Last year the Florida legislature passed a bill requiring participants in the state pension retirement program to contribute up to three percent of their income to the plan.
Friday, the state supreme court is hearing a challenge to that law.
The state is appealing a lower court decision that the law requiring public employees to contribute to their retirement violates the state constitution.
If the Florida Supreme Court upholds that ruling, local and state governments will have to repay millions of dollars.
Most city, county and school district employees are covered under the state pension plan.
"There are 560,000 public employees who had been guaranteed a free part of their benefits,” said Jess Snyder, the Bay District Schools CFO. “Public employees are paid probably 70% less than someone doing the same job in a private industry, part of that was the benefits package."
Snyder says the new requirement also cut into employees' personal pension programs.
"Most people were putting away extra for their retirement, that is the money they had to quit paying for their own retirement and now pay to Florida retirement."
If the Florida Supreme Court rules the state-required employee contributions are illegal, it could be a financial disaster for Bay County governments.
Last year alone, the school district's share was 3.5 million dollars. Bay County government's share was 780,000, the sheriff's office was 718,000, and the county courts share was 141,000.
That is money those government bodies will have to repay to employees if the law is overturned.
Since the county's constitutional officers cannot carry surplus money from one year to the next, no one is sure where they will get the money or how it will be repaid.
"If it happens all at once, and the payment comes in that form, then we would be able to do it,” said Bay County Manager Ed Smith. “We have some reserve funds, but wouldn't like to see that happen."
There is no word as to when the Florida Supreme Court will rule on the case.