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.
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.
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.
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.
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.