Newspaper article The Florida Times Union

Most of Pension Savings Years Away; Only $70 Million of $1.2 Billion in Cuts Projected over First 2 Years

Newspaper article The Florida Times Union

Most of Pension Savings Years Away; Only $70 Million of $1.2 Billion in Cuts Projected over First 2 Years

Article excerpt

Byline: Timothy J. Gibbons

The bulk of short-term savings in Jacksonville Mayor Alvin Brown's pension reform deal comes from the Police and Fire Pension Fund handing over to the city money it receives from the state to pay for extra benefits, according to figures the administration released this week, as well as from not changing an assumption that would raise the contribution.

Most of what the administration has touted as $1.2 billion in savings wouldn't come for about two decades: Since the tentative deal only affects new hires, the city has to wait for such workers to become a substantial part of the workforce.

The short-term savings add up to $70 million in the next two fiscal years, including $45 million the city would not have to contribute to the fund in the fiscal year that begins in October if the deal gets City Council approval.

About $21.3 million of the amount the city wouldn't have to contribute would come from the fund's handing over that amount of money, which will come from state funds designated to upgrade pension benefits.

The rest of the short-term saving in the administration's calculations comes from the fund sticking with the assumption it is now using when it comes to how much it will earn on its investments.

According to the deal, the fund will keep using an assumed rate of return of 7.75 percent, rather than dropping it to 7 percent, which would have pushed up how much the city owed.

It's unclear if such a drop in the rate would actually have happened, though.

Until this year, the fund had assumed it would earn 8.5 percent a year - less than it brought in during the boom years but a far cry from the 2.41 percent the fund lost in fiscal year 2011. After an analysis a year ago, that assumption was dropped to 7.75 percent, with a corresponding jump of tens of millions of dollars the city had to pay. …

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