Jacksonville Civic Council: Brown’s pension plan ‘isn’t enough’
Mayor Alvin Brown's pension reform proposal for police and firefighters "makes very substantial progress" but "isn't enough," and should not be approved by City Council, the Jacksonville Civic Council said in a letter submitted Thursday to Brown and incoming Council President Bill Gulliford.
The Civic Council is a group of almost 60 civic and business leaders.
Members include Chairman Steve Halverson, who signed the letter; John Delaney, University of North Florida president and former mayor; Herb Peyton, Gate Petroleum Co. chairman; Preston Haskell, The Haskell Co. chair; Peter Rummell, who served as the group's initial chair; and Randall Onstead, Bi-Lo Winn-Dixie CEO.
The council reviewed the proposed pension reform and submitted a summary of the issues it saw in reforming the City's pensions, the mayor's proposal and recommendations.
With a $1.3 billion to $1.7 billion unfunded City obligation and contributions that continue to rise, "the problem must be solved and the time to solve it is now," the letter said.
The council's suggestions:
• Adjusting the rate the City is willing to guarantee on retirement savings. "It is important to be realistic — now — about our pension liabilities and not reduce scheduled contributions on the expectation of more generous returns," Halverson wrote.
An assumed rate of 7 percent or lower, starting immediately, "is prudent," it said. The rate is now 7.75 percent, with the agreement lowering it to 7.5 percent for fiscal 2015-16 and 7.25 percent for fiscal 2016-17. The lower the rate, the more the City must contribute.
• Reducing plan costs further than what Brown proposed. It suggests a target of about 10 percent of payroll as a starting point, with the City also reducing or eliminating Cost of Living Adjustments, commonly referred to as COLAs, until unfunded liability is retired.
• Making employees pay more. "It is fair to ask employees to pay more and it is fair for the City to match employee contributions," it said. New employees should have a contribution equal to half of the total costs, while existing employees also should contribute 10 percent of salary, it said.
• Staying current with contributions, despite increased funding. "It is crucial the City not fall further behind," it said. A minimum floor should be established and "pension holidays" should not be used to lower annual contributions.
• Brown should re-evaluate the agreement's term, which is proposed for 17 years. "The longer the term of the agreement, the more conservative the City must be in its underlying assumptions," it said.
• Considering moving City employees to a defined benefit plan, which reflects what the private sector has done. "It is tough, but it can be done," it said, while saying there are "significant issues" that can be overcome in a conversion.
• Consideration of new revenue, which includes discussion of a millage rate increase for ad valorem taxes. "Duval taxpayers enjoy the lowest millage rates of any major city in Florida. But we can't continue to ignore a billion dollar plus liability and push the problem to our children," it said.
Brown has been steadfast in his policy to not raise taxes.
"We are acutely aware of the consequences of these recommendations. They will put real stress on the City budget. They will not be popular," the letter said.
Gulliford on Thursday said he was in agreement with the six-page letter.
"I think their points are well-taken. The plan might be fine but it doesn't go far enough," he said.
Gulliford said the mayor's plan doesn't address whether the City is bound by a 30-year settlement agreement with the Police and Fire Pension Fund board of trustees that includes language about not reducing benefits. That agreement is set to expire in 2030.
Brown announced in May that the City and public safety unions had agreed to a deal to save $1.1 billion over 30 years, which includes $50 million in pension-related savings for the 2013-14 budget year that begins Oct. 1.
The $50 million was later adjusted to $45 million when Brown proposed two preliminary budgets — one with pension savings and one without — to City Council earlier this month.
Gulliford said most of the anticipated savings are back-loaded and called the early gains in Brown's plan "voodoo accounting."
"Are there some good things in the plan he (Brown) proposed? Yes. Did it go far enough? No," Gulliford said.
He said he applauded the council's effort to look into the issue.
Chris Hand, Brown's chief of staff, released a statement saying Brown opposed higher taxes that the council appears to suggest and the agreement "brings certainty and resolution to an issue that has lingered for years."
"When Mayor Brown submits his budget in July, the tax rate will be exactly the same as it was last year. He will not raise taxes," Hand said in the statement.
Hand said the savings from the agreement will be implemented as soon as City Council approves the deal, which without would mean $64 million in budget cuts to services and additional legal expenses.
Jacksonville Civic Council members
Barry Allred, Chairman and CEO, Elkins Constructors
Ron Autrey, President and CEO, Miller Electric
Doug Baer, President and CEO, Brooks Health System
John Baker, Executive chairman, Patriot Transportation Holding
Joe Louis Barrow, CEO, World Golf Village
Paul Boynton, President and CEO, Rayonier
J.F. Bryan, Principal, The Bryan Group
Ed Burr, President and CEO, Greenpointe Holdings
Walt Bussells, President, Forbes Street Capital
Carl Cannon, Retired publisher, Florida Times Union
Gary Chartrand, Executive chairman, Acosta Sales & Marketing
Moody Chisholm, President and CEO, St. Vincent's HealthCare
Rob Clements, Chairman and CEO, EverBank
Franklin Danley, Jacksonville City President, Regions Bank
Joe Delaney, President and CEO, MSC Care Management Company
John Delaney, President, University of North Florida
Marty Fiorentino, President, The Fiorentino Group
Fred Franklin, Chairman and managing director, Rogers Towers
Pat Geraghty, Chairman and CEO, Florida Blue
Nat Glover, President, Edward Waters College
Michael Grebe, CEO, Interline Brands
Hugh Greene, President and CEO, Baptist Health System
Steve Halverson, President and CEO, The Haskell Co.
M.C. "Ceree" Harden, CEO and chairman, Harden
Hugh Harris, President and CEO, LPS
Preston Haskell, Chairman, The Haskell Co.
Robert Hill, President and CEO, Acosta Sales & Marketing
Leerie Jenkins, Jr., Board chairman, Reynolds, Smith & Hills
Howard Korman, President and CEO, Jacksonville Greyhound Racing
Dave Kulik, CEVA Global Logistics (retired)
Mark Lamping, President, Jacksonville Jaguars
Rad Lovett, Managing partner, Lovett Miller
Kelly Madden, North Florida wholesale regional president, Wells Fargo
Sherry Magill, President, Jessie Ball duPont Fund
David Mann, Chairman and CEO, SunTrust Bank, North Florida
Eric Mann, President and CEO, YMCA of Florida's First Coast
Paul McElroy, Managing director and CEO, JEA
Rusty Newton, President, Timucuan Asset Management
Mark Nusbaum , President, The Florida Times-Union
Randall Onstead, CEO, Winn-Dixie
M. Lynn Pappas Gunster
Ava Parker, Lawrence & Parker, P.A., Linking Solutions
Herbert Hill Peyton, Chairman, Gate Petroleum Co.
Bob Rhodes, Attorney at Law
John Rood, Chairman, Vestcor
Peter Rummell, Rummell Company
William Rupp, CEO, Mayo Clinic
George Scanlon, CEO, Fidelity National Financial
Greg Smith, Market president, Bank of America Merrill Lynch
Martin "Hap" Stein, Jr., Chairman and CEO, Regency Centers
R. Bruce Taylor, CEO, Taylor Engineering
Tom Van Berkel, Chairman & CEO, The Main Street America Group
Michael Ward, Chairman, president & CEO, CSX Transportation
Nina Waters, President, The Community Foundation for Northeast Florida
Terry West, President and CEO, VyStar Credit Union
Jim Winston, President, Citadel Life & Health Insurance Co.
Charlie Zink, Co-chief operating officer, PGA TOUR