HOME
 
- 2014 - January - 22nd -
-
Brown

Mayor Alvin Brown’s new pension plan saves the city $2.75 billion, could mean JEA hikes

By David Chapman, Staff Writer

Mayor Alvin Brown says his new pension plan, plus an extra $40 million a year from JEA, will save the city $2.75 billion over the next 35 years and curb the city's escalating unfunded liability.

But, there are concerns the additional JEA payments could increase rates.

"There's no way you can do that without JEA customers paying for that," JEA board Chairman Mike Hightower said.

Brown's updated plan seeks to have current employees contribute more and have a couple of perks scaled back, while also keeping contribution and benefit adjustments for new employees the same as the plan he introduced in May.

He unveiled the latest proposal Tuesday to members of the Jacksonville Retirement Reform Task Force, telling members he listened "very closely" to the criticisms from groups and City Council that his first deal didn't do "enough."

Under the new proposal, current employees will pay more.

They currently contribute 7 percent of their pay toward pensions, but that would immediately rise to 8 percent and ultimately to 10 percent when past salary cuts are restored. New employees would contribute 10 percent, too.

The Deferred Retirement Option Plan, which allows participants entering retirement to defer retirement benefits in exchange for a lump sum payment later, also is largely affected. Currently, employees are guaranteed an 8.4 percent return, but under Brown's plan that turns into the actual rate of return.

Cost of Living Adjustments for current employees take a hit and would be capped at 1.5 percent and tied to Social Security cost-of-living adjustments.

The lack of a plan to attack the city's unfunded liability was a main point of contention among critics of Brown's first plan. Under the latest pitch, the $1.7 billion problem will be chipped away using portions of the city's annual contribution, part of the state "chapter funds" and the additional contribution from JEA — an idea Brown discussed several months ago.

The goal is to have the plan 80 percent funded by fiscal 2028-29.

Brown's idea is that JEA would pay an additional $40 million each year, which would go directly toward paying unfunded liability. The public-owned utility currently contributes about $110 million per year.

The extra payments would continue until the fund hits that 80 percent funded mark.

Brown's administration has had discussions with JEA CEO Paul McElroy, Chief Financial Officer Melissa Dykes and Chief Compliance Officer Angela Hiers, but there is no agreement.

McElroy told the Daily Record in November that the utility was "tapped out" and couldn't afford to increase the contribution.

Chris Hand, Brown's chief of staff, told the task force members there is an opportunity to allow the utility to put its employees on a separate pension, away from the city's general employees' plan, that could provide JEA long-term savings.

The possibility of a JEA rate increase was a concern among several task force members.

Hightower shared that concern.

He said he had not been approached about such a plan nor heard the figures, but that didn't mean others within the utility hadn't been.

In addition, Hightower said the additional contribution would mean the utility would be paying a disproportionate share to

the city, likely impacting JEA's credit rating.

That didn't mean the board wouldn't be willing to listen, he said.

"The JEA board is always open to having discussion with anyone," he said, later adding: "We are happy to entertain, have people bring us an idea."

The board would have final say in whether to increase the contribution.

Hand said the administration would likely meet with JEA officials soon and report back to the task force with any developments.

Task force Chairman Bill Scheu said he hopes to hear from McElroy at a future meeting about the idea. The group is scheduled to meet again Jan. 29, before its last scheduled meeting Feb. 12.

One idea Brown is not in favor of is a tax increase to cover additional unfunded liability payments, a recommendation that's still on the table for the group.

"It was why I was against raising property taxes," Brown said. "It goes to the point where I don't support the gas tax … Gas tax, library tax, bond taxing for schools, we're going to be taxed out."

dchapman@baileypub.com

@writerchapman

(904) 356-2466

Mayor Alvin Brown's latest plan

• Saves general fund $2.75 billion over 35 years

• Reduces city's general fund pension payments by $130 million over next five years

• Current employee contribution rises to maximum of 10 percent

• Cost of living capped at 1.5 percent, tied to Social Security cost-of-living adjustments

• Deferred Retirement Option Plan for current employees will have lower return rate

• No changes to new employees from old proposal

The original

• Saves general fund $1.1 billion over 30 years

• Would have saved $50 million in fiscal 2014 budget

• New employees contribution rate 10 percent

• Eliminated Deferred Retirement Option Plan for new employees

• Cost of Living Adjustments for new employees capped at 1.5 percent

• Changes largely affected new employees

Last Week
Month
3 Months
Published for 26,370 consecutive weekdays
 
Bailey Publishing and Communications, Inc. Bailey Printing & Imaging Realty Builder Connection
Covering events in the Realty and Building communities in Northeast Florida.
10 North Newnan Street · Jacksonville, FL 32202 · (904) 356-2466 · Fax (904) 353-2628
© 2014 Bailey Publishing & Communications, Inc. All Right Reserved.

Privacy Policy · Refund Policy