Jacksonville pension liability looms, but credit markets unfazed

Jacksonville’s pension reform package, passed earlier this year, takes effect Oct. 1 — ensuring that all new hires will be placed into defined contribution plans, rather than defined benefit plans.

However, those defined benefit plans have a price tag still, and a looming $3.2B unfunded liability to be addressed down the road, according to the FY 17-18 proposed budget.

General Employees Pension Fund:  64 percent of the $2.9B liability is funded, leaving $1.024B unfunded.

Correctional Officer Pension Fund: 49 percent of the $354.2M liability is funded, leaving a $178M unfunded liability.

Police and Fire Pension Fund: 43 percent of the $3.518 unfunded liability is funded, leaving a $2B unfunded liability.

Of course, there are caveats to this — such as pension reform locking up the half-cent sales tax as a guaranteed source of income, once the Better Jacksonville Plan obligation is paid off.

And the value of plan investments is appreciating.

The value of investments in the General Employee Fund: up 10.8 percent ($215.7M), to $2.21B.

Police and Fire Pension Fund investments are even healthier, with a $277.18M (16.9 percent) appreciation. The biggest mover: US equity markets, with a 30.7 percent ($195M) increase.

All told, the PFPF portfolio is valued at $1.91B.

Though one analyst from Bloomberg Intelligence raised worries about “downward pressures” in the credit markets for Jacksonville, based on high fixed-costs and pension liabilities, city officials strongly pushed back against this narrative Wednesday.

This week’s successful sale of $147M of bonds was described by the city’s chief administrative officer Sam Mousa as people “scrambling to buy” Jacksonville bonds, “a great indication of how great those bonds are.”

“The ratings agencies did well in looking at our history, stability, willingness to pay … these are good, stable bonds to invest in,” Mousa said.

Treasurer Joey Greive dismissed the Bloomberg article, saying the “bond results speak for themselves,” though later he conceded that “fixed-costs” were an issue for future concern.

CFO Mike Weinstein also noted the article said Jacksonville was “moving toward AA standards … moving in the right direction.”

“We’ve had three ratings done on the city since pension, and each of the ratings agencies rated us AA- and stable,” Weinstein said. “We are in good stead.”