The Florida Supreme Court narrowly endorsed a fundamental change in public employee pensions Thursday by voting 4-3 to uphold a law requiring state workers to contribute to their pensions for the first time.

The Florida Education Association and state police unions sued Governor Rick Scott after he signed a law in 2011 that changed the state retirement system from a noncontributory design to one imposing 3 percent salary contributions and eliminating annual cost-of-living adjustments.

A trial court ruled the law unconstitutional, but the Supreme Court issued a reversal. Jorge Labarga wrote the opinion with concurrences from Chief Justice Ricky Polston and Justices Charles Canady and Barbara Pariente.

The majority rejected union arguments that the law made collective bargaining ineffective and futile by dictating a pay cut outside contract negotiations.

“The 2011 amendments requiring a 3 percent employee contribution as of July 1, 2011, and continuing thereafter, and the elimination of the COLA for service performed after that date are prospective changes within the authority of the Legislature to make,” the court decided. “There is no proper claim before the court in this appeal that the amendments violate any specific collective bargaining agreement.”

The normally left-of-center Pariente was the swing vote. She wrote a concurring opinion stating the majority could not ignore the court’s opinion in Florida Sheriffs Association v. Department of Administration as the court upheld a 1974 preservation-of-rights law that barred the Legislature from retroactively changing contracts.

The court noted the state faced a $3.6 billion budget shortfall in 2011. At Scott’s insistence in the early days of his administration, the Legislature decided taxpayers could not foot the whole bill for public employee pensions.

“In layman’s terms, the court said the Lord giveth and the Lord taketh away,” said Michael W. Casey, a corporate employment benefits lawyer and partner at Duane Morris in Miami.

Compelling Need

The dissenting justices, R. Fred Lewis, James Perry and Peggy Quince, argued lawmakers could not impair contracts without showing a compelling need and noted the pension system was one of the soundest in the nation.

Casey said it is not up to the justices to decide what constitutes a compelling need.

“The majority court correctly pointed out that because of the separation of powers, the Supreme Court is unable to question the wisdom of a Legislature’s actions in many respects so long as there is a rational basis for the Legislature and the governor to act,” he said.

Scott said the court’s ruling supports efforts to lower the cost of living for Florida families.

“This means even more businesses will locate and grow in our state, which creates even more opportunities for Floridians to live their version of the American Dream,” said Scott, who has made job growth a key theme of his administration.

Lewis and Perry, however, said the court misapplied the 1974 law.

“We cannot simply ignore the earlier statutory rights in favor of later statutes which create conflict,” Lewis said. “This conflict impacts a significantly important category of Florida workers, our first responders, those who provide safety and security for all citizens, those who provide education for all Floridians each and every day.

“These governmental employees are not second-class citizens but are entitled to the full protection of the law just as all other Floridians enjoy,” Lewis said.

The Florida Chamber of Commerce said the ruling upheld common-sense reforms that put public pension plans in line with those in the private sector.

Public employee unions argued every Floridian, “some of whom do not have pensions of their own, should foot the entire bill for public employee pensions,” the chamber said.

Union representatives vowed to return the fight to the Republican-controlled Legislature.

“This is disappointing news for those who work to make Florida a better place,” said FEA president Andy Ford. “Balancing the state budget on the backs of middle-class working families is the wrong approach for legislative leaders and the governor to take. … The next elections in 2014 can turn this decision around.”

The unions argued the law abridged their collective bargaining rights by removing the retirement from the bargaining process. The state claimed nothing precludes government employees from bargaining over the retirement system, and the majority agreed.