Jumpline magazine JUNE 2023 pages - Flipbook - Page 4
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William McAllister IV
President
President’s Report
Part 1 of 2 on our FRS reform:
“The Juice Wasn’t Worth the Squeeze”
How 1403 Convinced Elected Officials in 2021 to Preserve the FRS
Editor’s Note: The story of
how positive reforms of the
Florida Retirement System
(FRS) were delivered this
spring is an interesting one.
It is a series of short stories.
While it would be difficult to
fit them all in the Jumpline,
they deserve to be consolidated and told over two issues in order not to
miss a few of the high points. This first article retells how the destruction of the FRS was
averted in 2021. Next quarter’s story will explain how, from this foundation having been
preserved, improvements to the FRS were carried forward into 2023.
Florida Senate President Wilton Simpson opened the 2021
session by designating FRS reform as one of his top legislative
priorities. He described the state’s pension fund as the “single largest threat to Florida’s balance sheet.” He outlined the
urgency of those concerns, questioning the fund’s near-term
fiscal health, worrying that some retirees may live longer and
ringing an alarm over its unmanageable and growing “$36-billion-dollar unfunded actuarial liability.” He predicted that only
reform, such as those he was supporting, could save the FRS
from impending financial collapse and preserve retirement
accounts for future generations. Among other components,
this plan called for the closure of the defined benefit option
to nearly all new hires, forcing their participation in defined
compensation programs. This decision would have shifted risk
from the State’s stable and conservative pension investment
strategies to Wall Street’s wider array of alternative and riskier
investments. Worse, this would have effectively smothered future growth of the pension plan and increased market opportunities to cause instability.
The case that Senate President Simpson made in those
opening weeks, as he narrated his way through
numbers, could have been compelling. It would
even have been persuasive, if only it were
true.
For those familiar with statewide politics
since the Great Recession, it was obvious Simpson’s foreboding messages
were grounded in a fear-filled moment,
created by the coincidental intersection of economic uncertainties arising from the Coronavirus pandemic
with the annual June 30, 2020 close
of the State’s fiscal year. He wanted to
take another crack at an old personal po-
litical target – the Florida Retirement System. Nearly a decade
ago, Simpson tried to introduce
measures that would have steered
FRS participants away from pension options and halved defined
benefit values through the creation
of cash-balance plans. The House
and Senate couldn’t come to terms
on a common vision and his plans
were scuttled back then. As Senate
President, he saw another opportunity in 2021 to deliver a version
How the FRS was
of change he’s long envisioned.
preserved in 2021
For members of our Union’s
is a lesson in how
leadership who understand fund
important this
management and basic investment strategies, it was also obviUnion’s politics
ous Simpson’s assessment wasn’t
have been, and
based upon current fiscal reports
or future actuarial projections. It
if we want to
was good political theater, but it
accomplish
wasn’t built upon current economic
great things in
reports. The State’s pension program had a AAA credit rating and
the future, how
Simpson’s “unfunded actuarial
important they
crisis” was apolitically described
will always be.
by Ashbel Williams, who functioned as the Executive Director
and Chief Investment Officer for
the Florida State Board of Administration, as “an obligation
that is well under control” and “relatively insignificant given
the size of the State’s economy.” Between the close of the
State’s fiscal year on June 30, 2020 and the 2021 session, the
monthly unaudited reports indicated Ash Williams’ team had
timed the pandemic wave perfectly. Not only had they averted
significant losses, but they had also angled the FRS onto an
accelerating path toward a funding level not seen this century.
Recognizing several patterns we’ve seen before and knowing the financial arguments lacked merit, this Union had
several conversations with our state organization,
the Florida Professional Firefighters. We urged
immediate action. The House of Representatives under the leadership of Representatives
Chris Sprowls and Miami’s own Bryan Avila
had not yet introduced companion legislation. Local 1403’s team felt the best strategy
was to show influential House members why
Simpson’s plan was premised on outdated
information and headed for avoidable political
blowback from blue collar working families.
Without this House bill accompanying it, the
Senate’s efforts would wither, but the clock was
June 2023 | JUMPLINE Magazine
