The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Community Affairs
BILL: CS/SB 224
INTRODUCER: Governmental Oversight and Accountability Committee and Senator Hooper and others
SUBJECT: Special Risk Class Retirement Date
DATE: April 3, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Harmsen McVaney GO Fav/CS
2. Hackett Ryon CA Pre-Meeting
3. AP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 224 modifies the normal retirement date for a Special Risk Class member enrolled in the
Florida Retirement System (FRS). Currently, a special risk class member who enrolled in the
Florida Retirement System before July 1, 2011, reaches his or her normal retirement date, at
which the member may receive full retirement benefits from their chosen FRS retirement plan, at
either age 55 or after 25 years of service—whichever comes first. However, Special Risk Class
members who enrolled on or after July 1, 2011, reach their normal retirement date at either age
60, or after 30 years of service—whichever comes first. This bill lowers the age or service
requirement for the normal retirement date for special risk class personnel who enrolled after
July 1, 2011. This allows all Special Risk Class members to receive full retirement benefits at
either age 55, or after 25 years of service, whether or not they enrolled after July 1, 2011.
With the earlier normal retirement date, some Special Risk Class members will have worked
beyond the date upon which those members must enroll in the Deferred Option Retirement
Program or be deemed ineligible to participate. The bill allows those members to enroll in DROP
within 12 months of the effective date of this bill.
The bill is expected to have a significant fiscal impact on state and local governments that
employ members of the Special Risk Class of the FRS; the bill increases employer contributions
by $77.5 million annually system-wide to fund the benefit changes.
The bill takes effect July 1, 2023.
REVISED: BILL: CS/SB 224 Page 2
II. Present Situation:
The Florida Retirement System (FRS)
The Florida Retirement System (FRS) was established in 1970 when the Legislature consolidated
the Teachers’ Retirement System, the State and County Officers and Employees’ Retirement
System, and the Highway Patrol Pension Fund. In 1972, the Judicial Retirement System was
consolidated into the FRS, and in 2007, the Institute of Food and Agricultural Sciences
Supplemental Retirement Program was consolidated under the Regular Class of the FRS as a
closed group.
1
The FRS is a contributory system, with active members contributing 3 percent of
their salaries.
2
The FRS is a multi-employer plan, governed by ch. 121, F.S., the “Florida Retirement System
Act.” As of June 30, 2022, the FRS had 629,073 active non-retired members, 448,846 annuitants,
14,858 disabled retirees, and 28,827 active participants of the Deferred Retirement Option
Program (DROP).
3
As of September 2022, the FRS consisted of 990 total employers; it is the
primary retirement plan for employees of state and county government agencies, district school
boards, Florida College institutions, and state universities, and includes the 180 cities and 153
special districts that have elected to join the system.
4
The membership of the FRS is divided into five membership classes:
The Regular Class
5
consists of 537,128 active members and 7,806 in renewed membership;
The Special Risk Class
6
includes 72,925 active members and 1,100 in renewed membership;
The Special Risk Administrative Support Class
7
has 104 active members and one in renewed
membership;
The Elected Officers’ Class
8
has 2,075 active members and 109 in renewed membership; and
1
Florida Department of Management Services (DMS), Division of Retirement, Florida Retirement System Pension Plan and
Other State Administered Retirement Systems FY 2021-22 Annual Comprehensive Financial Report, 35, available at
https://employer.frs.fl.gov/forms/2020-21_ACFR.pdf. (last visited Mar. 31, 2023).
2
Prior to 1975, members of the FRS were required to make employee contributions of either 4 percent for Regular Class
employees or 6 percent for Special Risk Class members. Employees were again required to contribute to the system after
July 1, 2011. See, ch. 2011-68, s. 33, Laws of Fla. Members in the Deferred Retirement Option Program do not contribute to
the system.
3
Supra, n. 1 at 260.
4
DMS, Division of Retirement, Participating Employers for Fiscal Year 2022-2023 (Sept. 2022), available at
https://employer.frs.fl.gov/forms/part-emp.pdf (last visited Mar. 31, 2023).
5
The Regular Class is for all members who are not assigned to another class. Section 121.021(12), F.S.
6
The Special Risk Class is for members employed as law enforcement officers, firefighters, correctional officers, probation
officers, paramedics and emergency technicians, among others. Section 121.0515, F.S.
7
The Special Risk Administrative Support Class is for a special risk member who moved or was reassigned to a nonspecial
risk law enforcement, firefighting, correctional, or emergency medical care administrative support position with the same
agency, or who is subsequently employed in such a position under the Florida Retirement System. Section 121.0515(8), F.S.
8
The Elected Officers’ Class includes elected state and county officers, and those elected municipal or special district
officers whose governing body has chosen Elected Officers’ Class participation for its elected officers. Section 121.052, F.S. BILL: CS/SB 224 Page 3
The Senior Management Service Class
9
has 7,610 active members and 210 in renewed
membership.
10
Each class is funded separately based upon the costs attributable to the members of that class.
Members of the FRS have two primary plan options available for participation:
11
The defined contribution plan, also known as the Investment Plan; and
The defined benefit plan, also known as the Pension Plan.
Investment Plan
In 2000, the Public Employee Optional Retirement Program (investment plan) was created as a
defined contribution plan offered to eligible employees as an alternative to the FRS Pension
Plan.
12
Benefits under the investment plan accrue in individual member accounts funded by both
employee and employer contributions and earnings. Benefits are provided through employee-
directed investments offered by approved investment providers.
13
A member vests immediately in all employee contributions paid to the investment plan.
14
With
respect to the employer contributions, a member vests after completing one work year of
employment with an FRS employer.
15
Vested benefits are payable upon termination or death as a
lump-sum distribution, direct rollover distribution, or periodic distribution.
16
The investment
plan also provides disability coverage for both in-line-of-duty and regular disability retirement
benefits.
17
An FRS member who qualifies for disability while enrolled in the investment plan
may apply for benefits as if the employee were a member of the pension plan. If approved for
retirement disability benefits, the member is transferred to the pension plan.
18
9
The Senior Management Service Class is for members who fill senior management level positions assigned by law to the
Senior Management Service Class or authorized by law as eligible for Senior Management Service designation. Section
121.055, F.S.
10
All figures are from Florida Retirement System Pension Plan and Other State Administered Retirement Systems FY 2021-
22 Annual Comprehensive Financial Report, at 263.
11
Florida State Board of Administration (SBA), Plan Comparison Chart (Jul. 2020), available at
https://www.myfrs.com/pdf/forms/plancomparison.pdf (last visited Mar. 31, 2023).
12
See, ch. 2000-169, Laws of Fla.
13
Section 121.4501(1), F.S.
14
Section 121.4501(6)(a), F.S.
15
If a member terminates employment before vesting in the investment plan, the nonvested money is transferred from the
member’s account to the SBA for deposit and investment by the SBA in its suspense account for up to five years. If the
member is not reemployed as an eligible employee within five years, any nonvested accumulations transferred from a
member’s account to the SBA’s suspense account are forfeited. Section 121.4501(6)(b)-(d), F.S.
16
Section 121.591, F.S.
17
See s. 121.4501(16), F.S.
18
Pension plan disability retirement benefits, which apply for investment plan members who qualify for disability,
compensate a line-of-duty disabled member up to 65 percent of the average monthly compensation as of the disability
retirement date for special risk class members. Other members may receive up to 42 percent of the member’s average
monthly compensation for disability retirement benefits. If the disability occurs other than in the line-of-duty, the monthly
benefit may not be less than 25 percent of the average monthly compensation as of the disability retirement date.
Section 121.091(4)(f), F.S. BILL: CS/SB 224 Page 4
The State Board of Administration (SBA) is primarily responsible for administering the
investment plan.
19
The Board of Trustees of the SBA is comprised of the Governor as chair, the
Chief Financial Officer, and the Attorney General.
20
Pension Plan
The pension plan is administered by the Secretary of Management Services (DMS) through the
Division of Retirement.
21
The SBA manages the pension fund’s assets.
22
Any member initially enrolled in the pension plan before July 1, 2011, vests in the pension plan
after completing six years of service with an FRS employer.
23
For members initially enrolled on
or after July 1, 2011, the member vests in the pension plan after eight years of creditable
service.
24
Benefits payable under the pension plan are calculated based on the member’s years of
creditable service multiplied by the service accrual rate multiplied by the member’s average final
compensation.
25
For most current members of the pension plan, normal retirement (when first eligible for
unreduced benefits) occurs at the earliest attainment of 30 years of service or age 62.
26
For public
safety employees in the Special Risk and Special Risk Administrative Support Classes, normal
retirement is the earliest of 25 years of service or age 55.
27
Members initially enrolled in the
pension plan on or after July 1, 2011, have longer service requirements. For members initially
enrolled after that date, the member must complete 33 years of service or attain age 65; members
in the Special Risk classes must complete 30 years of service or attain age 60.
28
Deferred Retirement Option Program (DROP)
Members who retire from the FRS pension plan are eligible to enroll in the DROP, which allows
a member to continue employment with an FRS employer for up to 60 additional months.
29
While in the DROP, the member’s retirement benefits accumulate in the FRS Trust Fund
increased by a cost-of-living adjustment (COLA) each July and earn monthly interest equivalent
to an annual rate of 1.30 percent on the preceding month’s DROP accumulation until termination
of participation in the DROP.
30
19
Section 121.4501(8), F.S.
20
FLA. CONST. art. IV, s. 4.
21
Section 121.025, F.S.
22
Florida SBA, Summary Overview of the State Board of Administration of Florida, 4, available at
https://www.sbafla.com/fsb/Portals/FSB/Content/Topics/SBAOverview_20211025.pdf?ver=2021-10-28-120954-217 (last
visited Mar. 31, 2023).
23
Section 121.021(45)(a), F.S.
24
Section 121.021(45)(b), F.S.
25
Section 121.091, F.S. See also, Florida Retirement System Pension Plan and Other State Administered Retirement Systems
FY 2021-22 Annual Comprehensive Financial Report, 35-37, supra at 1.
26
Section 121.021(29)(a)1., F.S.
27
Section 121.021(29)(b)1., F.S.
28
Sections 121.021(29)(a)2. and (b)2., F.S.
29
Section 121.091(13), F.S.
30
Florida Retirement System Pension Plan and Other State Administered Retirement Systems FY 2021-22 Annual
Comprehensive Financial Report, supra note 1 at pp. 38-39. BILL: CS/SB 224 Page 5
Generally, eligible FRS pension plan members must elect to participate in the DROP within 12
months of their normal retirement date.
31
However, a member initially enrolled in the FRS before
July 1, 2011, who reaches normal retirement date based on years of service before he or she
reaches age 62 (or age 55 for special risk class members) may defer his or her entry into DROP
until 12 months immediately following their 57
th
birthday, or 52
nd
birthday for special risk class
members. A member who enrolled in the FRS pension plan on or after July 1, 2011, and who
reaches normal retirement date based on service before age 65, (or 60 for special risk class) may
defer DROP participation until the 12 months immediately following his or her 60th birthday, or
55
th
birthday for special risk class.
32
K-12 instructional personnel employed with an FRS employer may extend their DROP
participation for up to an additional 36 months, for a total of 8 years of DROP participation.
Administrative personnel who are employed with a K-12 FRS employer may extend his or her
DROP participation through the end of the current school year.
33
Similarly, law enforcement officers who are in the special risk class,
34
who elect to participate in
DROP on or after July 1, 2022, may participate in DROP for an additional 36 calendar months
beyond the 60-month DROP period, for a total of 8 years enrollment in the DROP. To qualify,
the participant must enter DROP on or before June 30, 2028.
35
The Special Risk Class of the FRS
The Special Risk Class of the FRS consists of state and local government employees who meet
the criteria for special risk membership. The class covers persons employed in law enforcement,
firefighting, criminal detention, and emergency and forensic medical care who meet statutory
criteria for membership as set forth in s. 121.0515, F.S.
When originally establishing the Special Risk Class of membership in the FRS, the Legislature
recognized that persons employed in certain categories of positions:
[A]re required to perform work that is physically demanding or arduous, or
work that requires extraordinary agility and mental acuity, and that such
persons, because of diminishing physical and mental faculties, may find that
they are not able, without risk to the health and safety of themselves, the
public, or their coworkers, to continue performing such duties and thus
enjoy the full career and retirement benefits enjoyed by persons employed
in other membership classes and that, if they find it necessary, due to the
physical and mental limitations of their age, to retire at an earlier age and
usually with less service, they will suffer an economic deprivation
therefrom.
36
31
Section 121.091(13)(a), F.S.
32
Section 121.091(13)(a)2., F.S.
33
Section 121.091(13)(b)1., F.S.
34
See, s. 121.0515(3)(a), F.S. This is a narrow permission that excludes sheriffs and elected police chiefs and does not
encompass the special risk class as a whole.
35
Section 121.091(13)(c), F.S.
36
Section 121.0515(1), F.S. BILL: CS/SB 224 Page 6
Compared to Regular Class members, a person who is a member in the Special Risk Class of the
FRS pension plan earns a higher annual service accrual rate, may retire at an earlier age and is
eligible to receive higher disability and death benefits. As a result, the contribution rate to fund
the normal cost of the Special Risk benefits is higher than the contribution rates to fund the
normal cost of the Regular Class benefits. Similarly, the contribution rate to fund the unfunded
liabilities of the Special Risk Class is higher than the same type contribution rate for the Regular
Class. Special Risk Class members of the FRS investment plan receive total contributions into
the individual investment accounts equal to 17 percent of salary. A Regular Class member
receives total contributions equal to 9.3 percent of salary.
37
The table below shows the contribution rates for the Regular Class and the Special Risk Class as
enacted for FY 2022-2023
38
and as recommended by the state actuary
39
beginning FY 2023-
2024.
2022-23 2023-24
Rates to fund Regular
Class
Special
Risk Class
Regular
Class
Special
Risk Class
Normal Cost 5.96% 16.44% 6.14% 17.05%
Unfunded Actuarial Liability 4.23% 9.67% 4.72% 10.83%
Total Contribution 10.19% 26.11% 10.86% 27.88%
For all membership classes, except the DROP and certain members with renewed membership,
employees contribute three percent of their compensation towards retirement.
40
Actuarial Study
The DMS requested an actuarial study to determine the required increase in employer
contributions to fund the change in normal retirement date for Special Risk Class members who
enrolled on or after July 1, 2011. According to the actuarial study, total combined employer
contributions to the FRS Trust Fund will need to be increased by approximately $77.5 million
annually beginning in Fiscal Year 2023-2024.
41
III. Effect of Proposed Changes:
Section 1 reduces the normal retirement date requirements for members of the Special Risk
Class of the FRS who enrolled on or after July 1, 2011, from age 60 with 8 years of service or at
any age with 30 years of service to age 55 with 8 years of service or at any age with 25 years of
service. This standardizes the normal retirement date for all members of the FRS Special Risk
Class, whether enrolled before or after July 1, 2011. Therefore, Special Risk Class members will
37
Section 121.72(6), F.S.
38
Section 121.71(4) and (5), F.S.
39
Letter to Andrea Simpson, Florida DMS Division of Retirement Director, from Milliman Actuarial Services, entitled
“Blended Proposed Statutory Rates for the 2023-2024 Plan Year Reflecting a Uniform UAL Rate for All Membership Classes
and DROP: Table 1” Dec. 2, 2022 (on file with the Senate Committee on Governmental Oversight and Accountability).
40
Section 121.71(3), F.S.
41
Letter to Andrea Simpson, Florida DMS Division of Retirement Director, from Milliman Actuarial Services, entitled
“Restore Normal Retirement and DROP Entry Eligibility Criteria to Pre-2011 Requirements for Tier II Special Risk Class
Members” Feb. 20, 2023 (on file with the Senate Committee on Governmental Oversight and Accountability). BILL: CS/SB 224 Page 7
reach their normal retirement date, or eligibility for unreduced benefits, at the earlier of 25 years
of creditable service instead of 30 years, or age 55 instead of age 60.
In order to collect retirement benefits on or after their normal retirement date, members of the
Special Risk Class must also complete the total year(s) of creditable service in the Special Risk
Class equal to or greater than the years of service required by their retirement plan to vest. A
member of the Special Risk Class who enrolled in the pension plan on or after July 1, 2011, will
still be required to complete 8 years of creditable service in the Special Risk Class, while
members who enrolled before July 1, 2011, will be required to complete 6 years of service in the
Special Risk Class. A member of the Special Risk Class who enrolled in the investment plan will
be required to complete 1 year of creditable service in the Special Risk Class.
Sections 2 and 3 amends ss. 121.091 and 121.4501, F.S., respectively, to adopt the amended
normal retirement date for Special Risk Class members who enrolled in an FRS retirement plan
on or after July 1, 2011.
Section 4 creates an unnumbered section of law that authorizes Special Risk Class members who
are not yet eligible to participate in DROP under current law, but who will be past their 12-
month DROP election period as a result of this act to elect to participate in DROP within 1 year
of the effective date of the bill.
Section 5 increases the employer-paid contribution rates to fund the benefit changes provided for
in this bill.
Section 6 finds that the act fulfills an important state interest based on the legitimate and proper
state purpose of extending basic protections afforded by governmental retirement systems in a
manner that is managed, administered, and funded in an actuarially sound manner.
Section 7 provides that the bill takes effect July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Article VII, s. 18(a) of the State Constitution provides that: “No county or municipality
shall be bound by any general law requiring such county or municipality to spend
funds...unless the legislature has determined that such law fulfills an important state
interest and unless:”
The law requiring such expenditure is approved by two-thirds of the membership in
each house of the legislature; or
The expenditure is required to comply with a law that applies to all persons similarly
situated, including state and local governments.
The bill requires a county or municipality that employs special risk class personnel to
increase their contributions to an FRS retirement plan. This bill includes legislative
findings that the bill fulfills important state interests, and the bill applies to all persons
similarly situated (those employers participating in the Florida Retirement System and BILL: CS/SB 224 Page 8
employing members of the Special Risk Class), including state agencies, school boards,
state universities, community colleges, counties, municipalities, and special districts.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
Actuarial requirements: Article X, s. 14 of the State Constitution requires that benefit
improvements under public pension plans in the State of Florida be concurrently funded
on a sound actuarial basis, as set forth below:
SECTION 14. State retirement systems benefit changes.--A governmental
unit responsible for any retirement or pension system supported in whole
or in part by public funds shall not after January 1, 1977, provide any
increase in the benefits to the members or beneficiaries of such system
unless such unit has made or concurrently makes provision for the funding
of the increase in benefits on a sound actuarial basis.
Article X, s. 14 of the State Constitution is implemented by statute under part VII of ch.
112, F.S., the “Florida Protection of Public Employee Retirement Benefits Act” (Act).
The Act establishes minimum standards for the operation and funding of public employee
retirement systems and plans in the State of Florida. It prohibits the use of any procedure,
methodology, or assumptions the effect of which is to transfer to future taxpayers any
portion of the costs which may reasonably have been expected to be paid by the current
taxpayers.
The bill includes employer-paid contributions that are expected to meet the funding needs
on a sound actuarial basis.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
None. BILL: CS/SB 224 Page 9
C. Government Sector Impact:
The bill increases employer contribution rates to generate $77.5 million annually, system-
wide. The table below shows the annual contribution increases by employer group.
Employer
Contribution
Group
Estimated
Increase in
Contributions
State Agencies $13.8 m
School Boards $2.9 m
State Universities $0.6 m
Colleges $0.2 m
Counties $55.1 m
Other $4.8 m
Total $77.5 m
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 121.021, 121.091,
and 121.4501.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Governmental Oversight and Accountability on March 22, 2023:
The committee substitute:
Allows a Special Risk Class member who has not yet reached DROP eligibility under
current law, but who, upon enactment of this bill, would be past his or her 1-year
DROP election period, to elect to participate in DROP within 1 year of the effective
date of this bill.
Provides the contribution rates paid by FRS employers necessary to adequately fund
the benefits granted in the bill. BILL: CS/SB 224 Page 10
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.