Sharon Nesvig, FEA Communications Director: You’re listening to “Educating from the Heart.” Thank you for joining our lively conversations with teachers, support professionals, parents, and students, as they share issues that matter most in our public schools. Here are your hosts, Tina Dunbar and Luke Flynt.
[00:00:27] Luke Flynt, Host: Welcome back to another edition of “Educating from the Heart.” I’m Luke here with Tina.
[00:00:34] Tina Dunbar, Host: Hey Luke, we’re talking about the Florida Retirement System, also known as FRS, and a move by the state to shut down part of the pension plan. State leaders say the retirement plan is carrying a huge unfunded liability of $36 billion, which continues to increase as more premium dollars flow out of the system than the amount coming in. We’re almost at the halfway point of the 60-day legislative session, and the priorities for each chamber have started to crystallize.
[00:01:06] Luke: In the Senate, President Wilton Simpson is following through with his desire to make radical changes to Florida retirement. You know, Tina, we’ve all seen FRS attacks as a staple with each session. Heck, even when retirement was funded well over 100% in the early 2000’s legislators were intent on slashing retirement security. It looks like this might be the year Florida Republicans abolish pensions for newly hired public workers, including educators. And those proposed changes won’t just impact new hires; they will threaten retirement security for all of those currently working as well.
[00:01:50] Tina: So sit tight, everyone. We’re going to present this episode in two parts. You’ll hear comments from three educators who will share their thoughts on their retirements and what these changes might mean for their future. But first, let’s begin with the big picture, look at the FRS itself and the proposed changes and Senate bill 84. Joining our discussion is FEA’s legislative specialist, Yale Olenick.
So, I want to start with the basic question I believe that most people will ask themselves when they first hear about changes to the FRS: What impact could this have for current retirees, as well as those looking to retire three to five years down the line and 10 to 15 years down the line?
[00:02:42] Yale Olenick, FEA Legislative/Political Specialist: That is the golden ticket in terms of what we are looking at right now, in terms of the outcomes, and everywhere we look, unfortunately, the data doesn’t really corroborate what happens when you close the system, in terms of the outcome to the members, both members in the system and those employees who are going to be in the system.
So the legislature, they commissioned a study on this exact change. What would happen if we closed the defined benefit plan [and] only had a 401k plan? And they look at that scenario, they looked at eight scenarios, but that was one of the most recent focuses of it, and that was the one where they basically kept saying over and over again, “Well, we have no data, but with the little data we have, it could be somewhere,” and basically their projections are putting it somewhere above or below where we’re currently at, in most situations, but based on no data. So ultimately if you’re left with just the 401k investment plan, you’re left with a diminished retirement plan. That is what we know for sure.
[00:03:53] Luke: So when you say for this most recent actuarial study that Milliman didn’t have the data, is the data unknowable because they’re making so many projections about things that might happen, or is there data that would have actually been useful for them to have that they just weren’t given? What [did] you mean when you said they didn’t have the data? Or they say there is no data?
[00:04:22] Yale: So they’re not looking at the actual, both the payout costs in terms of how much we would take to close the system. And then they’re also not looking at the outputs that, in terms of what happens when you close it. So they’re just looking at a very tiny, narrow example, and that was what they’re tasked to do. So they’re basically closing off these other data streams to look at this one scenario, and in doing so, it creates a disingenuous picture of what’s actually happening because you can’t just look at this one [data stream], and that’s why they even in their own studies, they say based upon the data, in terms of what we were asked to do, basically.
[00:05:08] Luke: All right. So I think this is a really important point. So I just want to be sure that I’m clear that I understand what you’re saying is when the state told them, “we want you to look at this, but we don’t want you to [look at this].” I know you can’t see me right now, but I’m like imagining Katie Porter with the whiteboard [saying] “this really, really, really small portion of of the system-
[00:05:37] Yale: Exactly.
[00:05:38] Luke: “Ignore everything else, but tell us what the impact will be on the overall system.”
[00:05:44] Yale: Yes, exactly. You nailed it. That is exactly what’s going on and why the poor actuary was like, “Oh, well, here you go. But, uh, you know, this isn’t really the full picture, but you know, we’re trying.” We’re in a pandemic, economic uncertainty, you know, fortunately the stimulus money helps, but to even propose closing a system at a $30 billion costs in this type of climate just seems on its face alone, without all the other information, crazy. And then when you add in all the corroborating information, we know it’s just that at that point, it’s like, “Wow, what are we doing?”
[00:06:23] Tina: It’s my understanding something like 74% of the entire membership is in the defined benefit plan.
[00:06:32] Yale: Yes, that’s correct. Because when you look at the long-term payout, a defined benefit plan for our members has been the choice, and for most people, if you look at it, and that’s the thing too, is that we know the benefits we get out of the system.
For instance, I think for every dollar that is invested into it, we get about six and a half dollars out of it. So I think a lot of times people just focus on, “Oh, well, we’re putting all this money into this system, and we have to keep putting more and more money into it each year,” but we’re not looking at what we’re actually getting out of it.
[00:07:15] Luke: So I think the benefit to members of the Florida Retirement System is obvious. What might not be as obvious is how the FRS actually benefits the entire state, and you did mention earlier about the return on investment. I think you said about 1 invested. Could you explain that a little more for people who might not understand how we actually get such a good, or why we get such a good return on investment?
[00:07:47] Yale: Well, first of all, a lot of things that I feel like aren’t acknowledged enough is that Florida still has more of the most well-funded plans in the entire country, and is actually, for its size, one of the best, because it’s a huge system.
And then also, not to bore people with history, but right before the Great Recession, the Florida Retirement System was overfunded. And I think it was at like 115% funded, and was, I think, one of the best systems, maybe one or two in the country. And then as a result of the recession, the legislature in all their wisdom decided it would be a good idea to take money out of the system and put it into other places.
So the combination of them literally, you know, not robbing it per se, but essentially taking that money out and then the combination of the recession, you went from basically 110%, 150% funded to almost 85% overnight. So if you didn’t combine those two things, that system would still be incredibly healthy, and it still is. Those numbers, 80 some percent, that’s still better than a lot of different states. I mean, 40 plus states. So, you know, we’re trying to, or trying to change a system that, for all intents and purposes, is working. But to more specifically answer your question, Luke, when you have a healthy system like that, you get the money that you’re putting into it, you’re getting out. And those members are then, the employees and retirees are spending that money.
So in terms of the actual number, it’s basically the actual figure is 6.67 in total economic activity in the state for each dollar invested by Florida taxpayers, employers into the plan. Also the FRS has about 19.5 billion in economic output alone. And I can keep rattling off figures. The average benefit each month is about 1,900, in terms of the current plan. There are projections that if you were to go in and slice off the defined benefit plan and leave it just a 401k, that number could be as low as 1300, and we’ve seen estimates that it could be even worse than that. So, and that’s the thing too, we know the benefits we get out of the system,
[00:10:21] Luke: Definitely more driven by ideology than by good policy. As you mentioned earlier, the system used to be funded over 100%. When I was still teaching in the classroom, the system was funded over 100%, and I remember they were coming after my retirement then. So they can throw up their big numbers to say the sky is falling, but let’s be real: this is more about their ideology than about good policy.
[00:10:51] Tina: Even though people say this is a national problem or retirement crisis that’s going on, that’s what people are saying to kind of sell this. You’re right. The sky is falling.
[00:11:07] Yale: Well, yeah, because that’s the only way you can sell it, right? Because otherwise it’s like, “Oh look at this system that has all this output, is ranked pretty great for its size.” I mean, and then it’s like, “well, why are we doing this?” So the only thing you can point to is if you just basically put a microscope on this one number, and then you just isolate all this other data, and then just say, “Hey, look at this, don’t look at anything else.” Or “we won’t look at all these other things that are going on around here, just look at this one huge number.”
That doesn’t tell the story at all. And it’s completely disingenuous to the actual big picture of the system. And that’s what’s happening with those numbers, and it’s absolutely ideologically based. And that’s a shame too, because people depend on this system for their wellbeing, especially in their golden years. And so the fact that this is so ideologically interwoven is really unfortunate, but as is a lot of things in our politics today.
[00:12:05] Luke: I don’t know about you, Tina, but I learned a lot. This legislative decision to shut down a portion of FRS is solely focused on the unfunded liability and nothing else. And yes, the liability is huge, but it’s important to understand that the debt is spread over a 30 year period. In the meantime, people rely on their retirement dollars. The state economy relies on retirement dollars.
[00:12:34] Tina: That’s right, Luke. Legislative leaders might consider how their policy decisions like this play out in the lives of Floridians across the state. To help bring life to this issue, we recently sat down with three educators, each at different stages of life planning, to get their reactions on the impending changes to the Florida Retirement System.
[00:12:57] Luke: When we caught up with Janice Poirier, a retired educator with more than three decades of teaching experience and current president of FEA Retired. She told us that she is concerned that FRS doesn’t provide enough income for retirees to live independently right now. And she only sees this trend getting worse if Senate Bill 84 were to become law. She wraps up her thoughts by explaining what she would like to see legislators do instead.
[00:13:28] Janice Poirier, President of FEA Retired and retired educator: I see more retirees rooming together. As a matter of fact, I have a friend who just celebrated a birthday on the 30th of January. It was [so] bad when she retired, she retired two years ago, [and it was so bad] that her sister actually moved here from New Orleans to live with her so they could put their little pot of money together and have a comfortable life.
She explained to me what was going on, she said, “I’m not going to be able to make it by myself.” And her sister said the same thing, “I’m not going to be able to make it by myself.” So she moved here, so they could make it together. Well, I mean, if you’re alone, if you have a husband that might be different, or a wife, whatever, but they’re alone, most of them are alone. So they had to move in together. I don’t know how many other retirees do that, but I can see that happening.
I would like for the legislators [to bear in mind stories like these]. I’m retired, so maybe it makes more sense [to me], I don’t know. I’m all for doing the right thing. If you have paid into the retirement system, I truly believe with every fiber of my being that’s your money. You get your money back, no cap on the money. If you pass away before you get all of your money, you give it to your spouse or your children. [They should] give you what you have worked years for. Give it to you. Stop putting all these stipulations on it, and we think this is best. First of all, I don’t know how anybody can think what’s best for an educator if you have not yourself been an educator. I just want them to do the right thing. That’s all, just do the right thing.
[00:15:42]Tina: Ron Pollard, a custodian and the president of the Orange Education Support Professionals Association, is a two time retiree who has been forced back to work to cover healthcare costs. Ron connects the dots and explains how the attack on FRS fits a larger political agenda aimed at attacking public workers and specifically public educators. As Ron sees it, politicians will use COVID as this year’s excuse to slash benefits.
[00:16:12] Ron Pollard, President of Orange Education Support Professionals Association and custodian: They use the gloom and doom to sell it now because of the COVID, we had a lot of retiring people and public sector. So we’re going to look at the numbers now, the numbers you see that they’re going to bring are going to be very much inflated. Not much actual [numbers], a lot of projections. Now they take the 3%. Period. What are we going to raise it to when you don’t want to raise the salaries?
There’s also legislation trying to keep the $15 an hour [minimum wage] as slow progress as they can. We’re trying to stop the advance and the salaries, at the same time, putting those costs on our workers. If this legislation goes through, it’s going to be the employee’s fault when they don’t have anything for retirement, because you didn’t put enough money into your investment account, even though they sold their future trying to live, which is what our ESPs do now.
And they don’t invest in a whole lot of stuff because the pay is still so low and you’re trying to live. I think this is going to lead to people not being so quick to go into public service. We’re going to lose our public service employees, especially public school workers. And I think in this state there is an attempt to destroy public schools. Period. It’s not right. It’s not right. But I know it’s political.
[00:18:06] Luke: “Promises made should be promises kept,” is one of the main points Patrick Strong, an ESE [Exceptional Student Education] classroom paraprofessional, and president of the Okaloosa Education Staff Professional Association had to say. Patrick also worries that people forced into the investment plan simply will not have enough funds for a secure retirement because the state is not upholding its end of the bargain.
[00:18:33] Patrick Strong, President of Okaloosa Education Staff Professional Association and ESE classroom paraprofessional: So, one of the issues that I have [is that] in 2011 when they started charging us with 3% to fund our retirement, instead of leaving the district’s contribution at the same level, they actually lowered the district’s contribution. So I wouldn’t be so upset about contributing that 3% to try to stabilize the, the retirement plan had they had been willing to keep on contributing in at the same level. So now here we are nine years later, we’re in another crunch because they haven’t adequately funded our retirement. And it’s like a big circle.
So we’ve come up with 3% that we never agreed to, they just took it out of our paycheck, but most of us were willing to secure that retirement for our future. And it’s still at work. What’s next? I mean, 6%? Many of you don’t know this, but if you’re in the investment program, you only get about 6.15% in the investment program, they take the rest of the district’s contribution and apply that to overhead
So many of our friends in the private businesses around the state, many of them contribute 10 to 15% to retirement if they contribute. And so, when we go back and look at the investment program as an option for a retirement for us, contributing 3% from the employee and 3.15% from the state is not enough to fund a retirement. You know, there’s four different options you can select when you actually retire. And some of those other options are very limited. So if you compare them to other benefit plans around the United States, they’re not very lucrative. And for you to have a retirement and take care of your spouse after your death, the retirement with the state of Florida doesn’t go very far.
When I go back to when I was a young person, I started working when I was 15 years old and paying social security, I’ll have over 50 years of social security pay. And I remember before I was 20 years old, they started talking about the demise of social security. And when I was less than 20, I said, “I understand we have an obligation to pay the people. If they tell me now, I will not depend on social security for my retirement,” but unfortunately it’s kept going.
And I depend on social security as part of my retirement. I do. We depend on it as a family for part of my wife’s return. And here I am, again at 56 years old, and the state is trying to destroy the state retirement system. When I stop, I’ll have about 27 years in, if I retire at 65. And my wife, when she retires, we’re planning for her to have in 38 [years], and we have planned our retirement around those incomes.
As Janice said earlier, I don’t want to have to go live with somebody to be able to live, with my children or something like that, but be able to sustain [myself]. I planned for the majority of my life to make sure that I have enough money in retirement. And because of influences that shouldn’t be there, because of promises made to me and my family and my wife, we should have that income.
[00:22:27] Tina: You can clearly hear the anger and the frustration in the voices of the educators we spoke with, and their anger is certainly justified because it doesn’t seem like the state is willing to keep its promise. Luke, if someone wants to learn more about Senate Bill 84, or anything else happening in the legislature, where can they get this information?
[00:22:50] Luke: The most up-to-date information on the FRS bill, as well as other bills relating to public education, can be found on our website, www.feaweb.org/session. Again www.feaweb.org/session.
[00:23:11] Tina: And don’t forget, you can find out more information about all the topics that we’ve talked about in our episode by visiting the show notes page on our website, www.feaweb.org/podcast.
[00:23:26] Luke: And we appreciate your feedback, comments, and suggestions. Keep sending them in by emailing email@example.com. Again, that’s firstname.lastname@example.org. Or you can call and leave a voicemail at (850) 201-3384. We hope to hear from you
[00:23:49] Tina: And we’ll meet with you again next month. Until then, keep educating from the heart.
[00:23:56] Primrose Cameron, FEA Professional Development Director: Greetings. My name is Dr. Primrose Cameron, and I am FEA’s Director for Professional Development and Educational Research. Please contact us for your professional development needs in the areas of race and equity, self-care, grief and loss, social-emotional learning, and many certification courses that are needed and required for our members across the state. [Please email] email@example.com.
[00:24:25]Sharon : “Educating from the Heart” is a production of the Florida Education Association. FEA is the statewide educators’ union, with more than 150,000 members, including teachers, education staff professionals, higher education faculty, graduate assistants, students preparing to become teachers, and retired educators.