Lewis, Longman & Walker Winter Newsletter

2018 Retirement Legislation Preview

By: Jim Linn and Glenn Thomas

The 2018 regular session of the Florida Legislature convenes on January 9, 2018, and is scheduled to adjourn on March 9th.   Several local government and FRS retirement bills have been filed.  A summary of the bills follows.

Copies of any bill can be viewed at the legislature’s website: www.leg.state.fl.us. Please feel free to contact us if you have any questions.

SB 126 (Torres) / HB 629 (Asencio)  Workers’ Compensation for First Responders

SB 126 is one of several bills filed in response to perceived shortcomings in disability and workers’ compensation benefits of first responders in the wake of the June 2016 Pulse nightclub shooting, in which 49 people were killed and at least 68 others injured. First responders being treated for post-traumatic stress disorder (PTSD) following the incident were not eligible for workers’ compensation or disability benefits because under current law, workers’ compensation compensability for PTSD must be accompanied by a physical injury, which the officers did not have.

SB 126 would amend section 112.1815, which sets benefit eligibility requirements for employment-related accidents and injuries of firefighters, paramedics, emergency medical technicians, and law enforcement officers (first responders).  Currently, a compensable mental or nervous injury involving a first responder must be demonstrated by clear and convincing evidence.  SB 126 changes this standard to a preponderance of evidence.

Under current law, only workers’ compensation medical benefits are payable for an employment-related mental or nervous injury unaccompanied by a physical injury involving a first responder.  Under SB 126, if a mental or nervous injury results in the disability or death of a first responder, payment of indemnity under Chapter 440 (Workers’ Compensation) may also be due, even if no physical injury occurred.

SB 126 has been referred to the Senate Banking and Insurance Committee, Appropriations Subcommittee on General Government, Appropriations Committee and Rules Committee.  It is identical to HB 629, which has been referred to the House Oversight, Transparency and Administration Subcommittee, Government Operations and Technology Appropriations Subcommittee, and Government Accountability Committee.

HB 251 (Clemons) SB 406 (Steube)  FRS – Reemployment After Retirement

Under current law, an FRS member whose retirement is effective before July 1, 2010, or whose participation in the Deferred Retirement Option Program terminates before July 1, 2010, may be reemployed by an FRS employer if the reemployment occurs at least one calendar month after retirement.  However, the member may not receive both a salary and retirement benefits for 12 months after retirement.  If a member is reemployed while receiving retirement benefits the member must notify the employer and FRS, and benefits are suspended until the 12-month period concludes.  Under HB 251, a member may be reemployed by an employer participating in the FRS before completion of the 12-month limitation period if the retiree is employed on a part-time basis and is not qualified to receive retirement benefits during the 12-month period after the date of reemployment.

HB 251 has been referred to the House Oversight, Transparency and Administration Subcommittee, the Appropriations Committee, and Government Accountability Committee.  It is identical to SB 406 (Steube), which has been referred to the Senate Governmental Oversight and Accountability Committee, Appropriations Subcommittee on General Government, and Appropriations Committee.

HB 359 (Nunez, Diaz) / SB 70 (Rodriguez) / SB 538 (Garcia)  FRS Investments

Under HB 359, the State Board of Administration would be required to divest any investments and would be prohibited from investing in stocks, securities, or other obligations of any institution or company domiciled in the United States doing business in or with the government of Venezuela, or with any agency or instrumentality thereof, in violation of federal law. The term “government of Venezuela” means the government of Venezuela, its agencies or instrumentalities, or any company that is majority-owned or controlled by the government of Venezuela. The Governor can waive the divestment requirements if the existing regime in Venezuela collapses and there is a need for immediate aid to Venezuela before the convening of the Legislature or for other humanitarian reasons as determined by the Governor.

HB 359 has been reported favorably by the House Oversight, Transparency and Administration Subcommittee and the Ways and Means Committee.  It is now in its final committee: House Government Accountability.  It is similar to SB 70, which has been referred to the Senate Governmental Oversight and Accountability Committee, Appropriations Subcommittee on Finance and Tax, and Appropriations Committee.

Another related bill, SB 538 (Garcia), includes the above prohibitions and also amends section 215.472 to prohibit state agencies from investing in any financial institution or company that extends credit or purchases or trades any goods or services with the government of Venezuela.  A state agency is defined as any official, officer, commission, board, authority, council, committee, or department of the executive branch of state government. SB 538 has been referred to the Senate Governmental Oversight and Accountability Committee, Appropriations Subcommittee on Finance and Tax and Appropriations Committee.

SB 376 (Book) / HB 227 (Willhite, Plasencia) Workers’ Compensation Benefits for First Responders

The Committee Substitute for SB 376 also revises standards for determining whether a mental or nervous injury is a compensable injury arising out of employment.  Like SB 126 it changes the evidentiary standard under section 112.1815, from “clear and convincing” to “a preponderance of the evidence.”  It also eliminates the provision in current law that precludes benefits for employment-related mental or nervous injury unaccompanied by a physical injury involving a first responder.

In addition, CS/SB 376 would amend the workers’ compensation law (Chapter 440).  Under current law, a mental or nervous injury due to stress, fright, or excitement without an accompanying physical injury requiring medical treatment is not considered an injury “by accident arising out of the employment” and payment of benefits is not allowed.  And a compensable mental or nervous injury must be demonstrated by clear and convincing medical evidence by a licensed psychiatrist. The compensable physical injury as determined by reasonable medical certainty must be at least 50 percent responsible for the mental or nervous condition.

Under CS/SB 376 a first responder could receive workers’ compensation benefits for a mental or nervous injury, regardless of whether it is accompanied by a physical injury requiring medical treatment, if the injury occurred within the course of employment and the employee witnessed, or arrived at the scene of, a murder, suicide, fatal injury, child death, or mass casualty incident. The mental or nervous injury must be demonstrated by a preponderance of the evidence by a licensed psychiatrist.

SB 376 has been reported favorably by the Senate Banking and Insurance Committee and is now in Commerce and Tourism.  It has also been referred to the Appropriations Committee and Rules Committee.  HB 227 (Willhite, Plasencia) is similar, but retains the clear and convincing evidence standard.  HB 227 has been referred to the House Oversight, Transparency and Administration Subcommittee, Government Operations and Technology Appropriations Subcommittee, and Government Accountability Committee.

HB 379 (Willhite, Gonzalez) Florida Retirement System – Special Risk Class

This bill would permit any FRS member employed as a 911 public safety telecommunicator to participate in the Special Risk class of the Florida Retirement System. This means telecommunicators would be able to retire earlier (at age 60 with 8 years of service or 30 years of service regardless of age, if initially enrolled in FRS on or after July 1, 2011; or at age 55 with 8 years of service or with 25 years of service regardless of age, if initially enrolled in FRS before July 1, 2011). However, monthly benefits for 911 telecommunicator members would still be calculated using the Regular Class multiplier (1.6%).

HB 379 has been referred to the House Oversight, Transparency and Administration Subcommittee, Appropriations Committee, and Government Accountability Committee.  It is similar to SB 606 (Steube), which has been referred to the Senate Governmental Oversight and Accountability Committee, Appropriations Subcommittee on General Government and Appropriations Committee.

HB 493 (Diaz, M.) / SB 1758 (Montford)  Florida Retirement System – Special Risk Class

HB 493 would add 44 specified Florida State Hospital employees to the FRS Special Risk class.  To be eligible, the member must spend at least 65 percent of his or her time performing duties that involve contact with patients or inmates.  Benefits would be calculated using the Special Risk Multiplier (3.0%).  The bill would be effective January 1, 2019.

HB 493 has been referred to the House Oversight, Transparency and Administration Subcommittee, the Appropriations Committee, and Government Accountability Committee.  An identical Senate bill — SB 1758 – has been filed, but has not yet been referred to committee.

HB 615 (Raschein) / SB 1778  Florida Retirement System – Special Risk Class

This bill would add to the Special Risk Class members who are employed by a local government as a pilot or registered nurse and whose primary duties and responsibilities are performed on an air ambulance service. Benefits would be calculated using the Special Risk Multiplier (3.0%).  It has been referred to the House Oversight, Transparency and Administration Subcommittee, the Appropriations Committee, and Government Accountability Committee.  An identical Senate bill — SB 1778 – has been filed, but has not yet been referred to committee.

HB 695 (Fitzenhagen) Cancer Benefits for Firefighters

HB 695 creates a new section 112.1816, Florida Statutes, to provide benefits for firefighters diagnosed with cancer.  Under this section, upon a diagnosis of cancer, a firefighter would be entitled, at no cost, to either an insurance policy that provides cancer treatment using the same health care network as the policy provided to all other employees of the employer for at least 10 years after the firefighter leaves employment, or a cash payout of $25,000.  To be eligible the firefighter must have been employed by his or her employer for at least 5 continuous years, not used tobacco products for the preceding 5 years, and not been employed in any other position in the preceding 5 years which is proven to create a higher risk for any cancer.

The bill would also require an employer to consider any cancer diagnosis of a firefighter to be an injury or illness incurred in the line of duty.

Governmental retirement plans would be required to consider a firefighter totally and permanently disabled if he or she is prevented from rendering useful and effective service as a firefighter and is likely to remain disabled continuously and permanently due to the diagnosis of cancer or circumstances arising out of cancer treatment.   If the firefighter did not participate in a retirement plan, the employer would be required to provide a disability retirement plan that pays the firefighter at least 42 percent of annual salary until the firefighter’s death in the event of a disability attributable to a diagnosis of cancer or disabilities arising out of cancer treatment.

If a firefighter dies as a result of cancer or circumstances arising out of cancer treatment, an employer sponsored retirement plan would be required to consider the death as occurring in the line of duty.  If the deceased firefighter did not participate in a retirement plan, the employer would be required to provide a death benefit to the firefighter’s beneficiary equal to 42 percent of the firefighter’s annual salary for 10 years following the firefighter’s death.

The beneficiary of a firefighter who dies as a result of cancer or circumstances arising out of cancer treatment would be eligible for benefits under section 112.191(2)(a), which provides a $50,000, death benefit when a firefighter is accidentally killed or receives accidental bodily injury which subsequently results in the loss of the firefighter’s life, while engaged in the performance of his or her firefighter duties.

The bill requires the costs of any insurance policy providing benefits in the new section, or the costs of a self-funded system, to be paid entirely by the employer.

This bill is significantly different from firefighter cancer bills filed in 2017.  The 2017 bills would have created a rebuttable presumption that a firefighter’s death or disability due to certain forms of cancer was accidental and suffered in the line of duty unless proven otherwise by competent evidence. The firefighter would have also been required to successfully pass a physical examination that failed to reveal evidence of cancer.  Under its current language, all cancer, regardless of the type or cause, resulting in a disability are deemed to have occurred in the line of duty.  There would be no mechanism to rebut this conclusion.

HB 695 has been referred to the House Oversight, Transparency and Administration Subcommittee, the Appropriations Committee, and Government Accountability Committee.  It is identical to SB 900 which has been referred to the Senate Governmental Oversight and Accountability Committee, Community Affairs Committee, Appropriations Subcommittee on General Government, and Appropriations Committee.

SB 722 (Garcia) Florida Retirement System – COLA

SB 722 provides a cost-of-living adjustment (COLA) of at least 2% for FRS members who retire on or after July 1, 2011 with service credit earned prior to July 1, 2011. Under the current FRS statute, a 3% COLA is applied to benefits earned before July 1, 2011, but no COLA is applied to benefits earned on or after that date.  Thus, the member’s COLA amount is based on the quotient of the member’s service credit earned before July 1, 2011, divided by the member’s total service credit.  Under SB 722, the COLA for members with FRS service before July 1, 2011 could not be less than 2%.

SB 722 has been referred to the Senate Governmental Oversight and Accountability Committee, Appropriations Subcommittee on General Government and Appropriations Committee. It is identical to HB 665 (Clemons), which has been referred to the House Oversight, Transparency and Administration Subcommittee, Appropriations Committee, and Government Accountability Committee.

SB 980 (Brandes) Publicly Funded Retirement Programs

SB 980 proposes several changes to Chapters 112 and 121, affecting government retirement plan funding. The bill could result in significant changes to actuarial assumptions used by plan actuaries in determining employer contributions.

Part VII of Chapter 112, Florida Statutes, created the “Florida Protection of Public Employee Retirement Benefits Act,” which is intended to implement the actuarial funding provisions of s. 14, Art. X of the State Constitution related to governmental retirement plans in Florida. The Act states that governmental retirement systems must be managed, administered, operated, and funded in a manner that maximizes the protection of benefits and it prohibits the use of any procedure, methodology, or assumptions that transfer to future taxpayers any portion of pension costs which may reasonably be paid by the current taxpayers. The Act also establishes minimum standards for the operation and funding of government retirement systems in Florida, including the standards for actuarial reports.  SB 980 would revise several of those actuarial standards.

Actuarial Reports

Under current law, governmental retirement plans are required to have regularly scheduled actuarial reports (at least once every three years) prepared and certified by an enrolled actuary, which must include, at a minimum,

  • The adequacy of contribution rates in meeting levels of employee benefits provided in the system and changes, if any, needed in such rates to achieve or preserve a level of funding deemed adequate to enable payment through the indefinite future of the benefit amounts prescribed by the system, which shall include a valuation of present assets, based on statement value, and prospective assets and liabilities of the system and the extent of unfunded accrued liabilities, if any.
  • A plan to amortize any unfunded liability pursuant to s. 112.64 and a description of actions taken to reduce the unfunded liability.
  • A description and explanation of actuarial assumptions.
  • A schedule illustrating the amortization of unfunded liabilities, if any.
  • A comparative review illustrating the actual salary increases granted and the rate of investment return realized over the 3-year period preceding the actuarial report with the assumptions used in both the preceding and current actuarial reports.
  • The mortality tables used in either of the two most recently published actuarial valuation reports of the Florida Retirement System, including the projection scale for mortality improvement. Appropriate risk and dollar adjustments must be made based on plan demographics. The tables must be used for assumptions for preretirement and postretirement mortality.
  • A statement by the enrolled actuary that the report is complete and accurate and that in his or her opinion the techniques and assumptions used are reasonable and meet the requirements and intent of this act.

Under SB 980 actuarial reports would also be required to include a list of preretirement and postretirement benefits provided to employees, including, but not limited to, life insurance; health insurance; dental care; vision care; fitness programs, discounts, or reimbursements; continuing education or tuition credit programs; cost-of-living adjustments; payment for unused leave; disability insurance; and health savings accounts or flexible spending accounts.

Plan Assumptions Analysis

Under SB 980, the statement by the plan actuary that the report is complete and accurate, would be required to include an analysis of the assumed rate of return established by the plan’s governing body (i.e. the pension board). The analysis must include specific recommendations by the actuary regarding an appropriate assumed rate of return.  The board must review the statement of the actuary within 30 days and if it has adopted actuarial assumptions other than those recommended by the actuary the board must explain in writing to the Department of Management Services why the recommended actuarial assumptions were not adopted.

Amortization of Unfunded Liability

Under current law, governmental plans established after October 1, 1980 are required to amortize any unfunded liability over a period of no more than 40 years.   SB 980 would require plans coming into existence after October 1, 2018 to amortize the unfunded liability within 30 years.

Payroll Growth Assumption

Current law prohibits actuarial assumption as to payroll growth from exceeding the employer’s average payroll growth for the 10 years preceding the latest actuarial valuation of the plan.  SB 980 would limit the payroll growth assumption to the average growth over the preceding 3 years.

The bill would also eliminate the ability of plans to continue using the same payroll growth assumption in their unfunded liability amortization schedule regardless of the 10 year payroll growth rate.  Current law permits the practice if the assumptions underlying the payroll growth rate are consistent with the actuarial assumptions used to determine the unfunded liabilities, and the payroll growth rate is reasonable and consistent with future expectations of payroll growth.

Additional Reporting Requirements

Under current law, governmental plans are required to maintain certain information on plan members, including:

  • For active members:  A means of identification; date of birth; sex; date of employment; period of credited service, split, if required, between prior service and current service; and occupational classification.
  • For active members:  Cumulative contributions together with accumulated interest, if credited, age at entry into system, and current rate of contribution.
  • For inactive members:  average final compensation and age at which deferred benefit is to begin.
  • For retired members:  a means of identification, date of birth, sex, beginning date of benefit, type of retirement and amount of monthly benefit, and type of survivor benefit.

SB 980 would require governmental plans to not only maintain the above information, but to report it to the Department of Management Services along with the plan’s actuarial report beginning October 1, 2018.

Plans are currently required, within 60 days of receipt of the actuarial report, to report the recommended employer contribution expressed as a dollar amount and as a percentage of payroll.  SB 980 would require the recommended employer contribution to also be expressed as a percentage of the employer’s annual revenue.

SB 980 would require the Department of Management Services to publish all of the data on governmental retirement plans it receives. Currently, the information is collected and subject to disclosure under public records laws; but the data is not published by the Department.

FRS Actuarial Study

Under section 121.031, an actuarial study of FRS must be performed every year and the results reported to the legislature before the beginning of the legislative session.  SB 980 would require the results of the report to be reported to the Governor, the President of the Senate, and the Speaker of the House by December 31 before the next regular legislative session.

Among the consensus estimating conferences required under section 216.136(10), is the Florida Retirement System Actuarial Assumption Conference.  The principals of the conference include Executive Office professional staff, the coordinator of the Office of Economic and Demographic Research, professional staff of the Senate and professional staff of the House of Representatives.  The FRS Actuarial Assumption Conference is required to prepare an analysis of the actuarial assumptions and methods used in the FRS actuarial study and to determine whether changes to the assumptions or methods are required.  SB 980 would require the FRS actuarial study to include this analysis by the Conference along with specific recommendations regarding an appropriate assumed rate of return.

Section 121.0312 requires the Governor, Chief Financial Officer, and Attorney General, sitting as the Board of Trustees of the State Board of Administration, to review the FRS actuarial valuation report.  In addition to this review, SB 980 would require the Governor, the President of the Senate, and the Speaker of the House, within 30 days of receipt, to acknowledge in writing their acceptance and review of the report, and any recommendations in the report regarding actuarial assumptions. The review must contain an explanation from each principal as to why actuarial assumptions other than those recommended by the actuary were adopted by the Florida Retirement System Actuarial Assumption Conference. The Department of Management Services would publish the written acknowledgments as addenda to the actuarial valuation report.

SB 980 has been referred to the Senate Committees on Government Oversight and Accountability, Community Affairs, and Appropriations.  There is no House companion bill at this time.

HB 1209 (Asencio) / SB 1692 (Torres)  FRS Normal Retirement Date

These bills restore the FRS normal retirement date for regular and Special Risk class members hired on and after July 1, 2011, to the normal retirement date for members hired before that date.  Regular class members would be able to retire at age 62 with eight years of service, or with 30 years of service regardless of age.  Special Risk members would be able to retire at age 55 with eight years of service, or with 25 years of service regardless of age.  The bills also make conforming changes to FRS early retirement and DROP provisions.  The bills have not yet been referred to committee.

(SB 1240 (Mayfield) / HB 977 (Fine)  FRS – Retirement of Instructional Personnel and Administrative Personnel

Under current law, FRS members may participate in DROP for a maximum of 60 calendar months.  However, if allowed by their District, teachers may extend the DROP period for an additional 36 months.  SB 1240 would require teachers who are authorized to extend their DROP period to have a termination date that is the last day of the last calendar month of the school year within the DROP extension period.   The bill also authorizes administrative personnel in grades k-12 to extend their DROP period beyond the 60-month period if their termination date occurs prior to the end of the school year.

SB 1240 has not yet been assigned to a committee.  It is identical to HB 977 (Fine), which has been referred to the House Oversight, Transparency and Administration Subcommittee, the Appropriations Committee, and the Government Accountability Committee.

SB 1518 (Rodriguez) Florida Retirement System – Special Risk Class

This bill would add water, sewer and other public works employees who work in hazardous conditions, as well as police service aides to the FRS Special Risk class.  It has not yet been referred to committee, and at this time there is no Senate companion bill.

If you have any questions on a bill, please let us know.

2017: The Year of Leadership at LLW

LLW Gives Back this Holiday Season

LLW Thanks You for a Great Year

Lori Killinger Featured in INFLUENCE Magazine

LLW Awards and Recognitions

Lewis, Longman & Walker, P.A. recently received the 2018 “Best Law Firms” Ranking by U.S. News & World Report. The firm’s Jacksonville, Tallahassee and West Palm Beach offices received Tier 1 rankings in Environmental Law and Environmental Litigation. Rankings are determined by a combination of hard data, peer reviews and client assessments. Best Law Firms® lists are excerpted in a wide range of general interest, business and legal publications worldwide, reaching an audience of more than 10 million readers. For more information on “Best Law Firms” rankings, visit http://bestlawfirms.usnews.com.

Amy Taylor Petrick earned Florida Bar Board Certification in City County and Local Government Law, sharing this designation with only seven percent of all lawyers in Florida. Board certification is the highest level of recognition by The Florida Bar.  Ms. Petrick represents clients on a wide variety of litigation, land use, administrative, regulatory, construction and contractual matters in state and federal court and administrative forums.  She can be reached at apetrick@llw-law.com or at 561.640.0820.

Frederick L. Aschauer, Jr. has been recognized as AV® Preeminent by the Lexus Nexis peer review rating service Martindale-Hubbell. The AV rating attained by Aschauer indicates the highest level of ethical standards and professional ability.  Legal ability ratings are based upon performance in five key areas: legal knowledge, analytical capacity, judgment, communication ability, and legal experience.  The General Ethical Standards Ratings denotes adherence to professional standards of conduct, reliability, and diligence.

The Legal Aid Foundation of Tallahassee recently announced that LLW attorney and lobbyist Natalie A. Kato has joined Thunderdome Tallahassee Class 4, a hands-on leadership and pro bono family law training program. First launched in September 2014, Thunderdome Tallahassee addresses a desperate need for equal access to justice for low-income families and children by attracting, harnessing and developing the talent of volunteer lawyers as they serve those needing family law assistance.   For more information, visit http://www.legalaidtallahassee.org/thunderdome-tallahassee/.

LLW Attorney Richard P. Green was recently selected to join the Board of Directors of the Manatee County Bar Association Young Lawyers Division. Manatee County Bar Association is a nonprofit voluntary organization for attorneys and judges in Manatee County. The association is dedicated to enhancing the legal profession, serving the community and promoting fellowship.

Kathryn B. Rossmell has been selected to join the 2018 Class of Palm Beach County Leadership Engage.  Kathryn is one of only forty other professionals who were chosen for their leadership and service within Palm Beach County and beyond. Leadership Engage is an educational, nonprofit organization designed to foster awareness of community issues. For more information, visit http://www.leadershippbc.org/.

LLW was a sponsor of the Leadership Florida Day of Service event at the North County Senior Center on December 15th in Palm Beach Gardens.  Click here to see photos from the event.

Notices of Note

November 16, 2017 – St. Johns River Water Management District water shortage plan and the South Florida Water Management District’s water supply plan.

October 25, 2017 – DOH issues emergency rules pertaining to the medical marijuana industry.

October 23, 2017 – The Florida Department of Environmental Protection (FDEP) has initiated rule development to adopt rules to establish procedures for providing loans to local governments or water supply entities for the development and construction of water storage facilities. FDEP is also hosting a workshop for public comments on proposed revisions to Florida’s State Implementation Plan under the Clean Air Act.  The Florida Fish and Wildlife Conservation Commission is holding a workshop to present draft species conservation measures and permitting guidelines for the Big Cypress Fox Squirrel, the Florida Pine Snake, Barbour’s map turtle, Black Creek Crayfish, Blackmouth Shiner, Saltmarsh Topminnow, and Florida Burrowing Owl. Finally, the Florida Department of Agriculture and Consumer Services has published a Notice of Proposed Rule regarding changes to the regulation of beekeeping.