FLORIDA RETIREMENT FLORIDA RETIREMENT SYSTEM REFORMSYSTEM REFORM

Comparative Summary of the Governors Comparative Summary of the Governors Budget Proposal and Senate Bill 1130Budget Proposal and Senate Bill 1130

FRS Defined Benefit PlanFRS Defined Benefit Plan

GovernorGovernor• Eliminates defined benefit for all new employees Eliminates defined benefit for all new employees

hired on or after July1, 2011 hired on or after July1, 2011 Senate Bill 1130Senate Bill 1130

• SameSame

Health Insurance SubsidyHealth Insurance Subsidy GovernorGovernor

• Discontinues subsidy of ($5.00) a month for each year of Discontinues subsidy of ($5.00) a month for each year of service up to 30 years after June 30, 2011service up to 30 years after June 30, 2011

• Phases out subsidy beginning July1, 2011 for employees Phases out subsidy beginning July1, 2011 for employees hired on or prior to June 30, 2011.hired on or prior to June 30, 2011.

Example:Example:

• Current employee has 15 years in system on June 30, 2011.Current employee has 15 years in system on June 30, 2011.

• That employee works 15 more years.That employee works 15 more years.

• Only the first 15 years will earn H.I.S. Only the first 15 years will earn H.I.S. • That employee will have 15 years x $5.00 = $75.00 a That employee will have 15 years x $5.00 = $75.00 a

month H.I.S.month H.I.S.

Health Insurance SubsidyHealth Insurance Subsidy

SenateSenate• No changes for current employees (vested or not) No changes for current employees (vested or not)

employed on or prior to June 30, 2011. employed on or prior to June 30, 2011. • No effect on current retirees. No effect on current retirees. • Continues H.I.S. for new employees hired after Continues H.I.S. for new employees hired after

July 1, 2011.July 1, 2011.

3 % Cost of Living Adjustment 3 % Cost of Living Adjustment (COLA)(COLA)

GovernorGovernor• Phases out COLA beginning July 1, 2011, for employees Phases out COLA beginning July 1, 2011, for employees

hired on or prior to June 30, 2011hired on or prior to June 30, 2011• e.g. Employee has 15 years in the system on June 30, 2011. e.g. Employee has 15 years in the system on June 30, 2011.

That employee works 15 more years after June 30, 2011. That employee works 15 more years after June 30, 2011. Only the first 15 years will be earn COLA. That Only the first 15 years will be earn COLA. That employee’s COLA will be 3% divided by 2 = 1.5%employee’s COLA will be 3% divided by 2 = 1.5%

SenateSenate• No change for current employees (vested or not) employed No change for current employees (vested or not) employed

on or prior to June 30, 2011. No effect on current retirees.on or prior to June 30, 2011. No effect on current retirees.

DROPDROP

GovernorGovernor• Eliminates DROP effective July 1, 2011. No effect on Eliminates DROP effective July 1, 2011. No effect on

current participantscurrent participants SenateSenate

• Eliminates DROP effective July1, 2011 for new Eliminates DROP effective July1, 2011 for new employees. employees.

• No effect on current participants or current employees. No effect on current participants or current employees.

• Participation changes from age 62 with six years or more Participation changes from age 62 with six years or more service to age 65 with six years or more service.service to age 65 with six years or more service.

Employee Retirement ContributionEmployee Retirement Contribution

GovernorGovernor• Requires 5% contribution by employees effective Requires 5% contribution by employees effective

July 1, 2011.July 1, 2011. SenateSenate

• Sets up the mechanism for employee contributions. Sets up the mechanism for employee contributions. • Does not specify a percentage. Does not specify a percentage. • TBD in the Appropriation Committee.TBD in the Appropriation Committee.

Community Colleges Optional Community Colleges Optional Retirement Program (CCORP)Retirement Program (CCORP)

GovernorGovernor• EliminatesEliminates• Phases CCORP participants into defined Phases CCORP participants into defined

contribution program effective July1, 2011contribution program effective July1, 2011 SenateSenate

• Continues as currently available.Continues as currently available.

Defined ContributionDefined Contribution GovernorGovernor

• Establishes Defined Contribution as the Florida Establishes Defined Contribution as the Florida Retirement Plan for all new employees effective July 1, Retirement Plan for all new employees effective July 1, 2011. It appears to only have one class.2011. It appears to only have one class.

SenateSenate• Establishes Defined Contribution as the Florida Establishes Defined Contribution as the Florida

Retirement Plan for all new employees effective July 1, Retirement Plan for all new employees effective July 1, 2011. Provides for multiple classes at current contribution 2011. Provides for multiple classes at current contribution rates. rates.

• Regular, Special Risk, Senior Management, Elected, Regular, Special Risk, Senior Management, Elected, JudicialJudicial

VestingVesting GovernorGovernor

• Appears to be unchanged for current employees. Appears to be unchanged for current employees. New employees hired after July 1, 2011 go into New employees hired after July 1, 2011 go into Defined Contribution. Vesting is unclear.Defined Contribution. Vesting is unclear.

SenateSenate• Unchanged for current and new employees hired Unchanged for current and new employees hired

on or before June 30,2011.on or before June 30,2011.• Employees hired on or after July 1, 2011 go into Employees hired on or after July 1, 2011 go into

Defined Contribution Vesting as follows:Defined Contribution Vesting as follows:

Senate Vesting PlanSenate Vesting Plan If you terminate employmentIf you terminate employment

• Prior to 3 years the Employee receives only their Prior to 3 years the Employee receives only their contribution three months after termination.contribution three months after termination.

• After 3 years the Employee receives 100% of employee After 3 years the Employee receives 100% of employee and 40% of employer contributions plus earnings.and 40% of employer contributions plus earnings.

• After 4 years the Employee receives 100% of employee After 4 years the Employee receives 100% of employee and 80% of employer contributions plus earnings.and 80% of employer contributions plus earnings.

• After 5 or more years the Employee receives 100% of After 5 or more years the Employee receives 100% of employee and employer contributions plus earnings.employee and employer contributions plus earnings.

Retirement Age Retirement Age

• 62 years old AND 5 years service62 years old AND 5 years service

Average Final CompensationAverage Final Compensation(Defined Benefit)(Defined Benefit)

Governor –Governor –• Appears to be unchanged for current and new Appears to be unchanged for current and new

employees hired on or prior to June 30, 2011employees hired on or prior to June 30, 2011 SenateSenate

• Eliminating overtime and Annual Leave for Eliminating overtime and Annual Leave for average final compensation for current and new average final compensation for current and new employees hired on or prior to June 30, 2011. employees hired on or prior to June 30, 2011. Unclear as to overloads.Unclear as to overloads.