On Monday, a political ally of Jacksonville Mayor Lenny Curry filed a bill that would close the Florida Retirement System’s defined benefit plan to new cities.
This is particularly relevant to Jacksonville’s police and fire unions, both of which want to see new hires put in the FRS defined benefit plan as a condition of collective bargaining.
The Jacksonville Association of Fire Fighters, which was the first of the two public safety unions to negotiate with the city on Wednesday, began the day by charging that Rep. Jason Fischer, who filed the FRS reform bill, was essentially doing the mayor’s bidding with this bill.
These developments seemed to undermine significant progress in collective bargaining, with the city having extended, earlier in the month, what Curry called a “deservedly rich” offer that had a 30-day window of acceptance.
That deal included a 25 percent match on defined-contribution plans for new hires, with death and disability benefits comparable to those under the defined benefit plan currently in place, and raises for all current employees.
On Wednesday, the city sweetened the pot, offering an extended term of a labor agreement — effectively a seven-year deal, with terms revisited at three, six, and seven-year intervals — provided that it meets certain conditions.
As well, in place of Social Security, a mechanism was floated to offer annuity accounts paralleling the DC plans.
However, the JAFF didn’t bite immediately. And Jason Fischer’s bill loomed over the whole event Wednesday.
Wednesday’s meeting started with a vocal disagreement between the city and the fire union about whether a collective bargaining deal can go beyond three years, with the city maintaining the limited term offers “dexterity to negotiate.”
General Counsel Jason Gabriel noted statute and case law prohibited governments from binding future elected officials to deals.
That said, he offered a waiver of benefit changes for seven years, “as long as the economy is of a certain value … it is an automatic renewal” after three years, then a second three years, then a year.
“In the event of some catastrophe, economically, there is some out,” Gabriel said.
Among the conditions that must be satisfied: a 7 percent annual rate of return on the fund, and 4 percent annual growth in the local sales tax revenue, and a three percent annual growth rate in the general fund.
Gabriel also said it was “possible” that after three years, a seven-year extension could be negotiated. Another scenario: after the second three-year term, with a year left in the seven-year deal, a negotiation could be for the next seven years.
“We want it legally defensible and not challenged,” said Chief Administrative Officer Sam Mousa.
Other points the city brought up, in response to fire union inquiries.
One important one: the city council “will be open to voting on ratification” before the union’s vote.
Survivor and death benefits would remain unchanged, with all falling under pre-2015 deal benefit levels
One potential negative: the city offer does not include retroactive pay raises.
The fire union agreed on the pension proposal for existing employees but still had an issue with benefits for future hires.
“Our proposal on the table is still FRS. You’ve countered with a 401(k). You still haven’t given us a safety net,” said JAFF head Randy Wyse.
That safety net: Social Security.
“That’s why we think that FRS is the best for future employees, and now we have a [bill] that’s threatening that,” Wyse said, noting the “work done in Tallahassee” was not helped.
“To have people who are not at the table, who keep throwing these haymakers at us … I don’t understand it,” Wyse added.
“Every time we get a good feeling,” Wyse said, a “roadblock” emerges.
Mousa countered that the FRS was a nonstarter for the mayor from “day one,” when Curry floated a DC plan to the city council.
“Notwithstanding what Jason Fischer did,” Mousa said, “it’s got nothing to do with our mayor.”
“I don’t want to waste my time talking about Jason Fischer,” Mousa emphasized, saying Curry is “not controlled by Tallahassee” and “controls his own destiny.”
CFO Mike Weinstein then discussed a plan to provide “security” to new employees that the city had researched.
The plan: “in-plan annuities.”
A certain amount, determined by negotiation, of the 33 percent shared employee/employer contribution would go into the annuity.
“There’s a guarantee that it never goes down,” Weinstein said, “and hopefully it grows.”
The annuity would be disbursed periodically when an officer stops working.
The officer would have two accounts: the annuity account, and a defined contribution account, with levels of annuity “flexible” for the employee.
The plan would be “relatively conservative,” said Weinstein, driven by ROI. And the risk would be hazarded by the insurance company.
The guarantee, Weinstein added, is even better than a defined contribution plan.
“We can look at it as a Social Security replacement,” the CFO added.
Benefits are payable over the lifetime of the employee, or the employee and spouse.
The Fire Union had a proposal of its own regarding current employees.
Among the points: that benefit levels be protected for the life of the fund; the Chapter 175 funds be deposited into each member’s share account; that DROP be returned to a fixed level of 8.4 percent; a 3 percent COLA.
As well, renegotiated terms would be triggered by returns lagging at least 2 percent lower than the accounting rate of return of the fund for three years, or by two consecutive years when returns were at or above the ARR of the fund. (These were a non-starter for the city).
Raises sought for current employees, meanwhile, are close to the city’s terms.
The union wanted 23 percent in increments from FY 18 to FY 20, comparable to the city’s 20 percent offer with a lump sum restoration, but the deal was rejected out of hand by the city.
“The 20 percent is taking care of your members,” Mousa said.
Also rejected at this time: discussions of incentive pay hikes, sought by the union.
These parties will meet again on Feb. 8 to hash out more details of the deal.