A plan to save $2.75 billion in the next 35 years is a good foundation for fixing the City's underfunded pension obligations but is not the end solution.
“It’s a much better starting place than the previous plan,” says City Councilman Greg Anderson.
Anderson is the Council Finance Chair and also serves on the Retirement Reform Task Force, which received the Mayor’s new pension reform proposal this week. He says the right ideas are laid out in this plan, but some of the details may not add up.
“If we can find out where the money comes from- that’s the big question,” he says.
The plan suggests an increase in benefit contributions for current employees, additional City payments toward decreasing the pension debt and other similar steps, Brown says the plan would save $130 million in the first five years alone.
However part of paying down the debt, called the unfunded liability, would include a $40 million annual contribution from JEA and $4.5 million annual contribution from the Police and Fire Pension Fund. Fund Executive Director John Keane is against redirecting any of their money, and the Board Chair at JEA tells WOKV any increased contribution would have a negative impact on you.
Anderson says paying down the unfunded liability should rightfully be a priority, but he hopes the Task Force looks at taking money from multiple sources instead of just a few. He tried last year, unsuccessfully, to have city council assign a small portion of existing tax revenue to this end goal. That’s an idea that could reemerge as we head in to the next budget cycle as well.
If the pension system remains unchanged, it’s estimated to cost about $180 million in the upcoming budget.
“It has taken an awful long time for us to kind of get in to this place, so it’s going to take us a number of years to get out,” Anderson says.
He’s nonetheless confident there can be forward progress made within this year. He says because of the lengths that have now been taken to study the inner workings of the system, they have a much clearer picture than ever before on the right balance to make the system sustainable.
Anderson says the Task Force will consider the Mayor’s plan along with other ideas and recommendations they have received through their process, with the goal of having some proposal to lay out in about another month. He believes the three themes that we will see in those recommendations include increasing transparency within governance, finding an affordable and competitive rate of benefits, and making sure funds are not over-managed at any unnecessary cost.