Jax pension reform plan back to City Council, with changes

The back and forth continues.

The Jacksonville Police and Fire Pension Fund Board has approved most provisions of the pension reform plan that could save the City between $1.5 billion and $1.8 billion over 35 years, but they're sending the proposal back to City Hall with some key changes.

Benefits

The one area the Board would not budge is the term to renegotiate benefits for current members with less than 20 years on the job. The Council-amended plan allowed for benefits to be renegotiated three years after this deal took effect, whereas the deal brokered with the Mayor had allowed for 10. The deal under which the system currently operates is 15 years.

“A majority of the trustees felt very strongly that was a major concession and that moving forward would not be acceptable,” says Board Chair Walt Bussells.

Some of the board members feared that would virtually nullify all of the work that’s being done on the current plan and that such a short term for renegotiating could lead to more uncertainty and less stability in the workforce, because employees would fear the consistent change.

New employees will be subject to the three year period.

“A rapidly growing percent of all police and fire employees in the future, starting with the effective date of reform, will be subject in terms of their benefits formulas to City Hall with the Fund having no authority over it whatsoever. That’s a huge change from current practice,” Bussells says.

Initially, the Board also voted down proposed changes in COLA and DROP for current employees with less than 20 years, standing by what had been negotiated with the Mayor: COLA not changing from the current 3% guaranteed rate of return- where the Council wanted it indexed to Social Security with a ceiling of 4%- and DROP being tied to actual rate of return between 5-10%- instead of the current guaranteed return of 8.4%.

When the term to renegotiate became a clear area that some Board members wouldn’t budge, however, Bussells urged them to go back and reconsider COLA and DROP. He believed giving a package back to Council that rejected changes in all three of those areas would effectively doom their talks and destine the process for a courtroom. After further debate, the Board agreed to COLA indexed to Social Security with a ceiling of 6% and DROP tied to actual rate of return between 2-14.4%.

Jacksonville Mayor Alvin Brown says he supports the “modest” changes made by the Board.

“We’re all working together to try to get it done,” he says.

Pension debt payments

Another key portion of the reform package which has drawn a lot of questions is a commitment that the City and Fund work together to pay down the roughly $1.7 billion pension debt. The Fund will give the City a little over $120 million over ten years and the City will chip in $40 million each of those ten years. While the funding line for the PFPF is known, the City has yet to agree on a source for the money. Because of that, the Fund is uneasy about whether the City will fulfill the annual obligation- especially several years down the road when those in office had nothing to do with putting the plan together. In the end, they approved the plan, but are seeking to add further penalties and guarantees to make the City pay.

Several ideas have been floated for paying that bill, including one currently favored by the Mayor which would use a one-time payment from JEA and borrowing by the City to front-load the contribution. Council has yet to review the plan, however, and JEA will only give the money contingent on their current contract renegotiation with the City. Jacksonville Mayor Alvin Brown has promised to veto any attempt to use a tax to cover the bill.

Moving forward

The revisions by the PFPF will be put together over the next few days and will head back to City Hall. I’ve reached out to Council President Clay Yarborough to see when he anticipates taking up the action but have not yet heard back.

It’s unclear if there will be enough support in Council to get these changes through, but Bussells hopes Councilmen keep an open mind.

“Far better for the tax payers, reasonable given all the concessions for current employees,” he says.

Brown is confident a deal will be reached.

“I’m optimistic about making sure that we solve this retirement reform once and for all,” he says.

Even if one is that doesn’t mean instant change. The City Council has passed an amendment to the agreement which prevents the bill to take effect until there is a funding source identified for the annual payment toward the pension debt.