A.G. Gancarski
Jacksonville Mayor Donna Deegan confirmed Friday she’s on board with a proposal being advanced to borrow from pension fund assets for needed renovations on the Jaguars’ stadium.
A review of one pension fund suggests that the city’s proposal to keep at least some of the financing from internal sources, which would give the pension funds a higher rate of investment return than bonds as Jacksonville pays back its obligation, could be viable.
For starters, the most recent draft copy of the Police and Fire Pension Fund’s Oct. 2022 actuarial valuation report (which helps to determine the employer contribution for the current fiscal year), suggests that the fund’s investments have been underperforming.
“Investment experience (on the net Actuarial Value of Assets) resulted in an experience loss (net of reserves) of about $37.5 million. The investment return on the smoothed Actuarial Value of Assets was 4.80% compared to the assumed annual investment return of 6.625%. (The net money-weighted investment return on the Market Value of Assets was -16.78%, as reported by the Plan’s investment consultant.) Investment gains and losses are spread over a five-year smoothing period, with gains and losses from prior years being smoothed into the current year.”
Simply put, the plan’s performance is roughly that found in today’s high-yield savings accounts, and investment in the stadium could be guaranteed a stronger rate of return than what the fund is seeing currently.
Another factor that the administration could use to make its argument for the stadium financing scheme is that the Police and Fire Pension Fund is actually not as fully funded as it was the year before, and is well below the 80% threshold historically understood as a best practice.
“This year’s funded ratio is 45.97% compared to 48.06% last year,” the report notes.
While some of that attrition is owed to changes in accounting methodology, there is nonetheless room for improvement. And some of that improvement could be tied to a more stable funding scheme than recent investments from the PFPF.
The city’s chief negotiator, Mike Weinstein, has noted that the 1/2 cent sales tax currently allocated to Better Jacksonville Plan obligations is expected to be repurposed toward pension obligations in early 2027, consistent with the deal made to close the defined benefit pension plan last decade in exchange for a defined contribution plan and the expansion of the sales tax. Yet the Police and Fire Pension Fund worries that sales tax may not be the magic bullet needed to deal with the debt.
The report notes that “annual contributions to the Fund in fiscal years 2018 through 2030” are “significantly lower than the recommended contribution levels would be to ensure the Fund accumulates adequate assets to make all benefit payments (in the absence of the pension liability surtax).”
Moreover, the PFPF document notes that liabilities exceed assets and that “the Fund’s assets are insufficient to cover the actuarial liabilities for inactive members. As of October 1, 2022 the market value of assets, net of reserves, is approximately $1.97 billion, and the actuarial liability for current inactive members is approximately $3.74 billion.”
The question regarding the sale of this plan: will using assets to fund stadium work guarantee better returns and more solvency for both the Police and Fire Pension Fund and the General Employees Pension Fund?
That’s the case the administration is going to have to make to stakeholders, and one strong talking point was rehearsed by Weinstein, who said the funding scheme would help the pension funds “close quicker.”
Current expectations are that financial obligations for the plans closed in 2016 to new entrants are now slated to be fulfilled in 2061, and beating that timeline would be good for the city’s bottom line.
The math might be with them, but if they are serious about going forward with this, they will need to start manufacturing consensus soon.
6 comments
The Dunning-Krugers of Florida
February 17, 2024 at 11:35 am
Flash ahead 26 years; the Pension fund is coming in short because of a litany of failed loans (Jags), people living longer (already hurting SS) and not enough of the State workforce contributing (we got them off healthcare plans to save money but then they can’t pay into the pension).
Your GoFundMe lifestyle needs to end, florida.
Billionaire welfare
February 17, 2024 at 2:39 pm
Dont forget these multi billion dollar stadiums are obsolete within 20-25 years max. Then you’re starting all over again before you’ve even paid for the last one, while that billionaire who took your check is long onto his new grifts. The stadium is a publicly FUNDED boondoggle with exclusive PRIVATE benefit—ie public welfare for a billionaire’s private enterprise and profits which he keeps and can move at any time. Look at cities with abandoned stadiums they are stuck with and still have to pay for. It’s a crumbling 20th century construct that just doesn’t make sense no matter how you look at it. Not in Hacksonville where people do not go to games and very few spend the $ on tickets. Most people operate under the assumption there’s some kind of trickle down benefit for the city. There isn’t. Just an albatross to taxpayers on the cost to build and all the upkeep, security, sewer, roads, drainage, security, maintenance, etc. that sucks the funding away from taxpayers’ real life needs like not having your street flood every time it rains, and actually helping prepare the city for storms and storm response, utilities that are affordable, actual functioning public transportation, clean streets that don’t destroy your car with its huge potholes, crime management (let us not hope for anything more), fair taxes, cost of living and affordable housing, could go on and on. But no. Let’s pay a billionaire all our money for a stadium no one wants to go to. And be stuck with it and all its costs while the billionaire pockets the check and moves on to his next victims.
Everyone on the city council and mayor’s office is bought and paid for because he funds their campaigns. All corrupt. Same stuff different day.
MH/Duuuval
February 17, 2024 at 9:26 pm
Actually, the diehard Jags fans comprise a loud, special interest that presumably votes regularly.
Myself, I prefer a place where basic public services are readily available to all, whether you live in Ortega or Avenue B.
We can’t have both stadium and services unless Khan steps up and embraces the city for something besides its NFL franchise.
Show us the money!
MH/Duuuval
February 17, 2024 at 9:21 pm
Social Security and Medicare can easily be fixed by increasing contributions from the uber-wealthy. They dominate so many areas of life in the US, why not taxes, too?
Nope
February 17, 2024 at 2:47 pm
They don’t even know what it’s going to cost. They will lie to get it approved and pay whatever it actually costs no matter what. Just like the courthouse and every development in downtown Jacksonville ever. Except the courthouse is to serve the public. The Jags franchise, any and all profits, those all go to the billionaire privately, paid for by the citizens. NFL franchises are NOT a public utility. They are privately owned businesses with private profits except all infrastructure costs and maintenance paid for by taxpayers. That’s just wrong.
MH/Duuuval
February 18, 2024 at 4:20 pm
I like the concept: if the people help pay for the stadium, then the people should get a cut of the profits. Works for me!
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