by Mike Sharkey
Staff Writer
It has taken nearly a year for the legislation to make its way through City Council, but Tuesday the Council Finance Committee finally approved a bill that paves the way for hundreds of City employees to elect one of two pension options. Ordinance 2007-1136 was first introduced to Council Oct. 23 of last year.
Since then, two different Finance Committees have been debating the merits of the bill that allows general employees and correctional officers to choose between the City’s current Defined Benefit Plan and the recently-created Defined Contribution Plan. According to a summary of the legislation attached to the Finance Committee agenda, a little more than 1,300 City employees and JEA employees will be affected. And, there’s flexibility within the plan, according to Director of Finance Mickey Miller.
“This allows employees the choice to switch (between the two) up to three times during their first five years of employment,” said Miller.
The bill affects those hired on or after March 1 of next year. However, the plan has its detractors, specifically the City’s Retirement System Board of Trustees. The group consists of eight members and is responsible for administering the Jacksonville General Employee Pension Fund. Board member Richard Cohee has been outspoken in his group’s opposition to the plan and laid out much of that opposition in an Aug. 15 memo sent to the entire Council. Tuesday, Cohee told the Finance Committee he had a number of issues with the plan.
“The Defined Contribution Plan may be more costly,” he said.
According to the legislation, those who opt to participate in the Defined Contribution Plan will be able to contribute 7.7 percent of their paychecks to the plan. In return, the City will contribute a minimum amount “to maintain the City’s exemption from Social Security, but not less than 7.7 percent.” Also, any employee who initially chooses the Defined Benefit Plan will be permitted, on the fifth anniversary of their employment, to switch to the Defined Contribution Plan. Anyone who enrolls in that plan after year five will not be allowed to switch back to the Defined Benefit Plan.
Cohee would like to see the City implement the plan with short-term employees first – those appointed to their positions – as opposed to those who may be looking to make a career out of working for the City. Cohee believes the administrative costs of the Defined Contribution Plan, especially due to the ability to switch back and forth multiple times in a relatively short period of time, outweigh any potential savings to the City or financial benefit to the employees.
“Let’s experiment with the appointed employees, not the long-term employees,” he said. “Not every new idea is a good one. There are a host of things that sound good the first time.”
Miller contends the new plan is an improvement on the way things have been handled for decades.
“The City has not handled that situation well the last 30 years. It has been mismanaged. It is clear Mr. Cohee and I could not disagree more,” said Miller, who implemented a similar plan in Orlando several years ago. “I would not be before you today if it was not in the best interest of the City.”
Council Auditor Kirk Sherman said his office has looked at the plan and said while there are administrative costs; they are “probably not a large cost.”
Sherman said he and his staff have examined the merits of the plan several times over the past 10 months.
“It gives options, but there is no safety net in the DC (Direct Contribution) plan,” said Sherman.
The bill passed and now needs full Council approval, which may come Tuesday. However, Finance Chair Michael Corrigan said he will look into ways to eliminate pensions for elected and appointed officials.
“I did not run for this job for the pension,” he said, adding he may ask the Duval Delegation to sponsor a J-Bill next spring that would remove elected and appointed officials from the City’s pension plan system altogether. “We have got to do something to control our pension costs.
“We can try this, but I want to monitor it the next couple of years.”
The Finance Committee deferred a bill that pertains to the Jacksonville Fire and Rescue Department and its 10-year capital improvement plan. The plan is the result of a study done by TriData. The study pointed out areas where JRFD needed improvement, specifically new equipment, replacement fire stations and new fire stations.
“We hope to have this in place by the final budget vote Sept. 23,” said JFRD Director Dan Kleman.
According to Kleman, additional rescue units are at the top of the priority list and will cost about $3.6 million. A new station No. 20 will run another $2 million.
“The TriData report said, and we concur, the need exists now to expand the department,” said Kleman.
After the Finance meeting, Corrigan immediately called to order the committee to review three departmental budgets that weren’t discussed Thursday due to time constraints. Without any wholesale changes, the Finance Committee approved the budgets of the Information Technology Department, the Tourist Development Council and City Council. However, the hot topic of discussion was Thursday’s final budget hearings and how they may be impacted by what is likely to become Hurricane Hannah.
“We are meeting Thursday morning no matter what,” said Corrigan. “It’s our responsibility to get the budget finished. If there’s a storm coming, we will shorten the meeting.”
Committee member Warren Jones – who is serving his second stint on Council – pointed that extraordinary circumstances in the past have dictated the need for Saturday Council meetings. A majority of the Finance members indicated they would be willing to meet Saturday if necessary. Peggy Sidman of the Office of General Counsel said she needed a final budget substitute ordinance by Tuesday.
“My goal is to have the entire Committee here and finish Thursday,” said Corrigan.
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