Newspaper article The Florida Times Union

Mayor's Pension Plan Is Missing Pieces

Newspaper article The Florida Times Union

Mayor's Pension Plan Is Missing Pieces

Article excerpt

The Jacksonville Civic Council deserves thanks for identifying the real solution to the city's crisis in the Police and Fire Pension Fund.

The Civic Council noted that Mayor Alvin Brown's proposal was a step forward.

Next, the council noted that a full solution must include shared sacrifices from both current employees and taxpayers.

The mayor opposes the last two parts of that three-part solution.

Brown's reform plan is seriously flawed:

- It uses a one-year gimmick to reduce next year's pension burden but saddles taxpayers with high costs for years.

- It propels irresponsible levels of unfunded pension debt - now at $1.3 billion - to keep growing for at least a decade.

- It locks in place an agreement for at least 17 years, attempting to circumvent state law that limits collective bargaining agreements to three years.

BIG CHANGES NEEDED

What's really needed are bigger and more thoughtful changes both for the benefit of taxpayers and for the benefit of police and firefighters, who deserve dependable but affordable pensions.

By delaying meaningful reform for so long, Brown's plan may jeopardize the city's credit rating and its ability to borrow at competitive rates.

After cutting a deal in secret negotiations with police and fire union representatives, the mayor is attempting to use the reform plan as a club, threatening to reduce city services - such as libraries - if the plan isn't accepted immediately by the City Council.

That cynical approach is made worse because the mayor's so-called $45 million "savings" in the first year is achieved by manipulative accounting.

In return for locking in current benefits in the costly 17-year agreement, the pension fund would transfer $21 million to the city's general fund.

The deal calls for arbitrarily hiking the "projected" rate of return on investments from 7 percent to 7.75 percent for two years, which would temporarily reduce the city's funding by close to $24 million.

In reality, annual pension obligation of $122 million this year, which caused layoffs and cuts in services, would double over the next two decades.

PENSION DEBT GROWS

And even with increased annual city contributions, the pension's unfunded liability - which now stands at $1.3 billion - would grow for several years and still be at $1.5 billion a dozen years hence. That's if optimistic predictions about investment returns hold true.

That would be unacceptable progress for a pension fund that the city's actuary found is only about 38 percent funded, which puts it among the worst such pension plans in the state.

The problem, of course, is overly generous benefits put in place by politicians who have been unwilling to be responsible in paying for the obligations they incur. …

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