Civic Council proposes $1B solution for pension
Jacksonville Civic Council leaders, emphasizing "shared sacrifice" among current and future city employees, are recommending a billion-dollar solution to the city's $1.7 billion Police and Fire Pension Fund problem.
"This is a solvable problem. It inflicts pain on everybody," said Civic Council Chairman Steve Halverson of the recommendations distributed Tuesday.
The sooner, the better.
"We are insistent this move quickly," Halverson said. Delays in addressing the problems mean taxpayers are on the hook for more money.
The influential private corporate group delivered seven-page letters Tuesday to City Council President Bill Gulliford, Mayor Alvin Brown's Chief of Staff Chris Hand and Bill Scheu, chairman of Brown's pension reform task force.
Among recommendations, the group advises that the city:
• Contribute $1 billion in assets to the pension fund by refinancing debt at a lower rate or also contributing unidentified city real-estate assets to lower the debt burden.
• Lower the gross investment return assumptions to no more than 7 percent.
• Make sure pension costs not exceed 20 percent of salary, shared equally between the city and the employee.
• Lower the service accrual rate to 2 percent for new employees and 1.5 percent for existing employees.
• Modernize the investment authority to match the Florida Retirement System.
The letter outlines the problem, as well.
Along with the Police and Fire Pension Fund being "severely underfunded" at $1.7 billion, the general employee pension fund plan has an unfunded liability of about $1 billion.
If nothing is done, retiring the unfunded liabilities and paying for current pension obligations will soon consume almost 25 percent of projected city revenues.
"This is clearly not sustainable," it said.
David DeCamp, spokesman for Brown, said in a statement that the mayor believes the task force is the "proper vehicle" to help solve the pension issue. He also said Brown is "concerned about the idea of borrowing $1 billion and opposes increasing the burden on taxpayers."
However, the statement said, Brown "thanks the Civic Council for offering suggestions to the Retirement Reform Task Force and encourages interested community members to do the same."
Halverson and Peter Rummell, the Civic Council's inaugural chairman, would like Gulliford to draft legislation based on the recommendations and enact it by year-end.
Gulliford said Tuesday evening he had not fully reviewed the Civic Council proposal, but was "appreciative that they are interested enough to get engaged and advance proposals" for what has been a "big problem."
"It shows strong community engagement and interest and that's what we need more of right now," Gulliford said.
Gulliford said he thinks it would be a good idea to invite Civic Council leadership to council to discuss the proposal and would potentially schedule a meeting next week.
"It would be worthwhile to do that," he said.
Scheu has looked through the proposal a couple of times but said "it was too early to make any judgments."
He said he was grateful for the work put into the proposal and that "everything is the table."
Scheu has asked his task force members to keep 9-11 a.m. Monday open for a presentation, but declined to say what it entailed. The group is scheduled to meet for its normal meeting Sept. 20.
The Civic Council's letter to Brown, Gulliford and Scheu refers to letter June 20 from that group about the fiscal issues created by the unfunded status of the pension fund. Brown presented a mediated settle to council, which was rejected July 23.
Halverson said since that vote, the Civic Council has had more than a dozen people working to develop an alternative plan. Its subject-matter experts included Police and Fire Pension Fund Executive Director John Keane, who Halverson described as "very helpful, objective and dispassionate" in providing information.
Civic Council leaders are scheduled to meet with JAX Chamber leaders Wednesday and are ready to meet with council members, who have the final vote on the pension fund settlement.