Pension woes not just about money
Jacksonville's pension woes aren't just issues of unfunded liability or rising annual city contributions.
The structure and way the police and fire pension fund is governed also contribute, according to the chair of a task force charged with finding solutions.
Bill Scheu's nine-page letter detailed governance issues of the Jacksonville Police and Fire Pension Fund. The 17-member Jacksonville Retirement Reform Task Force will discuss it today when the group meets.
Scheu on Wednesday said he spent the past several weeks on the letter and that among his findings — as an individual board member — he thought the trustee elections, use of the city's general counsel and the idea of an investment committee are "particularly important."
Among Scheu's concerns:
• The election of the board. The five-member pension fund board includes one police officer, one firefighter and two appointees by the City Council. The fifth member is chosen by a majority vote of those four members, which has been a concern for city officials. A bill has been filed asking the Legislature to amend that to allow the fifth member to be appointed by the mayor and council. Scheu's letter asks whether the task force should seek such a change at the state or local level, even if through a referendum. Also, he raised the question of whether to impose term limits on board members.
• The use of the Office of General Counsel. Scheu said the intention of consolidation was that the general counsel would represent all components within the government. The fund employs its own legal counsel instead of using city attorneys. A 1987 letter from then-General Counsel James Harrison said the office could no longer represent the fund because the relationships posed a conflict of interest.
But Scheu's letter says other people who have filled the role, including current top attorney Cindy Laquidara, all have said Harrison is incorrect. Possible considerations include amending the charter to make the fund receive approval from the general counsel before hiring its own legal help. It also asks if the fund should use central services.
• The frequency of actuarial studies. State law requires actuarial reports on retirement funds no less than every three years, but the task force should consider doing it annually, Scheu says. The Pew Charitable Trusts, which is assisting the task force in its work, also advises the practice.
• Creating an investment committee. Other pension funds use volunteers who oversee investment managers. The fund does not, which the task force should consider if it is a "best practice," Scheu says.
• A potential conflict of interest. Scheu poses that "a fair question is whether a conflict of interest arises when the board, acting as the administrator of the pension also acts as the primary advocate for benefits provided to members of the pension." The board's role, as outlined by the charter, is to administer plan assets, but there is no provision giving it authority to advocate or negotiate benefits. Scheu's letter says that "no documentation has come to light to show how this unusual arrangement began" and questioned why it's been overlooked.
The issues will be a major part of today's meeting that also will include a report by Pew officials on various possibilities on plans the task force could recommend.
Scheu said he hopes the information and discussion that follows will lead to consensus — whether on one plan or a combination of the proposals — so that the task force could adopt a recommendation in January.