News Stories

(Op ed, March 4, 2008)


High praise is due Model Plan for teachers' retirement benefits


By Tom Herndon


In these times of extreme budget shortfalls, a pay raise for those who are arguably Florida's most deserving public servants - our teachers - will probably be hard to come by. But teachers could get the equivalent of a pay raise in the form of more money for retirement thanks to a unique, collaborative endeavor by Florida's four leading education organizations.


All Florida school districts must change their tax-deferred retirement plans by January 1. That requirement created a window of opportunity to solve a longstanding problem and ensure that teachers get a far better deal on retirement funds than they are currently getting.


The next step is up to Florida's 67 individual school districts, which each must decide whether to adopt the "Model Retirement Plan" recently negotiated by the "Big Four" - the Florida Education Association, the Florida Association of School Administrators, the Florida School Boards Association and the Florida Association of District School Superintendents.


Up until now, school employees across the nation have paid unreasonably high fees for their tax-deferred retirement savings plans, also known as 403b and 457 plans. That's due, in part, because educators have been faced with a daunting array of choices - more than 150 plans in all - and that the plans suffered from little oversight.


Now, for the first time, the collective purchasing power of the state's 350,000 school workers has been brought to bear to drive down fees and get educators a better deal.


The four education groups, working in a historic and effective collaboration, created a competitive negotiation process through which companies offering these plans were invited to submit their best offer. The result is a deal that no individual teacher or even district could get on its own.


Educators would still have a choice, and that's important, since a recent poll of educators found that three out of four say they would be willing to pay a little more in fees to get a higher level of service. Under the Model Plan, educators will have a choice of plans with varying levels of fees and service offered by five companies - in all cases a far better deal than they have had up until now.


If adopted by school districts, the Model Plan could save educators billions over the course of their careers, allowing them to save 30 percent more toward their retirements. Considering that nine of 10 educators polled say they are concerned about meeting their financial needs after retirement, the Model Plan could help educators close the gap and enjoy the kind of retirement they deserve.


Over the next few months, school districts will be deciding whether to offer the Model Plan or negotiate their own plans, but maintaining the status quo is not an option. When the new IRS regulations take effect next January 1, local school districts will be required to exercise greater oversight over the plans they offer. That means a much greater administrative workload for districts that go it on their own. For those that adopt the choices negotiated for them under the Model Plan, the additional costs and workload are covered.


While every state will be scrambling to figure out how to comply with the new IRS requirements, Florida exerted an unprecedented level of leadership to come up with a solution that truly benefits school employees and school districts. It just goes to show what's possible when the leaders of Florida's education community roll up their sleeves and work together.


Tom Herndon has served as chief of staff to one Florida governor and chief of staff and budget director to another. Prior to his retirement from the state, he served as executive director of the Florida State Board of Administration (FSBA), managing $125 billion dollars of investments including pension fund assets as part of the Florida Retirement System.


Serving in all three branches of Florida's fiscal system, Herndon collected state revenues as director of the Department of Revenue, appropriated state revenues as staff director of the powerful House Appropriations Committee, and budgeted and expended state revenues during his six years as the state's director of planning and budget.


Herndon is the recipient of several state and national public service awards including the Florida Distinguished Service Medal for Exceptionally Meritorious Service to the State, presented in 1995. He currently serves on the board of directors of the Helios Education Foundation.


He also is the father of a teacher.


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