By Michael Connor
Jan 17 (Reuters) - Florida's top court on Thursday sided
with the state's governor and lawmakers and ruled as
constitutional a 2011 law overhauling the state pension system
that requires a 3 percent payroll contribution by state workers.
Reversing a lower court decision by a 4 to 3 vote, the
Florida Supreme Court in Tallahassee said in a 48-page ruling
that the 2011 law did not violate the state constitution as
argued by labor unions battling the pension reforms.
The lower court determined that the Florida Retirement
System reforms, which passed t wo years ago as policymakers
wrestled with a $3.6 billion budget gap, unlawfully broke a
contract and violated the rights of government workers to
bargain in unions.
The court ruling eliminates the possibility of a massive
refund of an estimated $900 million of employee contributions
and fees collected since 2011.
The decision eases pressures on state and local budget
makers in Florida because of lower pension costs at a time when
Florida's finances are improving after a recession aggravated by
the state's housing bust.
In addition to requiring the first-ever employee
contributions to pensions, the pension reforms covering about
623,000 Florida teachers and other government workers included
curbs on inflation increases in retiree benefits.
"The preservation of rights statute was not intended to bind
future legislatures from prospectively altering benefits for
future service performed by all members of the FRS," Justice
Jorge Labara wrote for the majority.
GOVERNOR SEES ECONOMIC BOOST
Republican Governor Rick Scott, who had championed the 2011
reform, applauded Thursday's decision.
"The court's ruling today supports our efforts to lower the
cost of living for Florida families," Scott said in a statement.
"This means even more businesses will locate and grow in our
The cost of funding public pensions is a controversial issue
in many U.S. states and cities, which are struggling with lower
revenue in the wake of the economic recession and higher costs
or public services such as public safety, healthcare and
When passed in 2011, the law was immediately challenged by
the Florida Education Association (FEA), the state's largest
teachers' union, and others. They said the pension benefits
represented a contract between the state and employees that
could not be altered without negotiations.
"Balancing the state budget on the backs of middle-class
working families is the wrong approach for legislative leaders
and the governor to take," FEA President Andy Ford said on
Thursday in a statement. "We're disappointed that the state's
highest court said this approach was legal."
(Additional reporting by Michael Peltier)
Follow us on Twitter @ReutersLegal | Like us on Facebook