Flanked by leaders of police and firefighter unions, Mayor Alvin Brown announced Wednesday the City has reached an agreement with public safety unions to save $1.1 billion over 30 years.
He said the deal also includes $50 million in pension-related savings for the 2013-14 City budget, which begins in October.
"Together we have achieved retirement reform that will help ensure financial stability for both taxpayers and employees," Brown said during the announcement at City Hall.
The agreement will apply to police and fire employees hired Oct. 1 or later, but Brown said new employees would embrace changes to retirement benefits.
"They will support it because it is a fair plan. It is a strong step in the right direction," he said.
The current retirement plan requires employees to contribute 7 percent of their pre-tax wages to their pension. Brown's plan requires 10 percent for new employees.
Current employees also will be affected.
Firefighter salaries were reduced 2 percent Oct. 1, 2010, with police salaries reduced 3 percent Jan. 1, 2012. After those reductions are restored, one-half of any subsequent salary increase will be used to increase the current employee contribution up to a maximum of 9 percent, according to the mayor's office.
Steve Amos, president of the Fraternal Order of Police Lodge 5-30, and Randy Wyse, president of the Jacksonville Association of Firefighters Local 122, agreed the plan was a good move forward.
Amos said current union members weren't greatly affected by the plan and will experience a slight change when salaries return to pre-reduction level, but new employees might not view the change the same way.
"We are losing potential employees to other agencies because of the reduction of benefits for new employees," said Amos.
Retirement plan changes for new employees include:
• The ability to retire after 30 years of service at any age, up from the current plan allowing retirement after 20 years of service at any age.
• A cap on annual benefits at just less than $100,000, indexed to inflation with a cap of 1.5 percent. The current plan has no cap.
• The elimination of the Deferred Retirement Option Program, also known as DROP. Under the current plan, employees can enter the program at 20 years of service. The program allows participants to defer receipt of normal retirement benefits and continue working without the loss of any other employee benefits. The deferred monthly benefits accrue in the fund, plus interest, and when the employee stops working he or she receives the lump sum.
• Cost of Living Adjustments are capped at 1.5 percent beginning the third January after employee termination. The current plan allows a 3 percent adjustment that begins as early as three months after DROP.
• A benefit accrual rate of 2.5 percent for all years of service, with a maximum of 75 percent. The current plan allows an accrual rate of 3 percent per year for the first 20 years and then 2 percent per years for 10 years, subject to a maximum of 80 percent.
• Final average compensation is based on the last 60 months of service, instead of the last 24 months in the current plan.
Although both City and union officials agreed to accept the pension reform, they still have differing opinions on how negotiations should be handled.
The City's opinion is that the mayor should negotiate directly with the unions, while the unions contend the mayor should negotiate with the Police and Fire Pension Fund, according to Chris Hand, Brown's chief of staff.
"We disagree to disagree," said Hand.
The unions gave up their rights to collective bargaining to complete the plan presented Wednesday, meaning the plan will not be voted on by the unions' members.
"The memberships of our unions elect trustees to represent them in these matters to work for the best solution possible and that's what was done here," said Mark Treglio, Local 122 vice president and director of public relations.
City Council member John Crescimbeni, chair of the Council's Finance Committee, attended Wednesday's announcement to receive information about the pension reform. He said it would be hard for Council not to approve the agreement.
"When everyone is behind it, it's hard not to approve it, but I'd like to see more details. The Council Auditor's Office is auditing the Police and Fire Pension Fund right now and I'd like to see that audit before voting on this," he said.
Council Auditor Kirk Sherman said Wednesday he wasn't sure if his office could fulfill that request.
"We hope to have something for them, but there is no way of telling right now when that audit will be completed," said Sherman.
Senior Staff Voluntary Pension Plan also addressed
Also addressed in the pension reform was the Senior Staff Voluntary Pension Plan, which was created for the fund's employees.
The fund has one retiree, one surviving spouse and one active member — fund Executive Director John Keane.
The senior plan is a point of contention between the fund and the City.
Robert Klausner, the fund's attorney, has stated the fund's board had the authority to create the pension plan.
City General Counsel Cindy Laquidara has issued an opinion that the fund did not have such authority.
Brown's plan announced Wednesday includes the elimination of the senior plan on or before Aug. 3.
"I would still like to get a legal opinion on the plan to determine if it was a legal plan," said Crescimbeni, who has suggested receiving a declaratory judgment on the plan from the court system.
Office of Ethics, Compliance and Oversight Director Carla Miller also sent a letter to Laquidara asking for further investigation of the senior plan.
"I am concerned about the possibility that (Police and Fire Pension Fund Director John Keane's) compensation and pension issues will be rolled into a global settlement. If this path is taken, I believe it would be detrimental to the public trust," Miller said in a Tuesday letter to Laquidara.
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