Group 4 At-Large City Council member Matt Carlucci wants the city to immediately pay off JEA’s estimated $338 million unfunded pension liability if the public utility is sold.
Carlucci said he will file legislation Wednesday that would earmark money from the minimum $3 billion in proceeds from a sale of JEA to pay for the utility’s unfunded liability.
“If it does happen — although this recapitalization has not earned my support — in the event it passes, I want to make sure this unfunded liability is paid off immediately and not set aside to grow and become a burden on the next generation of taxpayers,” Carlucci said.
If JEA is privatized or sold, its contribution to the city’s General Employee Pension Plan will end and the city would be responsible for all JEA- related contributions moving forward.
JEA senior management released an invitation to negotiate Aug. 2 to gauge interest and receive bids from companies or organizations interested in acquiring some or all of JEA’s assets.
The City Council approved legislation Sept. 24 that extends pension protection to full-time JEA employees in the event of a sale. The ordinance will require JEA to make a $132 million contribution to the pension plan to cover the cost of advancing the employees to vested status but would not cover JEA’s remaining unfunded liability.
Carlucci said he’s concerned that if JEA’s unfunded pension liability is allowed to sit unpaid, the cost to the city will grow. In an analysis of Ordinance 2019-566, the Council Auditor’s Office states the final cost of JEA’s unfunded liability should be calculated using a lower than expected rate of return on the pension fund so the city sets aside enough to eliminate the debt.
“The pension plan will be paying benefits for many decades into the future. Even if the pension is fully funded ... a downturn in the stock market can reduce that funding status and increase the city’s required contribution,” said the analysis.
Carlucci said his bill will address the Council auditor’s concern.
Before Mayor Lenny Curry’s pension reform plan was approved by Council in April 2017, JEA’s share of the city’s unfunded pension liability was an estimated $565 million. The extension of the 1/2-cent sales tax approved in the reform package that pays down the city’s pension debt, at present value, allots $227 million toward JEA’s unfunded liability, according to the Council auditor.
That leaves $338 million for the city if JEA is sold.
Carlucci said he’s not trying to make it easier to sell JEA but to protect taxpayers if a sale is approved by Council and Jacksonville voters.
“What I don’t want people thinking is that it’s clearing the way for the sale of JEA,” Carlucci said. “What it’s doing is preventing us from spending the net proceeds on other things other than the unfunded liability.”
