By Skylar Zander
Florida’s leaders have tirelessly promoted reforms paving the way for financial stability in the Florida Retirement System and advancing the state’s pension plan. Now a legislative proposal would put this at risk by reinstating cost-of-living adjustments in the current pension system.
We simply cannot afford to let the progress Florida has made over the years go to waste. If passed, House Bill 151 or the Florida House proposed budget would significantly impact Florida’s economy by inflicting an estimated $67 billion burden on the state budget over the next 10 years. Lawmakers should weigh the substantial risks tied to an automatic cost of living adjustment for all FRS beneficiaries, including that all taxpayers will be held responsible for funding this benefit in perpetuity, and at an ever-increasing cost. Also, the Florida legislature’s staff analysis shows this proposal will cost $2.4 billion per year.
Senators and representatives listen to remarks presented by Speaker Paul Renner and Senate President Kathleen Passidomo during the opening day of the 2024 Legislative Session.
Over the years, countless Floridians have made significant sacrifices to help sustain Florida’s Retirement System (FRS). If HB 151 or if the House proposed budget were to pass it will put the actuarial soundness of FRS in further jeopardy.
Past reforms to FRS were essential for the programs’ long-term health, bringing that goal to reality demands ongoing commitment and perseverance. The restoration of COLAs would disrupt this process and set the system back.
Even with significant reforms of the past, Florida’s pension plan is still several decades away from fulfilling its commitments to state workers and taxpayers. Currently, the system is around $36 billion short in funding for previously promised benefits, according to the Reason Foundation; therefore, we must continue efforts to bridge this gap.If these proposals were to pass it could mean higher taxes for you and me.
These proposals would require local cities, counties, and other government entities to contribute more for their workers into the pension system without funding their portion, which could lead to them raising taxes to make up for the shortfall.Furthermore, we have 60 million active 401K participants and millions of former employees and retiree recipients in the United States who don’t get the benefit of COLA.
Why should state workers be an exception to this type of adjustment when there are other ways to compensate people for the value they create? Depending on what legislators are trying to address with these proposals there are other ways to help current retirees deal with cost-of-living issues or to utilize other benefits to attract people into the state workforce.
The state could allocate a one-time COLA cash infusion adjustment for all retirees. Lawmakers could allocate funds to pay our state workforce more, which would attract new people into these professions.
HB 151 carries too many risks and unpredictable costs, a concern that was recognized years ago when COLAs were first removed to manage pension costs and help balance the state budget.States like California, New York and Illinois are examples of how this approach has not worked well and has cost every taxpayer additional costs.
Lawmakers must prioritize the best interest of Floridians in their financial and retirement decisions. HB 151 poses substantial threats, and we must urge policymakers to fully evaluate its consequences before proceeding. Staying the course with the current system is the key to getting back on track toward full funding and upholding the promises made to state workers and taxpayers for a secure retirement future.
Skylar Zander is the Americans for Prosperity-Florida State Director.
