Local folks soon will get an earful about our broken and broke Jacksonville Police and Fire Pension system, if recently elected City Council president Randy White pursues comments quoted recently in the Florida Times-Union. As City Council president, a post he assumes July 1, White will set council’s agenda for the next 12 months.

“We have big problems in public safety since we’ve lost the defined benefit plan,” White said. He recounted “200 vacancies in corrections,” “over 100” in the Jacksonville Sheriff’s Office, and only 1/3 the number of applications compared to past years for Jacksonville Fire and Rescue Department positions.

By any measure, that’s a big fat problem.

White blames our defined contribution plan, or put another way, our “closed-to-new-hires” defined benefit plan, for our inability to compete for police officers, fire fighters and rescue personnel.

Giant sinkhole

But that’s not our only problem with this system. The size of the pension system’s gaping funding hole compounds the size of our “big problems in public safety.”

A sleeping giant sinkhole this is, confirmed at a City Council March 5 Finance Committee meeting, when the pension fund’s CEO, Tim Johnson, explained that current funding stands at an abysmal 45%. Committee members learned this 45% is a far cry from the 80% required to meet the definition of a healthy system. A pension system’s goal is to be 80% funded, explained Johnson, equating to “20 years of benefit in the bank.” Our system is 45% funded, with a mere “eight years in the bank.”

Our pension fund’s “unfunded liability”—the amount we owe retirees—is approaching $3 billion, part of which will be covered by a 30 year, half-penny sales tax to begin in 2031.

A walk down memory lane

How did we get here?

In fiscal year 2012, our Police and Fire Pension system was 39% funded, having experienced a precipitous decline from its 87% funded position in 2000, caused in part by unrealistic market and actuarial assumptions, and cost-of-living adjustments that compounded over time.

Alarm bells had been distantly ringing for a while, but in 2013 they began clanging. In 2009, the nonprofit Jacksonville Community Council published “Our Money, Our City: Financing Jacksonville’s Future,” which signaled problems after the pension system had begun its decline.

In August 2013, Mayor Alvin Brown appointed the Jacksonville Retirement Reform Task Force, a group of 17 citizens (present company included), with Bill Scheu as chair. Meeting regularly over the next several months and aided by public pension experts funded by outside private foundations, the Task Force issued its set of recommendations in March 2014.

Scheu committee recommendations

In brief, the Scheu task force recommended keeping the defined benefit plan, extending retirement ages, and requiring larger contributions from participants. It also recommended raising a half-penny sales tax to add an annual $50 million contribution to the city’s then $148 million general fund contribution, essentially capping the general fund contribution at that level, and closing the pension fund gap by 2028.

Brown financing approach

Mayor Brown, willing to keep the defined benefit plan, basically agreed to the participant-side reforms. But he wanted to fund the growing gap with a $40 million extra annual contribution from JEA. His was the typical answer common to all our elected politicians: “No new taxes on my watch,” no matter the purpose, how small, and universally applied.

Curry Folly

Elected in 2015, Mayor Lenny Curry had a better idea: he replaced the then-existing defined benefit plan with a 401(k)-style defined contribution plan for new hires, a change the Scheu task force explored but decided against, for the very reason — the exact reason — Randy White now says is cause for alarm: Ending the defined benefit plan would jeopardize the city’s ability to recruit and retain police officers and fire and rescue personnel.

Curry also said “No” to the task force’s proposed 14-year half-penny sales tax, and “no” to Brown’s proposal to take an additional $40 million annual contribution from JEA dedicated to filling the pension gap. Both would have sunset in 2028.

Instead, Curry kicked the can down the road, proposed a 30-year extension of the Better Jacksonville Plan’s half-penny sales tax, to begin in 2031 and restricted to paying the pension obligation. (The Better Jacksonville Plan 30-year half-penny sales tax — originally approved in 2000 to finance infrastructure improvements, environmental preservation, and new public facilities — would sunset in 2030 had it not been for the 30-year extension.) When City Council unanimously approved the pension reform plan in 2017, folks understood that Curry’s plan would substantially increase taxpayer costs over time, visiting one more juggernaut on future generations.

So Wimpy’s like, “I will gladly pay you tomorrow for a hamburger today.”

Less talked about was the much-touted 401(k)-style defined contribution plan’s effect on Jacksonville’ s future ability to compete for personnel.

Until now.

End of the road

As Randy White no doubt knows, we have arrived at the end of the Curry road. White’s brief comments in the Times-Union article reveal that he understands the disastrous defined contribution plan. These are police officers, fire fighters and rescue personnel. They do not participate in Social Security, they put their lives on the line, and their experience with trauma and the worst of human nature is more akin to military service than sitting at a desk typing on a keyboard.

President White, too, will learn what the Scheu task force learned: The only route out of the mounting debt side, the only path to the 80% funded definition of a healthy pension system, is to fill the gap with additional contributions. The sooner the better. Sadly, the annual extra required amount, which could have been avoided, no doubt exceeds the 14 year, $40-$50 million annual contribution proposed by the task force and the Brown administration.

A double bind

Clearly, we must compete and compete well for police and corrections officers and fire and rescue personnel. And we must fund our existing pension obligations. Both issues must be addressed.

All best wishes to President-elect Randy White. It’s past time City Council take responsibility, stop kicking this can down the road and address Curry’s Folly.

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This column appears in partnership with the JaxLookout.