Mayor Lenny Curry unveils plan for paying down Jacksonville's pension debt

[finehoe]

How is it even remotely possible that any pension fund is underfunded given that, since the 2009 low, the stock market has tripled in value and the bond yields have fallen to record lows, which means bond portfolios should have soared in value?   Pension funds should be, if anything, over-funded right now.

[Tacachale]

Because the city didn't pay enough into it before and during the recession, or identify another funding source to deal directly with the liability. Hence the sales tax proposal.

[camarocane]

Not too familiar with the problem but my understanding was that the city didn't match the contributions when the market was doing well. Instead of the 8% match, it may have been 2-4% and they let the investments make up the remainder. Once the economy tanked, crap hit the fan. 

[camarocane]

No matter what, one can always say "The city did not pay enough" to explain away any under funding since the city has all the risk.

  The flawed model, faulty assumptions, excessive expenses, zero oversight,"bonus payments" (my personal favorite ), and DROP had absolutely nothing to do with it:)

I'll assume this is directed at my comment. Therefore, Ill venture to say both yes and no.  To play devils advocate for the sake of the discussion, I wouldn't say the model is flawed. It seemed to be overfunded prior to the 90's, maybe into the early 2000's. Once again,  it was just mismanaged within the last 20 years or so.
I don't know what you mean by "faulty assumptions, excessive expenses, zero oversight, "bonus payments"". Those are kinda vague statements and I don't believe bonuses dip into the pension plan. I'll agree about the DROP plan though. That's like double dipping, but without knowing the history of the plan, did it work before?
Regardless, its a mess that has no easy answer.

[Tacachale]

No matter what, one can always say "The city did not pay enough" to explain away any under funding since the city has all the risk.

  The flawed model, faulty assumptions, excessive expenses, zero oversight,"bonus payments" (my personal favorite ), and DROP had absolutely nothing to do with it:)

I'll assume this is directed at my comment. Therefore, Ill venture to say both yes and no.  To play devils advocate for the sake of the discussion, I wouldn't say the model is flawed. It seemed to be overfunded prior to the 90's, maybe into the early 2000's. Once again,  it was just mismanaged within the last 20 years or so.
I don't know what you mean by "faulty assumptions, excessive expenses, zero oversight, "bonus payments"". Those are kinda vague statements and I don't believe bonuses dip into the pension plan. I'll agree about the DROP plan though. That's like double dipping, but without knowing the history of the plan, did it work before?
Regardless, its a mess that has no easy answer.

Sanmarcomatt has his own theory about the pension fiasco. I don't think it's accepted very widely. At any rate, it doesn't get us out of having to deal with the issue.

In general, you're pretty much right. When things were good, the city reduced the contribution and the tax rate, as revenues were high enough to keep it fully funded. Later, however, the city added benefits without increasing the contribution, and in fact *reduced* the contribution. This became a much bigger problem when the economy went in the tank, devastating our revenues. The city still didn't increase the contribution, or raise taxes enough to cover it. The result is that now $150 million has to come out of the city's general budget every year just to tread water. So yes, mismanagement is the bottom line.

[spuwho]

Dont forget that Keane stuck to his 8% rate of return when every other public pension fund manager in the US said it wasnt possible. And that is exactly what didnt happen. No 8% return. Culpability is not just the city, its the pension board too.

[camarocane]

Thanks for shedding some light on the issue Bill!
Too many times people spread misinformation on this subject, its nice to see facts laid out rather than vague passive aggressive statements capped with emoticons.   

[Tacachale]

The pension bill, House Bill 1297, passed the Florida House yesterday. And by a wide margin.

Jacksonville defies odds and gets pension bill approved in House
JAX Chamber, City Council members travel to Capitol to lend support for bill

By David Bauerlein & Tia Mitchell Wed, Feb 24, 2016 @ 8:45 pm | updated Thu, Feb 25, 2016 @ 6:54 am

The weather forecast was rife with warnings about heavy rain and tornado threats when a bus carrying JAX Chamber and City Council members left Jacksonville early Wednesday for a trip to the state Capitol.
By the time the chartered bus reached Tallahassee, the clouds had cleared and the sky had turned blue as the Jacksonville contingent marched into the Capitol and watched the House approve a pension-related tax bill for Jacksonville by a decisive 86-23 margin.

Slideshow: Watching the pension vote

The House vote capped a two-month journey for the bill that resembled the bus trip. Both started with warnings that the ride could be turbulent, but in the end, the bill aimed at helping Jacksonville fix its pension crisis overcame the House’s usual aversion to passing anything that has “tax” in it.

Mayor Lenny Curry, who traveled weekly to Tallahassee to meet with lawmakers and press the city’s case at five committee hearings in the House and Senate, sat in a front-row seat in the House gallery when the vote total lit up on an electronic board.

“It was a quick moment of elation, and then a recognition that it’s time to move on and start thinking about the Senate and working with the governor and then what comes after that,” Curry said of his reaction.

...

[vicupstate]

If the referendum fails, all that effort, which sounds quite large will be wasted. I sure hope they have a plan B.

[mtraininjax]

I sure hope they have a plan B.

I am sure it does not include raiding JEA for all their future funds. Now that was a stupid idea!

[FlaBoy]

Great job Lenny. I am hearing this will pass the Senate and the Governor will sign it. He has used his influence in Tallahassee to help Jacksonville!

[vicupstate]

This is about taking out a loan that we don't begin to pay back until 2030, when there is a ton of interest to pay down, and it takes away the ability to use the half penny sales tax option for capital improvements for another 45 years from now.

If I understand correctly, it won't even PROVIDE any funds until 2030, right?  Are they bonding the tax revenues that won't even come in until 2030? 

 

[spuwho]

Dumb, dumb, dumb.

All because they dont want to put it to a vote in their political life.

This is a great example of where political dogma gets in the way of common sense.

Perfect example of what is wrong with our country.

[tufsu1]

If I understand correctly, it won't even PROVIDE any funds until 2030, right?  Are they bonding the tax revenues that won't even come in until 2030? 

correct....the plan is to bond money early and then pay back (with interest of course) using future tax revenues 

[Tacachale]

The benefit of the sales tax is that unlike the property tax, future mayors can't futz with it every year. That's part of how we got into our current situation. It's a forward thinking way of dealing with the issue. The 2030 start date puts some people off, which is understandable. But our yearly contributions are calculated by looking not just this year, but decades in the future (we'll always be dealing with retirement benefits). The reason our current contribution is so crippling -I think $150 million every year - is because there's no other dedicated funding going into it now or in the foreseeable future, so it has to come from the general budget. A dedicated injection coming up should free up a lot of money, especially when no future mayor can remove it.