Mayor, other leaders brace for conflict over police-fire pension

[NotNow]

Take note of the top line in the article which states that the average retirement is about $41000 per year.  The big pensions in the article represent the 2% that are top administrators, and is not an accurate representation of the other 98% of us.  As a matter of fact, if you take out those top fifty, our average is much lower. 

We contribute 7% of our salarty throughout our career.  The 8% figure does NOT apply to police/fire pension, but to the DROP plan.  Police/fire pension is a defined benefit plan, which will pay 60% at twenty years of service up to 80% at thirty years. 

As I have stated before, compare this package to Hillsboro, Orange, or Miami-Dade.  Ours is the least lucrative.  The pension IS SUSTAINABLE.  It requires the city to match 7% contributions.  State law requires 80% funding, which is quite conservative, as it should be.  While it is true that the city must "catch up", it is due to the combination of the city not making prior contributions and the lousy market. 

[NotNow]

stjr,

Figure again, use the city contribution of 7% of $65000 and another 7% contribution by the Officer.  Over twenty years and a payout of 60% of that $65000.  (That is $9100 times twenty years.)   Does that look a little more reasonable?  Those are the REAL numbers.  Now do the right thing and give Officers access to subsidized medical insurance in retirement.

[NotNow]

Now take that 7% and multiply it times about 1600.  That's how many sworn Officers we have.  (That's $4550 times 1600).  That is what the city has to contribute when the pension is properly funded.  Unsustainable?  Really?  Add a few million for bigwig salaries and it still looks pretty doable, doesn't it? 

stjr,  you do this more than me, What do you think?  Remember, the city has NO other obligation to retiring Police and Firefighters. 

[stjr]

stjr,

Figure again, use the city contribution of 7% of $65000 and another 7% contribution by the Officer.  Over twenty years and a payout of 60% of that $65000.  (That is $9100 times twenty years.)   Does that look a little more reasonable?  Those are the REAL numbers.  Now do the right thing and give Officers access to subsidized medical insurance in retirement.

NotNow, first I want to make clear I am not knocking JSO or fire fighter employees,  but I do think their retirement benefits are very rich vs. the private sector.  If other cities are richer than Jax, then my thoughts are double for them.  It doesn't change the relative comparison to the private sector.

My analysis was intended to be apples to apples, i.e. a 150K private sector employee vs. a 150K public sector employee since that was the salary revealed in the report.  I would assume that, at any given pay level, the relationship between the private and public sector would be similar.  If I understand you correctly, that a public employee always puts in 1/2 of the contribution to their pension from their pay, then the ratio would be 5 to 10 times the private sector, rather than 10 to 20 times based on my analysis.  Even at that, it is a huge difference in benefits and really doesn't change the conclusion.

Most private sector employers contribute a max of 4% of annual pay to a 401K, and they only do that if they are reasonably profitable (i.e. if they lose money they don't make any contribution).  And to get that, most employees have to match it with 4 to 6% of their own pay.  There are no guaranteed employer contributions or returns.

Most 401Ks today are employee directed and the employee is on their own to select investments from a limited menu of mutual and money market funds and maybe a REIT or two.  They typicially can't do hedge funds (if most could even understand them) or buy a piece of real estate from the City at a bargain price, fix it up, and lease it back to the City for a guaranteed exceptional return to enhance their plan's return.  In the current down market, many of my fellow employees have lost 30 to 50%.  No one is going to make it up to them.  They just have to hope the market rebounds and they are invested correctly to take advantage of it.

As to health insurance, again, in the private sector, many employers offer little or NO health insurance while one is  EMPLOYED (hence, our national health insurance debate).  Of those that do provide quality health insurance, the average employer subsidizes 60 to 70% of the employee-only insurance premium.  If there is any subsidy at all for the family premium, it usually maxes at about 30%.  When the employee leaves or retires from the company, they are on their own to pay ALL premiums for continuation/COBRA/private insurance or they get on Medicare/Medicaid if they are eligible.

When the voters can't obtain and/or afford these same benefits for themselves, especially in these tough economic times when many benefits are being further reduced/cut/eliminated, you can't expect them to have much "sympathy"  regarding public employee's gripes about making some kind of benefit sacrifice that still leaves them in far better shape than the private sector.  Nor, for the taxpayers to have any desire to continue to pay from their own barren pockets for the perceived overly-rich public benefits already being doled out.

[NotNow]

stjr,

I am not taking any offense to your arguments.   I certainly understand that times are tough.  What I was trying to do was correct some perceptual errors, such as employer only contribution and a guaranteed 8% income.  These do not exist in our pension.  I would also point out that while many private employers may meet the conditions that you describe, many do not.  Many private companies have better retirement packages than COJ.  Certainly the Federal, State, and other county packages are better.  My point is that the pension is not only sustainable, but is affordable when caught up.  Again, many private employers provide subsidized or company funded health care as well.  The correct comparison would size down to comparable job descriptions and salaries, rather than ALL private companies.  One other thing to remember is that Police/fire retiree life expectancy is a full ten years less than the general population.  I will do some more homework. 

Also, please remember that city employees are taxpayers as well, Increases in fees and taxes comes out of our pockets as well. 

[Dog Walker]

I think that the Social Security costs and benefits need to be added into the private employees total figures too, not just the 401K's to make it a true apples to apples comparison.

NN, I know that the police do not pay into the Social Security fund, but do you pay the Medicare portion of the system?  Surely the police get Medicare benefits at 65 like everyone else.

[NotNow]

Yes, we pay into Medicare and recieve the benefit at 65.

[NotNow]

And thanks DW, you are right.  SS costs and benefits should be counted.  I would be interested in real stats from around the country on Police/Fire retirements.  I think it is pretty clear that as far as comparable Florida cities are concerned, Jax Police/Fire is at or near the bottom as far as compensation and benefits.

[CS Foltz]

Like everything else here in COJ.....we are behind and then some. Comes from having an Administration with no vision or plan for much of anything. Only thing I've seen is a propensity to waste money and appoint friends to positions of power.......make use of GOB Network to line ones pocket......and generally ignore the public, until you need a new Fee!

[cityimrov]

I'm new to the pension argument so please forgive me if this is a dumb post.  

Pension is basically another form of debt isn't it?  What our forefathers said to people way back then was "work this hard for this tiny salary and we'll give you this money later on."  Basically, a balloon loan with a gigantic interest payment in the end.  

Because of this, the people back then got a huge amount of "free" labor to invest in Jacksonville and do whatever they want with extra cash to spend on whatever they wanted.  (Apparently, our forefathers invested all that extra money in wrecking balls for downtown.)   In short, as those conservative republicans say, "...our grand kids will be paying back all this money we spent". Except this time, we're the kids who are stuck with the giant bill our forefathers gave us to buy all those wrecking balls for downtown (maybe a golden parachute or two?).  Am I close to what happened or is there something I'm missing?  

[NotNow]

You don't have to just have faith in what I say.  All of this information is available on the pension  site which is accessable from here:

http://www.coj.net/Departments/Police+and+Fire+Pension+Fund/default.htm

 As for your questions:

1.  The 7% contribution that we pay is on every bit of income that we make, including overtime.  Our retirement pension is figured on the last two years of base pay, education pay, and differential pay.  There are some Fire Department pays that count that I am not familiar with.  So no, other than working the midnight shift (differential pay = 2 or 3%) you can't "pad" your retirement.

2.  Pension is calculated on the last two years of pay.

3.  Annuity only if you "retire" from the system.  If you leave before vested or before retiring, you can only take the cash that was deducted from your paycheck.  Any interest or city contribution stays in the system.

4.  Straight life with cost of living adjustment.  

Again, we do not contribute to, or receive Social Security.  Thus, the city does not pay it either.  Don't forget that "high risk" police and fire funds such as this also act as insurance policies.  When Officers are killed or injured on duty, their medical or survivors pension is paid by the pension fund.  Under another plan, the city will be responsible for this.  This is why every other county is on the state plan and other cities use a plan very similar to ours.  I would happily take the state retirement and social security plan that the Mayor will receive and that other Sheriff's Offices get.  He makes NO contribution except SS and the city makes a much higher contribution when you add in pension AND SS contributions.

[ChriswUfGator]

I for one actually think the police and firefghters deserve their pensions. This situation is nutty, the truth is that COJ scaled back its required contributions when the plans enjoyed substantial outperformance relative to their investment targets, but when the bubble deflates now all of a sudden it's "too expensive" to make up for the shortfall they created themselves.

Which , since someone else brought it up, is exactly the same thing that happened in the private sector. Companies scale back contributions when the market is doing well and the total plan assets exceed the required target, but when the market tanks and they have to make up the shortfall then it immediately becomes just one more cut to be made in the budget. As much as is wrong with the unions, they figured this scam out in the 1970's and have fought it tooth and nail ever since. And I give them credit for that.

Nobody wants to be responsible for anything anymore. A deal is a deal, and the city should honor theirs moving forward. I also think the federal laws governing these plans should change to require cash contributions to be based on 20 and 30 year historical returns, and not subject to constant modification in every way that will save the employer a nickel. The chickens eventually always come home to roost.

And yes I know this means I agree with NotNow, but that's the way I feel.

[NotNow]

While even I am shocked ,  right is right.

[cityimrov]

I for one actually think the police and firefghters deserve their pensions. This situation is nutty, the truth is that COJ scaled back its required contributions when the plans enjoyed substantial outperformance relative to their investment targets, but when the bubble deflates now all of a sudden it's "too expensive" to make up for the shortfall they created themselves.

Which , since someone else brought it up, is exactly the same thing that happened in the private sector. Companies scale back contributions when the market is doing well and the total plan assets exceed the required target, but when the market tanks and they have to make up the shortfall then it immediately becomes just one more cut to be made in the budget. As much as is wrong with the unions, they figured this scam out in the 1970's and have fought it tooth and nail ever since. And I give them credit for that.

Nobody wants to be responsible for anything anymore. A deal is a deal, and the city should honor theirs moving forward. I also think the federal laws governing these plans should change to require cash contributions to be based on 20 and 30 year historical returns, and not subject to constant modification in every way that will save the employer a nickel. The chickens eventually always come home to roost.

And yes I know this means I agree with NotNow, but that's the way I feel.

+1

Do you think the Citizens of Jax will be willing to honor their end of the deal?  The citizens pretty much elected the leaders and they are ultimately responsible for picking up the tab. 

[Timkin]

We have to have Law-enforcement and We have to have Fire Fighters and my hat is off to both!