The Florida Supreme Court was asked Friday to make a decision that could throw the state budget into chaos while returning the state retirement system to the way it has existed for decades.
Aware of the possibility, Governor Rick Scott issued a statement Friday that might be taken as a warning to the seven justices.
“The legal question in the case is straightforward. The Legislature relied on and carefully followed a 30-year-old Florida Supreme Court case, which held that the Legislature can change the public pension system on a going-forward basis,” Scott said. “We therefore expect the Supreme Court to follow its own prior decision.”
Scott pushed to make state employees contribute to their pensions for the first time as a centerpiece of his inaugural legislative package in 2011.
His remarks refer to the court’s 1981 decision in Florida Sheriffs Association v. Department of Administration , which looked at a one-third reduction to the special risk credit on retirement benefits.
That case was the starting point in oral arguments in the current case, Rick Scott v. George Williams , testing the constitutionality of the new law.
Representing the state, former Justice Raoul Cantero III asked the court to reverse a March trial court ruling by Leon Circuit Judge Jackie Fulford, who ruled the law violated state agreements with government employees.
At issue is whether the state’s 650,000 employees must contribute 3 percent of their pay to pensions.
The law also eliminated the retirement fund’s annual cost-of-living adjustment for employees retiring after the law took effect. Fulford ordered contributions collected to date to be returned with interest, but that order has been stayed.
Cantero, a partner with White & Case in Miami, said the 1981 case provided the authority for future Legislatures to change the pension system.
Speaking for employees, Ron Meyer of Meyer, Brooks, Demmas & Blohm in Tallahassee suggested a narrower interpretation of the same case and asked the court to recede from it. Challengers include members of AFSCME Florida, the Florida Police Benevolent Association and the Florida Education Association.
Justice Charles Canady expressed strong disagreement with Meyer’s position.
“How can you assert that in face of the reality that the whole state budget is based on that decision? The budget would be thrown into chaos if we recede,” Canady said.
In 2011, the Legislature faced a $3.6 billion shortfall. The pension plan amendment saved the state $1.1 billion, or nearly a third of the shortfall. Local governments saved an additional $600 million. But Meyer said the state budget shortfall is not the test.
“First, you identify whether there’s a contract. The trial court found there is a contract,” he said.
Opposing views focused on language in Florida Sheriffs on the meaning of the word prospective. Cantero said the 1981 case drew a bright line on how the state could change its employee contracts and said qualitative changes could not be retroactive.
Cantero argued prospective changes were permissible and applied to all employees when the new law took effect.
Meyer argued, “You can’t change the game in the middle.”
Again disagreeing with Meyer, Canady referred to Cantero’s written argument that if employees aren’t guaranteed future employment, they shouldn’t be guaranteed future benefits.
Sprinkled through the debate were suggestions from the justices that the Legislature could have taken even more severe action.
Justice Barbara Pariente said the Legislature could have dealt with the shortfall with layoffs or pay cuts. Justice Peggy Quince said the Legislature could have eliminated the retirement system altogether.
“I don’t want to think about those things, your honor,” Cantero told Quince.
“I’m sure your employees are,” she answered.
Florida’s pension plan had assets of $136 billion to meet projected retiree obligations of $154 billion as of mid-2011, according to data compiled by Bloomberg News.
Another sticking point in the law was that it circumvented collective bargaining rights, Meyer asserted.
“From Tallahassee on high, they said this is the system, and there’s no room to discuss it,” he complained.
Cantero said Meyer’s idea is unworkable because there are 11 state bargaining units and a myriad number at the county and local levels.