1. Florida Retirement System Recommendations Association of Florida Colleges 113 E College Ave. Tallahassee, Fl 32301 Michael Brawer, CEO

2. Florida College System and the AFC 28 member institutions 28 member institutions 9,000 individual members 9,000 individual members 20,000 full-time employees 20,000 full-time employees Serving 950,000 students Serving 950,000 students Educators and the FRS Educators and the FRS Educators comprise 55% of all FRS participants Educators comprise 55% of all FRS participants Florida Colleges = 3% Florida Colleges = 3% School Districts = 48% School Districts = 48% State Universities = 4% State Universities = 4%

3. Transition by CHOICE OBJECTIVES OBJECTIVES Provide suggestions that meet State and Employee needs Provide suggestions that meet State and Employee needs Provide suggestions that ensure a 100% actuarially sound FRS system Provide suggestions that ensure a 100% actuarially sound FRS system Provide suggestions that help with the State budget shortfall Provide suggestions that help with the State budget shortfall

4. SUGGESTIONS Raise Vesting for the FRS Defined Benefit Plan back to ten (10) years Raise Vesting for the FRS Defined Benefit Plan back to ten (10) years RATIONALE: This suggestion along with the expected increase in FRS investment earnings should come close to eliminating the current projected unfunded liability in several years. RATIONALE: This suggestion along with the expected increase in FRS investment earnings should come close to eliminating the current projected unfunded liability in several years. Continue Vesting for the FRS Defined Contribution plan at one (1) year Continue Vesting for the FRS Defined Contribution plan at one (1) year RATIONALE: This should result in an orderly movement by choice from the Defined Benefit plan to the Defined Contribution plan. RATIONALE: This should result in an orderly movement by choice from the Defined Benefit plan to the Defined Contribution plan.

5. SUGGESTIONS Eliminate all classes (except Special Risk for Law Enforcement, Firefighters and Correction Workers) of the FRS Defined Benefit plan to one class accruing retirement benefits at 1.6% per year Eliminate all classes (except Special Risk for Law Enforcement, Firefighters and Correction Workers) of the FRS Defined Benefit plan to one class accruing retirement benefits at 1.6% per year RATIONALE: Along with the next suggestion this should result in an orderly movement by choice from the Defined Benefit to the Defined Contribution Plan. RATIONALE: Along with the next suggestion this should result in an orderly movement by choice from the Defined Benefit to the Defined Contribution Plan.

6. SUGGESTIONS Continue the current Retirement classes (Senior Management, Elected Officers and Judicial) and State contribution rates for the defined contribution plan Continue the current Retirement classes (Senior Management, Elected Officers and Judicial) and State contribution rates for the defined contribution plan RATIONALE: Along with the last suggestion this should result in an orderly movement by choice from the Defined Benefit to the Defined Contribution Plan. RATIONALE: Along with the last suggestion this should result in an orderly movement by choice from the Defined Benefit to the Defined Contribution Plan.

7. SUGGESTIONS Mandate that all new employees select either the Defined Contribution plan or the Defined Benefit plan by the end of their first year of employment with the Defined Contribution being the default selection if the employee fails to select Mandate that all new employees select either the Defined Contribution plan or the Defined Benefit plan by the end of their first year of employment with the Defined Contribution being the default selection if the employee fails to select RATIONALE: Gives new employees time to make an informed choice RATIONALE: Gives new employees time to make an informed choice

8. SUGGESTIONS Continue, for current employees only, the policy of allowing a one-time change from one FRS plan to the other prior to vestment. Continue, for current employees only, the policy of allowing a one-time change from one FRS plan to the other prior to vestment. RATIONALE: Current employees have this option now. New employees have a year to consider their choice. RATIONALE: Current employees have this option now. New employees have a year to consider their choice.

9. DESIRED RESULTS OF CHOICE New employees opting for the shorter vesting of the Defined Contribution plan. New employees opting for the shorter vesting of the Defined Contribution plan. Higher paid employees opting for the better benefits of the Defined Contribution plan. Higher paid employees opting for the better benefits of the Defined Contribution plan. Reducing the number of classes and choices in the Defined Benefit plan will reduce/eliminate the gaming of the retirement system. Reducing the number of classes and choices in the Defined Benefit plan will reduce/eliminate the gaming of the retirement system. Employees that make careers of Public Service (Law Enforcement, Firefighters, Teachers and Higher Education Professors) will still have the option of a Defined Benefit plan. Employees that make careers of Public Service (Law Enforcement, Firefighters, Teachers and Higher Education Professors) will still have the option of a Defined Benefit plan.

10. Desired Results of Choice Professions that have recruitment and retention problems have one more tool in the Defined Benefit plan. Professions that have recruitment and retention problems have one more tool in the Defined Benefit plan. Employees in positions of high turnover will opt for the Defined Contribution plan with its shorter vesting. Employees in positions of high turnover will opt for the Defined Contribution plan with its shorter vesting. Protect the State from Lawsuits by employees as options will be by choice. Protect the State from Lawsuits by employees as options will be by choice. Allow the Financial Industry/Planners to ramp up education by avoiding the flood of employees needing financial assistance if the Defined Benefit plan were eliminated all at once. Allow the Financial Industry/Planners to ramp up education by avoiding the flood of employees needing financial assistance if the Defined Benefit plan were eliminated all at once. Avoid negative perceptions that could result from a hastily implemented exit from the Defined Benefit plan. Avoid negative perceptions that could result from a hastily implemented exit from the Defined Benefit plan.