The reform deal reached between the City and Police and Fire Pension Fund offers a “comprehensive solution” to Jacksonville’s public safety pensions, according to a key consultant.
David Draine of Pew Charitable Trusts assisted the Jacksonville Retirement Reform Task Force that spent months looking over issues surrounding pension reform and how it would affect employees and future city finances.
The latest deal between the two sides doesn’t entirely reflect the recommendations that task force made, such as cost-of-living adjustments to current public safety employees. Those were left off the table, with fund administrator John Keane calling it a non-starter.
By leaving that portion out, the city reduced its savings by about $237 million, Draine said in his analysis.
That’s offset some by the fund turning over about $117 million in chapter funds and reserve accounts and another $26 million saved from final average salary changes.
In all, Draine estimated the task force’s recommendations would have saved $1.77 billion compared to the current deal’s $1.54 billion.
Long-term savings, a new plan design, adopting the majority of the task force’s recommendations and a disciplined funding source all led to Draine’s determination that the latest deal offers a solution to the problem that has continued to put a burden on city finances.
But while many recommendations were followed, there is lack of a funding source for the city’s additional $40 million in annual fund payments.
Some City Council members have offered early criticisms on that point, too. Draine goes on to discuss that those additional payments are cut off after 10 years, regardless if the fund reaches the 80 percent threshold that often determines a healthy plan.
Despite their absence, he said both aspects can be altered outside the negotiation process between the two sides.
Legislation reflecting the deal was introduced last week to council, which will spend the upcoming weeks reviewing the deal.
The latest deal came after weeks of discussions moderated by former state Sen. Rod Smith.
Current employees would end up paying 10 percent of their salaries toward their retirements after past pay cuts are restored. New employees start at that 10 percent contribution rate.
While there were no changes to cost-of-living for current employees, the rate of return for the Deferred Retirement Option Program went from a guaranteed 8.4 percent to a floor of 5 percent and ceiling of 10 percent.
With the exception of a retirement calculation, the plan for new employees mirrored the one the two sides reached last year.
Governance changes include the addition of an investment advisory group to help the fund, additional ethics and transparency guidelines and a method to select the fund’s next administrator. Like the cost-of-living stalemate, the board’s composition and selection of the last member remain unchanged despite Brown’s pursuit.