Florida Supreme Court Rules Against Miami’s Unilateral Cuts to Police Pension

Court rules city’s Public Employees Relations Commission (PERC) overstepped bounds.

Florida’s Supreme Court has reversed a ruling that had allowed the City of Miami to make unilateral changes to a collective bargaining agreement with a Miami police union.

At issue was whether an employer must demonstrate that funds are available from no other reasonable source before unilaterally modifying a collective bargaining agreement. In 2010, facing what it deemed “financial urgency,” Miami’s legislative body voted to unilaterally change of the collective bargaining agreement with Miami Lodge 20, Fraternal Order of Police.

At the time, the city’s budget was approximately $500 million, and it faced a deficit of approximately $140 million for the 2010-2011 fiscal year. The city said that without the cuts, Miami would be unable to pay for utilities, gas, and other necessities, rendering it unable to provide essential services to its residents.

The changes included a modification of the normal retirement date and of the pension benefit formula; a cap on the average final compensation for pension benefit calculations; alteration of the normal retirement form, and modification of average final compensation. This was in addition to a cut in wages, elimination of education pay supplements, conversion of supplemental pay, and a freeze in step and longevity pay.

In response to the proposed changes, the police union suggested raising the millage tax rate, installing red light cameras, imposing non-union employee layoffs and furloughs, freezing the current cost of living adjustment, and changing the pension funding methodology. However, the city said this “would not adequately address the shortfall because they either failed to generate enough revenue to offset the deficit or they would increase the city’s long-term financial obligations.”

The Miami legislature created the Public Employees Relations Commission (PERC)

to carry out the provisions. PERC determined that the city was facing a financial urgency that required modifications. The Union then filed an unfair labor practice charge with PERC in 2010, which was dismissed as the hearing officer ruled that the statute had been properly invoked by Miami. PERC defined “financial urgency” as “a financial condition requiring immediate attention and demanding prompt and decisive action which requires the modification of an agreement; however, it is not necessarily a financial emergency or bankruptcy.”

In 2013, after suing the city over the changes, the First District Court of Appeal upheld PERC’s decision dismissing Miami Lodge 20, Fraternal Order of Police Inc.’s unfair labor practice charge against Miami.

But the Florida high court, in its March 2 decision overruling the First District Court of Appeal, said that PERC had overstepped its bounds.

“The interpretation set forth by PERC and the First District would allow a local government, once it has declared a financial urgency, the ability to exercise a management right to unilaterally alter the terms and conditions of a contract,” said the court in its decision. “This interpretation does not comport with our acknowledgment of and respect for the constitutional right of collective bargaining and prohibition of the impairment to contract.”

By Michael Katz