2017-258 Archives - Florida Politics

Jacksonville City Council passes pension reform legislation

The real work was done over the past weeks and months. But the ceremony, the cameras, the victory lap were all reserved for Monday afternoon, when the Jacksonville City Council officially passed 14 bills that equate to pension reform.

The “committee of the whole” vote – held Wednesday – was the dispositive one.

In that meeting, which lasted over three hours, the Jacksonville City Council worked through the last few rounds of questions and concerns it might have had over the pension agreements.

Those questions and concerns, really, were moot points.

The city can’t afford not to make the deal – not facing an untenable $360M pension hit next year on a $2.8B unfunded actuarial liability.

With pension reform closing current pension plans and backing up the repayment with the future assets from a 1/2 cent sales tax, the pension hit in FY 2018 is $218M; if reform fails, the hit is $360M (up from $290M next year).

As CFO Mike Weinstein has said of late, the savings add up to “$1.4B less out of the general fund over the next 15 years,” and “without that revenue” from the half-cent sales tax, the city would have “difficulty matching revenue to expenses.”

So that’s the reality.

Three bills ultimately are the most newsworthy.

2017-257 establishes the half-cent sales tax extension. 2017-258 changes pension plans for general employees and correctional workers. And 2017-259 changes plans for police and fire.

The city will offer 25 percent matches for defined contribution plans for police, fire, and correctional workers; for general employees, the match is 12 percent.

The other eleven bills ratified collective bargaining agreements between the city and JEA and various unions.

Jacksonville City Council, Lenny Curry prep for pivotal pension vote

The final Jacksonville City Council vote on Jacksonville Mayor Lenny Curry‘s pension reform bills is still a few days a way.

However, the “Committee of the Whole” meeting to be held Wednesday afternoon stands as an excellent preview of what is to come — a closing argument.

The Curry team — especially the political side — would hold that everyone on the council should, in fact, vote in the affirmative … and that vote should happen in the committee of the whole.

There is no obligation to vote Wednesday, though a vote can be taken if the council is comfortable.

Curry’s political team believes that comfort level should have been reached.

Privately, they have wondered why it is that more council members aren’t rushing to endorse the pension reform solution.

They have committed a six-figure budget to ads in heavy rotation on television.

As well, they have commissioned an internal poll, one which shows the mayor with 70 percent approval and pension reform at 71 percent.

A subtext of the poll: the relative popularity of the Jacksonville City Council is yoked to the charismatic mayor and his reform agenda.

The game being played: political hardball.

The political stakes are high for all parties: without immediate pension reform, costs of the unfunded actuarial liability on the city’s $2.8B pension debt will be $360M next year — out of a general fund budget that is barely three times that number.

Such a hit would be political suicide for the current leadership class.

Curry’s pension reform has its critics, and his team isn’t selling the legislation as perfect — but as the most palatable of a menu of bad options.

His team will want to see a vote. And will want it to be 19-0.

Will that happen?

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Three of the 14 filed bills are probably the most important: 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 best deals are for public safety: long-delayed raises to current employees (a 3 percent lump sum payout immediately, and a 20 percent raise for police and fire over three years) and gives all classes of current employees the same benefits.

As well, all police and fire officers will have DROP eligibility with an 8.4 percent annual rate of return and a 3 percent COLA.

The deal, if approved without modification, will bring labor peace through 2027 — though it can be renegotiated by the city or the unions at 3, 6, 9, and 10 years marks in the agreement.

For new employees, however, the plan is historic — a defined contribution plan that vests three years after the new employee for police and fire is hired.

The total contribution: 35 percent, with the city ponying up 25 percent of that — with guarantees that survivors’ benefits and disability benefits would be the same for new hires as the current force of safety officers.

The Curry model, rooted in a deferred contribution approach that increases a re-amortized liability and spreads out costs to hit hardest when the sales tax extension money starts coming in after 2030, is intended to provide fixed costs and certainty for budgets.

‘Slight adjustments’ drive City Council pushback to Jax pension reform projections

A Wednesday afternoon meeting of the Jacksonville City Council was intended to facilitate deeper inquiry into Jacksonville Mayor Lenny Curry‘s ambitious pension reform package.

However, the big news was the downward impact of adjustments to payroll growth projections and COLA calculations after Monday’s meeting of the Police and Fire Pension Fund.

“We still save a lot. But we save less,” was how the city’s CFO Mike Weinstein described the impacts of $13M of tweaks that would hit the process for FY 2018 — if the legislators approve the plan.

And that is still an if.

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Police and Fire Pension Fund actuaries thought the plan was too optimistic in assumptions regarding both payroll growth and sales tax revenue, speculating that even after the proposed sunset of Jacksonville’s half-penny tax in 2060, the $2.8B unfunded liability for the defined benefit pension plans that would be closed this year still would not be resolved.

The PFPF report, and a binding vote from the board, catalyzed changes in assumptions from the city.

City CAO Sam Mousa and CFO Mike Weinstein kicked off the event, noting that the mayor’s office has met with every single member of the City Council already, and is attempting to answer questions.

Mousa noted that the PFPF meeting, described above, necessitated “slight adjustments” in “program savings,” and promised detail about how those adjustments will be made.

Weinstein then went on to describe the “slight adjustments.”

“The goals were to try to create a revenue stream that would adequately fund the $3B” unfunded liability, to make sure the three funds were financially sound, and to offer budget relief to enhance services and provide raises.

“The work that our actuary had done … basically were a first cut,” Weinstein said, assuming that the PFPF actuarial analysis would jibe with the city’s.

However, the PFPF “did two things we didn’t do,” Weinstein said.

One such thing: a different payroll growth assumption — 1.5 percent per year from the city, versus 1.25 from PFPF.

The PFPF, said Weinstein, went with the “smaller payroll growth,” which led to a $2M increase in the city’s contribution next year.

“We lost $2M in next year’s savings,” Weinstein said. “They chose 1.25; we think it should be 1.5.”

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“A second thing that happened at PFPF was even a bigger surprise,” Weinstein said.

“The new actuary for PFPF determined,” said Weinstein, that COLA calculations had been done improperly.

This leads to an $11M increase in next year’s payment … and is an issue that the Curry administration had attempted to message months ago.

“We still save a lot. But we save less,” Weinstein said.

“If we don’t get this done and back from Tallahassee,” Weinstein said, the collective bargaining agreements fall through.

“They’ve made their decisions,” Weinstein said.

“There’s a long history with the PFPF and the city,” Weinstein said. “We asked for 1.5 … the Division of Retirement asked for 1.5 … they made the decision and we didn’t have the time to really deal with it.”

Though the $2M is “painful,” it “didn’t merit a blowup,” Weinstein said.

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The adjustments lead to the following changes:

If reform happens, the city would have to pay $221M in pension costs; if not, $360M.

The difference would still be $139M, as the original numbers were $208M and $349M respectively.

Weinstein also discussed what savings would look like: $69M compared to $82M in the original projections, comparing FY18 reform to FY17 contribution.

Weinstein also outlined calculations showing savings over four years instead of three, noting that “for the first 14 years, we will have a savings” from the $290M this year.

The anticipated savings: $69M in FY 18; $72M in FY 19; $65M in FY 20; and $55M in FY 21.

JEA savings in the plan has been reduced, said Weinstein, who noted that $60M in PFPF Reserve Funds would be part of the city contribution.

The impact of raises: also revised, with a $120M hit anticipated in FY20 and FY 21.

Weinstein also offered projections based on a 3 percent revenue growth and a 2.5 percent revenue growth in the general fund, including discussing a so-called savings bank.

“If we take the $10M and use it for growth, we still have $40M in savings,” Weinstein said of the four year projections, which see the “savings bank” bolstered in the first two years, then used to offset raises in years three and four.

Weinstein extolled potential general fund growth, with expectations that after four years, general fund growth will be up anywhere from $73M to $98M after costs.

“This does provide some relief,” Weinstein said, noting a $37M hole in next year’s budget — without reform.

“It’s not perfect. There may be pieces in it you don’t like. But the piece you don’t like may provide four pieces you do like,” Weinstein said, noting collaboration with Tallahassee and 22 bargaining units over a year and a half.

Mousa referred to this as a “sound financial program.”

“We know the issues. We know the positives. We know the negatives. And I believe we found a balance,” Mousa said.

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Questions came from the council.

“We have all of these experts, actuaries … my problem with this whole situation,” said Councilwoman Katrina Brown, is a lack of a “defined number” of how much money is in the General Fund.

Weinstein noted that budget is released in July, which provides clarity.

“If you want it to have an impact on next year’s budget,” Weinstein said, the City Council needs to vote “now,” or the work will be undone.

“If you want to do this the way it’s laid out — good and bad — you need to do it in a reasonable time,” Weinstein said.

“The mayor proposes and the City Council disposes,” Mousa chimed in, regarding the budget.

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Councilman Aaron Bowman noted projections don’t account for growth of expenses.

“The level of growth,” said Weinstein, depends on “variables” in future budgets.

“All those will be basically decided by you … our budget doesn’t have to go up … there are many years that our budget has gone down,” Weinstein said.

Bowman deemed this a “weak answer,” and wanted historic details on growth.

Weinstein noted that staff is down 1,000 bodies since 2009, indicating that growth is not a requisite.

“We know we’re paying a lot more … we know that expenses are going up … what I’d like to see is a better definition” than “$98M in our budget,” Bowman noted.

“We got rid of 1,100 people because costs went up,” Mousa noted. “Decisions are made to counterbalance [increased] costs by reductions.”

“I’m not sure that I want to take you to Vegas with me,” Bowman deadpanned.

One positive: an expected $40M YOY increase in property tax collections.

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Council VP John Crescimbeni noted that, “if we don’t do pension reform, we’re going to be looking at cutting.”

Mousa described the potential of “terrible, terrible budget cuts.” Layoffs would be “very possible.” And Mayor Curry would not “support any millage increase.”

This is “concerning” to Crescimbeni, who noted that millage cuts in the past led to today’s degradation of services.

Mousa said the budget being developed is at current levels — as if reform does not happen.

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Councilman Tommy Hazouri, a former mayor, wondered if there would be more surprises to come.

Mousa asserts that “all has been buttoned up now,” with the PFPF impact statement “outlier” now factored in.

Weinstein added that the Florida Division of Retirement approved the mechanism.

That said, Mousa added that the city is not “married” to these statistics, especially with yearly actuarial review and adjustment factored in.

“We feel very comfortable with the information presented here,” Mousa said, noting that unlike the Better Jacksonville Plan, which was predicated on borrowing with a 5 percent annual sales tax revenue growth rate, the pension reform plan does not involve borrowing.

“We’re not borrowing any money here. We’re not hoping that 4.25% will stay forever and ever,” Mousa added, noting — again — the yearly review function relative to sales tax projections.

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Councilman Garrett Dennis warned against “booby traps” that might await the mayor in 2031.

Weinstein believes that contributions will accelerate, and “the real cash starts rolling in in 2031,” with the impact blunted by the declining value of the dollar (the “present value calculation”).

Other booby traps?

“Don’t do DBs. There’s too much unknown,” Weinstein said.

“Make sure you hire the right folks,” Mousa added.

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Not all the feedback was bad.

Councilman Jim Love lauded the flexibility of the plan.

Councilman Bill Gulliford said that “savings down the road” will be a “big, big number,” noting that a “previous administration” provided unbalanced budgets that required a millage rate increase.

Pension reform, Gulliford added, is a “big topic” with bond rating agencies, which have seen pension as the “#1 focal point” of the yearly meetings.

“There are no absolutes. You want guarantees,” Gulliford said. “All of this is based on … a projection. We don’t know or control the things that can happen like an economic downturn.”

“What are our options? For years, we have looked at this thing … your options are pretty clear,” said Gulliford.

Those options: accept this or cut services and hike the millage rate.

“This is the best chance that I think we’ve got,” Gulliford said. “You don’t want to go where we’re headed right now.”

Councilman Matt Schellenberg noted that “we’ve been working on this for the last six years,” and “we’re on the right track.”

“The Council can always raise the millage rate one or two mills,” Schellenberg noted, though it would take 13 votes to get it through Mayor Curry.

And Councilman Al Ferraro endorsed the plan as a way to “stop the bleeding.”

“We’ve inherited a lot of things that we have to deal with,” Ferraro said. “If we don’t do this, I can see a huge problem in my area and the whole city.”

Councilman Tommy Hazouri endorsed the credibility of the plan in his comments as well.

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Despite Gulliford’s endorsement, the questions kept coming.

Councilman Reggie Brown questioned why millage hikes weren’t coming.

Councilwoman Joyce Morgan wanted assurances that the plan was “recession proof,” but the administration wouldn’t offer them, but “we can’t guarantee anything.”

“The only thing guaranteed is that you’ll die one day,” Mousa said.

“The majority of the contribution,” said Weinstein, “will be handled by the half-penny as much as possible.”

Morgan kept pushing back.

“We don’t talk about how we’re going to have more for our communities. We’re going to have the savings. Can you address that?”

Mousa noted that “if you don’t vote on this, services in the community are going to get worse.”

Morgan encouraged that parlance be used as part of the sales pitch.

Lenny Curry’s team sells big pension savings to Jacksonville City Council

Mayor Lenny Curry offered his presentation of pension legislation on Thursday afternoon, leaving it to the Jacksonville City Council to hash out.

They were helped along by CFO Mike Weinstein and Chief Administrative Officer Sam Mousa, who helped to explain the pension situation to the legislators.

The short version: if pension reform passes, the city could see big savings: $1.4B in the next 14 years.

That will offer budget relief, even with raises factored in.

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Mousa noted, vis a vis the half-penny tax, that revenue has grown 4.49 percent per annum over the last seven years. Since the inception, revenue has grown 3.2 percent — including the recession.

Weinstein, meanwhile, discussed recent declines in payroll growth — under 1 percent for all classes of employees.

“We’re putting in fewer and fewer people, and giving fewer and fewer raises,” Weinstein said, with 1,000 fewer employees now compared to 2009.

Weinstein also outlined sales tax growth through 2060, with a 4.25 percent anticipated growth rate per annum.

While a “fluid process,” projections are for that revenue to top $500M by 2060 — with revenue in 2031 adding up to $155M.

“The statute allows it to go to 30 years or 100 percent funded, whichever comes first,” Weinstein noted.

Actuarial assumptions, Weinstein said, include 1.5 percent for general employees, police and fire, and 1.25 percent for corrections. Investment returns, meanwhile, are pegged at 7 percent growth per annum for police and fire, and 7.4 percent for corrections and general employees.

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Weinstein also offered a distribution of the tax money to pay for unfunded liability costs of $2.861B.

The lion’s share –$1.8B — goes to the police and fire pension fund. The other 37 percent goes to general employees ($900M) and correctional workers ($159M).

Weinstein also outlined the hard costs of pension.

Right now, without reform, city pension costs are 119.6 percent of payroll. That number would go up to 149.7 percent without reform, and 88.2 percent with it.

“With DB programs,” Weinstein said, costs are “unknown.”

“It would be great if we were paying normal costs. But we’re not,” Weinstein said.

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Weinstein then went on to outline the savings via the previous plans.

With general employees, $25M of savings could be realized next FY.

In FY 31, Weinstein said, “we make a contribution and the cash comes in,” referring to tax proceeds.

Because of the money coming in, the city is insulated from the kind of crippling costs that effect current budgets.

Weinstein showed similar trending for corrections throughout the span of the amortization, before describing the PFPF relief.

“It’s a $250M difference for PFPF,” Weinstein said. “When you compare reform to not doing anything, it’s huge.”

How huge?

The city could save $82M in FY 18 .. pending reform. “A true savings in cash.”

“The difference in cash payout is $1.4B in 14 years,” Weinstein said, with the half-penny helping to absorb costs increases in the 2030s and 2040s.

Savings fluctuate over the years: $82M in FY18, $83M in FY 19, $74M in FY 20.

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Pay raises — the factor that sold the deal to the unions — will be substantial, adding up to $120M in costs by FY20.

That includes defined contribution increases.

All told, the city will still save $53M in FY18, $67M in FY 19, but then will come out $29M behind in FY 20.

The three years of raises will be covered with $29M left over, Weinstein said.

Meanwhile, the anticipated city contribution as a part of general fund revenue declines over the term of the scheme.

GF growth has been consumed by pension; with this plan, Weinstein said, reserves could be bolstered and new spending could be justified, via “payroll growth manageable throughout” the term of the plan.

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From there, Weinstein went to liquidity ratios: offering instant content for the TV reporters on hand.

Weinstein assured that, even if the impossible happened and no one was in the pension fund, the city would have five years of capital to pay off pension obligations.

“It’s a safeguard to lessen the concern people have that the funds won’t be financially sound,” the CFO asserted.

While neither the general employees or corrections funds are in danger of skirting the liquidity floor, the police and fire pension fund may require more capital — which the city would provide.

The city is committed to $180M of contributions no matter what, with $110M of that going to police and fire pensions.

“This minimum is just for the defined benefit plan,” Weinstein noted.

Lenny Curry frames pension-reform push as ‘new beginning for Jacksonville’

After weeks of speculation as to hard costs and real benefits of the Lenny Curry approach to Jacksonville’s pension reform, the first-term Republican Mayor talked it out with the Jacksonville City Council Wednesday afternoon.

The Curry administration feels the fierce urgency of now. With pension costs, already $290M in the current fiscal year, slated to be $345M next FY if reforms aren’t implemented, the model of reamortizing the old debt and opening new plans for new hires is a matter of existential importance.

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Three of the 14 filed bills, which could be voted on later this month, are probably the most important: 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 best deals are for public safety: long-delayed raises to current employees (a 3 percent lump sum payout immediately, and a 20 percent raise for police and fire over three years) and gives all classes of current employees the same benefits.

As well, all police and fire officers will have DROP eligibility with an 8.4 percent annual rate of return and a 3 percent COLA.

The deal, if approved without modification, will bring labor peace through 2027 — though it can be renegotiated by the city or the unions at 3, 6, 9, and 10 years marks in the agreement.

For new employees, however, the plan is historic — a defined contribution plan that vests three years after the new employee for police and fire is hired.

The total contribution: 35 percent, with the city ponying up 25 percent of that — with guarantees that survivors’ benefits and disability benefits would be the same for new hires as the current force of safety officers.

The Curry model, rooted in a deferred contribution approach that increases a re-amortized liability and spreads out costs to hit hardest when the sales tax extension money starts coming in after 2030, is intended to provide fixed costs and certainty for budgets.

However, with questions raised over costs over time (and Curry’s response to those critics being to “let them chirp“), Thursday’s presentation would end up being notable.

Would the mayor sell the City Council on the deal, giving them relief for local priorities in exchange for a longer-term amortization? And what about the press corps?

Those questions loomed Thursday.

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Curry kicked off the four-hour session with some opening remarks, noting that he would be distributing slides, one at a time, throughout his remarks.

The mayor noted that, when sworn in, he discussed the finite nature of time, and that he committed to a “sense of urgency” on key issues.

“We are poised to solve one of our city’s biggest challenges … a challenge that my predecessor handed off to a task force .. with a solution that would barely make a dent,” Curry said, also calling out critics of the current plan, whose plans would “make things worse.”

Curry vowed that his solution would free up resources for public safety, zeroing out the $2.8B liability with a dedicated income source.

“The legislation and policy before you … mark a new beginning for the financial health of Jacksonville,” Curry said.

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The “locked-in revenue source,” Curry said, is explicitly earmarked for pension relief, ending the “legacy pensions … bankrupting cities throughout the united states.”

“There are costs associated with paying off $3B of debt we didn’t create,” Curry said, but previous generations created the issue that he has to fix with “sound financial principles.”

Those costs include long-delayed pay raises for current employees.

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Among the benefits of the Curry plans: liquidity floors and contribution floors, which establish meaningful parameters for debt paydown.

“Future revenue growth will now be able to fund public safety,” Curry said.

The mayor also addressed tax growth, saying — as he told us — that the mechanism was based on averages in the current market, and would be subject to review yearly.

“The risk does not exist,” Curry said.

Curry outlined pension costs increasing: next year would be $59M over $290M this year, which is “eating our revenue alive.”

“Without pension reform, a $40,000 annual salary will costs $87,000. With it, it will cost $57,000,” Curry said, with pension costs thrown in.

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Curry discussed the path forward with local media after his remarks.

He stressed that, while costs are associated with retiring the $3B debt that his team “inherited,” this is ultimately a path to solving a problem previously neglected.

As well, the half-penny tax, though it doesn’t kick in on this obligation until next decade, is a future asset — offering actuarial certainty that frees up finite general fund resources.

Curry revised a previous actuarial assumption that the obligation could be paid off by 2045, noting that 2049-2051 was more likely.

“I know it will work. I’ve been fighting for this since the day I got into office,” the mayor said.

When asked to predict the vote count, he didn’t offer a number — but an assurance.

“We’re going to get this done,” Curry said.

Will Lenny Curry’s pension reform save Jacksonville money?

Jacksonville’s long road toward the latest round of pension reform – the Lenny Curry edition – is finally entering the home stretch this week.

While last week saw the introduction of 14 total bills related to the various agreements struck with the city’s bargaining units after months of negotiations, this week sees council attempting to come to terms with the specifics of the Curry proposal.

The mayor’s office has been very slow to offer specifics, having what the mayor and numerous council members describe as big-picture, conceptual meetings, while Team Curry promises to roll out numbers at a Thursday workshop

While the councilors support the reform measures in theory, in practice those reform measures may be more complicated – and expensive to the city – according to one external analysis.

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Tad Delegal, who served as a counselor to Jacksonville’s Fraternal Order of Police for 14 years, did a deep dive into the numbers for police and fire unions – and his work claims that the Curry plan will cost the city an additional $662M from 2017 to 2031.

Delegal’s numbers are based on certain assumptions, including a 25 percent pension cost for new employees (and a 25.9 percent cost for current ones), and a 3 percent growth in payroll costs per annum.

However, his analysis asserts that the mayor’s plan will cost the city $20M more in pension costs in FY17, with a gradual increase to over $62M by FY31.

In a roughly $1.1B operating budget, those are big hits. And Delegal isn’t even factoring in general employees.

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Those numbers differ from the more optimistic analysis put forth by Milliman in 2016.

That analysis, based on a 10 percent city contribution rather than the 25 percent contribution, created room for the city to move.

By FY 19, that number expanded to $57 million of saving, setting off a number of fiscal years with projected savings ranging from $55 million to $68 million.

The bullish trend in the 2016 projections slowed in the FY 28 to 34 period, with savings in the $40 million to $50 million range.

In FY 35, the trend reversed, with increased city spending on the liability, ranging from $14 to $31 million for the rest of the decade.

Then, said the 2016 projections, the big hit comes: FY 40 and 41 see increased city spending on the plan of $91 and $97 million respectively. Then, $127 million in FY 42, setting off a series of balloon payments that potentially extend from $230 million in FY 43 to $381 million of increased obligation in FY 48.

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Delegal, who is not a CPA, asserted that he was “concerned with the lack of financial analysis accompanying Mayor Curry’s pension plan, especially since it represents such an enormous change in the way that a substantial portion of our City’s finances are administered.”

With that in mind, he took a stab at it.

“The real savings with the 2015 plan comes in the future, and adding increasingly more employees at the 12% rather than at 25.9% will result in an eventual decrease in pension costs, even with expected payroll increases.  The Mayor’s plan would prevent the savings that would have accompanied the move from 25.9% (25% for post-2017 employees) to 12% of payroll.  The Mayor proposes to pay these new employees with a 401k-style benefit that costs 25% of payroll,” Delegal notes.

That, Delegal asserts, “effectively eliminates the savings that the 2015 reforms created.   Those employees will comprise an increasing percentage of the police and fire workforce, and while continuation of the 2015 plan would have created a substantial savings over the next fifteen years (and into the future), Mayor Curry’s plan will result in a net increase in pension costs over time.”

Delegal also asserts that “Additionally, the 2015 plan created substantial cost savings through reduction in benefits for other employees, especially those who had fewer than ten years of service as of 2015 … The 2015 reforms made revisions to not only the pensions of persons hired after 2015, but also those who were already hired before that date.”

“The task force predicted that the changes would decrease the City’s liability for these employees by about 7% of payroll for that group of employees. Assuming that these employees are compensated at the average salary, Mayor Curry’s plan will therefore increase the costs of their future benefits by approximately 7% of payroll, or approximately $4.3 million a year,” Delegal continued.

Delegal also contends that more costs that could have been avoided will emerge.

“It is unclear how much money the Mayor plans to save in the annual budget as a result of delaying the contributions to the unfunded liability.   In order to justify the much higher annual payroll and pension costs listed on the attached spreadsheet, Mayor Curry will have to reduce the unfunded liability payments by a much greater annual amount than is required under the ordinance,” Delegal argues.

“It is unclear how much Mayor Curry’s plan would decrease the unfunded liability payments between now and 2031, but the reduction in payments will result in a higher unfunded liability than would exist had regular payments been made, and had the funds been permitted to gain value over time through investment.  If the Mayor plans to refrain from paying $100 Million each year until 2013, the total amount of “interest” (earnings that would have been made on those payments at 7% return) would total approximately $470 Million by 2031,” Delegal notes.

Consistent with the heads of the police and fire unions, Delegal expects impacts from workforce attrition among public safety.

“The Mayor’s plan uses a very high contribution rate of 25% of payroll, along with extremely high raises in an attempt to counteract the turnover effects that have been experienced by the other places that have used 401k-type systems for public safety officers.  His use of the high dollar benefits could cause employees to stay, but the fact that their retirements will be portable could also spur them to leave the very demanding, high pressure jobs after five years of vesting.  If the plan results in higher turnover after five years, Jacksonville will have no choice but to further increase pay and benefits, which will be quite expensive,” Delegal contends.

Additionally, an inevitable economic downturn will leave Jacksonville exposed, Delegal claims.

“In future downturns, the implementation of a 401k-type system will force the City to be much more attentive to the market, and will require it to increase salaries and benefits more quickly during any recovery.

Delegal’s analysis is restricted to the police and fire plans, as well, necessarily leaving out general employees.

Meanwhile, he posed a number of questions for council.

Among them: the cost of restoring benefits for all of those under the current defined benefit plan to 2015 levels; the cost of administration and disability benefits under the plan; the cost of the 3 percent bonus, and the phased in 20 percent raise over three years; the rationale for an assumed 4.25 percent annual growth in surtax revenue; impacts of losing $75 million scheduled to be paid into the pension fund, per the 2015 agreement.

This outlet has asked Curry and his team for tangible projections for weeks, if not months, but delivery has proven elusive.

While collective bargaining was going on, the administration didn’t want to disclose the data, because it was subject to collective bargaining.

But with the bargaining process wrapped, the administration still isn’t rolling out numbers for public consumption, deferring to the workshop slated for Apr. 6.

“In the weeks ahead, in a big, public, transparent workshop,” Curry told us on Tuesday, “we’ll be laying all of this out.”

“I would remind you that all of the collective bargaining, all of the agreements that have been reached, were done in the sunshine — transparent for the public to see.”

That workshop, slated for Apr. 6, will “lay out the budget impact and the actuarial impact … everything that council needs to make a decision will be laid out for them publicly and you’ll all have that information available for you,” he told the press Tuesday.

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Legislation introduced Tuesday came without any data beyond the actual bill.

Ordinance 2017-257, which would levy (no later than 2031) the 1/2 cent discretionary sales tax approved by voters via referendum in August, and which creates a new ordinance section:  Chapter 776 (Pension Liability Surtax), had a fragmentary description on the legislative fact sheet.

“This ordinance is required by law to implement the Pension Liability Surtax.”

Bill 2017-258 affects the general employees and correctional worker plans. Bill 2017-259 implements revisions to the Police and Fire & Rescue plans.

The bills would close 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.

The bills impose a “ten-year agreement,” of sorts, able to be revisited on a bilateral basis three years, six years, and nine years after implementation.

The fact sheet, again, is a sad pastiche: “This ordinance implements the changes pursuant to collective bargaining” is all it says, leaving aside the usual detail one expects from such documents.

While Delegal’s analysis is not the final word on the matter, it is given more weight than it might be otherwise, were the Curry administration forthcoming about the projections.

In this context, a release of financial projections – perhaps ahead of the Thursday workshop – would offer a meaningful counter to a narrative that suggests that the city is in for some years of austerity – even after the so-called “pension tax” was masterfully marketed and approved by Jacksonville voters overwhelmingly last August.

Pension reform legislation introduced to Jacksonville City Council

Tuesday night saw a raft of bills introduced to the Jacksonville City Council, with the expected final result being implementation of comprehensive pension reform.

While the mayor’s office negotiated pension reform, it is up to the 19-person legislative body to enact it.

Bill 2017-257 would, if passed by the council, levy the 1/2 cent discretionary sales tax approved by voters via referendum in August.

The tax would take effect when the Better Jacksonville Plan obligation is paid off, or in 2031, whichever comes first.

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.

That bill requires the city to meet certain liquidity targets for the defined benefit plan, mandating additional contributions if that target isn’t met, though those targets aren’t defined in the legislation as introduced.

As well, the bill maintains a “ten-year agreement,” of sorts, able to be revisited on a bilateral basis three years, six years, and nine years after implementation.

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

Post-October hires will get a 25 percent match from the city on their defined contribution plans.

Raises for workers throughout the city will be part of the pension reform package, with the most generous raises going to police and fire, then corrections, then general employees.

Pension reform has been a priority of Mayor Lenny Curry, who spent 2016 selling the idea of a dedicated sales surtax to pay off the city’s $2.7B unfunded liability in Tallahassee, then used his political capital and machine to score a stunning 65 percent margin in favor of the plan in an August referendum.

Though negotiations were not without their quotable moments, Curry’s team, helmed by CAO Sam Mousa and CFO Mike Weinstein, was able to overcome objections and get key agreements with even the public safety unions early enough in March to where this financial security may be apparent as soon as the next fiscal year.

As locals know by now, the current defined benefit plans have to be closed to new hires, who will get defined contribution plans — that have as much as a 25 percent employer match for public safety employees.

Questions remain among the council about the specifics of the plans. Curry has been talking with them one on one about the conceptual framework of the plan, he told us Tuesday.

“Meetings with council members — we’re talking conceptually, big-picture. It’s important that we lay the information out so they can make a responsible decision. They’re all getting that information together.”

“In the weeks ahead, in a big, public, transparent workshop,” Curry continued, “we’ll be laying all of this out.”

“I would remind you that all of the collective bargaining, all of the agreements that have been reached, were done in the sunshine — transparent for the public to see.”

That workshop, slated for Apr. 6, will “lay out the budget impact and the actuarial impact … everything that council needs to make a decision will be laid out for them publicly and you’ll all have that information available for you,” he told the press Tuesday

Council members have already met to discuss the schematics of pension reform, with a 90 minute historical overview of pension from General Counsel Jason Gabriel on Monday.

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