Police and Firefighter Pensions
Prior to 1999, cities were largely free to bargain with local police and fire unions, or provide for non-unionized police and firefighters, pension benefits that best fit the priorities and needs of the city and its police and firefighters. In 1999, the Legislature amended Chapters 175 and 185, Florida Statutes, requiring that additional insurance premium tax revenues (IPTR) over a base amount be used to provide only extra pension benefits to police officers and firefighters. Since enacted, the mandate required cities to provide more than $520 million in new, extra pension benefits to police officers and firefighters.
Beginning in August 2012, the Florida Department of Management Services (DMS) issued a letter to the City of Naples that reflected a fundamental change in the DMS’s interpretation on the use of IPTR. Prior to this letter, the DMS had taken the position that if a city reduced any pension benefit below the statutory minimum benefits or below the plan benefit levels in effect in 1999, the city would be ineligible for future premium tax revenues. In the Naples letter, the DMS acknowledged that its prior interpretation “appears inaccurate.” The primary result of the Naples letter was increased flexibility to set sustainable pension benefit levels and ability to use IPTR for these benefit levels.
In 2015, the Legislature passed CS/SB 172, which was signed by Governor Scott. The law substantially changes Chapters 175 and 185, Florida Statutes, and how insurance premium tax revenues may be used to fund fire and police pension benefits. (A detailed summary of the 2015 law is below.) The effect of this law is to repeal the "extra benefits" mandate from 1999, and also eliminate the DMS "Naples" interpretation.