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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.”

National politics, political legacies, & the Jacksonville pension debate

Steve Zona, the head of the Jacksonville branch of the Fraternal Order of Police, got some backup over the holiday weekend from leaders of the state and national FOP in the biggest debate his union has had in some time.

They conveyed a clear message: the FOP has support in what looks to be a protracted period of collective bargaining with the city of Jacksonville.

“President Zona, thanks for filling me in on the details of your pension issue, I agree it is an issue of national concern and the 325,000 members stand with our Brothers and Sisters in Jacksonville,” wrote Jay McDonald, National FOP Vice President on Zona’s Facebook page.

State FOP President Robert Jenkins, meanwhile, offered a similar message of support.

What this all means: perhaps for the first time in the Lenny Curry administration (unless one wants to count the professional opponents and proponents of expansion of the Human Rights Ordinance who came to Jacksonville earlier in 2015), the Republican mayor is going to face national pressure to cave on his unprecedented plan to move all newly hired Jacksonville city employees to defined contribution plans.

Curry has some national backup, of course: central among that, the Koch Brothers’ front group Americans for Prosperity, which has set up a landing page saying that it’s “time to fix Jacksonville” in the light of the $2.85 billion debt caused by the “broken pension system.”

The page is intended to generate emails of support of Curry’s plan; thus far, despite publicity for the page in local news outlets, the emails received haven’t broken the server.

One interesting email generated from the page: that of fire union head Randy Wyse, who sent the same four paragraph form email everyone else did. When we asked him about it, he said that he was unable to erase the pre-populated message from the website.

Wyse, like his public safety counterpart Steve Zona, does not support the defined contribution proposal.

The heads of the public safety unions, who did support the referendum to unlock revenue from a sales tax extension pending new plans for new hires, want different plans for those hires: specifically, inclusion in the Florida Retirement System.

Collective bargaining sessions last week (Tuesday for the fire and rescue workers, Wednesday for police, courthouse staff, and corrections) established the parameters of the debate well.

Tuesday’s session saw the Jacksonville Association of Fire Fighters far apart from the city’s negotiators.

Calling the current pension plan “arguably the worst defined benefit plan in the state of Florida,” Wyse noted that when Mayor Lenny Curry “proposed the half-cent sales tax, we were supportive.”

Wyse sold the deal on the “knife and fork club” circuit, and the union put in $60,000 to sell the referendum.

However, once the referendum had passed, the differences between management and labor were laid bare.

The city wanted to offer a 14 percent raise over the course of three future years (7 percent in FY 18, 3.5 percent in the next two fiscal years).

A proposal to move employees to the Florida Retirement System: rejected, as the city insists upon defined contribution and the bargaining on a local level.

After that Tuesday session, Mayor Curry had a press conference in the large conference room in his city hall suite; fire union head Wyse was there.

The press conference was brief, giving the media a few quotes to counterbalance the drama involving city negotiators earlier in the day.

Curry explained his aversion to FRS.

FRS is “out of the city’s control,” Curry said, saying the city “can’t control costs” under the state model.

“It would be very easy for me to travel that road,” Curry said, but that would be “ceding the control of costs to the state.”

Wednesday saw Steve Zona making the case for police, courthouse workers, and correctional officers.

Armed with PowerPoint presentations and a compelling narrative, the stark case was made: in terms of “real” dollars, the value of a police officer’s salary has gone down since the 1980s. And a 401K would expose those officers to major risk given inevitable market under-performance.

Correctional officers are particularly exposed to risk, Zona contended; the average C.O. dies at 58 years of age, with lives truncated by exposure to risks of violence in the cell block, and exposure to communicable diseases.

Meanwhile, Zona contended, the city bears little risk in embracing the FRS solution; employer contributions have gone up just 4.1 percent over the last 17 years.

When asked about that Wednesday, Curry took issue with Zona’s assertions on a number of fronts.

Regarding the FRS option, the mayor reiterated his opposition — despite what Zona saw as minimal risk to the city.

“We’d be ceding control to the state,” Curry said. “and FRS doesn’t guarantee a solution.”

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Throughout the country, there have been pushes to move public safety workers — specifically new hires, who have no expectations of the future being guaranteed — into 401K plans.

The standard response from labor: mobilization.

An article in Law Enforcement Today from earlier this decade explains how the strategy played out in Illinois.

“Here in Illinois, these groups have been very successful blocking some legislation that would have been very harmful to both state and municipal pension plans.  These groups are only successful because they have united law enforcement officers and firefighters statewide.   Without that sort of strength our pension funds would have been ruined.  When detrimental legislation comes up these groups have been able to garner such huge support that the state legislators have had no choice but to stop and listen…

“During one such legislative push an Illinois State Representative was quoted, as saying all the representatives were receiving so many calls about the legislation that no one could make any outgoing calls from their office lines. If you are a young officer, do not make the mistake of thinking it will be fine just because retirement looks so far away to you,” the article advises.

Locally, politicians can expect a similar pressure.

We understand that there may be police officers showing up, as they tend to do when their interests are challenged, to council meetings and the like. And they may have wives and kids with them to illustrate the effects of potential benefit changes on real people.

That is a strategy that historically has worked with this current iteration of the city council, many of the members of which are politically pliable. That has been a condition the mayor’s office has enjoyed, as the “strong mayor” model (accentuated by persuasive senior staff members) has allowed the city council to trust what this mayor and his team has wanted to do.

Until now, this council hasn’t dealt with the real pressures exacted by organized labor. And in the only debate the current council faced that roiled the community — the one over the Human Rights Ordinance — most of the members of the council were unwilling to commit to a position one way or another on proposed legislation, even as council chambers teemed with passion on both sides. The LGBT community members who say legislation is needed to protect them, and members of churches and other advocates of limited government who caution against “unintended consequences.”

Will there come a point in the debate when the council steps up and takes the side of the police unions over the mayor?

For Curry, the commitment to defined contribution plans for new hires has many benefits.

It “takes the city out of the pension business,” creating a Jacksonville solution to a problem many cities will face going forward.

Being able to accomplish this solution, meanwhile, would write the mayor’s political ticket going forward.

During almost a year and a half in office, Curry’s word has been law in city hall.

But what is clear: the pension reform collective bargaining will be his toughest task yet.

 

 

 

 

 

 

Jacksonville police union: defined benefit pensions are not ‘dinosaurs’

Tuesday saw the Jacksonville Association of Fire Fighters slamming a pension reform proposal from City Hall. Wednesday saw the Fraternal Order of Police doing the same, offering its own proposals for police and corrections that include raises for all employees, pension benefits rolled back to 2015 levels for extant employees, and the Florida Retirement System pensions for new hires.

While union heads walked arm in arm for months with Mayor Lenny Curry in pushing County Referendum 1, which allowed for the extension of a 1/2 cent sales tax contingent on pension reform, the fork in the road came after the August plebiscite.

It started hot, with a discussion of how the majority of communities the size of Jacksonville have defined benefit plans.

“The city underfunded our pension,” FOP Head Steve Zona said, noting that with the surtax passed, “there is no financial crisis.”

Zona added that “if that surtax is realized, it will fund all three pension plans.”

Police union representatives noted in response to figures provided by city representatives, since the 1980s, the real dollar value of police salaries have actually gone down.

A “top end” police officer makes just over $62,000.

They then went on to argue that a 401K (the desired benefit plan of the Curry administration) is not viable for a police officer, given the risk of the job truncating career lifespans. Moreover, a market crash would provide even more adverse impacts.

The average increase per annum for a police officer: 1.4 percent over the last 16 years.

The police union contended also that JSO officers deal with the burden of being in the homicide capital of the country, facing increased risk of assault, and with the force overall bearing the impacts of attrition (#1 in the state, with resignations nearly tripling between 2008 and 2013), and increasingly difficult recruitment and training (including outsourcing training of some officers to nearby counties).

There currently are 34 vacancies on the force, and JSO officers haven’t had a pay raise since 2008, even as the purchasing power of the dollar has eroded.

Meanwhile,  Jacksonville’s starting salary is over $12,000 — or 33 percent — below the average starting salary in major Florida metros. Salary, insurance, pension contributions — all are deemed “not close to competitive.”

The police union contends that it would take a 17 percent raise to restore the entry-level officer to 2008 levels. This is especially troubling since, to fill a training class of 30, 300 officers have to be hired.

The replacement cost per officer: $100,000. Meanwhile, JSO competes with other counties that offer signing bonuses and cover Social Security.

With crime high and the quality of Jacksonville schools low, the union contends that effective and well-compensated law enforcement is especially important.

“Our current violent crime rate,” Zona said, “is the highest in the state and almost double the national average … we’ve been doing more with less, and because of this, our officers have been in danger.”

Zona, ahead of presenting a wage proposal, reiterated the lack of pay raises for eight years, and his union taking a pay cut years ago.

The beaches and airport police, he added, all make more than Jacksonville officers do.

“The offer you put on the table asks our officers to forget the last two fiscal years happened,” Zona said, adding a question: “Does the mayor intend to offer a more competitive insurance package for current employees?”

Insurance costs have “skyrocketed,” said Zona.

He then presented a wage proposal. 10 percent raises from FY 18 to FY 20, with a retroactive 3 percent raise going back to 2014, “which makes us a little bit competitive” with peer agencies.

From there, a pension proposal was presented, rooted in the context of the 2015 ordinance approved by city council that set a seven year agreement between police and fire and the city.

Zona noted that “pensions for police officers are not dinosaurs, not archaic … they are the market for public safety.”

Zona noted that Mayor Curry said that public safety members have “built their lives” around “promises” from the city.

“Our members already work in a city more dangerous than most … targeted for wearing a uniform … sit in a car, doing your job and they ambush you,” Zona said.

“Our members have earned and deserve a secure retirement,” Zona continued, noting that the Florida Retirement System is “stable” with “little risk to the city.”

Zona cited the task force report from the JSO, released earlier this week, that argued for a “competitive and reliable pension plan.”

Without that, problems with police service will be exacerbated.

Zona wants pension benefits restored to pre-2015 levels, ensuring that employees hired since then will have the same benefits as those hired previously.

New hires would be placed in the Florida Retirement System, which would “realize the terms of the referendum legislation.” Contributions would be 10 percent of salaries.

“If the mayor wants to be out of the pension business, this needs to be a 20 year deal,” Zona added.

City negotiators, after a pause, came back with “adjustments” to their previous proposal, asking for models from the police union.

The wage offer: increased to 2 percent for this year, 7 percent for next year, and 3.5 percent for each of the next two years.

The city still does not want new hires funneled into the FRS, remaining committed to the defined contribution scheme.

Combining classifications of current employees – bringing all current employees into the same class – is a point the city is willing to discuss, however.

The mayor, said city negotiators, is averse to the FRS because benefits would be defined by the Florida Legislature, and Jacksonville would be a “very small piece of that population.”

The city also is averse to “risk” imposed by not being a bargaining partner because of this scheme.

Zona pressed for more specific detail on the risk assessment, but detail wasn’t provided.

So he then provided it: employer contribution in FRS has risen just 4.1 percent in 17 years, which he asserts represents “very little risk” to the city.

“We want out of the pension negotiation business,” Zona said. “We don’t want it to be subject to politics in Tallahassee. There’s politics here too. You guys want to negotiate pensions with us every three years.”

Curry, meanwhile, “won’t be a mayor past eight years.”

Zona notes that previous mayors “failed miserably” in maintaining the integrity of pensions, and that the stable FRS offers “very little risk,” especially compared to the risk officers face every day.

Proposals were also rolled out for judicial officers and bailiffs. A 3 percent retroactive raise for judicial officers, and 2 percent for bailiffs, was the bargaining position going back to October 2014. From there, annual raises of 7, 6, and 5 percent would be granted, in 2017, 2018, and 2019 respectively.

After a break, the police union negotiators and the city negotiators returned to the table to discuss pensions for corrections officers.

The scenario Zona outlined was just as dire as that on the police side: low pay, stressful conditions (including exposure to physical violence and health problems, including communicable diseases), and high turnover.

Zona noted that no corrections officers in Florida have 401K plans.

Duval has the third largest jail population in the state, but in terms of starting pay for corrections officers, the county is 54th in the state.

Leave benefits: even worse. 55th out of 67 counties.

Adult AIDS and tuberculosis cases can be found in jails, and the average correctional officer lives to be 58, dies soon after retirement, and suffers issues related to substance abuse and family dysfunction.

“They took a 3 percent pay cut, just like everyone else,” Zona said, and “they haven’t had a pay raise since 2008.”

Zona extended a proposal: 10 percent increases in FY 18 through 20, with a retroactive pay raise of 3 percent — exactly the same as police officers. And all new hires would go to FRS.

“The same proposal on the police side, for the people humping it every day in corrections,” said Zona.

The city came back with the same proposal for corrections that it had for police, which left Zona “disappointed.”

FRS, Zona said, is “pretty low risk” for the city. And the savings plan?

“You work thirty years. You’re beat up physically, you’re beat up mentally, and the market crashes. What happens to their savings when the market crashes?”

Curry, in a phone conversation Wednesday, took issue with Zona’s assertions on a number of fronts.

Regarding the FRS option, the mayor reiterated his opposition — despite what Zona saw as minimal risk to the city.

“We’d be ceding control to the state,” Curry said. “and FRS doesn’t guarantee a solution.”

Curry noted that the city offer was “deservedly generous,” pointing out the raises of 7 percent in the first year, 3.5 percent in the subsequent two years, and a 2 percent one time increase.

Officers, Curry said, “have been neglected with no raises for years.”

“They’ve earned this, they deserve this … real money for real people who get up and go to work every single day

“This mayor is putting real money on the table. Period,” Curry said.

Curry also noted that, contrary to Zona’s assertions, that collective bargaining would have to happen every three years per state law.

The glad tidings of August, the rosy projections — all seem to have faded with the realities of negotiation, and a familiar retrenchment of management and labor positions.

For his part, Zona is playing it cool, as evidenced by comments he made in a gaggle.

Regarding the Koch Brothers‘ Americans for Prosperity group taking an interest in pensions locally, Zona said “ask them where they’ve been at the last ten years.”

Zona also had a message for the mayor.

“We want him at the table. The room will be full of police and corrections officers who don’t agree with him.”

Jacksonville pension proposal: A ‘shock’ to firefighters

Tuesday saw senior staff from the city of Jacksonville locked in negotiations with representatives from the Jacksonville Association of Firefighters.

Spoiler alert: those negotiations won’t be wrapped up in time for Thanksgiving. The fire union seems to prefer switching to the Florida Retirement System’s pension plan; the city likes defined contribution.

That is a huge gap.

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Collective bargaining has become a focus of the Lenny Curry administration, especially in light of the August referendum that requires closing of the current plans for new hires to unlock a guaranteed revenue stream years from now, from a half-cent sales tax that otherwise would sunset.

Union heads and city leaders presented a united front in getting approval for the referendum in Tallahassee, and in marketing the referendum in August.

However, collective bargaining is where the rubber hits the road. And what is clear is that the defined contribution model pushed by Curry and the fourth floor of City Hall is at cross purposes with at least one union, which sees the security of defined benefit pensions as essential to recruit and retain quality workers.

Jacksonville Association of Fire Fighters head Randy Wyse laid the facts on the table Tuesday in collective bargaining with the city.

The proposed pension agreement from the city of Jacksonville, offering defined contribution plans for new hires, is not good for his department.

Wyse noted the media had examined the proposal, which came as a “shock to a lot of firefighters.”

“Looks like a lot of people have looked at the plan,” Wyse said, name dropping The American Spectator magazine and Americans for Prosperity.

Wyse noted his union has played ball with the city for nine years, pointing out that firefighters took a 2 percent pay cut in the John Peyton administration, and supported “whatever the pension fund agreed to.”

Calling the current pension plan “arguably the worst defined benefit plan in the state of Florida,” Wyse noted that when Mayor Lenny Curry “proposed the half-cent sales tax, we were supportive.”

Just as Curry “burned a lot of political capital” pushing the pension plan, “so did we.”

The firefighters spent $60,000 marketing the Yes for Jacksonville referendum, and Wyse himself spent “hours upon hours” pushing the plan at “every knife-and-fork club there was.”

“Your proposal,” said Wyse, “will not recruit or retain” workers.

Wyse already spotlighted force attrition: 11 people have left in the last six months, for “better pay and better pensions elsewhere.”

Five interviews with new recruits were cancelled, over uncertainty over pension and benefits.

“I’m moving on to Orlando, Tampa, wherever it might be,” Wyse said regarding this workforce talent.

There are gaps between the union and the city on multiple issues, including projections of a consistent 7 percent rate of return and whether death benefits are in the plan or not.

Another sticking point for Wyse: a judicial decree from the federal court that pension benefits can’t be touched for seven years.

“We’re not waiving any of our rights,” Wyse said. “We’re not saying we’re not willing to talk, but we’re not waiving any rights.”

“I’ve got some real issues with no answer,” Wyse said to city negotiators, regarding the federal court agreement.

Another issue Wyse had: pension reform agreed to in 2015 is supposed to hold for seven years.

The fire union did have a proposal ready, and after some discussion among city negotiators, they agreed to not use the proposal “offensively” against the union.

****

A press release from the fire union laid out the objections to the proposal, which “does not qualify as a plan to either fully compensate or retain current employees to acceptable levels.”

“Jacksonville cannot afford to be a turnstile city for firefighters/paramedics,” the release continued.

The IAFF proposal posited a “one-time lump sum consideration” of 5 percent for 2016, for firefighters, engineers, lieutenants, and captains. As well, employees classified as Group II members under the 2015 agreement (those hired after June 30, 2015) would be changed to Group I. That classification allows for a five-year vesting period and retirement after 20 years of service.

COLA would be returned to 3 percent per year under the fire union proposal. The Deferred Retirement Option Program rate of return: 8.4 percent per year.

****

City negotiators had a verbal response to some components, with others to be taken back under advisement.

The proposed move of Group II under Group I: under advisement.

A proposal to move employees to the Florida Retirement System: rejected, as the city insists upon defined contribution and the bargaining on a local level.

Death benefits would be “comparable” to what current employees have under the defined benefit plan, said city negotiators.

COLA increases would be 14 percent recurring and 2 percent non-recurring over the course of five years.

****

“I’m very disappointed in the quick rejection of our formal retirement proposal,” Wyse said.

“The mayor said on Day 1 he wanted out of the pension business,” Wyse said, noting the Florida Retirement System proposal would accomplish that.

Wyse added that Clay County firefighters were watching, with one chief saying that “if [Jacksonville] goes to FRS, we’re going to lose everybody.”

Wyse reiterated issues with recruitment on the police side and retention on the fire side.

The city, meanwhile, balked again at the FRS proposal, not wanting to “leave it to the Legislature” to determine benefits.

Wyse and city negotiators talked about the level of risk assumed by the parties.

“What I perceive to be your risk: zero. There’s no risk to the city in your proposal,” Wyse said. “You’re just saying ‘here’s some money’ and all the risk is on the employee.”

“Risk to me is what you don’t know,” Wyse added.

Wyse notes the dangers firefighters face, such as running into burning buildings, getting shot at, and so on.

“We take on that risk unknown,” Wyse said, noting that firefighters wear bulletproof vests now, something he never expected to be the case.

Wyse noted that the firefighters are at 2006 wage levels, and sees the city’s proposed raise — which he and his team framed as 1.8 percent per annum — as a “lot low” and not aligned with the “commitment we’ve had from Day 1” from the city regarding pension reform.

As the noon hour approached, the discussion became less polite and more animated, with Wyse at one point questioning whether the city proposal is a pension plan at all.

Jacksonville’s pension reform efforts get national attention

Jacksonville is wrestling with a pension crisis decades in the making. And national media and political pressure groups are taking notice.

The venerable American Spectator magazine — a bible of movement conservatism — waded into the Jacksonville public pension debate last week, throwing sharp elbows at the Northeast Florida city’s pension crisis.

The Spectator hit on Jacksonville is part of a larger series discussing how “municipalities are also being hit with unprecedented pension debt.”

“Baby boomers are retiring. Some state and local budgets allocate more funds for pensions for retirees than they use for actual services and current worker pay. Once again, the younger generation is saddled with debt from a previous profligate era,” writes the Spectator’s William Patrick.

“Jacksonville’s unfunded pension obligations have blown a hole in the city’s finances and saddled residents of Florida’s most populous city with billions of dollars in debt and no ready way to pay it,” Patrick writes, without paying any heed to August’s County Referendum 1.

The “Yes for Jacksonville” referendum authorized the extension of Jacksonville’s half-cent sales surtax and dedicate it to funding the $2.8 billion unfunded pension liability, contingent on negotiated pension reform after collective bargaining with the city’s unions.

The Spectator article doesn’t discuss this, however. Instead, it savages the city for a lack of “accurate and transparent accounting data,” claiming “the city doesn’t have enough money to pay its bills”, that “the city is still hiding about $90 million in unfunded retiree health care benefits,” and that the city has a “debt burden … estimated at $6,100 per city taxpayer.”

“According to Jacksonville’s comprehensive annual financial statements, the city has $14 billion in assets. However, more than two-thirds are capital assets, such as roads, buildings, and land, leaving only $3.5 billion available to pay $5 billion in total obligations,” claims the Spectator.

“The 1.6 billion shortfall represents compensation and other costs incurred in prior years that should have been paid in those years. Instead these costs have been shifted to future taxpayers,” a report the Spectator cited from Truth in Accounting asserted.

Truth in Accounting CEO Sheryl Weinberg was unsparing in her critique of Jacksonville.

“If Mayor Lenny Curry and his administration want to address the city’s financial situation, the first thing they should do is publish accurate and transparent accounting data. The citizens of Jacksonville deserve an honest report on the city’s finances,” she said.

Ironically, this is something the Curry administration has sought to provide.

The city commissioned an audit from Ernst and Young shortly after Curry’s election; the audit pointed to the existential threat pension costs pose for the city.

“At 46 percent funded status, Jacksonville has the lowest pension funded status for the Police and Fire pension plan compared to other Florida cities included in the analysis. At 55 percent funded status, Jacksonville has the second-lowest total pension funded status for total consolidated pension plans,” the audit noted.

Without pension reform, the audit continued, Jacksonville would face long-term pressures on the stability of the city’s pension fund.

Without pension reform, the audit continued, Jacksonville would face long-term pressures on the stability of the city’s pension fund.

In a Monday conversation, Curry took issue with reporting from the American Spectator on this issue.

“It would appear to me they didn’t do their homework,” Curry said, noting that he’s been very vocal about the crisis created by unfunded pension liabilities for two years now, and has, with “clarity and transparency,” advanced a “solution tied to reform,” one that imposes “no additional burden” on taxpayers.

While “critics, so-called experts, and academics” pontificate, Curry is advancing “solutions grounded in principles” that he believes in.

“They wrote a story as if it’s a newsflash that Jacksonville is in a financial crisis, when I’ve been screaming at the top of my lungs that the crisis is here and must be dealt with now,” Curry added.

“We report with transparency and clarity … in accordance with [GASB] accounting rules and standards.”

Referring to the numbers used in the American Spectator report, Curry noted that they were “created and communicated” and “disclosed” by the administration … which counters the assertion from the conservative website that the city was not providing “accurate and transparent” accounting data.

The American Spectator, meanwhile, is not the only national entity taking an interest in Jacksonville’s pension negotiations.

Americans for Prosperity created a website (jaxfix.com) which allows interested parties to send form letters to members of Jacksonville’s city government, including the city council.

The website says it’s “time to fix Jacksonville” and its “broken pension system,” and includes a call to action: a form email that can be sent to elected politicians in the city.

The text exhorts site visitors to let Curry “know you appreciate him working to fix Jacksonville’s pension system problems,” and to let “the city council know that they should stand with Mayor Curry and get to work fixing the broken pension system.”

“Your city council works for you,” reads the AFP webpage, “not for Unions or special interests that are trying to keep Jacksonville broke.”

Curry said his political team has no involvement in this effort; that said, he’s “not surprised that groups would take notice” and he expects “that this will get more national attention.

Curry reiterated previous assertions that Jacksonville’s model of pension reform – which projects to be rooted in defined contribution plans for new hires, with current employee benefits guaranteed by a dedicated revenue stream after collective bargaining – could be a “model” for other cities facing similar pension issues.

One such city facing looming catastrophe: Dallas, Texas.

The New York Times reports that municipal bankruptcy may be on the horizon for Dallas, as the “city’s pension fund for its police officers and firefighters is near collapse and seeking an immense bailout.”

Risky investments and a tendency of older retirees to cash out their holdings have left Dallas seeking a $1.1 billion bailout – which does not even address the whole problem.

“As I’ve been saying for two years,” Curry added, “the crisis is here. It’s real.”

Dallas, like Jacksonville, didn’t get into its predicament instantly.

And Curry – despite the carping of the critics and their “soundbites” – is resolute in facing his city’s challenge.

“I’m facing the reality we’re in. We’re going to solve this,” Curry said.

Curry’s hope: that collective bargaining is completed in time for the next budget.

As those following Jacksonville’s situation know, renegotiated terms for new hires are a necessary prerequisite for the revenue that the ½ cent sales tax extension would allow in future decades, and – just as importantly – the guaranteed revenue source that sales tax extension provides

Paul Astleford says Visit Jacksonville gets results

With Gov. Rick Scott in Jacksonville announcing record-setting tourism numbers and attributing them to VISIT FLORIDA, it was only natural that Paul Astleford, who heads up Visit Jacksonville, would have his say on the “big numbers.”

With Visit Jacksonville under scrutiny for travel expenses, and with its contract due for renewal in a year, Astleford took advantage of the big stage and the media coverage to make his energetic case for Duval County tourism.

Astleford said “2016 has been a tremendous year for tourism in the entire Jacksonville area.”

“Tourism (and many people don’t know this) is a huge and growing economic development engine not only in the state of Florida, but here in Duval County. It produces $3.2 billion in visitor-generated spending,” Astleford said.

Those dollars “contribute significantly to the prosperity and the quality of life for all who live in Jacksonville,” he added.

Mirroring the governor’s invocation of the 1.3 million Florida jobs sustained by tourism, Astleford noted that 50,000 jobs in Duval County could be attributed to the industry.

These jobs affect “every sector of the local economy,” Astleford continued, “and these numbers continue to grow.”

In 2015, Jacksonville had 20.4 million total visitors; 9.7 million were overnight visitors.

“The numbers in 2016 literally continue to grow,” Astleford added, “over that record-setting year.”

October, said Astleford, was the 36th consecutive month of revenue growth per hotel room.

“Every area of our county has seen record numbers this year,” Astleford said, singling out the beaches for upticks in both “record occupancy” and rates.

Jacksonville, Astleford added, is outpacing the averages “of the entire nation” in terms of “occupancy growth percentages.”

“And for the rest of the state of Florida,” Astleford added, “we’re beating those figures as well.”

“We may still be considered an emerging visitor destination,” Astleford continued, “but our city is a natural water wonderland and a sportsman’s dream destination.”

Beyond that, sporting events — such as the Florida/Georgia football game in October, the TaxSlayer Bowl on Dec. 31, the TPC championship in May, and “our beloved Jaguars” — are major drivers of “Jacksonville’s emerging national and international presence.”

That success is translating into direct general fund budgetary impact also. Of the two cents of the six cent hotel/motel bed tax allocated to the Tourist Development Plan, anticipated revenue this fiscal year is $7.4 million, up $600,000 year-over-year.

New Jacksonville department heads are promoted from within

Two heads of Jacksonville departments are being promoted from within, it was announced Friday by the office of Mayor Lenny Curry.

Diane Moser, chief of Talent Management, has been promoted to serve as director of Employee Services. Stephanie Burch, chief of Real Estate, has been promoted to director of Neighborhoods.

Curry described these roles as “critically important” to his administration.

Moser has almost a quarter-century of experience in city government, with stints managing personnel services, and managing human resources at the Jacksonville Public Library.

Previous personnel services director Kelli O’Leary now works for the Jacksonville Transportation Authority, having left City Hall in September.

Neighborhoods chief Burch, a former counsel for the Florida Department of Transportation, is a recent addition to city government.

She was hired in March 2016 as chief of real estate.

However, the position heading the Neighborhoods department is a considerably more high-profile slot, especially in light of Neighborhoods being a major organizational priority for the Curry administration.

Neighborhoods was re-instituted in a much-ballyhooed reorganization, after the previous administration eliminated the department.

Finding leadership for the department has been a challenge. Derek Igou resigned the post without much warning in April, due to having a degree from an unaccredited university.

Kim Scott served as acting head of the department in the interim.

4th Circuit State Attorney-elect Melissa Nelson announces leadership team

As Melissa Nelson prepares to become 4th Circuit State Attorney in January, her administration is taking shape.

Two Chief Assistant State Attorneys, Mac D. Heavener III and L.E. “Leh” Hutton, were announced on Wednesday. Both Heavener and Hutton worked at the SAO previously.

Heavener currently is deputy chief of the U.S. Attorney Office in Jacksonville, while Hutton is a partner in the Willis, Ferebee & Hutton law firm.

Chosen as chief investigator is Timothy Quick, who will manage the office’s investigative staff. Quick is special agent in charge of the Norfolk NCIS office.

In a statement, Nelson affirmed these hires reflect the spirit of her campaign, in which she routed current incumbent Angela Corey in a closed GOP primary in August.

“Throughout their distinguished careers, Mac, Leh, and Tim have conducted themselves with unquestioned integrity. They bring a wealth of experience to our office and each shares my commitment to tough, but fair and ethical law enforcement,” said State Attorney-elect Nelson.

“Our office will protect our community, safeguard the constitutional rights of all, and exercise sound stewardship of taxpayer dollars. I am proud to have Mac, Leh, and Tim joining me to lead this important office,” Nelson added.

 

Americans for Prosperity issues call to action on Jacksonville pension debt

The major conflict in Jacksonville politics right now: negotiations between Jacksonville Mayor Lenny Curry and the heads of various public sector unions.

Curry wants to move the unions beyond defined benefit “dinosaur” plans, offering raises for current workers, assurances that their plans won’t change, and bonuses for the current employees.

The unions are reluctant to move toward the 401K model Curry advocates for future workers, saying there will be recruitment and retention issues.

Curry hopes to have this negotiation wrapped up in time for the next budget year. And Americans for Prosperity is trying to help, via a website that seems to misunderstand the issue being a matter of collective bargaining with seven different bargaining units.

The website says it’s “time to fix Jacksonville” and its “broken pension system,” and includes a call to action: a form email that can be sent to elected politicians in the city.

The text exhorts site visitors to let Curry “know you appreciate him working to fix Jacksonville’s pension system problems,” and to let “the city council know that they should stand with Mayor Curry and get to work fixing the broken pension system.”

“Your city council works for you,” reads the AFP webpage, “not for Unions or special interests that are trying to keep Jacksonville broke.”

AFP-Florida state director Chris Hudson says his group is putting a full-court press on Jacksonville residents.

“Our grassroots teams have been going door to door and phone banking to educate Jacksonville’s residents about the looming financial crisis. Our goal is to have thousands of face-to-face conversations across the city to encourage citizens to take action and call on their city officials to address the $2.85 billion debt brought on by the broken pension system,” Hudson asserts.

“Mayor Curry’s efforts to reform Jacksonville’s broken pension system should be commended. While we disagree with the tactic of allowing a sales tax increase to persist, we also believe that the city should be finding ways to cut spending and live within its means. Mayor Curry’s plan is a step in the right direction to give the residents of Jacksonville relief from these financial strains,” continued Hudson.

Will these efforts help with collective bargaining? That remains to be seen.

One union leader has already contacted FloridaPolitics.com with an email linking to the AFP site and the subject header: “Koch Brothers Money!”

Kerri Stewart cleared of ethics charges

Justice was delayed for an important member of Jacksonville’s city government. But on Monday, it was finally delivered, as one of the most honorable people in City Hall was cleared of what were ultimately spurious charges.

Last year, a report from the Jacksonville City Council auditor’s office implied Kerri Stewart, the chief of staff for Mayor Lenny Curry, had acted improperly years ago in a previous role with the city.

Stewart was head of the Neighborhoods department under the John Peyton administration, when a city contract was facilitated for consulting services from a company (Infinity Global Solutions) that she went on to work for.

Local media raised a ruckus about it at the time. One local outlet called it a “dubious” deal, predicated on a “no-bid contract” and the city had nothing to show for its million-dollar deal.

Meanwhile, at least one Republican council member wondered privately if there was substance to the wrongdoing, even going so far as to muse about Stewart potentially needing to resign her position.

However, after due process, the city’s ethics director concluded Stewart had done nothing wrong.

In an email to Florida Politics, Ethics Director Carla Miller summed up the current state of the case.

“This recommendation was reviewed by the Ethics Commission last night; the case was dismissed,” Miller wrote, adding that parallel cases were dismissed against two other parties: Wight Gregor and Mayor Lenny Curry.

Miller added other insights, noting “Stewart followed the procurement process that was in effect at the time.”

As well, those who wondered about the lack of clarity in the Council Auditor’s report might find this discussion of process interesting.

“I have been told that the Council Auditor’s report did not involve taking any statements from any of the interested parties,” Miller noted.

“That is typically how they do it, though — paper audits. Whereas, the IG’s office takes sworn statements.”

Miller offered a longer statement, in which she summed up the scope of the initial complaint.

“The audit issues revolved around the city’s purchase of consulting services (through a purchase order and contract) from Agency Approval & Development (now known as Infinity Global Solutions and hereinafter referred to as IGS) and the involvement of 2 City employees, Wight Gregor and Kerri Stewart in that purchase order/contract. The time period of the IGS purchase order/contract ran from March, 2007 through September 30, 2012. The total purchase order/contract with IGS went from a purchase order in March, 2007 for $85,000 to a contract with amendments that grew to $953,000. The contract ended on September 30, 2012 and the final payment was made to IGS on October 23, 2012, roughly 4 years ago,” Miller wrote.

The charge: “that Kerri Stewart and Wight Gregor had substantial involvement in the purchase order/contract with IGS and subsequently went to work with IGS (Kerri Stewart as Senior Vice President and Wight Gregor had IGS as a client) after they left City employment (Kerri Stewart on 9/3/2011 and Wight Gregor on 10/11/2011). To be clear, all funds expended were approved through the City’s procurement process.”

If this had been valid, Stewart and Gregor would have been on the hook for a panoply of charges, including misuse of position, soliciting future employment or compensation, and post-employment restrictions.

However, Miller wrote, it was not valid.

For starters, there was no evidence Stewart or Gregor were involved in the purchase order. Even if they had been, Miller writes, the two-year statute of limitations had elapsed. And even if it hadn’t elapsed, Miller notes the initial purchase order in 2007 preceded the ethics code of 2008.

“This is an old matter,” Miller notes, “happening between 2007 and 2012. The Commission does not have jurisdiction in these cases because of the statute of limitations. Therefore, the recommendation of the Ethics Director is that these cases should be dismissed.”

Miller also advises that the Office of Inspector General is more appropriate for reviews such as this.

Stewart’s attorney, former Jacksonville City Council President Jack Webb, notes the procurement process was followed to the letter of the law, and that the document authorizing the contract with IGS was signed by a deputy chief administrative officer to Mayor Peyton. Moreover, three other city officials signed off on contract extensions.

Thus, “the question of whether Ms. Stewart’s independence or judgement was compromised is implausible at best,” Webb wrote in his formal statement addressing the ethics inquiry.

As well, Webb notes that upon leaving city employment, she sought legal advice from the office of general counsel. Stewart adhered to the guidelines put forth in the letter, Webb wrote, avoiding any conflicts of interest such as representing IGS in a “conflict” with the city, or taking a role in the project in question.

Webb also rejected the contention that funds were somehow illegally diverted from the capital project accounts in question for consulting from IGS. Webb also added that the district councilman, Reggie Brown, had “full knowledge and total involvement” in the use of the funds, including monthly updates.

The “displaced ethical scrutiny” of this audit, as Webb put it, came later.

We talked to Stewart Tuesday afternoon, who appreciated the “vindication” of how this matter was resolved after a “horrendous six months.”

“I knew all along that I had done nothing wrong,” Stewart said, “so I wasn’t worried.”

For Stewart, who continued to work through the entire process, including through high-profile and high-intensity tasks as helping to finalize the current budget and helping the city to move forward toward the pension reform referendum, this period was a test.

However, she said, “I know better than to let other people’s political agendas distract from the mayor’s agenda.”

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