Author Topic: JEA Pension Fiasco Next Boondoggle to Come  (Read 1374 times)

jaxlongtimer

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JEA Pension Fiasco Next Boondoggle to Come
« on: September 18, 2019, 02:39:13 AM »
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The Jacksonville City Council’s Finance Committee agreed Tuesday that if JEA is sold, City Hall will take sole responsibility for several hundred million dollars of pension debt that currently falls on the shoulders of JEA.

Jacksonville’s woefully underfunded pension plans have been a huge burden on city finances, resulting in voter approval in 2016 of a future half-cent sales tax to ease that chokehold.

The Finance Committee voted 6-1 to recommend approval next Tuesday by the full council on an enhanced package of pension benefits for JEA employees if a deal actually happens for the city-owned utility. To cover the cost of those extra benefits, JEA would pay $132 million of the sales proceeds to fully cover the expected cost of making good on those benefits...

The legislation also gives entities preparing bids for JEA assurance that if they acquire the utility, they would have no financial responsibility for pension benefits earned by JEA employees and retirees.

However, the legislation does not say how the city would pay for JEA’s existing share of the unfunded liability in the General Employees Pension Plan.

JEA’s portion of the unfunded liability is $338 million, adjusting for the beneficial impact of a half-cent sales tax slated to kick in around 2030 for pension debt paydown...

“The pension plan will be paying benefits for many decades into the future,” the auditor’s office said in written comments on the legislation. “Even if the pension is fully funded at a point in time, a downturn in the stock market can reduce that funding status and increase the city’s required contribution.”

Billy said the General Employee Pension Plan assumes that the plan’s investments will generate annual 7 percent returns. He said a decade ago, the city assumed 8.4 percent returns, but as actual investment performance declined, the city dialed down its assumptions to be more conservative. He said if that downward trend continues, it will require even larger sums from taxpayers to make up for the difference.

For instance, he said if the financial forecast assumed 6 percent annual investment returns, then JEA would have to pay $256 million rather than $132 million to cover the enhanced pension benefits sought by JEA for its employees.

“So it is a big deal,” Billy said.

Billy recommended that since the city would have the sole responsibility for paying pension benefits earned by JEA workers, there should be a provision in the pension legislation (2019-566) or a future piece of legislation that a portion of the sales proceeds would fully fund the pension obligations earned by JEA workers.

Finance Committee members said that’s a decision for another day.

Really?  A decision for anther day?  That's not the attitude the City Council has with the School Board.  A blatant hypocritical double standard and more evidence of Curry's grip on the Council.

The City Council couldn't ask enough questions about the School Board's referendum but rushes through with little scrutiny the much bigger sale of JEA and the unloading of its pension on taxpayers so FPL or other buyers can make even more off of the citizens of Jacksonville.

If there is so little risk to the pension, why wouldn't the buyer take it on?  Because for-profit entities know pensions are a high risk game they almost always lose on.  Only politicians using taxpayer monies to promote their personal agendas willingly take on this risk.

And, did we not learn from the pension fiasco the City just went through?  This is just more of the same and taxpayers will be digging out for years to come.

Who thinks the City can reliably get 7% returns over decades (not the Council auditor it appears) when long term interest rates are hovering around 2% or less and the stock market is priced at historic earnings multiples or better already in a humming economy.  No problem, we will use all the JEA proceeds to pay boondoggle pension deals by Curry and his cronies and the City's debt for depreciating projects leaving nothing for our future.

https://www.jacksonville.com/news/20190917/jacksonville-city-council-committee-supports-taking-on-jea-pension-debt

Charles Hunter

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #1 on: September 18, 2019, 08:43:37 AM »
More malfeasance and deceit.

thelakelander

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #2 on: September 18, 2019, 09:40:03 AM »
Maybe I'm missing something.....but why in the hell would COJ want to take on this financial burden?
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Charles Hunter

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #3 on: September 18, 2019, 10:10:18 AM »
To sweeten the pot for whichever Curry financier wants to buy JEA.

vicupstate

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #4 on: September 18, 2019, 10:24:47 AM »
The City of Jacksonville has literally lost it's mind.
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thelakelander

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #5 on: September 18, 2019, 10:32:22 AM »
^Kind of crazy, considering the big deal on spending an extra $1 million for school tax referendum in 2019. That's peanuts compared to JEA, the Landing and Lot J (whenever it rolls around). I wouldn't touch anyone's pension debt with a ten foot pole, no matter what the deal was.
"A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.” - Muhammad Ali

Kerry

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #6 on: September 18, 2019, 02:23:41 PM »
The City of Jacksonville has literally lost it's mind.

This!

Selling off the asset while retaining the liability has to be the dumbest thing I have seen from COJ in....well...the last week.

Please tell me the sale of JEA isn't how we fund Lot J.
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jaxlongtimer

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #7 on: September 24, 2019, 01:26:54 AM »
The closer this gets the worse it looks.  $297 milllion for employee retention and sale sweeteners.  That's about 10% of Curry's $3 billion net right off the top.  That's on top of another 10% for the $300 million in underfunded JEA pensions the City will take over.  And, all of this is assuming a 7% unrealistic return for decades to come.  So, poof, 20% of sale proceeds are already spoken for.  Plus another $2.2 billion to pay down debt for depreciating properties and infrastructure.  That leaves $200 million for the endowment fund, the earnings of which are supposed to compensate for losing JEA's annual $150 million City contribution.  Go figure.  Curry is physically, financially and educationally degrading Jacksonville with long term consequences to our citizens.  For what purpose?

This is actually "bribing" JEA employees with extra dollars from the City (not the purchaser) so they support a sale just like it is doing with JEA customers by offering one time "sale rebates" of $300 to $400.  "If you can't convince them, buy them."  Seems to be the current modus operandi of our City government.
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JEA says the cost of retention payments would be about $165 million. The cost for enhanced pension benefits would be $132 million. The expenses would only kick in if there were a sale or other transaction involving privatization of the utility...

...The legislation also would commit the city to take over more than $300 million of unfunded pension liabilities that currently are JEA’s obligation. The legislation does not say how the city would handle that added pension burden.

https://www.jacksonville.com/news/20190923/jea-employee-protections-take-center-stage-with-board-jacksonville-city-council
« Last Edit: September 24, 2019, 01:30:49 AM by jaxlongtimer »

Peter Griffin

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #8 on: September 24, 2019, 07:17:19 AM »
this deal is ridiculous. Losing the benefits of a public utility, reducing the profit margin on the sale, AND taking on a massive debt burden for the pension fund?

would this even break us even and leave us debt-free like the admin wants us to be/lieve?

jaxlongtimer

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #9 on: September 24, 2019, 09:25:40 PM »
Here is the rubber stamp tonight, as expected, by City Council.

They had a million detailed questions for the school board referendum but almost none for this.  And, we are not in a rush to help our schools who have critical fixed and determined maintenance needs but we can't wait 2 more weeks to explain things to JEA employees about a transaction that is supposedly only mere speculation at this time.

Interestingly, once again, like the charter school issue, Rory Diamond is the mayor's champion for this issue.  On the other side, Randy DeFoor, Garrett Dennis and Brenda Priestly Jackson stood both in opposition to deferring the school referendum and to approving this newly created pension debacle for the City.  Hats off to them for representing the public, not special interests.

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City Council voted 16-3 on Tuesday for enhanced pension benefits for JEA employees if the city reaches a deal for the utility. Opponents say more vetting was needed for how city would handle financial cost of taking sole responsibility for several hundred million dollars of JEA-related pension debt.

The Jacksonville City Council and the JEA board voted Tuesday on measures aimed at giving JEA employees some assurance that if the city strikes a privatization deal for the utility, employees would get enhanced pension benefits for retirement nest eggs and retention bonuses for continuing to work at the utility in the face of career uncertainty.

The City Council voted 16-3 for legislation that authorized expanded pension benefits for JEA employees if there is a deal. The legislation also makes clear that in the event of a deal, the entity that takes over the utility would have zero financial obligation for several hundred million dollars of unfunded pension obligations already on the books for JEA employees and retirees.

Council members Randy DeFoor, Garrett Dennis and Brenda Priestly Jackson voted against the legislation. The opposition didn’t stem from protections for JEA employees, but instead was based on the lack of a plan in the legislation for how the city would handle paying for the unfunded pension obligations from JEA.

The legislation states that if there is a sale, $132 million of the proceeds would go into the General Employees Pension Plan to cover the cost of providing the enhanced pension benefits. However, the legislation is silent on how the city would take care of several hundred million dollars of unfunded pension obligations that already are owed in future years to JEA workers and retirees.

“I will tell you my conservative constituents are not happy about this,” DeFoor said.

The vote on the legislation (2019-566) came after some council members unsuccessfully tried to get the bill referred to the Rules Committee so it could add a committee report to the one filed by the Finance Committee.

Priestly Jackson said it’s inconceivable that legislation with several hundred million dollars in play would only get reviewed by one committee before the full City Council takes a final vote.

Council member Rory Diamond, also on the Rules Committee, said council members have had six weeks to ask questions and could have sat in on the Finance Committee meeting.

“I don’t want the families of JEA employees to wait another two weeks to know what’s going to happen to them if something happens to JEA,” Diamond said. “I think it’s time to vote.”

https://www.jacksonville.com/news/20190924/jea-board-jacksonville-city-council-approve-financial-protections-for-employees

thelakelander

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #10 on: September 24, 2019, 09:45:09 PM »
Lol, not surprising.
"A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.” - Muhammad Ali

Captain Zissou

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #11 on: September 25, 2019, 09:27:26 AM »
The city council switches positions by the day.  Now they care about people and must rush things through legislation so that they aren't worrying about their future?  What about the thousands of teachers that we have left out in the cold (or extreme heat for some) for months? 

RiversideRambler

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #12 on: September 25, 2019, 09:30:21 AM »
***impatiently waits for Nate Monroe's Thursday column***

vicupstate

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #13 on: September 25, 2019, 10:00:33 AM »
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“I don’t want the families of JEA employees to wait another two weeks to know what’s going to happen to them if something happens to JEA,” Diamond said. “I think it’s time to vote.”

I sympathize with the JEA employees, concerning the uncertainty they are facing, but it no way, shape or form is it 'normal' or 'typical' for a company being sold to give its workforce an upgrade in their pension. If anything it is the opposite. I fully support keeping the existing pension obligations intact, but this is unnecessary, unwarranted and an expensive form of bribery.

It could not be any more obvious that the majority of the city council is 'taking orders' and serving as a rubber stamp for someone or something.  And whatever that is, it is not the taxpayers.       
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Charles Hunter

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Re: JEA Pension Fiasco Next Boondoggle to Come
« Reply #14 on: September 25, 2019, 10:19:54 AM »
Where were the pages and pages of questions from each council member about the pension deal, about the sale - oh, excuse me "recapitalization"?