Why Was Alvin Brown's Pension Reform a Bad Deal?

[Metro Jacksonville]

Why Was Alvin Brown's Pension Reform a Bad Deal?  



The idea of pension reform in Jacksonville for civil service is something that should have been done ten years ago. Former mayors such as John Peyton wanted to reform pensions so why didn't it get done? There are many factors that is holding back pension reform and much of it has to do with egos and bad ideas. What can be done to reform pensions for our civil service and what should the Mayor and the City Council be focusing on instead of what amounts to a bad play of politics.


Full Article
http://www.metrojacksonville.com/article/2013-aug-why-was-alvin-browns-pension-reform-a-bad-deal-

[theduvalprogressive]

I missed a very valuable point that I needed to made about getting the union to come back to the table to discuss a new deal. They really need to. We're getting to a point now where if something isn't done about the pensions we could be in some serious trouble in the near future. But it starts with getting people with tenure to give a little more.

[SunKing]

privatize

[Stephen]

Whats up with the sheriff's budget ? Are they planning to close CTC again?

[Bridges]

Great article!  Well written and informative. 

I have some questions and concerns though.  From talking to some people who were in on the negotiations of the mayor's plan, this was the best we could get from current employees.  They actually think we got more current employee concessions than we first hoped for.  But now that it's rejected, the current employees have no reason to come to the discussion table.  So its back to the courts.  My question is, how have other lawsuits around the nation turned out on this issue? 

I understand the need, and want, to get current employees to give up more, but how realistic is that objective now that it's back in the courts?

[Cheshire Cat]

Very good fact filled article. There are a few other things impacting this pension deal that should also be highlighted and will possibly make any "work" between Brown's office and the Council a wasted effort.  Apparently the committee to review the pension that disbanded right after Brown's deal was killed by the council, is back meeting again which is supposed to "figure" this thing out.  The problem underneath all of this is that fact that there are three separate lawsuits currently going forward in the court system that revolve around this issue.  It has been estimated that resolution of these suits could take two to five years.  Currently there is a "private" attitude on the part of many in city hall to let the legal system decide what they will do next and let that be what dictates their next step. To put it plainly, some are prepared to let folks meet, talk and spin their wheels in committees knowing full well that it will be the courts that will decide what the next step will be.  While different agencies can discuss a potential "pension" deal and brainstorm about how to change it, they must first deal with the reality that the "pensions" are in fact an obligation backed by a rather involved contract the city drafted.  There were also some things bartered way back when with the police that are underneath all of this.  Without breaking down that original contract and finding alternative ways to meet the original agreed to and lawful requirements it contained in a fair manner will be a difficult thing to accomplish which is why this has ended in lawsuits. 

Robert, did you contact Cindy Laquidara and get the specifics on the three lawsuits and exactly what each one is about and who filed them?  That would be a great addition to this topic and your research on it.

[NotNow]

The bottom line is who pays the ~$1.5B unfunded pension liability?  Should the city, who's failure to uphold its contractual obligation be responsible?  Or the employees who have not only upheld their obligations, but made numerous previous concessions in pension funding as well as salary?  Those "tenured" employees are not the high paid examples that are always cited in the paper.  The average pension is much lower.  The "DROP" plans are offered to almost all public employees in Florida and many other states.  It is a way for government to save money and force out higher paid older workers. 

A recent TU article pointed out that Jax public safety employees are the lowest paid first responders with the lowest pension benefits of the states largest cities.  They are currently working for what are essentially 2006 wages.  Now the Mayor proposes the worst public safety pension not just for Florida but the nation for a city of any size. 

Anyone with a brain would look to Tampa and Orlando to see how they solved this common problem, but when the answer is not what they want to see....

It doesn't take a rocket scientist to see how this debacle will wind up.  An unsafe area is not a desirable destination or prospective business homebase.

[theduvalprogressive]

Your concerns as a tax payer are important. As a city we are closer, from my analysis to 1.7 bil in unfunded liabilities and over the next two years are going to be telling as to what happens in terms of dramatic tax increases on mileage to meet those obligations. There is a lot of disinformation going around that this isn't a big problem but it is.

Currently if things are allowed to go the way they are keeping our current pension structure logically has to lead to an increase in tax revenue. The city is not bringing in more public sector jobs to pay for current unfunded liabilities and doesn't plan to.

Really in these times, and it's not a popular position, we are going to have to run deficits until 2020. We are going to have expand public sector jobs to bring revenue back into the pension funds and to get the wheels going again in local neighborhoods around town.

Also we are going to have to demand, if possible, that the union go back into arbitration with the city and give up some of the money they're looking forward to. If at all possible maybe extend the tenure time, eliminate DROP or pay DROP over time in smaller payments, and adjust monthly pensions to a more manageable level. This is going to take full cooperation of the Mayor's Office, the City Council, the Union, and I would hope, some of the city's intellectual culture outside of government on behalf of the people. I believe this can be accomplished thus saving the city from depleting it's reserves(1 billion via sources).

Ultimately as I tried to touch on in the article it takes a city pulling together and trying to make the best of a bad situation.

[theduvalprogressive]

Im Robert by the way Cheshire Cat. Most of my sources have been from analysing the Mayor proposed Pension Reform and talking with the few people I have access to. I try to stay as far away from partisan influence as I can which is really hard when you're discussing issues with the labor side and the management side. Ultimately as a socialist I am in favor of the worker(city employees), but not at the expense if over encumbering management(the people).

Privatization isn't the answer as far as pensions go. In the situation of JP Morgan a few years ago in Jefferson County, Alabama, the company gambled pension funds and lost but left it up to the citizens to socialize the repercussions. We can't afford to have that happen to us here in Jacksonville by turning over worker's pension to the financial sector to gamble on in the open market. The purpose of a pension is to have some in old age; not to provide play money for capitalists.

The same thing, it should be noted, has happened with public sector pensions in Detroit and Gary, Indiana and to their detriment as they are now unable to pay for essential city services due to being driven into bankruptcy. Personally what I would suggest is a single payer pension plan similar to Social Security with payments linked specifically to cost of living. I would also add that such a system such include legal bans against appropriating money to make up imbalances in budget due to government not collecting enough taxes, and that pensions should be suspended if retired city employees run for office or are appointed to government positions. Also I don't believe people such be able to stack pensions and that needs to be addressed in explicit legal language.

[theduvalprogressive]

I also wanted to mention that I purposefully left out anything about the lawsuit as I wanted to try to breakdown why Brown's was a bad idea as simply as possible. The lawsuit it completely a separate issue and I am discussing this with a few friends in law for another article.

What I really wanted to impart is that this issue is very complicated and needs to have a lot of time invested in it for the future financial health of the city. I am encouraged that ten seats on the council are coming open in the near future and I believe that this issue needs a fresh set of ears and eyes. This is not in any to say that our current city government is inept but I believe they have been vested too long to be open minded as to new possibilities.

[civil42806]

Your concerns as a tax payer are important. As a city we are closer, from my analysis to 1.7 bil in unfunded liabilities and over the next two years are going to be telling as to what happens in terms of dramatic tax increases on mileage to meet those obligations. There is a lot of disinformation going around that this isn't a big problem but it is.

Currently if things are allowed to go the way they are keeping our current pension structure logically has to lead to an increase in tax revenue. The city is not bringing in more public sector jobs to pay for current unfunded liabilities and doesn't plan to.

Really in these times, and it's not a popular position, we are going to have to run deficits until 2020. We are going to have expand public sector jobs to bring revenue back into the pension funds and to get the wheels going again in local neighborhoods around town.

Also we are going to have to demand, if possible, that the union go back into arbitration with the city and give up some of the money they're looking forward to. If at all possible maybe extend the tenure time, eliminate DROP or pay DROP over time in smaller payments, and adjust monthly pensions to a more manageable level. This is going to take full cooperation of the Mayor's Office, the City Council, the Union, and I would hope, some of the city's intellectual culture outside of government on behalf of the people. I believe this can be accomplished thus saving the city from depleting it's reserves(1 billion via sources).

Ultimately as I tried to touch on in the article it takes a city pulling together and trying to make the best of a bad situation.

Then basically what you are saying then, the citizens of Jacksonville ( I am no longer one of them) exist to fund and pay for the city employees pension.  The public employees are no longer serving the public, but the public exists to service the public employees?

[SunKing]

Expanding public sector jobs in order to fund pension liabilities?

[theduvalprogressive]

No what I'm saying is that, to lesson the sting of the raising of taxes, until times get better we are going to have to create more public sector jobs(city employees) and run deficits.

Creating more public sector jobs broadens the city revenue pools for consumption of goods and services(sales taxes and user fees), creates a reliable flow of money back into pension funds, and circulates more money into the local economy. I could break this down into macros if need be.

Ultimately creating more civil service jobs may drive up wage prices as well as it forces the private sector to be competitive as it will bring down demand for the service of labor. What does that mean currently? If there are 100,000 people in a city looking for a 1000 jobs service sector jobs, as a businessperson I can offer what I want: part-time, minimum wage, just over minimum wage, or commission based positions. By diminishing that pool of labor service by offering a competitive alternative, I am driving up wage prices thus necessiting a need to drive up production and to compete. This could be done without creating a living wage ordinance - something the city needs to do.

Running deficits to do this will in time justify the creation of deficits as there will be more individuals who can afford more expensive rent or purchase a new home thus broadening property tax pools. The trick is in better economic times, to actually pay the bills instead of putting it off.

Galbraith explains it much better than I do.

 

[theduvalprogressive]

Okay Sun King, let say the city creates 500 new employees(public sector jobs). That's 500 more people to pay dues into the pension plan at 3% per salary of 30k per year(450,000 in pension contributions) plus the resulting taxes will "rebate" themselves back into the system growing it from an estimated 945 million(estimated for next year).

The 15,000,000 cost of creating 500 new public sector jobs, at a stable wage, will circulate more money back through the system - and local business - bringing more tax revenue that will pay for the job creation and kick start modest growth.

[Intuition Ale Works]

Okay Sun King, let say the city creates 500 new employees(public sector jobs). That's 500 more people to pay dues into the pension plan at 3% per salary of 30k per year(450,000 in pension contributions) plus the resulting taxes will "rebate" themselves back into the system growing it from an estimated 945 million(estimated for next year).

The 15,000,000 cost of creating 500 new public sector jobs, at a stable wage, will circulate more money back through the system - and local business - bringing more tax revenue that will pay for the job creation and kick start modest growth.

You definitely are a socialist