HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 239 Special Risk Class Retirement Date
SPONSOR(S): Appropriations Committee, Constitutional Rights, Rule of Law & Government Operations
Subcommittee, Busatta Cabrera and others
TIED BILLS: IDEN./SIM. BILLS: CS/SB 224
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY
CHIEF
1) Constitutional Rights, Rule of Law & 14 Y, 0 N, As CS Villa Miller
Government Operations Subcommittee
2) Appropriations Committee 27 Y, 0 N, As CS Helpling Pridgeon
3) State Affairs Committee
SUMMARY ANALYSIS
The bill conforms law to the House proposed 2023-2024 General Appropriations Act (GAA) as retirement contributions are
included in the GAA.
The Florida Retirement System (FRS) is a multiple-employer, contributory plan that provides retirement income benefits
for employees of state and county government agencies, district school boards, state colleges and universities. It also
serves as the retirement plan for employees of the cities, special districts, and independent hospitals that have elected to
join the system. Members of the FRS have two plan options available for participation: the pension plan, which is a
defined benefit plan, and the investment plan, which is a defined contribution plan. The FRS is a low-cost system
compared to other retirement systems. The cost to administer the FRS in 2022 was $19 per active member and annuitant,
compared to the peer average of $115 for other similar pension systems.
The Deferred Retirement Option Program (DROP) allows eligible FRS Pension Plan members to participate in the
program and defer receipt of retirement benefits while continuing employment with his or her Florida Retirement System
Employer. Generally, members may elect to participate in DROP for a period not to exceed a maximum of 60 calendar
months.
The Department of Management Services (DMS) must compile an annual actuarial valuation of the FRS and report the
results to the Legislature by December 31 of each year. Thereafter, the Legislature uses the results of the actuarial
valuation to establish uniform employer contribution rates during the next legislative session to ensure the FRS is funded
in a sound actuarial manner.
The bill:
Increases the employer-funded allocations to investment plan accounts by 1 percent for each membership class.
Restores the pre-2011 cost-of-living adjustment for eligible FRS Pension Plan members to 3 percent.
Restores the pre-2011 normal retirement age and years of service for Special Risk Class members.
Revises DROP by:
o removing age restrictive entry windows to enter DROP for all members that have met normal retirement
requirements,
o increasing the amount of time all eligible members can participate in DROP from 60 to 96 months, and
o increasing the amount of interest applied to a member’s accrued DROP benefit from 1.3 to 4 percent.
Adjusts the employer contribution rates for the FRS based on the annual actuarial valuation and additional
actuarial studies.
Increases allocations for member disability coverage and line-of-duty death benefits.
Declares that the act fulfills an important state interest.
The application of the rates will have a significant fiscal impact to funds appropriated by the Legislature associated with
employee salaries and benefits. Provisions of the bill relating to employer retirement contribution rates will increase
amounts FRS Employers must pay for employee retirement benefits. See Fiscal Comments.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 3/30/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Florida Retirement System
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. The FRS was amended in
1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and
amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS
members effective July 1, 2002.1
The FRS is a multiple-employer, contributory plan2 governed by the Florida Retirement System Act.3 As
of June 30, 2022, the FRS provides retirement income benefits to 629,073 active members,4 448,846
retired members and beneficiaries, and 28,827 members in DROP.5 It is the primary retirement plan for
employees of state and county government agencies, district school boards, state colleges, and state
universities. The FRS also serves as the retirement plan for the employees of the 180 cities, 153
special districts, and two independent hospitals that have elected to join the system.6
The FRS is a low-cost system compared to other retirement systems. The cost to administer the FRS in
2022 was $19 per active member and annuitant compared to the peer average of $115 for other similar
pension systems. Further, the number of staff to administer the FRS is 1.3 positions per 10,000
members versus an average of 3.4 per 10,000 members of other similar retirement systems.7
Membership of the FRS is divided into the following membership classes:8
Regular Class 9 consists of 537,128 members (85.38 percent of the total 2022 FRS
membership). This class is for all members who are not assigned to another class.
Special Risk Class 10 includes 72,925 members (11.59 percent). This class is for members
employed as law enforcement officers, firefighters, correctional officers, probation officers,
paramedics and emergency medical technicians, among others.
Special Risk Administrative Support Class 11 has 104 members (0.017 percent). This class is for
former Special Risk Class members who provide administrative support within an FRS special
1 DMS Florida Retirement System Pension Plan And Other State Administered Systems Comprehensive Annual
Comprehensive Financial Report Fiscal Year Ended June 30, 2022, at p. 35. A copy of the report can be found online at:
http://www.dms.myflorida.com/workforce_operations/retirement/publications/annual_reports [hereinafter Annual Report]
(Last visited Mar. 22, 2023).
2 Prior to 1975, members of the FRS were required to make employee contributions of either 4 percent for Regular Class
members or 6 percent for Special Risk Class members. Members were again required to contribute to the system after
June 30, 2011.
3 Chapter 121, F.S.
4 As of June 30, 2022, the FRS Pension Plan, which is a defined benefit plan, had 444,150 members, and the investment
plan, which is a defined contribution plan, had 184,923 members. Annual Report, supra note 1, at p. 260.
5 Id.
6 Id., at 298.
7 Email from Jeff Ivey, Deputy Chief of Staff, Department of Management Services, RE: 2022 CEM Slides (Mar. 13, 2023).
8 Annual Report, supra note 1, at 263.
9 S. 121.021(12), F.S.
10 S. 121.0515, F.S.
11 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 FRS. Section 121.0515(8), F.S.
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risk employing agency. Members of this class must maintain the certification required for their
former Special Risk Class position and be subject to recall into those positions if needed.
Elected Officers’ Class 12 has 2,095 members (0.33 percent). This class is for elected state and
county officers, and for those elected municipal or special district officers whose governing body
has chosen Elected Officers’ Class participation for its elected officers.
Senior Management Service Class 13 has 7,875 members (1.24 percent). This 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
Class designation.
Each class is funded separately based upon the costs attributable to the members of that clas s.
Members of the FRS have two primary plan options available for participation:
The investment plan, which is a defined contribution plan; and
The pension plan, which is a defined benefit plan.
Total FRS Membership by Plan14
2021 2022 Percent Change
Investment Plan 176,577 184,923 5%
Pension Plan 458,689 444,150 -3%
Total Membership 635,266 629,073 -1%
Total FRS Membership by Source 15
2022
School Districts 302,399
Counties 151,223
State 90,754
State Universities 27,994
Others 36,491
State Colleges 20,212
FRS Investment Plan
In 2000, the Legislature created the Public Employee Optional Retirement Program (investment plan),
a defined contribution plan offered to eligible employees as an alternative to the pension plan. The
earliest that any member could participate in the investment plan was July 1, 2002. The State Board of
Administration (SBA) is primarily responsible for administering the investment plan. 16 The SBA is
comprised of the Governor as chair, the Chief Financial Officer, and the Attorney General.17
A member vests immediately in all employee contributions paid to the investment plan. 18 With respect
to the employer contributions, a member vests after completing one work year with an FRS employer. 19
Vested benefits are payable upon termination of employment with the FRS employer or death, as a
lump-sum distribution, direct rollover distribution, or periodic distribution. 20
12 S. 121.052, F.S.
13 S. 121.055, F.S.
14 Annual Report, supra note 1, at 260.
15 Annual Report, supra note 1, at 261.
16 S. 121.4501(8), F.S.
17 Art. IV, section 4(e), Fla. Const.
18 S. 121.4501(6)(a), F.S.
19 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.
20 S. 121.591, F.S.
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Benefits under the investment plan accrue in individual member accounts funded by both employee
and employer contributions and investment earnings. Benefits are provided through employee-directed
investments offered by approved investment providers. The amount of money contributed to each
member’s account varies by class as follows: 21
Membership Class Percentage of Gross
Compensation1
Regular Class 9.30%
Special Risk Class 17.00%
Special Risk Administrative Support Class 10.95%
Elected Officers’ Class
Justices and Judges 16.23%
County Elected Officers 14.34%
Others 12.38%
Senior Management Service Class 10.67%
1
Includes the three percent employee contribution.
The above table reflects the rates in effect since July 1, 2022. Between July 1, 2022, through June 30,
2022, the Percentage of Gross Compensation was 3 percent less for each class.22 The additional 3
percent for each class was provided in the 2022 Legislative Session. 23
FRS Pension Plan
The pension plan is a defined benefit plan that is administered by the secretary of the Department of
Management Services (DMS) through the Division of Retirement (division).24 Investment management
is handled by the SBA.
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.25 For members initially enrolled on or after July
1, 2011, the member vests in the pension plan after eight years of creditable service. 26 A member vests
immediately in all employee contributions paid to the pension plan.
For non-special risk members of the pension plan initially enrolled before July 1, 2011, normal
retirement is the earlier of 30 years of service or age 62.27 For members in the Special Risk and Special
Risk Administrative Support Classes, normal retirement is the earlier of 25 years of service or age 55.28
Members initially enrolled in the pension plan on or after July 1, 2011, must complete 33 years of
service or attain age 65, and members in the Special Risk and Special Risk Administrative Support
Classes must complete 30 years of service or attain age 60.29
Cost-of-Living Adjustment
For a member whose effective retirement date is before July 1, 2011, the member receives a 3 percent
cost-of-living adjustment (COLA). 30 In the 2011 Legislative Session, the COLA adjustment was
21 S. 121.72(6), F.S.
22 S. 121.72(5), F.S.
23 Ch. 2022-159, Laws of Fla.
24 S. 121.025, F.S.
25 S. 121.021(45)(a), F.S.
26 S. 121.021(45)(b), F.S.
27 S. 121.021(29)(a)1., F.S.
28 S. 121.021(29)(b)1., F.S.
29 S. 121.021(29)(a)2. and (b)2., F.S.
30 S. 121.101(3)(b), F.S.
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reduced for future retirees.31 For members enrolled on or after July 1, 2011, the COLA adjustment is
zero. For retirees with years of service prior to 2011, the COLA amount is prorated. 32
Below are examples of potential COLAs, dependent on the years of service before and after July 1,
2011.
Total Years Years of Service COLA
of Service before July 1,
2011
30 30 3.00%
30 25 2.50%
30 20 2.00%
30 15 1.50%
30 10 1.00%
30 5 0.50%
30 0 0.00%
The charts below show the number of retirees receiving a full COLA (Tier I) and a reduced
COLA (Tier II).33 As more members of the FRS Pension Plan retire post July 1, 2011, Tier I
will continue to decrease and Tier II will continue to increase.
Tier I Tier II
Number of Retirees Receiving a 3% COLA Number of Retirees Receiving 0.00% to 2.99% COLA
1. State 61,167 1. State 25,570
2. State Universities 14,430 2. State Universities 6,236
3. Counties 64,904 3. Counties 37,009
4. School Boards 135,984 4. School Boards 72,628
5. State Colleges 9,402 5. State Colleges 4,972
6. Others 8,868 6. Others