Bill Spells Sunshine in Fixing Local Florida Pension Woes

The Florida legislature has passed a bill that would allow county governments in Florida, with voter approval, to impose a pension liability surtax. Among the jurisdiction this measure would empower if it is enacted is Jacksonville, the largest city in Florida and the entire Southeast, which has long grappled with a huge pension plan unfunded liability.

The state House of Representatives passed CS/HB 1297 on Feb. 24; the Senate followed suit on March 9. The bill now goes to Gov. Rick Scott (R) for his consideration.

The measure would allow the governing body of a county to levy a pension liability surtax of no more than 0.5% to fund an underfunded defined benefit plan or system. But a county government could only do so if:

• an ordinance is approved by a majority vote in a referendum. Such a surtax cannot exceed 0.5%;

• the underfunded pension system is below 80% of actuarial funding when the ordinance or referendum is passed;

• an employee, including a police officer or firefighter, who enters employment on or after the date when the local government certifies that the pension system formerly available has been closed and he or she may not enroll in a pension system that will receive surtax proceeds;

• the local government and the collective bargaining representative for the members of the underfunded system or, if there is no representative, a majority of the members of the plan or system, mutually consent to requiring each member to make an employee retirement contribution of at least 10% of each member's salary for each pay period beginning with the one after the plan or system is closed;

• if there is a board of trustees for the underfunded system, it cannot participate in the collective bargaining process and engage in the determination of pension benefits;

• the county levies a local government infrastructure surtax which is scheduled to terminate and is not subject to renewal; and

• the pension liability surtax does not take effect until the local government infrastructure surtax is terminated.

If Scott signs the bill, it will go into effect on July 1.

This is only the most recent effort that could help Jacksonville address its more than $1 billion unfunded liability. The city had negotiated with the fund behind closed doors in 2013; in October 2014, Florida’s First District Court of Appeal upheld a ruling that Jacksonville broke state law when did so. In December 2014, the city council approved a pension reform plan, but the fund did not agree to it. And on Oct. 28, 2015, Justice Marcia Morales Howard of the U.S District Court for the Middle District of Florida said she would oversee a pension reform deal between the city and the pension fund.