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News Clips 03/08/2012
POLITIFACT: Rick Scott says state pension fund is "not funded"
Source: PolitiFact, 03/08/12
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"Today, you can't rely on (the retirement fund for public employees), it's not funded." Said by Rick Scott on Tuesday, March 6th, 2012 in a press conference. PolitiFact ruled this False.
Gov. Rick Scott made no secret of his distaste for a judge’s decision to overturn a 3 percent cut in state workers’ salaries on March 6, 2012.
Lawmakers in 2011 touted the cut as necessary; they said they were diverting the money to shore up the $124 billion pension fund for state and local employees. The change saved the state $1 billion and local governments $600 million, reported the Tampa Bay Times and the Miami Herald.
Circuit Judge Jackie Fulford’s decision throws that plan into chaos. She ruled the pay cut an unconstitutional breach of the state's contract with employees and ordered the money returned with interest.
Fulford noted in her order that the 3-percent salary reduction did not actually go toward the retirement fund; legislators used it to balance the budget and left $1.2 billion unspent.
Her decision didn't sit well with Scott.
"This is an example of a judge wanting to write the law. We all know that this is constitutional, there's no question about it," Scott told reporters.
"I want to make sure we fix the plan so individuals can actually rely on it. Because today, you can't rely on that plan, it's not funded," he said. "So it's going to have a big impact on our counties, it has a big impact on our state budget. But it's clearly constitutional."
We’ve heard alarming things about Florida’s pension fund over the years, but never that it is flatly not funded. PolitiFact Florida wanted to set the record straight on how the Florida Retirement System works.
The truth is that Florida’s pension fund is funded. Is it fully funded? No, but that’s not typical for most state pension funds.
The most recent data shows the pension’s worth versus what it owes in benefits is 87.5 percent, as of June 30, 2011. So if everyone in the pension system retired at once, there would not be enough money in the retirement system to pay their full benefits.
Still, 87 percent isn’t bad compared to most states. The average level is 77 percent.
"87 (percent) is a strong funding level, particularly given the difficult financial market over recent years," said Keith Brainard, research director of the National Association of State Retirement Administrators.
Scott spokesman Lane Wright said we were nit-picking the governor’s statement and that he obviously just misspoke. Wright pointed us to past stories on the pension from our site and the Tampa Bay Times, where Scott correctly asserts the retirement system is underfunded.
What’s more, Wright said, is that Scott’s office for a few months has been occupied by a big chart comparing the pension fund’s liabilities, assets and payments. His graphic correctly shows the plan as funded at 87.5 percent for fiscal year 2010-11. It also shows how that liability has grown since 2007-08.
"He’s had that chart there since at least the beginning of January," Wright said.
Not long before storing a daily reminder of the liability gap in his office, Scott attempted to address it in his 2011-12 budget proposal. He called for $300 million to go into the retirement system, including an additional $120 million to address the liability on top of fully funding the normal annual contribution.
In his response to the judge’s ruling, though, Scott’s warning was stark, saying "I want to make sure we fix the plan so individuals can actually rely on it. Because today, you can't rely on that plan, it's not funded." That sounds really bad to people who are relying on state benefits. The truth is, it's one of the better funded pension plans in the country. If all public employees retired tomorrow, they still get 87.5 percent of what they were owed. We rate his statement False.