News image

Tension erupts over pension changes in Florida

Politicians in Florida looking to cover a $3.6 billion budget shortfall targeted the pensions of public employees to do so. While a trial court said that the move, which would save $1 million in pension benefits, was unconstitutional, the lawmakers behind the proposal are relying on the state’s Supreme Court to label it a fair cost-cutting move amid a financial crisis. This battle has proven to be a high-profile employment law issue as the changes essentially equate to an illegal salary reduction for workers, according to the opposition.

Lawmakers, predominately Republicans, altered the way that the state funds pensions for its employees. Public employees are now required to put 3 percent of their income into their pension to help pay for it. The new law also eliminated the cost-of-living adjustment, which would ensure that employees can stay on pace with inflation during their retirement years.

A lawyer representing a group of public employees who are challenging the new law said that it is unfair to make such a drastic change so suddenly. The lawyer, who is representing 11 people who were affected by the new pension law, said that the change was a direct violation of the agreements already struck between the state and its workers. The lawyer’s clients are asking that their contributions to their pensions be given back to them with an extra amount in interest.

A circuit court judge originally sided with the workers in the case, saying that they have the right to collectively bargain over conditions of employment, and in this case, were not able to. However, the state’s high court has agreed to hear the case to determine whether that decision would be reversed or upheld.

If the circuit court’s decision is upheld, Florida will have to continue funding workers’ pensions as it did, plummeting further into a financial hole. On the other side of the coin, if the Supreme Court decides that lawmakers were within their rights in changing pension laws, state workers face an uncertain financial future.

Source: Money News, “Florida $1 billion pension reform faces high court scrutiny,” Sept. 7, 2012