Florida warns pension plans: Fix your sinking ships

TALLAHASSEE | Three troubled Jacksonville pensions are among 19 statewide that received “call to action” letters Tuesday informing them their unfunded liabilities are unacceptable and need to be fixed now.

The 19 pension plans all are less than 50 percent funded, prompting terse letter from the Department of Management Services, the state agency tasked with reviewing local pensions.

DMS Secretary Chad Poppell sent letters to Jacksonville Police and Fire Pension Fund executive director John Keane and Raymond Ferngren, administrator of the Jacksonville Corrections Officers’ Pension Fund and the Jacksonville General Employees’ Disability Fund. The Alachua School Board Early Retirement Plan and Ocala General Employees’ Retirement System also received letters, and Jacksonville Chief Financial Officer Ronald Belton was copied.

The letter to Keane pointed to the Police and Fire Pension’s $1.6 billion unfunded liability and said current funding was only enough to pay 37.3 cents of every dollar owned to retirees and current employees.

“As a result, your plan should consider taking action to prevent future taxpayers from having to incur costs,” Poppell wrote.

Coincidentally, Poppell serviced as Jacksonville’s chief of human resources under Jacksonville Mayor John Peyton.

The Police and Fire Pension letter also mentions ongoing discussions with city officials to reform the pension, saying they “are not yet realized.”

“The Department of Management Services requests you immediately notify all active and retired members of the plan regarding the plan’s conditions and what actions will be taken to improve it,” it said.

The letters to the other pensions had similar admonition. DMS spokeswoman Kendra Parson said the agency hopes these local pensions work with state officials or come up with options on their own to shore up the finances.

What the letters don’t mention is if the 19 funds will face any repercussions if they fail to comply.

LOCAL RESPONSE

Jacksonville Mayor Alvin Brown’s chief of staff, Chris Hand, said the city shares the concerns expressed in the letters from DMS.

“We have long been concerned about the underfunded status of the city’s pension plans, which is why Mayor Brown has made comprehensive pension reform a major priority of his administration and why he appointed a Retirement Reform Task Force made up of 17 community leaders to recommend solutions to this challenge,” Hand wrote in an email to the Times-Union.

He pointed out that the most recent reforms Brown proposed to the City Council would boost the pension to being 70 percent funded.

The latest study of the Jacksonville Police and Fire Pension said it currently has enough assets to cover 46 percent of future pension obligations, up from 43 percent the year before.

Pension payments have become a drag on the city of Jacksonville’s budget, potentially affecting services like libraries and parks.

AN ONGOING DEBATE

The debate over how to pay for pension reform in Jacksonville stems from how to pay $400 million over 10 years in extra payments to the Police and Fire Pension Fund so its $1.62 billion unfunded pension liability goes down faster. The sooner that debt is reduced, the less it will cost the city in the long run.

The council voted 16-3 in December for its version of pension reform. The Police and Fire Pension Fund board agreed to most but not all of that legislation. The legislation was introduced into the council Tuesday, and it’s likely to take it up shortly.

A key difference between the City Council and the Police and Fire Pension Fund board is how long it will be before the council could impose further cuts to pension benefits for current police and firefighters. The City Council voted in December to allow that to potentially happen in three years, which council members said is in line with state law for collective bargaining. The pension fund board put that at 10 years, which is shorter than its current agreement with the city going through 2030.

Even as one of his state agencies points out issues with Jacksonville pensions, Gov. Rick Scott still has not directly responded to a request from state Rep. Janet Adkins, R-Fernandina Beach, to investigate the Jacksonville Police and Fire Pension. Adkins asked Scott to order the state inspector general and the Florida Department of Law Enforcement to look into whether the fund has broken any state laws or rules, citing reports in the Times-Union that concerned her.

The Atlantic Beach City Commission voted Monday on a resolution supporting Adkins’ request. Members of the Jacksonville City Council, including President Clay Yarborough, have also voiced support.

Tia Mitchell: (850) 933-1321

http://jacksonville.com/news/metro/2015-01-27/story/florida-warns-pension-plans-fix-your-sinking-ships