Jacksonville, FL - Saving $2.75 billion of your tax dollars over the next 35 years.
That’s the bottom line Jacksonville Mayor Alvin Brown says the city has achieved with a pension reform plan that was unveiled to the Retirement Reform Task Force Tuesday.
The pension payment, specifically to the Police and Fire Pension Fund, is a portion of Jacksonville’s budget that continues to grow year after year. It accounted for $150 million in the current fiscal year budget, and could climb to $180 million for FY 2014-2015 according to most recent predictions.
The City reached an agreement last year with the Fraternal Order of Police, Jacksonville Association of Fire Fighters and the Police and Fire Pension Fund to save an estimated $1.1 billion over 30 years. The plan was quickly criticized by Jacksonville’s City Council, however, and voted down. Councilmen did not think the plan that was presented achieved the long term savings really needed to make the system sustainable.
While this new proposal from the Mayor’s Office offers the same changes to new employee benefits as the previous agreement, there are bigger changes coming for current employees in an effort to better “share the sacrifice” across the board. Currently, police and fire employees contribute 7%. The prior plan would have kept that rate locked in until prior pay cuts were restored- at which point the contribution could climb to 9%. The current proposal has an immediate boost in contribution to 8%, and an increase of up to a 10% contribution when pay cuts are restored.
Another significant change for this proposal is directly addressing the unfunded liability- which is the projected benefits payout that’s not met with current levels of funding. Right now, Jacksonville’s pension system is only funded at about 40%, according to Brown. As of August, the unfunded liability was estimated to be around $1.6 billion. Brown wants to see 80% funding by FY2028.
In order to do that, he says the city is negotiating with JEA to contribute an additional $40 million annually until that 80% level is reached. While those negotiations are still ongoing, Brown told the Task Force he is “confident” they will come to an agreement because JEA has employees in the city’s general employee pension plan. The Mayor’s Office tells me they also agree that deal can be achieved without raising utility rates.
Brown is also asking the Police and Fire Pension Fund to contribute $4.5 million annually in state paid “chapter funds” that currently go to enhancing pension benefits, to be used for the unfunded liability.
He also renewed his commitment not to raise taxes in order to pay down the unfunded liability.
Because there is an ongoing legal dispute concerning who the City of Jacksonville should negotiate pension reform with, Tuesday’s presentation to the Task Force was the first time the unions and the Fund were shown this new plan. WOKV is working to gather their feedback on the proposal.
We will also be working with leaders in City Council, where any plan must ultimately be approved.