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Pension reform plan needs big private investment
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Pension reform plan needs big private investment

Pension reform plan needs big private investment
Photo Credit: Stephanie Brown

Pension reform plan needs big private investment

It looks like a long-term solution to Jacksonville’s pension problem may need a hefty private sector investment.

“It’s professional support that the Task Force will need in order to craft the work,” says former Publisher at the Atlanta Journal & Constitution John Mellott.

Mellott is consulting with Jacksonville on the road to a pension reform solution after working on Atlanta’s proposal.  While Atlanta has a smaller unfunded liability than Jacksonville and different structure, Mellott thinks he can bring a lot to the table- chiefly a professional task force with pension reform experience.

Speaking in front of the Retirement Reform Task Force, Mellott outlines a multi-faceted group which would include lawyers, actuarial professionals, communications, and project managers. The price tag for such a crew and the plan they come up with is expected to be six figures, but Task Force Chairman Bill Scheu tells WOKV that will be entirely privately funded.

This was the first time the Task Force has met since the proposed pension deal reached between the Mayor, Jacksonville Association of Fire Fighters, Fraternal Order of Police local and Police and Fire Pension Fund was voted down by Jacksonville’s City Council.

“What we need is everyone to understand the problem, focus on that problem, and work on finding a solution,” says PFPF Executive Director John Keane.

His focus this time around is that of many others- the unfunded liability.

Right now, about $1.6 billion of Jacksonville’s pension liability is unfunded. Keane says a lot of that is because interest rates have been so low so long that there hasn’t been a good yield.

The city is already starting to vaguely float some ideas for paying this down. Jacksonville Mayor Alvin Brown tells me we will have to look at assets the city can leverage. There is one way he says we will not generate the money.

“I don’t agree with any tax increase to solve the unfunded liability,” Brown tells WOKV.

Solutions like this pay down are still a few months away, however. First the Task Force has to tackle its own structure. There was a unanimous feeling that the board is not diverse enough, and that more representatives from the city or labor side of discussions need to be involved.  General Counsel Cindy Laquidara reminded the Task Force that was a central problem that led them to litigation, because the unions feel the PFPF should be at the bargaining table instead.

Mellott says the long road to a solution needs to start with a better understanding of the here and now.

“Where are we, what are out options, and then how do we execute against those options,” he says.

Mellott is planning several meetings in the coming months, but Scheu doesn’t expect they will be truly presented some kind of actionable plan until the spring. That leaves the possibility that we could see reform savings coming in the 2014-2015 budget cycle.  The pension payout for the next budget year is more than $150 million, that will rise to $180 million in 2014-2015 without reform.

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