Misleading Pension Reform Language Explained

July 29, 2016 1 comment Open printer friendly version of this article Print Article

A policy and legal analyst explains the controversy over the misleading language of Mayor Curry's pension reform bill.

There is currently litigation over the wording of Mayor Curry's Pension Pitch.  It involves misleading language contained in the final bill that is being viewed as confusing what people are actually voting for.

Below is the ballot language. The analyst found a couple of misleading parts and takes the time to explain them.

"Permanently closing up to three of the City’s underfunded defined benefit retirement plans, increasing the employee contribution for those plans to a minimum of 10%, and ending the Better Jacksonville ½-cent sales tax are all required to adopt a ½-cent sales tax solely dedicated to reducing the City’s unfunded pension liability.  Shall such pension liability sales tax, which ends upon elimination of the unfunded pension liability or in 30 years maximum, be adopted?"

(1) "Permanently closing up to three of the City’s underfunded defined benefit retirement plans"

Obviously, this is somewhat misleading because the language would be true if they closed none.

And I think it is very possible they will not close any of the plans. The main reason to close a plan is if you are moving from a defined benefit to defined contribution plan. The public safety unions will never agree to that move, so I doubt they will close the Police and Fire Pension Fund (PFPF) or Corrections Officers Pension Plan (COPP). If they do close the current defined benefit plan in favor of a new defined benefit plan, it will be purely cosmetic.

That leaves the General Employees Pension Plan (GEPP), which is by far the healthiest of the three plans. Are they really going to force new general employees into 401(K) plans when Council members, task forces, mayoral administrations, and many others have repeatedly said the GEPP is not the problem?

(2) "Increasing the employee contribution for those plans to a minimum of 10%"

This increase has already happened for some employees. For the Police and Fire Pension Fund, the employee contribution has already been increased to 10%. The 2015 Agreement required that all new police and fire employees hired after the effective date of the agreement (June 19, 2015) would have a 10% pension contribution. For existing employees, their contribution rose from 7% to 8% when the 2015 agreement took effect. That 8% contribution will increase to 10% when the City restores the 2% pay cut that firefighters took in 2010 and police officers took in 2012.

As for general employees, the previous administration reached agreement with two of the four general employees unions -- AFSCME and JSA -- that would have increased the contribution for new employees from 8% to 12%. Current employees would have had employee contribution increases (from 8% to 10%) tied to restoration of previous pay cuts. The City Council never took up those two agreements with general employees unions because they wanted to deal with PFPF first.

(3) "Ending the Better Jacksonville ½-cent sales tax "

That tax expires because of language in the 2000 referendum, not because of anything in this one. This summary suggests that the 2016 referendum ends the tax, when clearly that end was prescribed long ago, and will not speed up, nor change the date of its expiration.

Hopefully, this clears up the reasoning behind the criticisms, I hope that this is of use to my fellow readers at MetroJacksonville.com