Florida

Attorneys Spar in Oral Arguments over Florida Government Employee Pensions

Policy

The Florida Supreme Court appeared sympathetic today to legislation requiring government employees to contribute toward their taxpayer-funded pension plans. At issue is a lower court decision that a prior statute forbids the legislature from ever requiring government employees to contribute toward their retirement plans.

The legislature in 1971 created a pension plan for government employees under which state and local government would pay 100 percent of the money into government employees’ retirement accounts. In 2011, however, with the state facing a daunting budget crisis, the legislature passed a bill requiring government employees to pay three percent of their salaries into the retirement fund, to help pay for their future retirement benefits.

Circuit Judge Jackie L. Fulford struck down the 2011 bill earlier this year, agreeing with government employee unions that a provision in the 1971 statute saying government employees’ retirement payments “shall be legally enforceable as valid contract rights and shall not be abridged in any way” precluded the legislature from ever changing the terms of the pension program. State officials had argued the 1971 legislature merely intended to preclude the state from reneging on pension payments already accrued by government employees, as is sometimes done by private sector employers.

Appearing in front of the Florida Supreme Court today on behalf of the State, attorney Raoul G. Cantero, III, argued that the Florida Supreme Court has already ruled that the legislature can modify the terms of the pension plan. Cantero noted that the 1981 Florida Supreme Court case, Florida Sheriffs Association v. Department of Administration, held that the legislature can make prospective changes to the terms of the pension plan. The Florida Sheriffs decision, Cantero said, held that prospective changes are allowed, but retroactive reductions in accrued benefits are not allowed. Accordingly, said Cantero, the legislature in 2011 acted lawfully in changing the prospective rate that government employees must contribute to their pensions.

Justice R. Fred Lewis asked for clarification on whether the 2011 bill retroactively changed any employee rights, benefits or compensation.

“This has no impact on individuals already retired, no impact on people already in the [pension] program, does not deal with other collective bargaining agreements?” Lewis asked.

Cantero replied that the 2011 bill applies solely to future contributions to pension plans.

Justice Barbara Pariente pointed out that the 2011 bill for the first time required government employees to contribute toward their pension plans. She then asked whether the Florida Sheriffs ruling applied to a transformation of the pension plan from a non-contributory to a contributory plan.

Cantero responded that the key holding in the Florida Sheriffs case is that the legislature can change the plan prospectively. The prospective-versus-retroactive distinction made in Florida Sheriffs therefore applies to the 2011 bill and affirms the legality of the 2011 bill, said Cantero.

Pariente acknowledged that the state was facing a severe budget crisis in 2011, but pointed out that the legislature could have solved it in other ways. Couldn’t the state have cut government employee salaries or laid off workers instead of changing the pension plan, Pariente asked.

Cantero acknowledged that cutting salaries and laying off government employees was an option, but emphasized that requiring government employees to instead make future contributions to their pension plans was also a lawful option.

Testing the limits of the legislature’s power, Pariente asked Cantero if, under Cantero’s interpretation of the statute, the legislature could totally abolish the pension plan. Cantero said the legislature could indeed abolish the plan if it so chooses.

Justice Jorge Labarga asked why, given the different interpretations of the 1971 statute, the legislature did not amend the statute to clarify that the statute should be interpreted in accordance with Cantero’s interpretation. Cantero responded that the legislature chose not to do so because it agreed with the Florida Sheriffs case that the law merely precludes retroactive changes to the pension plan.

Justice Peggy Quince, appearing troubled at the extent to which the legislature can roll back government employee benefits under Cantero’s interpretation of the 1971 statute, asked again if Cantero believes the legislature has the power to completely eliminate the pension plan.

“Yes,” said Cantero. “But I don’t want to think about such things.”

“Well, I am sure the employees do,” Quince replied.

Throughout Cantero’s oral arguments, the justices asked pointed questions but the majority appeared relatively satisfied with Cantero’s answers.

Next, attorney Ronald G. Meyer presented oral arguments on behalf of the government employees opposing the 2011 bill.

Meyer argued that the Florida Sheriffs decision merely allowed the legislature to prospectively adjust existing aspects of the pension plan, not to eliminate them. By completely eliminating the non-contributory nature of the government employees’ pension plan, the 2011 bill went far beyond the pension plan adjustments at issue in Florida Sheriffs, Meyers asserted.

Justice Charles Canady immediately and forcefully expressed skepticism of Meyer’s argument.

“How can you assert that, when you have the reality that the whole state budget will be thrown out of balance, and thrown into chaos, if we recede from that decision [Florida Sheriffs]?” Canady asked.

“The legislature has previously increased retirement benefits. They relied on their ability to make changes when they did this,” Canady continued.

If the legislature did not believe it had the power to reduce benefits if future financial circumstances warranted, Canady said, the legislature would have been more hesitant to increase benefits when it did so.

Summing up what appeared to be the general sentiment of the justices, Pariente said, “Florida Sheriffs seems to clearly state that the legislature can make changes.”

“Why would the legislature bind itself forever, no matter what the budget crisis was, to a plan that could not decrease benefits, but could only increase them?” Pariente asked.

“Why would the legislature bind itself and handcuff itself forever?” she added.

Justices Quince and Perry appeared to offer Meyer a fallback position, asking if he would interpret the 1971 statute to hold that the legislature can prospectively amend the pension terms for future employees, but not current employees. Perry analogized that college applicants rely on the descriptions and promises made in college recruitment literature when they commit to attend a college.

Meyer agreed that drawing a distinction between current and future employees would be a fair reading of the law. Accordingly, the Florida Supreme Court’s prior holding in Florida Sheriffs may apply solely to future employees but not current employees.

The seven Florida Supreme Court justices will likely issue a ruling near the end of the year.

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