis MacKee, SBA spokesman, denies that the move into riskier investments is anything new. "We started looking into hedge funds when we were well overfunded," he said.

And he says that by diversifying its portfolio, the SBA is actually decreasing risk.

But even if the SBA upped its risk profile considerably, the payoff is debatable. The board's consultants said earlier this month that by sticking with its current asset mix of mostly stocks and bonds, there's only about a 50-50 chance the fund is going to reach its assumed rate of return of 7.75 percent.

Jack up the risk? Probability of making that return ticks up slightly, to 55.4 percent.

"It's a joke," said Leo Kolivakis, a former senior investment analyst at two of Canada's largest pension funds and publisher of the blog, Pensionpulse. "They're deluding themselves if they think they can get that kind of return. And they're taking big risks with pensioners' money."

But the alternative is even less attractive. Lower the projected rate of return to a more conservative number and the state's pension gap grows, triggering even harsher demands on the funding side.

"Pension funds that are experiencing downturns are turning to a 'Hail Mary' pass to save them," said former SEC attorney and South Florida accountant Edward Siedle about the move to riskier investments. "But they'd better have a really good arm, because it's a stretch."

Nor are the SBA's trustees — Gov. Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink — particularly eager to tackle the unfunded liability issue. As beneficiaries of the plan, they're not anxious to talk about paring back benefits. As politicians, all running for higher office, they see no upside in demanding more money from taxpayers or telling them they'll lose services because the dollars are going to government retirees. Voters will be mad enough to find out their library is closing. Tell them the money is going to the retired librarian and they'll be even madder.

Andrew Biggs, former principal deputy commissioner of the Social Security Administration, has strongly criticized public pensions for using what he calls "bogus accounting" and believes the unfunded liability in all states, including Florida, is worse than projected.

"There's no incentive for anybody to be honest about this stuff because the taxpayers are going to be upset," said Biggs, now resident scholar at American Enterprise Institute. "That produces lower contribution rates today but passes off the risk to future taxpayers."

• • •

When experts talk about the recently opened gash in Florida's pension fund, they quickly add this caveat: We're in a whole lot better shape than most states.

Florida was one of only four state pension funds to go into the current recession fully funded. And based on its performance in fiscal 2008 — before the market meltdown — Florida was touted as a nationwide model in a report on public pension funds by the Pew Center on the States.

Kil Huh, director of research at Pew, said it's not surprising that Florida's pension fund should slip into a deficit, given market conditions.

"You're going to see a drop in assets, as well as an increase in unfunded liabilities until the actuarially required contributions catch up," he said. "But that's provided states fully fund these things, which is a big 'if' in this fiscal environment."

States that procrastinate find the tab quickly snowballs. New Jersey was fully funded in 2002 when it began to shortchange its contributions. By 2008 the New Jersey plan was one of the worst in the nation, about 73 percent funded. Catching up now would cost an estimated $3 billion; the state's new governor has recommended simply skipping this year's payment.

Richard Keevey, a professor at Princeton University and consultant on a Pew pension report in 2007, has watched the New Jersey debacle unfold in his back yard.

"When economic times are bad, legislatures are torn by priorities and underfund the pension a little bit till things get better, but they never do," he said. "Florida shouldn't go down that path."

Eric Johnson, assistant county administrator in Hillsborough County, knows exactly what it would take for his municipality to fulfill its pension obligations to about 5,000 public employees this year: $44.5 million, an increase of 18 percent.

To meet that obligation during a year when tax revenues continue to plummet, Johnson said the county was considering cutting benefits or replacing workers with private contractors.

While he's relieved to hear the Legislature is proposing a somewhat smaller increase in contributions, Johnson is troubled by what that means long term. He worries that Hillsborough's triple A credit rating, which translates into lower borrowing costs, could be jeopardized by the move.

"If you have a pension plan, it ought to be fully funded," Johnson said. "Part of the creditworthiness of a government is based on its unfunded liabilities. And the challenge is, when you punt one time, how confident should anyone be that you won't punt a second time?''

Times/Herald staff writer Mary Ellen Klas and Times researcher Caryn Baird contributed to this report. Kris Hundley can be reached at khundley@sptimes.com.



$15.4 billion Florida's public pension fund deficit in fiscal year 2009, compared with a surplus

of $8.2 billion at the end of the previous year.

1997 Last time the fund had a deficit.

1 million Number of fund members in 2009, with roughly two active workers for every retiree.

0 Amount state employees in Florida contribute to pension fund. In 44 states, public employees are required to contribute a median of 5 percent of their salaries.

[Paparazzi LEO]

During the 28 years the FRS was under-funded not one person did without their promised benefits. If that could occur when the FRS was well below the 100% mark then why all of a sudden there is a crisis?

As George stated, this is only an excuse for the state to get out of the retirement fund business. It would not surprise me to find out that the state took that surplus money and used it elsewhere.

The market will recover and our FRS moines will again be over 100%. We need to stop trying to fix a system that is not broke. If the state wants to get away from managing the expenses of operating the FRS then say so and allow every member to take their money and invest it into a 401k but do not take something from me and tell me that it is in my best interest and lie to me for the reasons given.

This is all B.S. !