New report addresses most pension issues
After months of study based on years of pension issues, the Retirement Reform Task Force today will propose several recommendations to fix those problems — with one key omission.
How the Jacksonville Police and Fire Pension Fund are governed is included.
So is the recommended creation of a volunteer investment authority.
Ways to reduce the unfunded liability are, too.
But how retirement benefits are decided won’t be because they are a matter of collective bargaining, according to a draft of the recommendations citing a Dec. 31 Circuit Court decision.
That includes contributions made by the city, current employees and future employees.
Most of the recommendations on the draft report can be made without collective bargaining and should be a part of a restated or amended 10-year agreement between the city and fund, according to the report.
It would replace the 30-year agreement signed in 2001 that determined minimum pension benefits. That 30-year agreement has another subject of concern for city officials and a court opinion has been sought for its validity.
The proposed 10-year agreement could end if the fund reaches an 80 percent funding mark.
It’s also recommended that what’s within the 10-year agreement be enforced by a “special master” appointed by the U.S. District Court for the Middle District of Florida.
On a quarterly basis, that person would determine if the city is making its contributions on a timely basis, if the financial advisory committee is performing its task, whether the fund’s investment performance is meeting assumptions, among other oversight.
The request is that U.S. District Judge Harvey Schlesinger is the initial special master.
On the governance side, one of the bigger recommended changes is the creation of an investment advisory committee.
The five-person volunteer group would advise the fund’s board on financial matters, investment strategy and selection of an outside services provider. Members would be Duval County residents, require periodic fiduciary training and be confirmed by the City Council.
Fund administrator John Keane last month said the idea of such a group “could be explored” if it provided comfort to council and others.
It’s recommended the fund will use the Office of General Counsel on its legal needs instead of employing outside counsel, as the general counsel’s opinions are binding for the entire city, including the fund.
The charter gives the fund the authority to hire outside counsel with the approval of the general counsel.
Council during the past several budget sessions has been critical of the fund’s outside legal expenses and administrative overhead.
Within the draft, the status of how the board’s fifth member is elected still remains. As it is now, two of the five members of the board are approved by council and the administration. Two more come from the public safety unions. The fifth member is appointed by the first four, which council and Mayor Alvin Brown’s administration has sought to change as another City-appointed member.
The task force also will receive a report from a subcommittee that in the past several weeks has studied how to fund the plan.
The task force initially suggested the city’s funding should be up to a $210 million annual contribution, which reflected allocating “existing budgetary resource allocations” of $120 million with another $90 million of new funding, “likely from increased tax revenues,” the draft states.
Among its recommendations:
• When forecasting contributions, investments shouldn’t be assumed to earn more than 5.4 percent.
• Economic and inflationary growth to the tax base shouldn’t be relied upon.
• For funding strategies, continue to use a 7 percent investment return assumption for actuarial and regulatory projections.
• Make annual contributions that exceed minimum requirements. This year the city is contributing more than $140 million to the plan.
The task force met this morning at City Hall to discuss the draft.