Jacksonville Police and Fire Pension Fund Archives - Florida Politics

Jax Council Auditor spotlights PFPF governance issues

In a meeting of the Jacksonville City Council Finance Committee Wednesday, Council Auditor Kyle Billy presented a report on the local Police and Fire Pension Fund‘s bank account.

That report revealed myriad governance issues with the fund throughout 2016, including dubious purchases and questionable accounting practices.

Checks without signature, checks without documentation, delayed check endorsements, questionable invoicing for medical examinations, payments made without adequate support, failure to present all payments to the Board of Trustees (a failure in database management), and an accounting system with software that hasn’t been supported since 2011: all of these were issues Billy spotlighted.

A big takeaway: the PFPF needs to junk its separate checking account.

“Overall, we found the internal control structure, specifically with regards to proper segregation of duties, would be improved if the fund stopped collecting payments directly and ceased operation of a separate checking account. The revenue could be directed to the Tax Collector and the normal operating expenses could be processed by the City’s Finance Department,” the report reads.

Benefits of that move: a clearer paper trail for audits and more accountability generally.

As well, the audit found “issues with the accuracy and timeliness of the deposits of revenues received directly by the Fund (excluding pension contributions and fines/fees remitted to the City first).”

Another issue identified in the audit: 13 payments being made without adequate support, including one $58,973 payment without an invoice.

Audit recommendation?

Use the city’s accounting division to handle this process.

What the audit calls “questionable payments” also came under scrutiny: “20 out of 2,242 payments from the local bank account or .082% totaling $4,849.69.”

A payment for frequent flyer website membership was among those payments.

Also, this: “We also found a payment from the custodial account totaling $19,219.66 which was made for the purchase of a 2012 Ford Expedition. This payment is questionable from a stand point of why the Fund needed the vehicle and from the stand point of why it was paid from the custodial account which is supposed to only be utilized for professional services.”

Another internal control issue revealed: over $2M in payments not explicitly approved by the board of trustees, between the two accounts the PFPF used.

Further payments were reported in the wrong amount on board minutes, or approved on more than one consent agenda.

Council members had their say also.

Councilman Bill Gulliford, instrumental in PFPF reforms, noted the “excessively high administrative costs” of the pension fund were still trending in the “wrong direction.”

While there has been a leadership change since this report’s time frame, the audit is a lagging indicator of how badly things went in the John Keane era.

Jax PFPF questions payroll growth assumptions in city pension plan

Prologue: A Monday meeting of the Jacksonville Police and Fire Pension Fund centered around the ultimate actuarial impact of Lenny Curry‘s pension reform package, with presented actuarial analysis from the board proving to be more pessimistic than that of the city about rates of tax revenue growth, payroll growth, and amortization schedule.

Ultimately, not much of that mattered in the trustees’ decision making.

The Jacksonville City Council currently is considering legislation that would close the current defined benefit plans to all new hires, open up defined contribution plans for new hires, and pay off the city’s $2.8B unfunded pension liability with a sales tax extension starting in 2031.

The unfunded liability will be re-amortized, with a longer payment term and higher overall costs on the pre-2017 pension debt, which would be paid off in full by approximately 2051, asserts the city.

While the PFPF doesn’t get to approve the deal, they do get to weigh in via an impact statement.

The PFPF trustees were encouraged by the city to use the city’s anticipated rates of growth for tax proceeds (4.25 percent per annum) and payroll growth rate (1.5 percent).

Yet the board’s actuarial projections (3.34 percent for tax, and 1.25 percent for payroll) are less optimistic — by far.

In a meeting that sprawled over four hours, PFPF actuaries threw some cold water on the mayor’s push toward pension reformsuggesting that the city of Jacksonville’s assumptions could put the underfunded police and fire pension fund in danger of not meeting liquidity targets, and that more conservative benchmarks are recommended to protect the fund in the decades to come.

The crux of the fund’s decision, however, was simple: to accept the city’s 1.5 percent payroll growth rate, or the more conservative 1.25 percent that plan actuaries believe is appropriate.

The 1.25 percent was accepted. Along with the 4.25 percent expected growth in anticipated tax revenue increase annually, which was the city’s projection — one that was less conservative than that by the pension fund’s own actuary.

Also accepted: the 30-year amortization agreement of the deal.

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Board attorney urges skepticism on Curry plan: Fund attorney Bob Sugarman noted that state law required the trustees to offer an actuarial impact statement to the city council.

“They’re not bound by it,” Sugarman noted, adding that the Board of Trustees would offer comment on the ordinance at a later point, as part of a “two-step procedure.”

As well, committee members should not be “guided by the impact on the city … the unions … collective bargaining agreement.”

Focal points of board analysis: the amortization schedule; rate of payroll growth; growth of surtax revenue.

On all of these issues, Sugarman posited that the city and the fund would have different interpretations of efficacy.

On surtax revenue, Sugarman posited the PFPF can define that, based on independent actuarial opinion.

“The law doesn’t say who values the surtax. I believe it’s the board,” Sugarman noted.

And Sugarman added that the city has an “irreconcilable conflict” in setting this up, and, moreover, there are conflicts with statute in doing so — a move he framed as a way of shirking contribution burden.

With all that said, there was some wiggle room for those on hand.

“Are you protected by relying on the opinion of the General Counsel’s office? The answer is yes,” Sugarman said.

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Sales tax revenue estimates diverge: John Pertner of GA Public Solutions offered the fund’s actuarial statement.

He posited that there may be economic recessions between now and 2060, when the tax is slated to sunset. As since 1974, over a decade was spent in economic recovery — including a seven year decline and recovery period between 2006 and 2013, a period which saw sharp decline followed by gradual recovery.

That indicated what the report called a “significant impact” from recessions.

“You’re going to run into negative performances,” Pertner said, with the question being how long recovery takes.

Pertner projects a 3.34 percent YOY increase in sales tax revenue, compared to a more optimistic 4.25 percent per annum increase from the city.

Jacksonville CFO Mike Weinstein cautioned that whatever number is used “will be reviewed every year,” as per ordinance.

“The four and a quarter will be reviewed every year. This is a reasonable expectation of where we are today,” Weinstein said.

“It’s not like Better Jacksonville where we borrowed a billion and a half at 5 percent and the money went to debt service,” Weinstein said.

All told, the PFPF projects that $6.637B could be brought in by the surtax by 2060.

But the recommendation is to use the lower growth rate assumption, rather than the city’s, as a starting point.

Similar pessimism was to be found in payroll growth revenue.

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Negative amortization qualms: The board offered an experience study from Pete Strong, the board’s internal actuary, to analyze payroll growth.

The city posits 1.5 percent growth per annum. Strong was not so bullish on that, saying the historical average was .67 percent.

Strong notes that in a closed pension fund, a payroll growth rate historically is factored in. But current state law requires a reflection of “open group payroll.”

Strong also indicated the possibility of negative amortization, where payroll growth doesn’t cover the interest on the unfunded liability, presenting a “risk to the health of the plan.”

In that context, a 1.25 percent payroll growth rate — half of that of the city’s projection — is Strong’s advice.

Also discussed: whether DROP assets can be invested separately. That may be a heavy lift, given the anticipated 8.4 percent return. Strong continued to outline issues created by the ordinance, including the use of chapter funds and issues deviating from “reasonably sound actuarial analysis.”

Among those: using the future revenue stream as a present asset, which Strong said was unprecedented.

The “unique structure capitalizes an unknown future revenue stream as present dollars,” Strong said.

Meanwhile, discussions ensued of the potential for a constitutional challenge of the legislation, in that it passes on present costs to future generations.

Strong noted increased costs: $176M in benefit payments from salary increases, $64M in benefits from the new ordinance.

City contributions would go down, and so would the fund’s funded ratio — from 45 to 43 percent. And, because of the asset provided by tax revenue, the UAAL for the police and fire pension fund would go down $580M, to $1.42B.

“However, this is not the revised funded ratio for the fund,” Strong noted.

Strong discussed the difference between 4.25 and 3.34 percent for tax revenue growth as meaning a potential shortfall of $10M for the city’s contribution.

 That, coupled with the 30 year amortization, means the “funded status could deteriorate in the short term.”

As well, “it is our opinion that current costs will be transferred to future taxpayers under this arrangement.”

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30 year projections: Strong presented a number of possibilities.

One such had no changes. Another was a “stress test” with a -15 percent yearly return (with a recession in mind). Still another was under the city’s plan, with a built in stress test. And yet another dealt with the more pessimistic projections from PFPF actuaries.

Under the current scenario, the plan would be fully funded by 2033; with the negative return year built in, that would be 2036, assuming the city applied $460M of payments required by the 2015 agreement.

Board Chair Richard Tuten noted these payoff dates are around the time money kicks in from the Curry plan.

Under the city’s assumed rates of payroll and sales tax increases, the plan will be 51.85 percent funded by 2047 — though that doesn’t factor in the sales tax.

The “stress test” would strain the plan, putting the 5 to 1 liquidity ratio mandated by the ordinance in jeopardy for a full decade, according to the PFPF actuary projection.

“This only happens when we assume a stress test,” Strong noted.

With a 3.34 percent anticipated tax revenue increase and a 1.25 percent payroll growth increase, the fund would be more able to withstand the stress test, Strong added.

No matter which projections are accepted, Strong said, the unfunded liability grows, peaking right as the surtax begins to come in.

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Weinstein strikes back: It was inevitable that CFO Mike Weinstein would have his say.

He noted the 4.25 percent projection for tax revenue growth is conservative, and “each year it doesn’t go down gets us closer to the present value.”

As well, Weinstein said the distribution of funds would be adjusted yearly based on the needs of the discrete pension funds.

“The payroll growth piece — we’ve had numerous calls and visits to Tallahassee,” Weinstein said, and the state is “comfortable” with the city’s projections.

The projections can’t change from the city’s, said Weinstein, given the two-year process “getting us where we are today.”

“We stand by the 1.5. And we stand rigid on the 4 and a quarter,” Weinstein said.

The city feels good about the projections, especially in terms of Jacksonville’s permits “skyrocketing.”

As well, Weinstein expressed comfort with the liquidity floor.

“You can’t pay off a $2.86B debt without an impact,” Weinstein said.

General Counsel Jason Gabriel chimed in his periodic reminder that his office holds authority over the city’s independent authorities — including this board.

Gabriel noted that the city sits on firm legal ground, and that the city controls these pension reform deals relative to the discretionary sales tax, with the board having limited powers.

Board Chair Tuten fired back, saying “no matter what we recommend to you, you’re going to do 4.25 and 1.5.”

Gabriel denied that assertion, but did say the city determines the use of the surtax.

The difference between the projections helped carry those in the room into the fourth hour of the meeting.

Weinstein stressed that, if things go south, the city will have to pay up in lean years — and that the City Council would be charged with yearly review of the plan, including the rate of surtax growth, to determine the city’s contribution.

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Deliberation: A motion was issued and seconded by the Financial Advisory committee to accept the 1.25 percent yearly payroll growth increase from the PFPF actuary, and was quickly seconded, as a “more conservative, more rational” approach.

That motion carried.

From there, the question of tax revenue growth.

Questions emerged about a lack of robustness of the analysis, which only goes back historically to 2000.

Before that, of course, the 1/2 cent tax was not in play.

A desire for conservative estimates colored the discussion; however, the Financial Advisory committee — with cavils and caveats — accepted the 4.25 percent yearly projection of tax revenue increase — the city selected rate.

With committee recommendations, the full board of trustees accepted the terms.

The fund will provide more fleshed out opinions next week to the Jacksonville City Council.

Jax PFPF Board Chair: ‘I think the mayor’s plan is terrible’

The slow walk by the Jacksonville Police and Fire Pension Fund toward policy marginalization continued apace Friday, as the five-person board of trustees offered “review and discussion” of the city’s latest pension proposal.

The General Counsel contended earlier this week that the PFPF had no role in the pension decision, arguing that the 2015 pension deal removed the pension fund out of a decision making capacity.

The unions decide, according to the OGC, and they ratified the deal … one which the Lenny Curry administration says is essential to unlocking the guaranteed revenue of a future half-cent sales tax, and finally resolving the current $2.7B unfunded pension liability.

The proposed pension deal loomed over the entire meeting. And discussion went beyond whether or not the board could vote on the deal, as the board’s fiduciary duty to the plan requires board input regardless of the need for a vote.

Long story short: the lack of a need for a vote doesn’t eliminate the PFPF board role in the pension reform process.

And the review process looks likely to sprawl into at least April, including a need for a financial analysis, an impact statement, and input from Tallahassee.

Meanwhile, General Counsel Jason Gabriel explained why he decided the board didn’t need to vote after all.

And, by the end of the meeting, board members raised their voices at each other, with the pension board chair being upbraided for a “diatribe” about Gabriel.

All in a day’s work in #jaxpol.

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The pension deal offers raises and uniform benefits for current public safety employees, and a defined contribution plan for new hires. Questions abound about the actuarial projections for the plan, including repurposing the PFPF reserve account for a share plan, and while the Jacksonville City Council will have a vote — and it will be contingent on that projection making sense for the city — those questions were to have no answers on Friday.

That said, something was provided to at least some council members, via a shade meeting this week.

Trustees came into the meeting with questions about the specific proposal, and the general counsel’s position that no board vote was needed.

Bill Scheu, one of four trustees who met with the city, noted that no specific numbers were provided in those meetings.

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 As the meeting progressed, questions were raised about the mayor’s proposed plan even before Gabriel’s portion of the program.

Treasurer Joey Greive noted the city’s projection of 3.75 to 4.25 percent annualized sales tax growth (optimistic in light of past performance), urging that the PFPF actuary review projections be done before the end of March for the benefit of council review.

“That’s going to be tight for us,” the actuary said.

The projection of 1.1 percent payroll growth from the city also got brought up. The PFPF growth rate projection was far more conservative: 0.67 percent a year.

“Now the city’s expecting us to sign off on something that hasn’t been approved anywhere,” Tuten said, calling it a “cart before the horse situation.”

As discussion progressed, there was a movement to refer the specifics to the Financial Investment Advisory Committee, which could provide advice in the coming weeks.

“The city needs this in two weeks, let’s give it a shot, but the FIAC should look at it,” actuary Pete Strong said.

General Counsel Jason Gabriel suggested that there would be a 5-6 week legislative cycle, with a “milestone” public hearing in this process after the board reviews the plan, at which point the board can provide an “impact statement” that can guide the council’s thinking, and can also offer guidance to the state of Florida.

The board’s next regular meeting: April 21, which Trustee Scheu framed as an “absolute sort of deadline.”

Tuten noted that “we haven’t even got a green light from the state Division of Retirement Services yet,” which could reset all hastily-rendered calculations.

Scheu noted that “we aren’t being asked to adopt anything,” but to provide actuarial assumptions, including an experience study, for meaningful policy guidance.

Discussion got more heated during the discussion of the need for an actuarial study, with Tuten comparing Gabriel’s urging to push through to a pitch from a “used car salesman.”

“It takes time. We need to get something from the state saying we aren’t wasting our time,” Tuten said.

The board motioned for an actuarial report and to authorize cooperation between lawyers and actuaries.

“It’s going to take us beyond the 31st,” the PFPF actuary said, especially when factoring in a range of hypothetical assumptions.

The board can expect an actuarial impact statement as the next step in the process.

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The board expected in February to have a more extended process, and after a hard break, Executive Director Tim Johnson noted that.

“Jason and his staff have more deeply analyzed these questions … and determined there isn’t an action this board has to take,” Johnson said.

Johnson compelled Gabriel to explain the change in status from February to March regarding the board “role as it applies to accept these agreements” and what happens regarding the surtax as a source of revenue.

Tuten echoed Johnson, noting that “it seems all of a sudden you don’t need the board approval.”

“There’s a whole host of theories as to why you cam out with this opinion when you did … days before we meet,” Tuten said.

Gabriel reiterated his position from a letter this week: that the 2015 pension agreement was intended to remedy “inappropriate” intertwining of the board with pension negotiations.

The relationship was marked by litigation and power struggle since 1990, Gabriel noted.

“2015 culminated with an agreement … right at the end of the Brown administration … a very strong foot forward, putting the parties of the consolidated government back into the traditional and legal roles set forth by law,” Gabriel noted.

That agreement precluded the PFPF involvement in collective bargaining or benefit determination, Gabriel said, a position consistent with Florida law and necessary according to the terms of the pension tax referendum.

“What changed between a month ago and perhaps now? The city and the unions entered into good-faith collective bargaining,” Gabriel said, which had been precluded for decades because of the fund’s outsized role in pension negotiations previous to 2015.

Reserve accounts came into the discussion during the bargaining process, and “there was an agreement regarding the reserve accounts.”

“The board has several roles to play,” Gabriel said, but “action needed to effectuate these bargaining agreements” isn’t one of them.

“A pension board does not intertwine with the constitutionally protected rights of the union and the city to agree on benefits,” Gabriel said.

The Mar. 15 deadline was set by the city in that context, that the board had no “approval” it needed to offer.

“I immediately caucused with my attorneys,” Gabriel said, regarding the disposition of chapter funds and other governance-related concepts, and the analysis revealed that “every dollar in reserve accounts is tied to pension benefits.”

“The action of the board,” said Gabriel, “is inclusive of the actuarial plan reporting … not the collective bargaining agreements.”

As well, the board is expected to offer review and analysis of the implementing ordinance once offered to the city council, Gabriel noted.

Regarding the accelerated payments from the city required as part of the 2015 pension deal, Gabriel noted the potential of a “retreatment of the dollars” and a “change of the disbursement” was in the deal.

“Whether it’s good or bad policy is another debate,” Gabriel said.

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Tuten wondered how an agreement between the city and the unions could loop out the PFPF from a “former contract of the past.”

“This is of some sort of urgency,” Tuten said, “you met with the four trustees then pop up and say ‘hey, we don’t need you anymore’.”

“Nobody knows what he’s proposing. It’s all hush-hush, hurry-hurry … a cynic mght say the mayor’s trying to avoid bad press and controversy,” Tuten thundered, wondering if the mayor thought the vote would go bad for the deal.

Tuten and Gabriel engaged in spirited cross talk as to whether the general counsel was the lawyer for the plan or not, with Tuten saying the plans were taken from the city oversight by the state, and that there was a potential of “conflict of interest.”

“Who hired you? Who fired you? The mayor is the one who tells you what to do,” Tuten said, “not us.”

Tuten wanted input from fund attorney Bob Sugarman.

“This decision is the first one in fourteen years that if we screw it up, we’re held liable,” Tuten said, “frustrated” by the Gabriel presentation that “doesn’t add up.”

Scheu then reminded Tuten that Gabriel was the “legal officer for the whole city — like it or not” and the general counsel gets to decide relative to conflicts in city government, as per the charter.

“The office of General Counsel is the lawyer for the fund,” Scheu said.

Sugarman backed Gabriel up to a point.

“You have no right to vote on the collective bargaining agreement,” Sugarman said, unless the union had offered that approval as a precondition.

“Our work is seeing what your rights and obligations are … on these other things,” Sugarman said, including the board’s rights under the 2015 agreement and the consent decree.

“You’ve got a contract. You’ve got a consent decree. You can’t just throw them under the table and pretend they don’t exist anymore,” Sugarman said.

“Everything that’s happened,” Gabriel added, “fits into the 2015 agreement.”

Worries among the trustees remain about liquidity risk, potential fiduciary liability, and other major issues, but they are going to be worked out — in fact, they’ll have to be.

“For the record, I think the mayor’s plan is terrible,” Tuten said, regarding “putting off a problem now for a problem 20 or 30 years from now.”

“I don’t see them deviating from the plan,” Tuten added, asking “are we going to have to sue them to stop?”

The board would need the state Attorney General’s approval to sue, and that isn’t likely.

The board will hire a financial consultant for guidance in the meantime … a move not precluded by charter.

“We’re just spinning our wheels here,” Tuten opined, before presenting a series of nightmare scenarios about the city not having the revenue to fund pensions for the people on the current plan, and raising questions about not being able to send an accurate bill to the city.

One suggestion emerged to the council: not cutting out the extra supplemental payments to the pension fund, as mandated by the 2015 deal.

Jacksonville PFPF expected to vote on pension deal Friday

In February, the Jacksonville Police and Fire Pension Fund Board of Trustees balked at a Mar. 15 deadline to vote on the city’s latest pension plan.

The board had worried that there would not be enough time to review the data of the new plan, which offers raises and uniformity of benefits for current employees, while providing a new defined contribution plan for future hires — offering a 25 percent city match and assurances that death and disability benefits would substantially be the same as they are for current employees.

Since then, the Fraternal Order of Police and the corrections officers had approved the deal, with the Jacksonville Association of Firefighters voting on it this week.

And now, after a prolonged period of negotiations, which included candid emails between PFPF Trustee Board Chair Richard Tuten and the city’s chief administrative officer, Sam Mousa, the board and the city have struck a compromise.

The board is expected to vote on the deal two days after the city’s unilaterally imposed deadline: Friday, March 17, at its regular 9 a.m. board meeting, according to emails between Mousa and the heads of the police and fire unions.

Facilitating the compromise to extend the deadline two days — cooperation of the members of the board not named Richard Tuten, as Mousa wrote to PFPF Plan Administrator Tim Johnson.

“The Mayor has asked me to ask you to please extend his thanks and gratitude to the four (4) PFPF Board Members (Scheu, Brown, Payne and Patsy) who took time out of their busy schedule to meet individually with me and Mike Weinstein concerning pension reform. Mike and I are furthermore appreciative of those members as we believe the meetings were very productive,” Mousa wrote.

If this vote is successful (and if it actually happens, the pension deal will move on to the Jacksonville City Council, whose own members have serious questions about the actual hard numbers in the deal — numbers that have yet to be produced for public review by the Lenny Curry administration.

Curry contends that the deal will save the city money, saying that the 25 percent city match is far short of what the city pays for pension costs for current employees.

“Right now we’re spending 119 percent of for [pension costs] for every JSO employee and fireman,” Curry said. “If we hired you today, we would take your salary and put 119 percent of that in the pension fund. That’s not sustainable …. 25 percent is a fraction of 119 percent. It works. It will attract and retain people.”

“As to when the numbers will be made available,” Curry said, “City Council will have to vote on this, and all of these numbers will be laid out before them, which is how the budget process works.”

Jacksonville mayor’s office, PFPF board chair clash on pension pitch

An exchange of emails this week between Richard Tuten, the head of the Jacksonville PFPF Board of Trustees, and Sam Mousa, the city’s chief administrative officer, reveal friction between the mayor’s office and the PFPF board chair.

The dispute centers around a meeting Mousa sought with Tuten to discuss the latest pension reform package, which has been accepted by the local AFSCME and Fraternal Order of Police.

Tuten had many reasons for declining the invite.

Though “this meeting is not a violation of the sunshine law per se, it does not look good in my opinion,” Tuten wrote.

As well, Tuten wanted Mousa to present to the whole board at once, so that Mousa and the city’s treasurer could answer panel questions before such a “monumental decision.”

Mousa’s response, meanwhile, could be described as precisely written.

“I can certainly appreciate your sensitivity to perception, particularly in light of the Board’s past troubles and litigation expenses incurred in defending various public record and sunshine law violation lawsuits,” Mousa wrote.

Mousa wasn’t done putting Tuten on notice, however.

“As you are well aware, it is standard practice, and in fact, well-advised, to be briefed on such important topics prior to Board action. It is routine and common to hold such informative meetings with elected officials, appointed officers, trustees or otherwise, and particularly the Chair of any given board,” Mousa said.

In February, Jacksonville Mayor Lenny Curry said the board would have the info it needed to make a decision before Mar. 15 to accept the deal.

However, that may be easier said than done when it comes to the chair, a trustee who was elected to serve by the fire union … the one bargaining entity which has yet to accept the deal.

Lenny Curry outlines Jacksonville’s legislative priorities, talks pension and Enterprise Florida

This is a pivotal time in Jacksonville’s city hall.

With complete turnover in the city’s delegation to Washington and opportunities created by the new President, majority turnover in the city’s representation in Tallahassee, a revolutionary pension deal currently being approved by the city’s unions, and the imperiled fate of Enterprise Florida, this is a make or break time for Mayor Lenny Curry.

He discussed all these topics with us – exclusively – on Friday.

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Expect more from D.C.: The mayor met with Rep. John Rutherford on Wednesday.

“We caught up … talked JAXPORT, public safety,” Curry said.

In addition to leaning on Rutherford, an ally of long standing, Curry also will take advantage of connections within the Donald Trump administration – including Chief of Staff Reince Priebus.

“I’ve already got messages in to the Trump Administration. I’d like the federal government to be able to help us in some form in Jacksonville. I don’t know what that looks like yet. But we’re going to leverage every relationship we have to get help here with issues we’re facing, specifically on the public safety front, and the port is a huge issue,” Curry said.

Jacksonville is uniquely positioned in terms of the Trump administration. Ballard Partners employs Susie Wiles, a city hall veteran and a close ally and friend of Curry, and she will be doing work in the nation’s capital in addition to Jacksonville. And Marty Fiorentino is in Washington right now also, doing consulting for Transportation Secretary Elaine Chao.

The city contracts with both Ballard and Fiorentino on the state level.

“Certainly we have relationships [in D.C.],” Curry said. “I have direct relationships as well with Reince Priebus and others. We have an RFP [in process] regarding lobbying for the feds. Expect to see movement there.”

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Duval Delegation: There have been grumbles from inside city hall about the relative effectiveness of the Duval County Legislative Delegation.

Committee assignments: weak. Bills filed: often ancillary to city priorities. Leverage with leadership: dubious.

However, Mayor Curry was focused on what could be done.

Despite the relative paucity of appropriations requests on many key issues, Curry noted that he’d been “working with our delegation on priorities I’ve laid out. One of the big ones is septic tank removal. The city’s looking for a match – a big match. That is an issue that’s environmental … that will help us honor promises that were made pre-Consolidation.”

“I’m working with the delegation toward the priorities that I have, and I think we’ll work very successfully,” Curry said.

In a related note, Curry’s office announced Friday that the Florida Department of Transportation has committed $250,000 to a study of the Hart Bridge ramps.

Curry rolled out a potential $50 million ask to remove the antiquated ramps, which present public safety and aesthetic concerns, last year to the Duval Delegation.

Traffic would be routed on to Bay Street under the latest conceptual proposal for replacement, creating a direct route into the Sports Complex and a developing entertainment district close to the river.

That request got de-emphasized, however, and looks more likely to be done in a more gradual manner than the mayor’s office initially wanted.

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Pension Deal Will Save the City Money: Jacksonville’s Fraternal Order of Police overwhelmingly voted to approve the city’s pension offer on Thursday.

One union – the Jacksonville Association of Fire Fighters – is left to approve the pact, which will offer raises to current employees and defined contribution plans to new hires.

Curry was reflective on the process.

“This has been a very long road, this pension reform. Yet we’ve traveled this road aggressively and in a short window. It hasn’t even been a year since the last legislative session,” Curry said.

In fact, the referendum passed less than six months ago – which kicked off the collective bargaining that appears to be reaching its conclusion.

“So we are close. The yes vote by the police membership [shows] they recognize that this is good for them, it’s good for taxpayers, and it’s good for the city of Jacksonville. We’re going to continue to work for the fire membership vote, and the Police and Fire Pension Fund vote, and then the city council vote – and then be done with this,” Curry said, noting that the proposal yokes two of his campaign priorities – public safety and budget discipline.

“When this pension reform is done and final,” Curry said, “our budgets will be responsible and they’ll allow us to fund the things that I said I’d focus on – the things that voters voted me into office on.”

Yet questions remain, still, about whether this plan saves money for the city

The actuarial projections used in 2016, when last released to the public, were predicated on 10 or 12 percent contributions from the city to the employee’s retirement, far short of the 25 percent in the current proposal.

Though the actuarial projections have not been released and likely won’t be for at least a bit longer, Curry contends the plan will save the city money on its public safety retirement plans.

“Right now we’re spending 119 percent of [salary] for [pension costs] for every JSO employee and fireman,” Curry said. “If we hired you today, we would take your salary and put 119 percent of that in the pension fund. That’s not sustainable.”

“25 percent is a fraction of 119 percent. It works. It will attract and retain people.”

“As to when the numbers will be made available,” Curry said, “City Council will have to vote on this, and all of these numbers will be laid out before them, which is how the budget process works.”

“The public will see them, the council will debate it, people will be able to make their opinions known at the time, and I think they’ll have a favorable opinion.”

The Police and Fire Pension Fund will also have the data needed to make a decision, Curry said, before the Mar. 15 deadline.

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Enterprise Florida: Slowly but surely, locals are compelled to take sides on the Enterprise Florida debate.

The JAX Chamber endorsed the concept Thursday. And on Friday, Mayor Curry offered insight as to why.

One issue that many in the Florida Legislature have not considered: for cities like Jacksonville, Enterprise Florida has offered meaningful benefit, as Curry told us.

“Let me speak specifically to Jacksonville and how we work here,” Curry said.

“We use incentives – local incentives and state incentives through Enterprise Florida – and we use them successfully,” Curry contended.

The city’s scorecard, which ensures ROI for taxpayers when incentives are offered, is designed to ensure an “inflow of tax dollars that exceeds that investment.”

“I would say that incentives are important to us. They’re used in a way that respects the taxpayers. Without the state funding,” Curry said, “we would have had trouble closing some of the big deals that we closed.”

“They’re talking about reforms over there [in Tallahassee],” Curry said. “I can tell you how we do business locally. We use our tax dollars in a way that’s responsible to taxpayers, and we’ve been able to use the state incentives the same way. I hope they can figure out a way to continue to give us the opportunity to have access to state incentives.”

Jacksonville PFPF trustees throw cold water on Lenny Curry’s pension deal

On Friday, the Jacksonville Police and Fire Pension Fund held its monthly meeting of trustees.

It was the first such meeting since the city agreed to tentative pension deals with the police and fire unions last weekend.

As part of that deal, the city will no longer be obligated to the terms of the 2015 pension reform agreement, including the extra payments.

Out of the loop in negotiations, it was inevitable that the PFPF Board would raise questions. And they did just that, before and during the meeting.

In sum, the PFPF believes that they had no say in the deal, and that without specifics, they can’t agree to the deal.

They also believe that the deadline to agree to terms by Mar. 15 is unrealistic, given that the deal is still opaque, especially relative to the role of the PFPF board — which was not at the bargaining table.

****

Before the meeting, Trustee Bill Scheu was asked about the deal.

He noted that there’s “no financial information yet,” in terms of the specific financial projections as to what it will cost the city.

Board Chair Richard Tuten expressed similar sentiments, noting that there are no numbers yet on paper that have been produced for the board or the media.

Scheu and Tuten expanded on these positions during the first hour of the meeting.

****

The position of Mayor Lenny Curry has been that such details are “exempt from disclosure” through the collective bargaining process.

However, it should be noted that the city projected real savings from the plan … when the city contribution was expected to be 10 or 12 percent on the defined contribution plan, not 25 percent.

In that context, the numbers are relevant to the discussion.

****

A public commenter kicked the meeting off, saying that he advocated signing the deal immediately, albeit with a waiver to make the 10 percent employee contribution voluntary.

The board disagreed.

Director Tim Johnson noted that the draft agreement cut out those voluntary payments, and advised that there be a workshop to discuss the pension surtax and the supplemental payments from the city, with an eye toward figuring out the board’s rights and role going forward.

Tuten advised that the lawyers be there to review the relevant ordinances, including the extra contributions from the PFPF.

“Until we have long-term numbers from the mayor,” Tuten said, the projections can’t be dealt with.

****

Time is of the essence, said a representative from the city’s office of general counsel.

“The agreements themselves provide for a short window. Everything has to be done by the 15th of March,” said Steve Durden of the OGC.

“The bills have to be introduced by Mar. 31,” Durden added.

Durden framed the deadline, meanwhile, as a device to facilitate the next budget.

As well, “parties just want things done,” Durden added.

That didn’t go over well at the table; the PFPF board asserted that they were dealt out of the negotiations.

****

Board members noted that the PFPF wasn’t a party to the agreement, yet Durden contended that the time frame was not elastic.

“We have no financial information, no nothing,” an exasperated Scheu said.

Durden advised that the “agreements were not done — the proposed agreements — until early last week. It has not been long. And I don’t know if it was appropriate to bring it to your attention.”

The workshop, said Scheu, is about the PFPF authority — not the terms of the deal, which is a different matter entirely.

“The mayor doesn’t want to pay the extra payments. We’re a little reluctant to give that up, now that it’s been codified by a federal court,” Tuten said.

“If the numbers don’t add up,” Tuten added, “it’s going to be a problem.”

Durden noted the board’s internal schedule conflicts precluded them getting together as a board.

“The mayor wants to get that information to you right away … what exactly’s in the deal,” Durden contended.

****

The deal was framed by PFPF Attorney Bob Sugarman as a “momentous decision … equivalent to a merger and acquisition. The numbers are very large, and you’re going to need legal advice, as well as outside advice.”

Requiring focus: the reliability of revenue streams.

“We’ve made promises with share plans, extra contributions … the contracts are a little hazy on what all this means,” Tuten said.

“Are we going to need the mayor’s complete plan? If he doesn’t spell out his numbers, we’re talking to ourselves,” Tuten added.

Tuten framed “what the mayor wants” as “irrelevant.”

“You don’t come and say — just sign it man, no big deal. Our responsibility is to the members, to make sure it’s fiscally sound … the mayor should be presenting a very convincing case at the moment to us … until we get those things from the mayor, there’s no way we can meet March 15.”

“A lack of planning on your part does not mean an emergency on mine,” Tuten said, eliciting laughter from the table.

“We’re going to need you to show us why this is a good deal,” Tuten said, “because you’re not going to be mayor in eight years.”

“Paying extra now doesn’t necessarily cost the city anything,” Tuten said, given the money will come in later.

“They don’t want to skip one year, they want to skip every year,” Tuten explained.

Tuten said they might need two months to figure out the specifics of the deal.

****

Scheu found it “shocking” that the board was being expected to approve a plan without hard numbers.

He also raised questions about whether the future value of the plan could be considered an asset.

Scheu also advised that “the mayor’s office will demean us” as a PR tactic.

“Now he’s likely to demean us for wanting to take our fidicuiary responsibility seriously. I for one think we need to exercise that,” Scheu said.

“We don’t have the power to sue the city,” Scheu said, “without city council approval.”

“The city is our partner here,” Sugarman said, “but we do have procedures we need to go through.”

This is especially true, Sugarman added, with a half a billion dollars on the line.

“Until we get a proposal, I can’t even tell you,” Sugarman said. “If the March 15 deadline is not realistic, that’s not our fault. We did not establish the Mar. 15 deadline. We need to know what we’re talking about.”

“It’s unlikely we’ll be able to do our due diligence in four weeks,” Sugarman said.

Sugarman noted that “each trustee has skin in the game,” and “you can’t buy enough insurance” to protect against personal indemnification if the pension deal doesn’t work out as advertised.

“All we have here is a deal sheet,” Sugarman said, and the real story is in the amendments and the ordinances

In sum, the PFPF believes that they had no say in the deal, and that without specifics, they can’t agree to the deal. They worry about revenue streams, usurped governance authority, and so forth.

There was also talk of enforcing the 2015 agreement in court, if need be.

On Friday afternoon, Mayor Curry offered a statement attempting to cool the tensions expressed in the PFPF Trustees meeting.

“Last weekend,” Curry said, “the Police and Fire union leadership reached a tentative agreement with us that keeps our promises to public safety workers, respects tax payers and is fiscally responsible. The tentative agreement included a timeline that would ensure that we solve this problem in a timely manner. The PFPF Board will have the financial information they need to make a responsible decision prior to their vote.”

Fire Union head Randy Wyse, in the crowd, understood the board’s position.

“I would not want the trustees to breach their fiduciary duty. They need time to make the right decision,” Wyse said.

Subpoenas with a side of sauce: The 10 biggest #JaxPol stories of 2016

Subpoenas with a side of sauce.

That’s one way to sum up the year.

In Jacksonville politics, 2016 started with subpoenas being delivered to Rep. Corrine Brown and her clique at a barbecue place on the Northside.

And it ended with a raid on Councilwoman Katrina Brown’s familial barbecue sauce plant on the Westside.

Katrina Brown’s family, which was granted/loaned over $600K by the city for job creation that never fully happened despite having years to do it, poured real money since that money came through into the campaign apparatuses of the councilwoman herself, along with Corrine Brown and former Mayor Alvin Brown.

As well, shortly after Katrina Brown got the Corrine Brown “Quick Pick,” she gave $500 to Corrine Brown’s former right-hand woman, Von Alexander, for what was called “marketing.”

That, my friends, is what we call a narrative arc. And a story that will have legs in 2017.

Beyond these issues, a heck of a lot happened in #jaxpol in 2016.

Political dynasties: toppled.

Conventional wisdom: shattered.

We are limiting ourselves to looking at the ten biggest stories of 2016 in Jacksonville politics.

In a year as driven by a change dynamic as any since the Consolidation era, this was an easy write.

The biggest difficulty?

Limiting the article to just ten stories.

***

The # 1 story of the year: the passage of the pension reform referendum Aug. 30.

Jacksonville Mayor Lenny Curry spent the better part of a year manufacturing consensus for the once unlikely seeming proposal of getting the Better Jacksonville Plan tax extended, and using the revenue secured to stabilize the pension debt.

Curry brought together a coalition that the city hasn’t seen since consolidation, with unions and union bosses; African-American pastors and community leaders; and other unlikely supporters, including every Democrat on the city council, lining up behind the mayor.

The manufacturing of consent went deeper than just influencers:
Also in play was a deep-dive data operation, with specific appeals made to medium-propensity voters, to female homeowners between the ages of 35 and 46, and to other blocs of voters, where support could be firmed up and maximized.

“Campaigns are tough,” Curry said at the victory party at the Hyatt on Aug. 30. “You’ve got to execute and win.”

Execute and win he did.

Curry leveraged support in the Senate and the House from regional power brokers, Sen. Rob Bradley and Rep. Travis Cummings, driving to and from Tallahassee with everyone from Marty Fiorentino to Randy Wyse, the head of the local fire union to guide and prod the bill through committees in each house, then through a floor vote.

Any resistance that might have manifested was quelled, as Curry had entire days of meetings with everyone in a position to kill the bill in committee.

It was a tour de force political performance; one planned out well before the session.

And while there is a long way to go to secure the future revenue from the current ½ cent sales surtax — a tortuous road through collective bargaining — Curry did the impossible: provided actuarial certainty that Jacksonville had a way to pay down its massive unfunded pension liability.

Story of the year? Absolutely.

But it had competition.

***

# 2: Angela Corey goes down.

While some other Northeast Florida titans drew their last political breath in 2016, the State Attorney from the 4th Circuit is arguably the most significant locally.

Legislators go to Tallahassee and Washington and generally toe the party line. They aren’t going to be outliers on the big issues of the day.

Corey? Very much an outlier.

It was a climate where the Koch Brothers are attempting to push criminal justice reform from the right, and various groups on the left and libertarian sides pushing for similar ends.

Corey’s “lock ‘em up” approach was as much of a throwback as acid-washed jeans, Milli Vanilli cassette singles, and asbestos insulation.

Corey? She stood athwart that trend, seeking more death penalty convictions than almost any district or state attorney in the country, and earning sobriquets like “the cruelest prosecutor in America.”

It all seemed to be going pretty well. Corey stacked regional and state endorsements like Scrooge McDuck stacking greenbacks. Her first declared opponent in the primary, Wes White, attempted to run an insurgent campaign with little money and institutional backing.

White got some traction, as the negation of the case for Corey, but it looked until June like Corey would get her third term.

Then, a funny thing happened.

Melissa Nelson got in the race, getting real money behind her, and the best political machine in the state — Tim Baker and Brian Hughes — doing what so many people wanted to do.

Getting paid to end Angela Corey’s political career (though one suspects that Baker and Hughes might have been willing to take that task on for free).

By July, Corey was cratering in the polls. By August, the scenarios in which Corey — the epitome of a disqualified candidate — would find even a dead cat bounce were winnowed down to nothing.

By September, she was a lame duck.

Melissa Nelson takes office in January, armed with a community and institutional support, a great team (Dave Chapman, handling comms next year, had been probably the best reporter on the Jacksonville city politics beat this century), and a commitment to reform.

Nelson will spend a big part of her first term cleaning up Corey-era messes.

There will be stumbles.

But Melissa Nelson, unlike Corey, is willing to have a dialogue with the media and the community. And she is looking for applications of justice that actually heal rather than divide communities.

As hinted above, Corey’s political obituary wasn’t the only one written this year. In fact, the third-biggest story in Jacksonville this year was a variation on that theme.

***

#3: Corrine Brown goes down, and Jacksonville loses a congressional seat.

When federal agents served subpoenas up to Rep. Brown and political operatives at the Bono’s on Norwood Avenue, it was the beginning of the end for the congresswoman.

Though she ran a modified version of a re-election campaign for her seat in Congressional District 5, Brown was wounded.

She couldn’t raise real money. She was distracted by the legal fight. And when asked during and after her sole televised debate about the incompatibility of a 23-count federal indictment and a campaign for re-election against a Democrat as connected as Al Lawson, Brown said that the charges against her were as absurd as accusations of pedophilia against news media members.

“The Fifth Amendment says that the prosecutors have to prove their case. Now, what if I said, as we standing up here talking, that you were a pedophile? You would think there would be something wrong with me. So, you would put together a team of lawyers and you would go to court, and duke it out in court. And that’s what I’ve been trying to do. Just because someone accuses you, doesn’t mean that they have the facts. The federal government under these, have a slush fund, and they can do and they can bring charges,” Brown said in August.

She’s not saying that now. Or much of anything. The waiting game of 2017 now involves seeing when and if her inner circle (including/especially Ronnie Simmons, her co-defendant and almost-erstwhile chief of staff) turns against her in the One Door for Education trial.

Meanwhile, Jacksonville is in deep doo-doo regarding its representation, as Al Lawson hasn’t demonstrated a real understanding of local issues compared to those out west.

Jacksonville may produce a real challenge to Lawson in the 2018 primary, but the first two years of the Trump era are going to be challenging for Jacksonville. At a time when the White House is looking to fund ambitious infrastructure projects via expanding the monetary supply, a reliable Jacksonville veteran of the United States Congress will be replaced by a neophyte.

Meanwhile, we hear that the initial staffing process for Lawson is chaotic, with scheduling problems for mid and lower level staff interviews, and a distinct Tallahassee bent to those hired by his office.

***

# 4: Ander Crenshaw out, John Rutherford in.

“I won’t miss the circus, but I will miss the clowns.”

Those words from Rep. Ander Crenshaw, who represented Jacksonville in D.C. for eight terms, say it all.

Crenshaw was ready to step down. And former Jacksonville Sheriff John Rutherford, on the political sidelines since he was termed out in 2015, was happy enough to step up.

Crenshaw was the type of Republican prominent around Jacksonville in a bygone and better time; cut from the John Thrasher/Mike Hightower cloth, Crenshaw was the kind of conservative who didn’t fit the polemical Tea Party mold.

Because of that declining level of affinity with the grassroots, Crenshaw faced a primary challenge in 2014 from Ryman Shoaf — and it was a closer race than many expected.

Crenshaw’s decision not to run for re-election set up a lively primary campaign, with Rutherford forced to fend off State Rep. Lake Ray and the biggest spender in the race, Hans Tanzler III.

Rutherford, evidently, will attempt to maintain as much continuity as possible. Jackie Smith, a Crenshaw holdover, will run the district office.

That realization of the importance of continuity by their replacements is a major difference — in terms of impact — to the departures of Corrine Brown and Ander Crenshaw.

Of course, there’s more to Jacksonville politics than arrivals and departures. Some issues persist no matter who the incumbent is.

***

#5: The ongoing battles of collective bargaining

When “County Referendum 1” passed Aug. 30, allowing the extension of the one-half cent local sales tax to be devoted to the unfunded liability conditional on closing one of the city’s pension plans to new hires, it represented the fulfillment of one quest and the necessary beginning of another.

Mayor Curry counted fire union head Randy Wyse and police union leader Steve Zona as allies in the run-up to the referendum. However, that was destined to be a short-term accord.

As the days got shorter in 2016, it became apparent that the city and its unions — especially its public-sector unions — were far apart.

The union heads will tell you: getting competent new hires to come in and stick around with a promise of little more than the same 401(k) an office jockey gets is not a sustainable strategy for workforce development and retention.

Cops in their 20s may not see that the future involves them being battered and broken down from the job. But add a wife and 2.5 kids to the equation, and then the future moves from an abstraction to reality.

Thus, the unions want the Florida Retirement System for new hires.

The current sheriff, Mike Williams, is caught between labor and management, and his comments to us a few weeks back reflect that.

While Williams wants a “competitive pay and benefit package,” he contends the “vehicle” doesn’t matter — a position that is news to the union.

Former Sheriff John Rutherford, advocating pensions for officers while in office, has yet to see a defined contribution plan accounting for the real downside risk of a career as an officer.

Expectations are that general employees will be the easier sell on DC plans for new hires. But with six bargaining units to deal with, consensus won’t be quick — and probably won’t be in time for the budget deliberations of June and July.

Amazingly (or not), another pension story makes the top ten.

****

#6: Drama continues between city and Police and Fire Pension Fund

The PFPF continues to serve as a piñata for local politicians; 2016 was no exception.

Things were relatively quiet between city hall and the pension fund in the first quarter, until the city and the fund squabbled over the controversial “senior staff voluntary retirement fund” that served to benefit former executive director John Keane and a few others.

Just as May brought in the summer heat, Jacksonville’s general counsel issued a ruling that — contrary to the PFPF position — the fund was subordinate to the city, and the general counsel was, in fact, the prevailing legal authority.

The PFPF attempted to appeal to Florida Attorney General Pam Bondi. But it didn’t do any good.

From there, the PFPF cropped up again — a $44 million accounting true-up, for which the fund claimed to have a waiver from the state, allowed Curry to win a November news cycle by excoriating the fund for its sloppy financial practices.

Curry’s ire was undercut in December, however.

The city’s CFO and the executive director of the PFPF appeared together at a Dec. 7 meeting of the Jacksonville City Council Finance Committee.

They said the documents regarding the waiver leaked to the media before they had a chance to figure out a collaborative strategy to address it.

They also suggested that the extra $44 million or so of yearly costs — could be phased in over a few years, or even wiped out after collective bargaining with the public safety units wraps.

Whenever that is.

The CFO, Mike Weinstein, also undercut the mayor’s position by saying the $44 million was a “hiccup” compared to the larger unfunded liability.

A goal for the city of Jacksonville: to not have next year’s “stories of the year” piece marred by yet another chapter in the saga between the city and the PFPF.

There’s still a lot of work to do to get there.

***

#7: Municipal bond ratings improve.

In the “if it bleeds, it leads” world of television news, the esoterica of bond ratings doesn’t exactly drive the Nielsen #s.

But in the world of municipal government and finance, bond ratings determine the ability to borrow money, and the favorability of the repayment terms.

With that in mind, a big success of 2016 was rooted in Dec. 2015, when Mayor Curry and an entourage of senior city staffers flew to New York for that year’s annual meeting with the rating agencies.

Successes outnumbered failures.

JEA came out of the event with its first ever AAA rating. Standard & Poor’s Rating Services upgraded the rating on the City of Jacksonville’s sales tax revenue bonds to an “A+” from an “A” the previous year. Other rating upgrades followed.

By October, with the referendum out of the way, Curry’s office was able to trumpet the improved perception of its financial management.

Examples thereof: documentation of Better Jacksonville Plan sales tax revenue upgrades in February to A+ from S&P and Fitch, with a A1 from Moody’s in that category; a March upgrade to AA in excise tax revenue from Moody’s; a July Fitch AA long-term credit rating and an AA issuer credit rating predicated on expectations the city will “continue to demonstrate a prudent level of fiscal management” and “continue to moderate the impact of its pension liability on the annual budget;” similar upgrades in the special revenue rating in August; and an upgraded commercial paper rating in September.

Curry ran as a CEO type with an accounting background, and though his team deserves a lot of the credit regarding the nuts and bolts actions, Curry brought it together.

That wasn’t the only major story of 2016 involving JEA, however.

***

# 8: “JEA Agreement

“It’s important to put this in context,” Curry said in March when signing off on the deal.

When Curry came into office, there was a “narrative” that there “didn’t look like a way forward” for the mayor’s office, the Council, and JEA on an agreement.

Curry pushed Alvin Brown’s appointees out, for the most part, and put in his people, creating a “strong board.”

And that strong board was a mechanism to get an agreement between the city and its utility through 2021.

To recap: the JEA Agreement applies between the city and the utility through 2021, with the current JEA contribution set at about $114.2 million, with minimum annual increases of 1 percent. It also allocates $30 million of total funding, split evenly, from JEA and the city for five years for water and sewer projects. And two million dollars a year in water quality trading credits, which will go to stormwater needs.

The stormwater projects are already under way, and they will help to close a long-standing infrastructure gap between pre-Consolidation communities and the rest of the city.

Curry’s comfort level with JEA is such that even when the CEO was out of town during Hurricane Matthew, the mayor did not take the opportunity that some on the city council did to question his priorities and job performance.

Speaking of Hurricane Matthew, that was a pretty big deal also.

***

# 9: Hurricane Matthew

There was a reasonable chance in October that, if the storm had moved 40 miles west when trucking up the Florida coast, Jacksonville would have been devastated.

In fact, the city did pretty well, considering.

While St. Augustine got hit with higher winds and more devastating flooding, which the city is still recovering from, Jacksonville dodged the catastrophic hit that was feared as the storm approached.

To be clear: there were tens of millions of dollars of damage.

Debris removal from rights of way and parks cost a couple of million dollars.

Streets, drainage, and parks likewise required a real financial commitment.

The road to Huguenot Park still needs repair.

And over half the city lost power, with, in some cases, restoration taking up to a week.

But Mayor Curry, the sheriff’s office, and mayors of the beach communities coordinated evacuations for zones where half the city’s population lives (as well as the entirety of the county east of the Intracoastal), and despite the property damage and inconvenience, Jacksonville got through the storm.

***

#10: Duval GOP dysfunction

While there are probably stories offering more civic import, worth watching is the continuing decline of the Republican Party of Duval County.

This tale of infighting goes back well before 2016 began, of course. But 2016 had enough drama to make up for it.

The year started with Lake Ray as party chair. That lasted until May, when Cindy Graves took control.

All seemed to be going well enough. From the outside at least.

Karyn Morton, who backed Graves at least by the time votes were counted, said in a news release: “Cindy is the leader our party needs right now.”

Note the temporal phrasing.

The election came and went, and despite Trump getting elected, there was still some trouble brewing.

Just like Andrew Ridgely and George Michael in Wham!, the Morton/Graves alliance would turn a different corner soon enough.

By summer, Morton was grousing as Graves spoke at GOP events, saying that “the leader our party needs right now” doesn’t know when to shut up. [Paraphrased, obviously]

Summer turned to fall, leaves turned on and fell off the trees, and quiet dissidence turned into open rebellion.

December was Graves’ undoing.

Morton ran against Graves, and her speech brought the quiet frustrations to light, as it was peppered with descriptions of mistakes from past leadership.

Some of the old guard wasn’t allowed to vote, including Rep. John Rutherford and Mike Hightower.

Meanwhile, some new Republican Executive Committee members were allowed to vote. And they made the difference.

A veteran of party politics says Morton and the other party officials constitutes the “worst leadership since 1980,” predicting “Audrey Gibson will have a field day” as local Democratic chair, as Republicans “decentralize” in the short term … an important factor to look for as the 2018 races ramp up.

Will Morton be able to appease the donor class? That question remains to be answered.

***

And that was the year that was.

Will 2017 have as much barbecue-related drama as 2016?

Probably not.

But it will have drama, personality clashes and, if we’re lucky, some things on the policy front as well.

Jacksonville CFO: money in $44M pension “waiver” is “hiccup” compared to total liability

[Updated: 6:40 p.m. with commentary from Mike Weinstein, at the bottom of the piece.]

In the Jacksonville City Council Finance Committee Wednesday, Mike Weinstein, the city’s CFO, and Tim Johnson, the director of the Police and Fire Pension Fund, discussed a “waiver” in pension cost allocations that had been controversial in recent news cycles.

Their joint appearance was notable for a unified message, in which Weinstein said the city and the PFPF were on a “solution path” and that the money involved in the waiver was a “hiccup” compared to the larger unfunded liability.

However, countermessaging soon followed.

Shortly after this was originally posted on Wednesday afternoon, the city’s Chief Administrative Officer, Sam Mousa, took issue with our description of the unified messaging of Weinstein and Johnson as a “kumbaya moment” between the PFPF and the city.

“There is no kumbaya on this pension issue. We are still livid over the issue and we still are of the position we did not know and the fund did not follow state law.  They misrepresented the fund value for years and we are not happy,” Mousa wrote in a text and said on the phone.

However, the ameliorating tenor of the Weinstein and Johnson messaging in Finance did not reflect Mousa’s concerns primarily.

Weinstein and Johnson agreed on a more calming message: that so-called waiver, once expected to near an extra $45 million budgetary hit in the FY 17-18 budget, likely won’t be as dramatic or sudden a hit as expected … even as the city and the PFPF diverge on the legality of the waiver.

The two outlined potential workarounds for what was feared to be a budget-busting lump sum hit to the city’s general fund, including spreading out the cost over years and absorbing the impact into amortization after collective bargaining.

No matter how the waiver is mitigated, the city will be on the hook for at least $200 million in pension costs in the next fiscal year.

However, this reframing of a narrative that caused toxic confrontation between Curry and one union head seemed well-timed; CFO Weinstein delivered it just before boarding a plane to New York with Curry and other senior staffers, for pivotal meetings with bond ratings agencies that will last for the rest of the week.

****

In their comments to the Finance Committee, Weinstein and Johnson both noted that the projections in question were from a “draft actuarial report” not intended for public consumption.

“In the draft that came over,” Weinstein said, “there were some changes in the assumptions that were made … that would affect next budget year.”

Among those changes: a “$25 million uptick” in the payroll growth rate.

“We talked about options on how we deal with this,” Weinstein said, “then it sort of got out from under us in the press.”

Since 2008, the actuary had been using a higher growth rate than is actually the case: a 3.25 percent payroll growth, when the real number is 0.67 percent.

“Though statute requires calculation for 10 years,” Weinstein said, “there’s wiggle room [to] adjust [calculations] … but normally not for ten years.”

All parties have believed, said Weinstein, that there was an “indication of state approval.”

“The consequence is that our payments have been a little less than they should have been,” Weinstein added, noting that “this is money we owe” and the payroll component is a mere “$25 million of a $2.5 billion issue.”

Weinstein delineated options to ameliorate the hit.

“One of the options,” asserted the city CFO, is to “get through the union negotiations and everything is redone, and this uptick [becomes] negligible.”

Another option: to ask the state Division of Retirement that the police and fire pension fund take the hit in sequence over years, phasing in the obligation so as not to offer too much of a shock to the general fund budget.

There is, said Weinstein, an “actuarial analysis every year. We have discretion … if local authorities decide to give them waiver … things could be different six months from now.”

PFPF head Johnson sang from the same hymnal as the city’s CFO, stressing that the report was a “draft,” and that actuarial reports on defined benefit plans, such as that of the city of Jacksonville, were “not unusual.”

The report in question, said Johnson: a “draft with the intent to identify size of the liability and how much money needs to be put in the plan this year,” leading to eventual discussion in an open meeting with the board.

As well, Johnson noted potential options to ameliorate the hit, including staggering the payments or, in accordance with the terms of 2016 legislation that authorized Jacksonville’s pension reform referendum, “wash[ing] the increase” when the amortization period is stretched to 30 years.

“I wouldn’t be surprised if board comes up with a recommendation,” Johnson said, “to phase in these payments” and “lower the [city] contribution.”

The changes in the mortality table, a big talking point in a meeting in January between Weinstein and other senior city staffers, will result in $8 million of the $44 million in question.

Meanwhile, $33 million is attributed to payroll growth, Johnson said.

The $25 million in question was identified via an “experience study,” Johnson said, which “replaced the 3.25 percent growth rate with rate that matches inflation: 2.5 percent.

Then, the number was adjusted to the real number of 2.5 less than 1 percent, “based on the 10 year average of payroll growth,” Johnson said.

In other words, the actuarial changes were demystified.

Johnson urged the committee to “look at this in the context of past history … various assumptions that actuaries use to project liability.”

“Very likely, board is going to have to discuss if they are going to accept assumption,” Johnson added.

****

Weinstein cosigned the message, affirming the validity of the so-called “waiver,” even if the “terminology may not be exact.”

“The fact that different process is used,” said Weinstein, “was brought up frequently over the years … the city was told there was a waiver … wiggle room.”

Weinstein then addressed the pension reform of 2015, which scheduled $350 million more of city contributions over 13 years.

“The fact that more money has been put in has been helpful,” said Weinstein, but “not to anyway that would drastically change this calculation,” a “little hiccup” that would affect two or three years.

Weinstein has found the state’s Division of Retirement to be “unbelievably helpful.”

“They want to help us get to a solution,” said Weinstein, and have vowed to “return a new actuarial study almost immediately to help us with our budget,” after pension negotiations, which Weinstein hopes will be wrapped in time to “have benefit for next fiscal year.”

“We don’t have to close all of them,” Weinstein said, noting that an accord with general employees would unlock the revenue source.

****

The city, of course, wants to “get out of the pension business.”

But that has yet to happen.

And one Finance member, Councilman Bill Gulliford, noted that the city’s expected rates of return, which are between 7 and 8 percent in all pension plans, is “no longer considered a conservative rate of return.”

Weinstein noted that the PFPF had a “9 .5 – 10 percent ROI” this year; however, that is during a bull market, and the flux in rates of return illustrates “why we have to get out of this business.”

“Decisions made over the last two decades that have gotten us to where we are with our pension plans. We are on a solution path,” Weinstein said.

****

One union head – Randy Wyse of the Jacksonville Association of Fire Fighters – spoke favorably of the commentary on offer in Finance.

Weinstein and Johnson, Wyse said, were “honest and handled questions well.”

Wyse had a different reaction to Mayor Curry’s reaction in the media to the draft documents, however, asserting that showed “his lack of institutional knowledge of how this works.”

It was, said Wyse, a “kneejerk reaction” by Curry “to think something was illegal.”

****

Weinstein offered a response to this piece Thursday evening, and it is below in full.

“The chair [of the Finance Committee] asked for the conversation to move us forward not backwards. I mentioned numerous times the PFPF didn’t use the state calculation formula since 08 and each year it gave the city an incorrect result so our contribution was wrong. I also said numerous times when PFPF was asked by the division of retirement council members and administration why aren’t they using the state required formula their response was they have a waiver. I stated no such waivers can be given we find out. I also restated this is why we have to get of the defined benefit business. My opening comment was we have had decades of bad decisions that have brought us to this problem.”

“My position continues to be aligned with the mayor. Not following the state statutes resulted in a misrepresentation of the city’s financial obligation to the PFPF.”

“The hiccup was in reference comparing the 25 million to the 2.5 billion problem.  The hiccup was not in reference to the ongoing misrepresentation,”

Lenny Curry: Pension costs have ‘crippled’ Jacksonville

Another day, another pension pratfall for the city of Jacksonville. And this latest one will have big cost impacts, perhaps expanding the $2.85 billion unfunded liability.

Jacksonville Mayor Lenny Curry is incensed about the latest cost overrun from the perpetually beleaguered Jacksonville Police and Fire Pension Fund.

“It has come to my attention,” Curry wrote in an email to senior staff Monday, that “the pension fund actuary has been using standards that seem to violate Florida law when calculating the unfunded pension liability.”

“The impact could be as much as an additional $45 million to taxpayers when calculating pension costs,” Curry wrote, going on to label this “reckless disregard for the taxpayers from the pension board.”

Tuesday, Curry gaggled with local media on the subject.

“I’m frustrated,” Curry said. “This is more nonsense coming from the pension board. It appears that the actuary has not been using the standard [established] under Florida law in calculating our pension obligation. If that’s correct, if what I’ve learned is accurate, that’s going to end up costing the city another $44 to $45 million a year in pension costs.”

“It’s outrageous … I’ve asked my general counsel to look at this. Was it intentional? Is it a mistake or was it intentional? If it was intentional, what was the purpose? Who knew it was being done in an incorrect way? Why was it being done in an incorrect way? Were they trying to conceal how bad the pension crisis really is?”

“I don’t know the answers to those questions. But at the end of the day, every time we peel the onion back on the pension fund, it continues to disrespect and cost taxpayers more money,” Curry added.

“We’ve got to get out of the pension business! That’s what I’ve been saying with pension reform. We’re going to honor the obligations we have to existing employees, existing policemen, and firemen. I told them in the campaign: I believed they were promised those, earned those. But we’ve got to get new employees out of the pension business,” Curry continued.

“It’s not sustainable, and specifically when you look at the history of the pension business in Jacksonville; this $45 million problem again speaks to the long story of the pension mess in Duval County,” Curry added.

His team is “still gathering facts,” Curry added, noting that the current actuary will be leaving in January.

“He did some sort of a true up and said ‘here, this is how it’s done; we’re going to do it this way now.'”

Curry has asked his general counsel to “get an understanding of exactly what happened and what our revenues are.”

“We’ve got to get out of the pension business. They’re not sustainable. They’re disrupting the city’s future. They’ve crippled our city,” Curry said.

Curry noted that, while he wants to honor the commitments to current employees, the August referendum created a mandate for pension reform.

“Pension reform is getting new employees out of the pension business. Getting the city out of it too,” Curry said.

Of course, the city’s bargaining units all have different views on how that can be done.

The police and fire unions would like to see new employees in the Florida Retirement System; this option is a nonstarter for Mayor Curry, who believes it keeps the city from being able to control costs.

On a happier note, the Jacksonville Supervisors Association is more amenable to having new hires on a 401k plan, though like the other unions, the JSA would like pay raises that greatly exceed the city’s offers thus far.

When asked about the JSA’s receptiveness to defined contribution plans for new hires, Curry said it was “good,” though he demurred in offering a timeframe as to when negotiations with that bargaining unit might wrap.

“We’re going to continue to schedule collective bargaining meetings with everyone. General employees, police and fire as we go through this process, and work towards the end, work towards the goal.”

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