Jax Police and Fire Pension Fund investments underperform

While Jacksonville leaders wait to see whether Tallahassee will give them the go-ahead on the Pension Tax referendum, they might want to consider the latest annual report from the Police and Fire Pension Fund, which offers disturbing auguries for the future of fund holdings.

The Jax PFPF report indicates a major downturn in equity investment income, mirroring that of the global equity markets, which are tanking.

The annual money-weighted rate of return for 2015: – 4 percent.

It was the third straight year of decline, though the fund outperformed its 7 percent rate of projected return in the preceding three years.

The fund was hammered in international equity, and energy holdings: international equity returns, down 11.78 percent; energy holdings returns, down 38.77 percent. U.S. equity returns were down about half a percentage point. All told, the net value of fund holdings is down year over year by almost $50 million.

With the city contribution already at $153.6 million in 2015, up from $38 million in 2006, the downturn in equity markets and other recessionary indicators are concerns.

One bright spot: the fund, which has been dealing with city litigation, scrutiny, and subpoenas (the latter of which were summed up by former Executive Director John Keane in an elevator conversation with this writer as “bullsh-t”), describes such legal maneuvering as “various claims and litigation arising in the ordinary course of operations, most of which, in the opinion of the fund’s administrator, will not have a material effect on the Fund’s financial position.”

With at least one Tallahassee lawmaker in the State Affairs Committee raising concerns about “this [time being] the window to look at benefit levels,” contending that the obligation “shouldn’t only be on the back of the taxpayer,” and  that the estimated $60 million in annual tax proceeds wouldn’t make a big enough in the city’s unfunded liability obligation, one might expect everyone from state lawmakers to Jacksonville voters to take a look at the fund, which has not been immune from the global macroeconomic turmoil.

The lurid stories about generous Jax Police and Fire Pension fund benefits may pale in comparison to the very real possibility of fund equity churn in future quarters and years.