DC Consultant (Ret)
09-02-2012, 04:02 PM
Editorial: State deserves to lose big pension case, but needs to win
By Jac Versteeg
Palm Beach Post Staff Writer
If the Florida Retirement System case that the state Supreme Court is scheduled to hear Friday were decided strictly according to who deserves to win, teachers and other state employees challenging the 2011 law that required a 3 percent pension contribution from them easily would prevail. Legislators and Gov. Scott singled them out for what amounts to a pay cut, even while giving out tax breaks to others.
Regardless of moral merit, though, the state has a strong legal case that the Legislature acted within its authority when it changed the retirement system, which covers about 600,000 workers and more than 300,000 retirees.
The practical effect of a victory by the workers and their unions also is daunting. Combined, the state, county governments and school districts would have to refund roughly $1.6 billion the workers paid into the system starting in 2011. Then those governments would have to find an equivalent amount in every budget to cover the 3 percent pension contributions that had been shifted to the workers. A victory by the employees, for example, would cost the Palm Beach County School District about $30 million a year. Ironically, if the teachers win, the result statewide almost certainly will be teachers layoffs and the end to any hope of raises.
Not that the legal arguments union attorney Ron Meyer makes on behalf of the state workers are shabby. They were good enough to win at trial. Leon County Circuit Judge Jackie Fulford ratified all the plaintiffs’ main arguments. Judge Fulford ruled that the 1974 law that set up the non-contributory system explicitly established contract rights the state can’t unilaterally take away. The state, Judge Fulford said, also improperly negated the cost-of-living formula granted in that law.
Judge Fulford distinguished this case from a 1981 precedent that allowed governing bodies to alter pension plans. The Legislature didn’t just change the retirement system in 2011, Judge Fulford ruled. Legislators acted to “completely gut” it. Making the changes, she said, illegally took away the workers’ rights to collective bargaining.
In his brief to the Florida Supreme Court, which agreed to hear this case directly from the trial court because it is so important, Mr. Meyer reiterates those points and emphasizes that the pension fund remains financially solid. The change in 2011, he says, was not to shore up the retirement system — something Judge Fulford said could be allowed in an emergency — but was intended to plug unrelated budget holes.
The state’s case, argued in a brief by former Florida Supreme Court Justice Raoul Cantero, emphasizes that the state constitution gives the Legislature power to appropriate money. If legislators want to make teachers and other state employees contribute 3 percent to free $1 billion-plus for other purposes, that is the legislators’ prerogative. The 1974 Legislature, he says, couldn’t create a pension system that a future Legislature is powerless to change.
Mr. Cantero’s other essential point is that the 2011 change did not take away any benefits that current workers had earned. Neither did it take away benefits of those who have retired. All the changes are “prospective,” affecting only future earnings and payments. Both sides agree that the Legislature can change the pension plan for new employees.
The teachers and state workers say a victory for them would not necessarily bring layoffs. Legislators could find other ways to pay. But the teachers don’t dispute that layoffs would result if the Legislature decided to be “punitive.” Which, of course, it would. The moral high ground is no protection from a low blow.
These are powerful legal arguments on both sides. The decision will clarify legislative powers and public employees’ rights. A victory for the employees would be great — until it came time to pay up.
Jac Wilder VerSteeg
for The Post Editorial Board
By Jac Versteeg
Palm Beach Post Staff Writer
If the Florida Retirement System case that the state Supreme Court is scheduled to hear Friday were decided strictly according to who deserves to win, teachers and other state employees challenging the 2011 law that required a 3 percent pension contribution from them easily would prevail. Legislators and Gov. Scott singled them out for what amounts to a pay cut, even while giving out tax breaks to others.
Regardless of moral merit, though, the state has a strong legal case that the Legislature acted within its authority when it changed the retirement system, which covers about 600,000 workers and more than 300,000 retirees.
The practical effect of a victory by the workers and their unions also is daunting. Combined, the state, county governments and school districts would have to refund roughly $1.6 billion the workers paid into the system starting in 2011. Then those governments would have to find an equivalent amount in every budget to cover the 3 percent pension contributions that had been shifted to the workers. A victory by the employees, for example, would cost the Palm Beach County School District about $30 million a year. Ironically, if the teachers win, the result statewide almost certainly will be teachers layoffs and the end to any hope of raises.
Not that the legal arguments union attorney Ron Meyer makes on behalf of the state workers are shabby. They were good enough to win at trial. Leon County Circuit Judge Jackie Fulford ratified all the plaintiffs’ main arguments. Judge Fulford ruled that the 1974 law that set up the non-contributory system explicitly established contract rights the state can’t unilaterally take away. The state, Judge Fulford said, also improperly negated the cost-of-living formula granted in that law.
Judge Fulford distinguished this case from a 1981 precedent that allowed governing bodies to alter pension plans. The Legislature didn’t just change the retirement system in 2011, Judge Fulford ruled. Legislators acted to “completely gut” it. Making the changes, she said, illegally took away the workers’ rights to collective bargaining.
In his brief to the Florida Supreme Court, which agreed to hear this case directly from the trial court because it is so important, Mr. Meyer reiterates those points and emphasizes that the pension fund remains financially solid. The change in 2011, he says, was not to shore up the retirement system — something Judge Fulford said could be allowed in an emergency — but was intended to plug unrelated budget holes.
The state’s case, argued in a brief by former Florida Supreme Court Justice Raoul Cantero, emphasizes that the state constitution gives the Legislature power to appropriate money. If legislators want to make teachers and other state employees contribute 3 percent to free $1 billion-plus for other purposes, that is the legislators’ prerogative. The 1974 Legislature, he says, couldn’t create a pension system that a future Legislature is powerless to change.
Mr. Cantero’s other essential point is that the 2011 change did not take away any benefits that current workers had earned. Neither did it take away benefits of those who have retired. All the changes are “prospective,” affecting only future earnings and payments. Both sides agree that the Legislature can change the pension plan for new employees.
The teachers and state workers say a victory for them would not necessarily bring layoffs. Legislators could find other ways to pay. But the teachers don’t dispute that layoffs would result if the Legislature decided to be “punitive.” Which, of course, it would. The moral high ground is no protection from a low blow.
These are powerful legal arguments on both sides. The decision will clarify legislative powers and public employees’ rights. A victory for the employees would be great — until it came time to pay up.
Jac Wilder VerSteeg
for The Post Editorial Board