A.G. Gancarski
While most of the #jaxpol world focuses on whether the Lenny Curry pension tax proposal is a “new” tax, the real sticking point may be the defined contribution requirement that the Curry administration imposed as a precondition for new employees.
In that context, Curry’s “political capital” necessarily will be used, to a considerable degree, to get this plan to the finish line, perhaps among Council, in addition to Tallahassee.
A lead letter to The Florida Times-Union from local labor lawyer Tad DeLegal (former counsel from 1993-2007 for the Fraternal Order of Police, and husband of Extensive Enterprise contributor Julie DeLegal) makes some points that Team Curry will have to answer.
I am concerned, however, that the mayor’s plan calls for a 401(k)-type system (defined contribution plan) rather than the current defined benefit plan.
The task force reviewed a 401(k) alternative, and we concluded that it was neither necessary nor beneficial.
Revisions made to the defined benefit plan for new benefits have brought costs to the same funding level that would likely be paid under a 401(k) type plan, so implementing the mayor’s proposed plan is not likely to save any money.
In fact, abandoning the defined benefit plan will add substantial costs in the future and will reduce the quality of our police and fire departments.
Delegal, a member of the Pension Task Force under Mayor Alvin Brown, observes that “defined benefit plans provide benefits at the back end of a public servant’s career, but if the employee leaves early, he or she forfeits all or most of the benefit.”
“The 401(k) plans permit the employee to leave with the full value of the retirement benefit, so employees don’t face the disincentive against early departure,” he adds.
Delegal, who will be on Melissa Ross’ radio show Monday talking about this, also contends that “the defined benefit plan will create higher compensation costs. A 401(k) plan will not keep officers on the job for long, and eventually the city will be forced to increase pay to stem the turnover.”
An example of a city facing such an issue is Palm Beach.
“In 2012, the council severely cut the multiplier used to determine pension payments, and required police and firefighters to wait until age 65 to collect pensions — part of a broad package of pension benefit cuts the town said was necessary to avoid a string of budget deficits and put the pension plan on a sound financial footing,” claims the Palm Beach Daily News.
Palm Beach’s Public Safety Director said that 40 officers and 56 firefighter-paramedics have left since 2012, creating “a hard time with recruiting and definitely high levels of attrition in the public safety departments.”
As well, over 60 percent of public safety employees have been on the job for under three years, which creates leadership vacuums.
Clearly, there will be questions raised about the Curry proposal in the days to come.
Members of the Duval Legislative Delegation, thus far, have been quiet on the proposal. We sent a series of questions to them ahead of the session in Tallahassee starting next week that included pension tax questions, but have yet to hear back.
The Curry administration had meetings with police and fire unions on Friday; we reached out for comment from the mayor’s office on those meetings and whether or not those unions (two of the six that would be affected by changes in terms) were on board, but have yet to hear back.
The reality is this: if the unions don’t lend tangible conceptual support, this Council will balk. The first-term members will not hazard bucking the unions, and some second-term members have other political plans down the road, and will want those endorsements also.
It will be left to Curry’s team (read: CAO Sam Mousa and CFO Mike Weinstein, the local originator of this plan) to explain, in a way even the less cerebral members of Council will understand, how the Jacksonville plan differs from that of Palm Beach and other localities facing the unintended consequences similar attrition issues.
With Chief of Staff Kerri Stewart scheduled to address the Police and Fire Pension Fund meeting on Friday, when the rest of the #jaxpol world will be at the Martin Luther King Jr. breakfast, it will be interesting to see if she receives the kind of pushback that the former FOP lawyer Delegal says is warranted.
Meanwhile, another question: how many uniformed personnel will show up to the Tuesday City Council meeting for public comment?
The answer to that will have a bearing on Council’s position, as that body has been known to shirk from positions when Public Safety officers show up to make their very persuasive arguments.
