Jacksonville, FL - After his initial proposal to have JEA increase their contribution to Jacksonville’s pension debt received instant criticism from the utility and city councilmen alike, the Mayor is now offering new details on how to make that plan financially solvent for all involved.
Just about one month ago, the Mayor came out with a new proposal a team from the city had drafted which they estimate would save $2.75 million over 35 years. The plan was presented to the Retirement Reform Task Force, but had not been reviewed by any of the police or fire parties, nor JEA. That’s why it came as somewhat of a surprise to the Chairman of the Board at JEA when the Mayor asked for the utility to contribute an additional $40 million each year, which would be earmarked specifically to pay down the city’s $1.7 billion pension debt. The payments would continue for 14 years, or until the debt is 80% funded.
When the plan first came out, Chairman Mike Hightower told WOKV any increase would have an impact on the rate payers. With some of the new details, he’s now willing to let the authority do its “due diligence”.
“We have a process and we’re always open to all types of requests,” he says.
Hightower tells me he first got these new details late last night and formally presented them to the Board Tuesday. The Mayor's Office tells me they met with Hightower in the early afternoon Monday to discuss these details. Hightower says they will now let the proposal go through legal and financial analysis before coming to a specific subcommittee. Once the Board subcommittee makes its recommendation, they will decide the next step.
The city’s team maintains an increase in the contribution could be done through channels other than a rate increase.
Mayor Alvin Brown told a Task Force subcommittee Tuesday that he is prepared to grant the utility the ability to create its own pension plan separate from the city’s, a longstanding request from JEA. The Mayor’s Office believes that step alone would save JEA $500 million over 35 years.
Additionally, he says JEA can improve operating expenses by a small margin in order to save a few million dollars each year. Further saying a projected growth in revenue or fuel budget surplus could be applied to paying down this contribution, rather than having it impact rate payers.
The impact on public safety is also now under review. On Wednesday, the Task Force will look specifically at the pension design, or whether the payouts and benefits for current and future workers should be altered.
“You want to make it a fair and sustainable pension, but at the same time it really does have to be affordable,” says Task Force Chair Bill Scheu.
The Task Force has come forward with several recommendations to this point, but the biggest questions- including the benefits structure and pension debt- will be addressed Wednesday and next Wednesday, respectively.
The Jacksonville Association of Fire Fighters previously told WOKV they had some concerns that changing the benefits payout could negatively impact their ability to recruit and retain skilled workers to Duval County. Scheu says the Task Force has asked both the Fire Chief and the Sheriff to speak to them about any concerns.
Since a pension plan that would have saved an estimated $1.1 billion over 30 years was voted down early last year, there have been multiple parties working again on a new plan. That plan must ultimately be approved by the city as well as the police and fire unions and/or Police and Fire Pension Fund- one or the other depending on ongoing litigation on a longstanding pension governance agreement. If there’s no agreement before the upcoming budget cycle, the city’s pension obligation is expected to reach $180 million.