Jax City Council auditor’s office raises pension questions

The Jacksonville City Council is currently mulling a raft of bills that could change the way the city handles pensions forever.

2017-257 creates a new ordinance section:  Chapter 776 (Pension Liability Surtax).

Bill 2017-258 affects the general employees and correctional worker plans, closing the extant defined benefit plans to those hired after Oct. 1, 2017, and committing the city to a 12 percent contribution for those general employees and a 25 percent contribution for correctional officers hired after October.

Bill 2017-259 implements revisions to the Police and Fire & Rescue plans.

258 and 259 both offer fixed costs via a defined contribution plan for new hires, while offering generous contributions from the city to those hires, and raises for all current employees.

The council spent Thursday afternoon being walked through the legislation by Jacksonville Mayor Lenny Curry and his team.

However, questions still loom.

And with the council prepared to discuss the bills further this week, here’s a look at the questions the auditor’s office has … thus far.

Questions include an explanation of how employees in defined contribution plans will not be eligible for Social Security. Also desired: an actuarial analysis of plan health at different sales tax growth rates — notable, as the Police and Fire Pension Fund posited that sales tax growth would be around 3.34 percent per annum.

Another question worth noting: the cost of plan administration.

2017-258, legislation which affects corrections and general employees, likewise came in for scrutiny. As did 2017-259, which affects plans for police and fire employees.

The auditor wonders about changes to DROP language, and questions calculations of the average annual growth rates, while wondering why the contract negotiations re-opener for Corrections is tied to the Police and Fire Pension Fund.

“If this bill is to pass, do employees who are currently in the DC immediately begin receiving a 12% contribution from the City for the remainder of FY 2016/17,” the auditor’s office wonders.

A complete list of questions — ones which certainly will be mulled over in a looming Wednesday afternoon council workshop — follows here.

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Handout Provided on 4/6/17

• Page 20 – How would the baseline go to $0 in FY 47-49?

General Questions

• Anything recognized on financial statements related to pension liability sales tax? Consulted with CRI?
• Will chapter fund use be legal? If so, explain.
• Employees on DC will not be eligible for SS, correct? Please provide basis for how they will still be exempt.
• Please provide other analyses run by the actuaries at other Sales Tax growth rates (e.g. 3.2% and 3.75%)?
• On the PFPF Payment Forecast (page 20 of presentation), how does the Baseline payment ever arrive at $0?
• In relation to page 4 of the presentation, what is the basis for these amounts? Please indicate which years fall into which category.
  • Actuals?
  • Budget?
  • Actuarial Report?
• Financial Impact Statements – How are the “Reduction due to amortized value of discounted value of allocated surtax revenue” amounts calculated that are included in GERP and CORP financial impact statements?
• What is the estimated cost of the administration of the DC plans? How will it be funded?

 

 

2017-257

• Page 1, lines 5-9 – There is not a corresponding section in the bill levying the ½ cent sales surtax. Is the Ordinance Code language sufficient or are sections needed? The same is true for the collection, administration, etc. and establishing the start date.
• Page 4, line 30 – How this is worded makes it seems like a change in October 2017 would impact FY 2017/18. Wouldn’t that amount impact FY 2018/19 instead?
• Page 5, line 14 – How many years do you recognize this over (e.g. 30 years)?
• Page 5, line 20 – This section heading is the same as 776.104. Is that intended?

2017-258

• Page 13, line 13 – The phase 2 of DROP reads differently in the ordinance than what is included in the tentative agreement and needs added language about tying length to mortality tables. Is this is a new benefit?
  • If new, please provide an impact statement and explain how it is allowed to add this benefit.
• Page 14, line 3 – How will the average annual growth rate be calculated?
• Page 14, line 15 – Shouldn’t “average annual growth” be “average annual gross return” according to the manual changes in the tentative agreements?
• Page 14, line 15 – Why is the re-opener for the Corrections Plan tied to the growth rate of the PFPF?
• Page 14, line 15-19 – Does this make sense? I think there is an issue with the wording.
• Page 15, line 16 – If this bill is to pass, do employees who are currently in the DC immediately begin receiving a 12% contribution from the City for the remainder of FY 2016/17?
• Page 16, line 14-17 – Does this election have to occur prior to retirement? How is the switch calculated?
  • Will it be dictated by 120.508A?
• Page 17, line 17-19 – What does this mean?
• Page 18, line 18 – Should this mention a time period such as 90 days?
• Page 20, line 14 – Need to add something here about COLA starting five years after commencement of survivorship benefits. Also, when would this happen (i.e. current delay method)?
• Page 21, line 28 – Why is the Board referenced here?
• Page 22, line 2 – Is there no minimum length for a spousal marriage?
• Page 23, line 22 – Why is there a reference to 120.207 (a)? This is not handled this way for the survivorship benefits for a deceased active employee. Should this go somewhere else? If so, would the same reference need to be for survivorship benefits for a deceased active employee?
• Page 25, line 6 – The reference as presented is to the GERP DB plan language and not CORP. Is that intentional?
• Page 27, lines 17-19 – Why are those the periods selected?
• Page 27, line 27 – The tentative agreements seem to indicate that other groups (unmarried orphaned children and disabled children) besides surviving spouse will also receive a COLA in the event of the death of an active employee. This language is not in the bill.
• Page 29, line 4 ½ – Was (g) intentionally left out?
• Page 29, line 8 – Is there no minimum length for a spousal marriage?
• Page 29, line 16 – Why is subsection (k) almost a direct repeat of subsection (f)? Is this intended to address something else?
• Page 31, line 10 – The reference as presented is to the GERP DB plan language and not PFPF. Is that intentional?
• Page 34, line 8 – So each January 1, even if effective on December 31?
• Page 34, line 18 – So each January 1, even if effective on December 31?
• Page 34, line 27 – So each January 1, even if effective on December 31?
• Page 35, line 10 ½ – Was (g) intentionally left out?
• Page 35, line 22 – Why is subsection (k) almost a direct repeat of subsection (f)? Is this intended to address something else?
• Page 36, line 16 – So each January 1, even if effective on December 31?
• Overall – How will the survivor’s benefit of an active employee be funded? Same for disability benefits.
• Overall – What are the current balances of the various accounts – UALPA, SPA, CBSA, and EBA to get to the $90 million referenced in the presentation?
• Overall need to update all references to Part 5 of Chapter 120 to Part 5A?

2017-259

• Page 4, line 28-31 – Does this make sense? I think there is an issue with the wording.
• Page 17, line 11 – What is the Supplemental Payment Account?
• Page 18, line 9 – Who is the City (i.e. who makes the decision)?
• Page 22 – Will the Share Plan get any additional contributions after 9/30/17? If so, how? Just re-distribution?