Lawsuit over Escambia County retirement contributions now in the hands of judge

A judge will soon decide a major question in Escambia County's lawsuit with the Escambia County Clerk of Court and Comptroller Pam Childers.

If the judge rules in favor of Childers, it would severely undercut the county's lawsuit seeking to force Childers to authorize payments to three county commissioners' private retirement accounts.

Earlier this fall, Childers filed two motions seeking to have the judge rule on two major issues in the case.

Key issue to be decidedPam Childers seeks ruling in Escambia County lawsuit over retirement contributions

Lawsuit filedEscambia County sues Clerk Pam Childers over withholding retirement payments

One motion seeks an interpretation from the judge on what is considered compensation under Florida law. The other motion seeks an interpretation of a key law that, according to the county, gives it the authority to create a local retirement program.

The county filed its response to Childers' motion in November and last week Childers filed a final rebuttal on the issue.

The final filing leaves the two questions in the hands of Okaloosa County Circuit Court Judge William Stone.

What is the clerk's objection to the retirement plan?

The lawsuit arose after Childers refused to authorize payments to three county commissioners' retirement accounts, arguing the contributions constituted an illegal pay raise for commissioners.

Each year, the FRS updates its contribution rates, and under the latest rates, the county has to contribute 57% of an elected official's salary, a 5.58% increase over the previous year.

In the FRS system, typically only about 8% to 10% would end up in the individual retirement account of an elected official. The remainder would go toward funding the larger FRS system.

However, Escambia County offers a local retirement plan called a 401(a) plan to senior-level managers and elected officials who want to opt-out of the Florida Retirement System plan. The local plan ends up being much more personally lucrative for a county commissioner than the state plan, with contributions amounting to 57% of their salary going into their retirement account.

For a county commissioner whose salary is set at $92,738 by the state, that translates to $52,860 a year also contributed directly into their retirement account, with the state retirement system losing out on that funding.

The cost to the county is the same for both the FRS plan and local plan, and Escambia County sued Childers asking a court to force her to authorize the payments under the local plan.

Childers loses first roundJudge dismisses Childers lawsuit and advances Escambia's in retirement program fight

The first round of the legal battle was decided in July when Childers lost an attempt to get the county's lawsuit thrown out and the court to accept her own countersuit intended to force commissioners to repay the retirement contributions.

In the latest round of the lawsuit, Childers asked the judge to interpret a key Florida law that allows counties to set up annuity retirement plans and asked the judge to rule that retirement contributions are compensation under Florida law.

The county argues that both motions are procedurally invalid and should be dismissed on that account alone before the judge dives into the merits of the arguments. If the judge decides to move forward, the county also presented arguments about why both motions should be dismissed.

Florida statute 121.182

Since the lawsuits have progressed, it's become clear that how the court interprets Florida statute 121.182, a law allowing counties and municipalities to create annuities, will largely decide the case.

The 190-word law originally passed in 1996 is made up of six sentences. In the first four sentences, the law says that counties and municipalities can create annuities for employees that meet specific criteria based on years in service in government. Then in the fifth sentence, the law says counties and municipalities can create local retirement programs to provide annuities for employees, and the last sentence says the programs have to comply with the Florida Constitution.

Childers argues that the entire law must be interpreted together and that all of the specific criteria must be met to allow a county employee to participate in a local retirement plan. An elected official would unlikely meet the criteria unless they spent 25 years or more in local government.

The county argues that the fifth sentence on its own gives the county the power to create a local retirement plan for all employees. The county breaks down the entire statute, noting that the first two sentences modify each other, as do the third and fourth sentences, while the fifth and sixth sentences stand on their own.

The fifth sentence on its own allows the county to create its local retirement program, the county argues.

"It is (obvious) that Section 121.182 is not intended to be read as one unified glob of law," the county's attorneys wrote. "While six sentences appear in one paragraph, they are simply not capable of all having effect at the same time."

Childers argues in her rebuttal the county's read of the statute would create a situation where the fifth sentence of the law nullifies the rest and would also make the law unconstitutional as it creates a way for local governments to get around the Florida Constitution's requirement that elected officials compensation amount be set by law, as there is no limit to contribution rates.

What is compensation?

The last point in Childers argument ties into the second motion she is seeking from the court to declare that a retirement benefit is a form of compensation under Florida's Constitution.

Compensation for elected officials is required to be "fixed by law" under the Florida Constitution.

Childers points out that Chapter 145 of Florida statutes sets out that compensation of county commissioners can only be set by "general law" and establishes the formula for commissioner salaries.

The county argues that retirement contributions are not compensation under their meaning in the Florida Constitution or Chapter 145, arguing that the term only refers to salaries and wages, not retirement benefits.

The county points out that Chapter 145 specifically says that insurance benefits authorized in other areas of Florida law are not considered compensation in that chapter, and that proves that the term compensation only means salaries.

In a lengthy rebuttal, Childers agrees that Chapter 145 deals with salary, but the law does not change the definition of compensation to mean only salary and that there is no doubt the retirement benefits are a form of compensation.

"There can be no doubt that receiving more than $50,000 a year of public funds, a 57 percent match to your salary, into your private, self-directed retirement account would be deemed by any rational person to be a 'benefit received in return for services rendered…'" Childers' attorneys wrote.

Stone will not hear oral arguments over the issue but decide it based on the legal briefs filed in court. No timeline has been set for when Stone will rule on the case.

This article originally appeared on Pensacola News Journal: Key questions in Escambia County retirement lawsuit now before judge