Why Was Alvin Brown's Pension Reform a Bad Deal?
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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-
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.
privatize
Whats up with the sheriff's budget ? Are they planning to close CTC again?
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?
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.
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.
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.
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.
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.
Quote from: theduvalprogressive on August 17, 2013, 12:01:34 AM
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?
Expanding public sector jobs in order to fund pension liabilities?
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.
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.
Quote from: theduvalprogressive on August 17, 2013, 10:23:34 AM
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 ;D
Quote from: theduvalprogressive on August 17, 2013, 10:23:34 AM
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.
That's not a solution, that sounds like Detroit. Why not just sprinkle fairy dust on it and make it all happy again?
Here's a proven solution. Privatize 500 existing positions thereby 1)eliminating any future pension obligation, 2)create savings to fund existing obligations and 3)create competition with the unions to potentially negotiate pension reform.
Done.
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
Privatize police and fire?
Quote from: Bridges on August 17, 2013, 02:16:59 PM
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
Privatize police and fire?
I wouldn't.
Quote from: stephendare on August 17, 2013, 03:14:05 PM
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
The broken system is really the fact that we have a moocher/looter 'conservative' government. It doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.
THAT is what needs to change.
Meh, maybe but that's another conversation.
We are discussing pension reform and when you really think about it, isnt it sad that so much time, talent and treasure is tied up in an issue that really is not what government is set up to do? Its really not a political argument, its fiscal and it has nothing to do with how other money is spent. Its a bad financial deal for the City and it needs to be changed.
Fix the pension problem and you can have the money and time to go back to arguing about more important matters.
Quote from: SunKing on August 17, 2013, 03:50:17 PM
Quote from: stephendare on August 17, 2013, 03:14:05 PM
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
The broken system is really the fact that we have a moocher/looter 'conservative' government. It doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.
THAT is what needs to change.
Its a bad financial deal for the City and it needs to be changed.
Just don't forget that this bad deal for the City was brokered by the City. That fact is what makes this issue bigger than it is on the surface and why things like lawsuits need to remain a part of the discussion when talking about "pensions". The police and fire fighters did not create the mess. City officials did from the original barter of the deal to it's ultimate mismanagement exasperated by "pension holidays".
Beginning with the Peyton administration, dealing with this issue became instead the bashing of both police and fire fighters. Both folks who had oddly enough worked to help get Peyton into office. His attempts to talk pension became instead an standoff complete with insults being readily traded.
Then we get the Alvin Brown crew, mostly untested, that as it turns out cannot even write a "real" budget trying to fix the problem. That was a non starter to begin with. For Brown this was and is about political points and not about fixing the problem now. He and his deal was not only faulty but based upon unproved projections. All he did was kick the can further down the road.
Privatizing Police and Fire is frankly a very bad idea for several reasons. The number one concern in our city is the protection of our citizens and their safety. This is why such a large part of our budget goes to that effort and why I suspect the original contract was according to some, too generous. While we talk numbers and solutions what has to be at the top of that discussion is the reality that we are talking about a contract made with some of our most important employees, which are the police and fire fighters and that cannot be forgotten.
The outcome here is going to be impacted by what the court does. As I mentioned earlier, there is a "quiet" mindset at city hall that holds the attitude that this will end up being decided by the actions of the court.
Quote from: Cheshire Cat on August 17, 2013, 04:59:27 PM
Quote from: SunKing on August 17, 2013, 03:50:17 PM
Quote from: stephendare on August 17, 2013, 03:14:05 PM
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
The broken system is really the fact that we have a moocher/looter 'conservative' government. It doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.
THAT is what needs to change.
Its a bad financial deal for the City and it needs to be changed.
Just don't forget that this bad deal for the City was brokered by the City. That fact is what makes this issue bigger than it is on the surface and why things like lawsuits need to remain a part of the discussion when talking about "pensions". The police and fire fighters did not create the mess. City officials did from the original barter of the deal to it's ultimate mismanagement exasperated by "pension holidays".
Like I said I wouldnt support privatizing police and fire. but there is another $200million in the General Fund that I would.
Quote from: SunKing on August 17, 2013, 06:19:16 PM
Quote from: Cheshire Cat on August 17, 2013, 04:59:27 PM
Quote from: SunKing on August 17, 2013, 03:50:17 PM
Quote from: stephendare on August 17, 2013, 03:14:05 PM
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
The broken system is really the fact that we have a moocher/looter 'conservative' government. It doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.
THAT is what needs to change.
Its a bad financial deal for the City and it needs to be changed.
Just don't forget that this bad deal for the City was brokered by the City. That fact is what makes this issue bigger than it is on the surface and why things like lawsuits need to remain a part of the discussion when talking about "pensions". The police and fire fighters did not create the mess. City officials did from the original barter of the deal to it's ultimate mismanagement exasperated by "pension holidays".
Like I said I wouldnt support privatizing police and fire. but there is another $200million in the General Fund that I would.
Those funds would be? Are they one time money, unencumbered and not earmarked for other uses? Curious to know where you got the number. :)
Where Sun King is coming from is a school of thought I grew up with in college. The idea is to take 500 jobs at 30k and turn them over to the private sector thus one removes one and a half millions dollars from the public sector and thus from tax rolls. (Do you see where this is going?)
Basically in real terms let say we contract a private sector company. We'll call the company "Waste Management Systems" as I'm not feeling very imaginative right now. We eliminate 500 garbage collectors at 24k a piece removing them from pension rolls under a low ball start up contract. "Waste Management" absorbs those jobs a starting wage of 22k a year and benefits plus what ever private insurance they decide to give them. The taxpayer is still going to pay for the contract including the expense of vehicle maintanence etc. in what is figured into the low ball figure.
(Note the magic wand twirling)
Let's say for the next couple of years at contract time that service goes up as they also price the 1st year losses to the next years in succession. At some point the contract price for privatized service will make it's way back up due to profit motive and imagined cost leaving the city where it was.
But it gets worse. The income loss to labor affects the local economy due to reduced purchasing power. The lower wages creates a situation where labor opts out of healthcare coverage because of its hit on the paycheck creating net loss at hospitals. Or if labor keeps benefits, that additional loss of purchasing power rings the bell one time less in a restaurant or coffee shop. So what value came from privatization? None. Basically the taxpayer will end up with the same expense that will worsen.
All privatization is is a redistribution of public wealth to private corporations using government as the method of delivery.
Again I'd like to remind you who missed the point that the allowance of financial services companies to gamble pension fund on the stock market lead to the bankrupting of pension funds in Birmingham, Detroit, and 34 other cities nationwide. How's that for waving a "magic wand".
Another thing people need to understand is that running deficits in slim times can hold the local economy together until times get better. This whole fear of debt thing is just DNC/RNC propaganda.
Quote from: theduvalprogressive on August 17, 2013, 06:52:49 PM
Where Sun King is coming from is a school of thought I grew up with in college. The idea is to take 500 jobs at 30k and turn them over to the private sector thus one removes one and a half millions dollars from the public sector and thus from tax rolls. (Do you see where this is going?)
Basically in real terms let say we contract a private sector company. We'll call the company "Waste Management Systems" as I'm not feeling very imaginative right now. We eliminate 500 garbage collectors at 24k a piece removing them from pension rolls under a low ball start up contract. "Waste Management" absorbs those jobs a starting wage of 22k a year and benefits plus what ever private insurance they decide to give them. The taxpayer is still going to pay for the contract including the expense of vehicle maintanence etc. in what is figured into the low ball figure.
(Note the magic wand twirling)
Let's say for the next couple of years at contract time that service goes up as they also price the 1st year losses to the next years in succession. At some point the contract price for privatized service will make it's way back up due to profit motive and imagined cost leaving the city where it was.
But it gets worse. The income loss to labor affects the local economy due to reduced purchasing power. The lower wages creates a situation where labor opts out of healthcare coverage because of its hit on the paycheck creating net loss at hospitals. Or if labor keeps benefits, that additional loss of purchasing power rings the bell one time less in a restaurant or coffee shop. So what value came from privatization? None. Basically the taxpayer will end up with the same expense that will worsen.
All privatization is is a redistribution of public wealth to private corporations using government as the method of delivery.
Again I'd like to remind you who missed the point that the allowance of financial services companies to gamble pension fund on the stock market lead to the bankrupting of pension funds in Birmingham, Detroit, and 34 other cities nationwide. How's that for waving a "magic wand".
Could you give an example of one city/county/parish/province/country utilized this method which resulted in a proof positive benefit?
QuoteIt doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.
When we need gut check decisions, we'll make sure we look back at what they did 40 years ago. Stop living in the past and move forward! Everything should be up for discussion, including consolidation.
Quote from: JayBird on August 17, 2013, 07:32:12 PM
Quote from: theduvalprogressive on August 17, 2013, 06:52:49 PM
Where Sun King is coming from is a school of thought I grew up with in college. The idea is to take 500 jobs at 30k and turn them over to the private sector thus one removes one and a half millions dollars from the public sector and thus from tax rolls. (Do you see where this is going?)
Basically in real terms let say we contract a private sector company. We'll call the company "Waste Management Systems" as I'm not feeling very imaginative right now. We eliminate 500 garbage collectors at 24k a piece removing them from pension rolls under a low ball start up contract. "Waste Management" absorbs those jobs a starting wage of 22k a year and benefits plus what ever private insurance they decide to give them. The taxpayer is still going to pay for the contract including the expense of vehicle maintanence etc. in what is figured into the low ball figure.
(Note the magic wand twirling)
Let's say for the next couple of years at contract time that service goes up as they also price the 1st year losses to the next years in succession. At some point the contract price for privatized service will make it's way back up due to profit motive and imagined cost leaving the city where it was.
But it gets worse. The income loss to labor affects the local economy due to reduced purchasing power. The lower wages creates a situation where labor opts out of healthcare coverage because of its hit on the paycheck creating net loss at hospitals. Or if labor keeps benefits, that additional loss of purchasing power rings the bell one time less in a restaurant or coffee shop. So what value came from privatization? None. Basically the taxpayer will end up with the same expense that will worsen.
All privatization is is a redistribution of public wealth to private corporations using government as the method of delivery.
Again I'd like to remind you who missed the point that the allowance of financial services companies to gamble pension fund on the stock market lead to the bankrupting of pension funds in Birmingham, Detroit, and 34 other cities nationwide. How's that for waving a "magic wand".
Could you give an example of one city/county/parish/province/country utilized this method which resulted in a proof positive benefit?
A Georgia Town Takes the People's Business Private (http://www.nytimes.com/2012/06/24/business/a-georgia-town-takes-the-peoples-business-private.html?pagewanted=all&_r=1&)
QuoteCities have dabbled for years with privatization, but few have taken the idea as far as Sandy Springs. Since the day it incorporated, Dec. 1, 2005, it has handed off to private enterprise just about every service that can be evaluated through metrics and inked into a contract.
To grasp how unusual this is, consider what Sandy Springs does not have. It does not have a fleet of vehicles for road repair, or a yard where the fleet is parked. It does not have long-term debt. It has no pension obligations. It does not have a city hall, for that matter, if your idea of a city hall is a building owned by the city. Sandy Springs rents.
The town does have a conventional police force and fire department, in part because the insurance premiums for a private company providing those services were deemed prohibitively high. But its 911 dispatch center is operated by a private company, iXP, with headquarters in Cranbury, N.J.
...
Does the Sandy Springs approach work? It does for Sandy Springs, says the city manager, John F. McDonough, who points not only to the town's healthy balance sheet but also to high marks from residents on surveys about quality of life and quality of government services.
...
During a tour of city hall, Mr. McDonough bumps into Kevin Walter, the deputy director of public works. Mr. Walker has good news. Currently, Sandy Springs pays for two people to operate two road maintenance trucks five days a week — in effect, 10 days of work every two weeks. Well, Mr. Walker has just figured out a way to reduce the number to nine days every two weeks, saving $50,000 a year.
Does Mr. Walker, or rather his company, URS, get to keep a portion of that $50,000?
"No," Mr. Walker says. "But I get to keep my job. Our job is to run all these projects and programs very efficiently."
And your contract?
"It is renewed every year," Mr. Walker says.
"It can be renewed every year," Mr. McDonough clarifies.
"It can be renewed every year," says Mr. Walker, correcting himself.
There are a couple presuppositions behind duvalprogressive's critique:
- Privatized services being delivered under long-term, cost-plus contracts
- Privitized services being a monopoly without competition
- Paying private-sector employees serves less of a public good than public-sector employees
My response:
- The art of privatization is in well run bid/auctions and well-written contracts. Cities that resort to privatization are often there because they've already done a terrible job at defining missions and controlling costs, leaving them ill-prepared to create a robust privatization process. Given the trade-offs that come with scarcity, these cities often throw up their hands and try to do too much with too little. Case in point is transit. There's a push-pull between coverage and service quality. Cities are often forced to run little-used bus lines, or Amtrak to maintain long distance connections that don't serve many people and are expensive to maintain. At the same time there's the expectation of short headways and hours of service. Given limited resources, and legislative prerogative restricting them from making trade-offs, these systems are set up for failure. These same contradictions are often seen in privatization contracts and result in service just as poor and expensive as what they were supposed to replace.
- Monopoly providers often result from cities trading long-term stability for short-term return. Chicago parking meters, or the 99-year lease of the Chicago Skyway are great examples of this. When the motive is for the city to make a quick buck, it's confusing to blame the buyer for the problems.
- The implied distinction between private and public sector employment is spurious unless one considers a *primary* function of government and government agencies is to provide employment. How are an excess (relative to worker productivity) of employees any less redistribution than privatization? The very premise of privatization is that it provides more efficient service and lower cost, allowing for lower taxes (benefiting *all* taxpayers). Surplus government employment only benefits the government employees (which I count myself part of as a lucky recipient. Thanks taxpayers!).
And as another argument, besides 3P (public-private partnerships), that the public/private dichotomy is overly simplistic and incomplete: The Case for Letting Nonprofits Run Public Transit (http://www.theatlanticcities.com/commute/2013/08/case-letting-nonprofits-run-public-transit/6563/)
My article is 2 years more recent than yours.
Residents happy and officials in Sandy Springs, Ga., get re-elected with huge margin (http://www.michigancapitolconfidential.com/18713)
This one from June 7 this year.
Good luck with your experiments. Now I see why so many good Officers are leaving JSO.
Steven is correct for the same reason privatized libraries didn't work in my hometown. They low ball to get the contract and then spread the cost of operating below profit ratio over successive years. By the time cities figure this out they are too vested to go back. IF you want to see the biggest waste and corruption associate with privatization, look no further than the Military Industrial Complex.
There is a model of privatization I believe would work and it revolves around employee owned cooperatives. I believe the city could benefit from taxpayer investment in employee owed and operated companies as it would increase more private ownership in the means of production of goods and services - keeping it local.
What that would involve is, say, a company is about to leave town and close shop. The city could partner with local lenders to help purchase equipment, help with rental of the facilities, and provide start up cash to kickstart the enterprise. The company could payback the money over time and do services for government on a "pro bono" or discounted basis.
For example if a civil contractor goes out of business and the employees could submit a plan that would show they were capable of running a similar company, the city would help them. In return they would have the option of paying the money back on terms or paying part of the money back in cash and providing a service in trade such as repairing roads or clean up. Once their term is done they would go on their own.
What you're describing duvalprogressive is almost entirely how the Chinese economy is structured. Government-run banks give loans to government-run companies which provide services to other government-run companies while soaking up excess labor from urbanization. The loans are offered at rates not available to private enterprises and the companies are entrenched "employee-owned" bureaucracies.
Countries like Venezuela or ME countries similarly use government-owned piggybanks like oil companies to prop up other government-owned companies or interests. It's not a sustainable way to operate and the oft-touted social benefits end up limited by commodity prices (Venezuela) or slow growth (Brazil).
Back on point, would you propose privatization of police and fire service in Jax JFman00? If so, I would have a few questions.
I think fire service could plausibly be privatized, police probably not. In terms of practical and political feasibility, absolutely not. Practically because of the insurance issues that Sandy Springs ran into, politically because the benefits would be dispersed while the loses would be concentrated. There was a news story... last year? about a county with a privatized fire service that allowed someones house to burn down because they hadn't paid their bill. They were on hand to prevent the neighbors houses from being damaged though. Is that system working as designed? Probably. Is it equitable and fair? Depends on who you ask. Did voters change their mind? I'll have to do some research.
I just last week moved into a house for the first time since I lived with my parents and was quite surprised that trash pickup is municipal and not privatized. That's a pretty straightforward service to 100% outsource.
Quote from: Cheshire Cat on August 17, 2013, 06:23:59 PM
Quote from: SunKing on August 17, 2013, 06:19:16 PM
Quote from: Cheshire Cat on August 17, 2013, 04:59:27 PM
Quote from: SunKing on August 17, 2013, 03:50:17 PM
Quote from: stephendare on August 17, 2013, 03:14:05 PM
Quote from: SunKing on August 17, 2013, 02:11:24 PM
and by "privatize" I mean take jobs AWAY from the union, not privatize the pension plan. Whatever side of the fence you sit on politically, you cant honestly believe that expanding a broken system and incurring debt in order to do so makes any sense at all. The City (we) owe what we owe and there may be a deal to cut with the union but who knows? Stop the bleeding by moving away from that tired old system. It is simply unsustainable.
The broken system is really the fact that we have a moocher/looter 'conservative' government. It doesnt believe in paying its own bills and has subsidized both its development and its maintenance through taxing other parts of the state for decades.
THAT is what needs to change.
Its a bad financial deal for the City and it needs to be changed.
Just don't forget that this bad deal for the City was brokered by the City. That fact is what makes this issue bigger than it is on the surface and why things like lawsuits need to remain a part of the discussion when talking about "pensions". The police and fire fighters did not create the mess. City officials did from the original barter of the deal to it's ultimate mismanagement exasperated by "pension holidays".
Like I said I wouldnt support privatizing police and fire. but there is another $200million in the General Fund that I would.
Those funds would be? Are they one time money, unencumbered and not earmarked for other uses? Curious to know where you got the number. :)
Im not talking about CIP. Anything that's non public safety that's in the General Fund.
Obion County, TN. They will now extinguish all fires, but will bill non-subscribers ($75 a year) $3,500 for the response.
Been going pretty well since 2005. I'll never understand the ideological rigidity that rejects out of hand ideas of how to do things better. Conservatives and liberals in this country alike seem absolutely set in their worldviews and resistant to not only compromise but non-partisan alternatives. Guess it's easier to blame someone else than entertain the idea that a particular system or institution is broken.
I didn't say that the Chinese system is awful, simply what it is. If you like it, good for you. I think it's done a great job given its foundations and goals (supporting economic development at all costs and resulting in the largest absolute decrease in poverty in world history) but I'm pessimistic on its long-term prospects as it's economy transitions away from the low-hanging productivity gains that come from pure physical capital investment. There's always a trade-off and it bothers me when people don't acknowledge them.
Quote from: theduvalprogressive on August 17, 2013, 09:55:46 PM
Steven is correct for the same reason privatized libraries didn't work in my hometown. They low ball to get the contract and then spread the cost of operating below profit ratio over successive years. By the time cities figure this out they are too vested to go back. IF you want to see the biggest waste and corruption associate with privatization, look no further than the Military Industrial Complex.
Actually you both are wrong and it is working in Georgia very well by the way. But privatization has been in place throughout most of Florida for years, particularly in areas that are experiencing rapid growth. Shifting non public safety employees off a city funded pension will provide immediate and future savings. Its a fact, don't hate the truth.
The argument that the private sector is somehow inherently more corrupt than the public sector? Military Industrial Complex? Cmon folks we are talking about pensions, not politics.
Quote from: stephendare on August 17, 2013, 10:54:03 PM
Quote from: JFman00 on August 17, 2013, 10:51:44 PM
Been going pretty well since 2005. I'll never understand the ideological rigidity that rejects out of hand ideas of how to do things better. Conservatives and liberals in this country alike seem absolutely set in their worldviews and resistant to not only compromise but non-partisan alternatives. Guess it's easier to blame someone else than entertain the idea that a particular system or institution is broken.
This isnt a conservative or liberal issue. Its a simple question of how to provide services. The Atlanta Constitution is hardly a bastion of socialism, incidentally. Privatization breaks down because when it stops working its generally unfixable.
I argue that privatization breaks down when the circumstances that led to it were unfavorable to begin with. There was a great article in the Economist on how Raul Castro seems to be managing Cuba's transition away from a communist system in a way less prone to the oligarchic capitalism that came with Russia's rushed privatization process. Or see a lot of the half-baked, half-hearted privatization proposals that the EU is forcing Spain and Greece through. Will the failure of privatization in those countries be blamed on the act of privatization? Or the difficult circumstances that led to a search for alternatives to the status quo in the first place?
When you look at government bankruptcies across the country from Stockton, CA to Jefferson County, AL it's hard to believe that privatization is the bogeyman people make it out to be. Privatization, like government-owned and operated services, non-profits, public-private partnerships or other structures we haven't thought of yet, is just one of a set of possible tools to use when approaching issues. The same structure won't always work in the same place, but given that each has it's own set of costs and benefits, and the multitude of issues facing governments at every level, it makes sense to leave all options on the table and explore their applicability on a case by case basis.
OK, JFMan already mentioned a few in Georgia but in Florida how about Miami, Weston, Pembroke Pines, West Palm Beach, Orlando, Ft. Lauderdale.
had to catch my breath but anyway forget the Chinese, ask the Greeks about all of those public sector jobs. They are loving all of this socialist trickle down economics.
now back to Jacksonville and our little pension problem....
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
Quote from: stephendare on August 17, 2013, 11:12:16 PM
Quote from: SunKing on August 17, 2013, 11:09:41 PM
OK, JFMan already mentioned a few in Georgia but in Florida how about Miami, Weston, Pembroke Pines, West Palm Beach, Orlando, Ft. Lauderdale.
Cool. Provide the link that shows how they saved the pensions with 30 years of unmet obligations. Im sure that I must have missed the story of how Miami privatized their pension program. That must have made headlines. Lets see a few. Im very curious.
I am making the point of privatizing jobs in order to eliminate pensions, not privatize pensions.
Quote from: stephendare on August 17, 2013, 11:13:54 PM
Is this your way of avoiding providing some documentation for your claims?
Or are you admitting that you are just talking 'theoretically'?
See my prior post.
Quote from: stephendare on August 17, 2013, 10:58:45 PM
Quote from: JFman00 on August 17, 2013, 10:55:44 PM
I didn't say that the Chinese system is awful, simply what it is. If you like it, good for you. I think it's done a great job given its foundations and goals (supporting economic development at all costs and resulting in the largest absolute decrease in poverty in world history) but I'm pessimistic on its long-term prospects as it's economy transitions away from the low-hanging productivity gains that come from pure physical capital investment. There's always a trade-off and it bothers me when people don't acknowledge them.
I have yet to meet a foreign minister, including the American Ambassador to China, John Huntsman that would feel comfortable saying that he knows how the 'chinese economic system' works, simply because they don't really have a single economic system or way of doing things, JFMan. Its a complex society with a billion people and different kinds of economic zones. While it might be useful to toss "China" into a conversation as a debate tool, its like using the bible as your reference. There is so much there that you can find at least one scripture that taken out of context will prove anything you are trying to say, from cannibalism to incest.
A most cursory look at the statistics, from stock market capitalization, to value of loans, to number of employees to see the basis for Chinese growth. Without a doubt, a handful of different states and the SEZs have notably (but not ground-breakingly) different structures, but the numbers are quite straightforward on how much Chinese economic activity is centered on state capitalism/state-owned enterprises.
Quote from: stephendare on August 17, 2013, 11:17:24 PM
Quote from: JFman00 on August 17, 2013, 11:15:39 PM
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
So then, no. There is not, nor has there ever been a successful example of a completely privatized large city or small country.
Why is that necessary to prove? The only 100% privatized example of anything would be anarchy for all intents and purposes. Not a single American entity operates without some influence or money or benefit from government.
Quote from: stephendare on August 17, 2013, 11:19:38 PM
Quote from: SunKing on August 17, 2013, 11:18:57 PM
Quote from: stephendare on August 17, 2013, 11:13:54 PM
Is this your way of avoiding providing some documentation for your claims?
Or are you admitting that you are just talking 'theoretically'?
See my prior post.
Your prior post in which we are to assume that the existing pension obligations magically disappear?
Not at all in fact I have maintained that we need to honor our obligations but by transferring existing employees to private sector capitalism, yes, you stop the bleeding going forward. And if you want proof, its not on Wikipedia, just look at the city budgets yourself.
Quote from: stephendare on August 17, 2013, 11:21:26 PM
Quote from: JFman00 on August 17, 2013, 11:19:08 PM
Quote from: stephendare on August 17, 2013, 10:58:45 PM
Quote from: JFman00 on August 17, 2013, 10:55:44 PM
I didn't say that the Chinese system is awful, simply what it is. If you like it, good for you. I think it's done a great job given its foundations and goals (supporting economic development at all costs and resulting in the largest absolute decrease in poverty in world history) but I'm pessimistic on its long-term prospects as it's economy transitions away from the low-hanging productivity gains that come from pure physical capital investment. There's always a trade-off and it bothers me when people don't acknowledge them.
I have yet to meet a foreign minister, including the American Ambassador to China, John Huntsman that would feel comfortable saying that he knows how the 'chinese economic system' works, simply because they don't really have a single economic system or way of doing things, JFMan. Its a complex society with a billion people and different kinds of economic zones. While it might be useful to toss "China" into a conversation as a debate tool, its like using the bible as your reference. There is so much there that you can find at least one scripture that taken out of context will prove anything you are trying to say, from cannibalism to incest.
A most cursory look at the statistics, from stock market capitalization, to value of loans, to number of employees to see the basis for Chinese growth. Without a doubt, a handful of different states and the SEZs have notably (but not ground-breakingly) different structures, but the numbers are quite straightforward on how much Chinese economic activity is centered on state capitalism/state-owned enterprises.
Thats very polysyllabic for reasons which aren't immediately obvious to someone listening for your answer on how Robert's suggestions are exactly like the Chinese 'system'.
Perhaps you wouldnt mind elucidating?
I don't know how else to explain it. Those are the words that publications and textbooks use to describe the kind of governmental involvement duvalprogressive was suggesting. Boeing/Airbus and the military-industrial complex are often the Western examples provided.
Quote from: JFman00 on August 17, 2013, 11:22:03 PM
Quote from: stephendare on August 17, 2013, 11:17:24 PM
Quote from: JFman00 on August 17, 2013, 11:15:39 PM
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
So then, no. There is not, nor has there ever been a successful example of a completely privatized large city or small country.
Why is that necessary to prove? The only 100% privatized example of anything would be anarchy for all intents and purposes. Not a single American entity operates without some influence or money or benefit from government.
Agreed, I wouldn't want to 100percent anything either. Public sector should partner with the private not be at odds with each other. For instance a Parks Director can be a city employee but utilize private contractors to maintain the Parks.
anyone wish to congratulate me on my Full Member status?
FT, the Economist, Der Spiegel, Bloomberg, WIRED. In textbooks, I think Mankiw added a section on it and I'm pretty sure Development Economics by Debraj Ray includes an involved discussion of it (haven't unpacked my books yet). If you hear urban planners on NPR talk about 3P they're talking about public-private partnerships. Just because it's jargon doesn't make it a myth.
Quote from: stephendare on August 17, 2013, 11:29:24 PM
Quote from: SunKing on August 17, 2013, 11:23:45 PM
Quote from: stephendare on August 17, 2013, 11:19:38 PM
Quote from: SunKing on August 17, 2013, 11:18:57 PM
Quote from: stephendare on August 17, 2013, 11:13:54 PM
Is this your way of avoiding providing some documentation for your claims?
Or are you admitting that you are just talking 'theoretically'?
See my prior post.
Your prior post in which we are to assume that the existing pension obligations magically disappear?
Not at all in fact I have maintained that we need to honor our obligations but by transferring existing employees to private sector capitalism, yes, you stop the bleeding going forward. And if you want proof, its not on Wikipedia, just look at the city budgets yourself.
I have. I have a full copy of all city budgets for the past 22 years. Most of the metrojacksonville editorial board started this publication be getting them and familiarizing ourselves with them before we started posting on the subject.
So under your radical proposal, we would keep all the old obligations and then saddle the city with a new layer of obligations and shifting contracts on top of the old ones?
Sounds brilliant.
You should publish a white paper.
So I take it that you are no longer trying to claim that Miami privatized their pensions or their public safety services?
I mean, just for the record.
Just for the record, you have a nasty habit of misquoting to make a point Mr. Dare. I thought you were better than that.
Quote from: JFman00 on August 17, 2013, 11:15:39 PM
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
Placing pubic safety employees on a 401k type system would leave you with several questions. What is your intended contribution to such a system? How would on medical disability retirements be funded, and at what level? At what point would public safety employees be vested?
Jacksonville could easily fix all employee pension costs now. All they have to do is place employees into the Florida Retirement system. The high risk state fund is what other Florida sheriff's office uses for retirement. It is one of the best funded systems in the nation. The Mayor and City Council are in the state retirement. Why won't they place the rest of city employee's in the state fund? Why won't they at least put new employees or new public safety employees in the state retirement system? Could it be because we are too cheap to even fund what every other county in Florida is funding?
You must not realize that current employees and current retirees are protected by contract and state law. Any attempt to alter that contract would have to be negotiated, arbitrated, or left to the courts in the employer is claiming that it cannot meet its obligations. Which is what the City of Jax will have to do if the current agreement ever winds up in court. The city will then get a chance to explain why after not making required contributions, cutting property taxes for twenty years, cutting off state funding streams to the Police & Fire Pension Fund, and building a huge "reserve" fund, they now say they cannot meet their obligations. At least we will finally get a listing of city owned real estate and other assets.
By the way, Sandy Springs did not privatize their public safety employees.
Quote from: NotNow on August 17, 2013, 11:42:13 PM
Quote from: JFman00 on August 17, 2013, 11:15:39 PM
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
Placing pubic safety employees on a 401k type system would leave you with several questions. What is your intended contribution to such a system? How would on medical disability retirements be funded, and at what level? At what point would public safety employees be vested?
You must not realize that current employees and current retirees are protected by contract and state law. Any attempt to alter that contract would have to be negotiated, arbitrated, or left to the courts in the employer is claiming that it cannot meet its obligations. Which is what the City of Jax will have to do if the current agreement ever winds up in court. The city will then get a chance to explain why after not making required contributions, cutting property taxes for twenty years, cutting off state funding streams to the Police & Fire Pension Fund, and building a huge "reserve" fund, they now say they cannot meet their obligations. At least we will finally get a listing of city owned real estate and other assets.
By the way, Sandy Springs did not privatize their public safety employees.
I know what I'm proposing is politically quite difficult but I don't think it's impossible. Unless you reject the idea that the city's pension system is unsustainable as it is (in which case nothing I say will have an effect), I think it's self-evident that making some painful adjustments in the short run (a combination of benefit cuts, service cuts and tax increases) is much preferred to pushing the problem down the road. From my reading of the numbers and budgets relying on just one measure would just not be doable. Just tax increases would be daunting, just service cuts would be draconian or just benefits would involve gutting.
You're definitely right that the CoJ would have to do that, and the fault of decision makers would be evident. That doesn't change the existence of the problem though. I think politicians will have a difficult time justifying higher taxes and service cuts unless, at the very least, the existing pension structure changes. As a taxpayer I'd be wary of politicians promising future changes in exchange for tax hikes/service cuts now. And as a public employee I'd be wary of accepting lower benefits in exchange for future improvements to funding. The only way it happens is with some shared sacrifice. Too often the different interests (taxpayers, unions, politicians) just play chicken on who takes the cuts first where if they all just agreed to some sacrifice they'd hurt much less in the long-run.
Quote from: NotNow on August 17, 2013, 11:42:13 PM
Quote from: JFman00 on August 17, 2013, 11:15:39 PM
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
Placing pubic safety employees on a 401k type system would leave you with several questions. What is your intended contribution to such a system? How would on medical disability retirements be funded, and at what level? At what point would public safety employees be vested?
You must not realize that current employees and current retirees are protected by contract and state law. Any attempt to alter that contract would have to be negotiated, arbitrated, or left to the courts in the employer is claiming that it cannot meet its obligations. Which is what the City of Jax will have to do if the current agreement ever winds up in court. The city will then get a chance to explain why after not making required contributions, cutting property taxes for twenty years, cutting off state funding streams to the Police & Fire Pension Fund, and building a huge "reserve" fund, they now say they cannot meet their obligations. At least we will finally get a listing of city owned real estate and other assets.
By the way, Sandy Springs did not privatize their public safety employees.
Ah a reasonable discussion. But first for the THIRD TIME I AM NOT TALKING ABOUT PUBLIC SAFETY EMPLOYEES.
However other departments or even personnel within departments such as accountants, admin, code enforcement, maintenance, etc. can be privatized.
Simply put, employer side benefits continue to be funded by the City on a year to year basis. It can be 25, 50, 100% whatever the City as employer decides, but it eliminates the unfathomable term requirement going forward. Current retirees are protected and current employees have an opportunity to be hired by the contractor.
And you are correct on Sandy Springs, nor did they convert, general service employees. With the exception of public safety, all general service employees have been private since incorporation.
I say we allow Corrine Brown to tackle it, she wants to take on the Supervisor of Elections issue. Corrine, we need you to "deliver" a solution on our local mess.
Quote from: stephendare on August 18, 2013, 10:34:42 AM
Quote from: SunKing on August 18, 2013, 12:02:52 AM
Quote from: NotNow on August 17, 2013, 11:42:13 PM
Quote from: JFman00 on August 17, 2013, 11:15:39 PM
Bringing the discussion back to pensions, Stockton was threatened with a lawsuit from CALPERS when it floated the idea of touching pensions, while the federal justice system seems to be behind Detroit's efforts to touch theirs.
To me the only sane solution is to shift all new hires to a defined-contribution plan, dramatically cut future benefits for existing employees based on years of service and impose a stiff but not draconian (10%?) cut on current pensions, while returning to normal funding levels. When major service cuts are necessary, millages to fund that specific service should be proposed and voted on.
There's nothing inherently desirable about 100% privatization of certain services and different communities have different expectations. I'm not saying privatization always works, or should always be tried, but that saying it never works and should never be tried is wrong.
Placing pubic safety employees on a 401k type system would leave you with several questions. What is your intended contribution to such a system? How would on medical disability retirements be funded, and at what level? At what point would public safety employees be vested?
You must not realize that current employees and current retirees are protected by contract and state law. Any attempt to alter that contract would have to be negotiated, arbitrated, or left to the courts in the employer is claiming that it cannot meet its obligations. Which is what the City of Jax will have to do if the current agreement ever winds up in court. The city will then get a chance to explain why after not making required contributions, cutting property taxes for twenty years, cutting off state funding streams to the Police & Fire Pension Fund, and building a huge "reserve" fund, they now say they cannot meet their obligations. At least we will finally get a listing of city owned real estate and other assets.
By the way, Sandy Springs did not privatize their public safety employees.
Ah a reasonable discussion. But first for the THIRD TIME I AM NOT TALKING ABOUT PUBLIC SAFETY EMPLOYEES.
However other departments or even personnel within departments such as accountants, admin, code enforcement, maintenance, etc. can be privatized.
Simply put, employer side benefits continue to be funded by the City on a year to year basis. It can be 25, 50, 100% whatever the City as employer decides, but it eliminates the unfathomable term requirement going forward. Current retirees are protected and current employees have an opportunity to be hired by the contractor.
And you are correct on Sandy Springs, nor did they convert, general service employees. With the exception of public safety, all general service employees have been private since incorporation.
lol. so now that there are questions that you cant really answer but which also dont make you look speculative and unresearched, the conversation is 'sane'?
Yes, I know. Its crazy to ask people to back up what they say. And having The Google around makes it so hard to at least fact check. ;)
No you either intentionally misquoted me or simply misread what I was writing. I'm sure you spent the night researching my point already but just in case here is a link.
http://www.governing.com/blogs/view/How-.html
It's an unbiased publication on running government services. You should read it sometime. Much more informative than Wikipedia. Apology accepted. ;)
Now I have a real question for anybody. In all seriousness, what is City's pension obligation? In dollars and as a percentage of its general fund budget and how does it compare with other cities?
I'm not saying all privatization is bad. There are some decent companies out there I'm sure that understand government is not a business; it is a non-profit commons. The mismanagement of infrastructure upgrade programs in Birmingham, Alabama by private contractors and then JP Morgan and Goldman Sach coming in via bribes and extortion and further compounding their situation made things worse.
http://www.policymic.com/articles/46543/jefferson-county-alabama-bankruptcy-county-s-decade-of-bribery-and-bankruptcy-comes-to-a-close
Privatization and "Public Private Partnerships" almost invariably lead to corruption and value loss to taxpayers as not-for -profit government enters into agreements where they guarantee their profitability with taxpayer funds.
http://www.inthepublicinterest.org/node/457
Here is another example of privatization that has led to outsourcing to other countries and abuses of food stamp programs in 24 states. And, who pays - guess who...
http://rooseveltinstitute.org/new-roosevelt/food-stamps-jpmorgan-banking-industry-profit-misery
http://www.alternet.org/newsandviews/article/446636/jp_morgan_makes_big_bucks_from_food_stamp_growth,_then_hires_workers_in_india_with_our_tax_dollars
Those sources are a little bit of information I pulled when I was engage with other groups in the city to pressure the council not to approve a QTI for expansion of JP Morgan in the city two years ago. There is a wealth of information on them alone that justifies that privatization is not always a good thing.
Not to mean disrespect to those who brought up this city in Georgia by I have yet to find any statistics that prove that the community has found any real value. Assuming they have only been a couple of years into it I would say its a little premature to trumpet it an either a success or failure.
http://www.huffingtonpost.com/2012/02/29/401k-failing-boomer-generation_n_1311096.html
The idea of 401k are that they are to supplement social security and, hopefully, other retirement savings. However many are beginning to feel that going back to traditional, single payer pension plans are a less expensive idea.
As have a few City Councilmembers. The numbers are apparently magical. They change, they shift, they misconstrue in on themselves. An actual public presentation of the math would be pretty good for everyone concerned I think. - Stephen Dare
^^^^^^^ A very true statement^^^^^^^
Quote from: theduvalprogressive on August 18, 2013, 11:48:43 AM
As have a few City Councilmembers. The numbers are apparently magical. They change, they shift, they misconstrue in on themselves. An actual public presentation of the math would be pretty good for everyone concerned I think. - Stephen Dare
^^^^^^^ A very true statement^^^^^^^
That's why I ask. And that's why they are a bad idea.
Quote from: stephendare on August 18, 2013, 01:43:04 PM
Quote from: SunKing on August 18, 2013, 01:35:16 PM
Quote from: theduvalprogressive on August 18, 2013, 11:48:43 AM
As have a few City Councilmembers. The numbers are apparently magical. They change, they shift, they misconstrue in on themselves. An actual public presentation of the math would be pretty good for everyone concerned I think. - Stephen Dare
^^^^^^^ A very true statement^^^^^^^
That's why I ask. And that's why they are a bad idea.
you dont have enough information from a public fund to adequately judge a claim and you think its a better idea for a private firm to manage it because you would have better access to more information that way?
If you don't actually know any of the numbers, then this is really a discussion about your philosophy of government isnt it? Just not based on any concrete examples or hard facts or figures?
I think its more likely that 'privatization' usually ends up a lot like the recent debacle of privately managing publicly owned parking garages, personally.
But at least we all agree that having the actual numbers would be a good starting point.
Does anyone with an opinion on how the Police and Firemen's Pension Fund is 'unsustainable' actually have the facts and figures to back up the claim?
http://www.metrojacksonville.com/forum/index.php/topic,19131.msg339148.html#msg339148
City Council Finance chair was on First Coast Connect this morning. Talked briefly about the "bad choices" made in the past (a caller singled out the Peyton and Delaney administrations) but said essentially what's done is done and we need to start having serious discussions how to deal with the issue (150 million on an almost 1 billion dollar budget to pensions with the cost projected to continuing increasing as a share of the budget) and move forward.
Take a look at the JCCI letter to see how big the hole is and how quickly it is growing, and once you start running numbers, solving the underfunding by increasing tax revenue alone is entirely unrealistic (how would you propose covering 1.3-1.8 billion in underfunding that grows 7% each year). I guess a fourth option I didn't mention was eliminating increasingly large chunks of the budget to pay for pension cost increases.
http://www.metrojacksonville.com/forum/index.php/topic,19131.msg339162.html#msg339162
Note that given the current level of funding the liability grows by 7% each year. Even given the lower end of the JCCI estimate, that's 90+ million dollars increase a year. At 120 million (13% of the budget) for PFPP city contribution in the current year, we'd need to increase contributions by 75% just to keep even. Annualizing 1.3 billion over 10 years, 130 million a year. So to reach full funding entirely from city contributions, $340 million a year. On a general fund budget of a billion dollars, that's exactly as dramatic as it sounds. Please do correct me if I'm misunderstanding the situation but the numbers seem relatively straightforward
Fine. Disregarding the unfunded liability (by definition the gap between promised future benefits and current assets and contributions), per city budgets Jacksonville was paying 10 mil a year towards pensions in 1997, 75 million in 2007 and 150 million last year with the contributions expected (by everyone except you) to continue increasing for the forseeable future. That looks like a pretty unsustainable trend to me.
Frankly the onus is on you to prove the naysayers wrong. You ask for numbers, don't like the ones you get yet don't provide any of your own.
The paper doesn't explain that because it's pensions 101. Here's an AARP (https://www.google.com/url?sa=t&source=web&cd=10&ved=0CEoQFjAJ&url=http%3A%2F%2Fassets.aarp.org%2Fwww.aarp.org_%2Farticles%2Fwork%2Fpension-funding-gap.pdf&ei=PiYRUongFuP-2gWa5ICYCw&usg=AFQjCNGhQCtfrKf3UHpVe7Jc5SkDs_9fVA&sig2=vEXYDX-MoJnCOJjQc8fHxw) article explaining it.
The underfunding means catch up funding in the future as payments come due which is why we're seeing the increase. The bigger the gap between what the pension fund was supposed to bring in and what's required to be paid, the more the city is on the hook for. The unfunded liability gets worse every year both because of the underfunding in the past and the overly rosy discount rate used.
So yes, blossoming is a good word to use to describe the issue and Jacksonville's situation is really not all that different from other DB plans. I'd absolutely love to see numbers that show me wrong.
Just look at the city budget and you can reach the same conclusions they do. Non-partisan think tanks across the country are sounding the alarm on this and you don't have to look far to find labor that have been hurt because of precisely this issue. Again even if the JCCIs numbers are skewed, they'd have to be criminally wrong for the problem to go away. Please, prove them wrong. They've done a lot more legwork than you've shown so far.
You are literally describing the problem. The city didn't pay before, now they have to pay more, where does the additional money come from. Saying "the city is legally obligated to pay" doesn't answer where the money to pay comes from. The fact that you think that "unfunded liability" is some arbitrary made up term and your similar lack of familiarity with basic economic terms and concepts makes me doubt YOUR level of knowledge. I've tried to be very patient and explain things as concisely as possible but am clearly getting frustrated at what seems to be purposeful obtuseness.
If you owe 10,000 on a credit card and only make minimum payments, the debt compounds. The minimum payment increases correspondingly. Your example doesn't work without the amount owed and the interest rate. In the case of Jax pensions JCCI has done the actuarial computations to determine total debt, while the payments made can be seen in the city budget, along with the discount rate.
Depends on the ratio of debt to income and when, if ever you plan to pay off the debt. If you're not actually paying it off faster than it compounds and don't plan to, yes, it's unsustainable. The death spiral starts when you start taking out debt to service (not pay off) existing debt. From what I've seen Jax isn't in the death spiral yet, but the public safety pensions are unsustainable. Cook County's (Chicago) credit rating was recently downgraded because of this (mainstream) way of thinking. The joy of that is that borrowing becomes more expensive which exacerbates the problem.
You can go into bankruptcy and negotiate a debt settlement that will involve either cancelling your obligations or restructuring them to reduce how much you owe, the monthly payment/term and/or the interest rate. Also your creditors have the right to seize whatever assets you're holding relative to how much you owe. If the judge agrees that you have to pay 1000/mo for the car but you only make that much, you have no choice but to pay all your income towards that debt. Additionally since you're in bankruptcy your chances of securing credit to keep you afloat until the debt is repaid are zero.
Probably a lot less of it.
Its in the best interest of the ccreditos to agree to debt repayment commensurate with the ability to repay. Otherwise obligation or not, there is literally no means to pay the debt.
You have to be kidding.http://mobile.reuters.com/article/idUSTRE81718S20120208?irpc=932
The airline, a unit of AMR Corp, proposes to terminate its four underfunded pension plans as part of its bankruptcy proceedings, replacing them with a 401(k) offering. The pension plans' assets and liabilities would be transferred to the Pension Benefit Guarantee Corp (PBGC), the government-sponsored agency that insures most private sector defined benefit pensions.
The plans, which cover pilots, flight attendants, agents and ground crews, have an estimated total of $8.3 billion in assets and $18.5 billion in liabilities. American told employees this week it expects 90 percent of its workers to receive full benefits.
That's a reduction in debt. And that's a corporation that had an existing entity onto which it could offload its debt. Even then, there will be fewer benefits paid than originally promised. I have been on my phone this entire time but I challenge YOU to show me I'm wrong. You've literally brought 0 numbers, from any source, to the table.
Quote from: JFman00 on August 18, 2013, 05:08:58 PM
You have to be kidding.http://mobile.reuters.com/article/idUSTRE81718S20120208?irpc=932
The airline, a unit of AMR Corp, proposes to terminate its four underfunded pension plans as part of its bankruptcy proceedings, replacing them with a 401(k) offering. The pension plans' assets and liabilities would be transferred to the Pension Benefit Guarantee Corp (PBGC), the government-sponsored agency that insures most private sector defined benefit pensions.
The plans, which cover pilots, flight attendants, agents and ground crews, have an estimated total of $8.3 billion in assets and $18.5 billion in liabilities. American told employees this week it expects 90 percent of its workers to receive full benefits.
That's a reduction in debt. And that's a corporation that had an existing entity onto which it could offload its debt. Even then, there will be fewer benefits paid than originally promised. I have been on my phone this entire time but I challenge YOU to show me I'm wrong. You've literally brought 0 numbers, from any source, to the table.
Keep in mind that a municipality claiming bankruptcy is not the same, nor is it treated the same as a corporation filing. The tax law has different chapters for a reason. It would seem JFMan that you are in favor of COJ exercising such opportunity if Detroit proves successful, which is very dangerous. That means one term be used to buy buy buy, and the following term can be use to file file file. A horrible pattern.
If that is your belief, you are not alone, but it is a dangerous slippery slope to get caught on.
Quote
http://www.jdsupra.com/legalnews/detroits-unprecedented-bankruptcy-filin-64204/ (http://www.jdsupra.com/legalnews/detroits-unprecedented-bankruptcy-filin-64204/)
Municipal bankruptcy filings are rare. While there were more than 1.2 million bankruptcies filed in 2012, only 276 municipal bankruptcies were filed between 1980 and 2012 – about eight a year. Nevertheless, the number of municipal filings is increasing. Thirty-six municipal cases have been filed since January 2010. Detroit is easily the largest municipality to file bankruptcy. With a population of more than 700,000, Detroit is twice the size of the next most populous municipal debtor, which was Stockton, California. Likewise, Detroit's debt of more than $18 billion is by far the largest of all municipal bankruptcies.
Pensioners will be watching the Detroit case closely as well. Orr estimates that Detroit's pension liabilities are underfunded by $3.5 billion. Underfunded pensions are a widespread problem for municipalities across the nation. In 2010, economists at the Kellogg School of Management at Northwestern University estimated that the nation's municipalities have underfunded pension liabilities of approximately $574 billion. If through its bankruptcy Detroit is permitted to modify its pension liabilities, bankruptcy may become more enticing to other municipalities with underfunded pension debt.
I have to agree with Stephen, until the absolute math is made available, any discussion can only be based on the principal of what should be done in normal situations and speculation about the numbers.
JFmann00,
Just a few things that could be done:
1. Dedicate 1 mill of property taxes to the pension unfunded liability.
2. Transfer unused and idle real estate to the PFPF.
3. Hire enough police and firefighters to stop the excessive use of overtime (which costs more than salary but does not contribute to the pension fund).
4. Ban the replacement of PFPF positions with AMIO's or "friends of Alvin".
5. Float a bond. If we can do it for football and concerts, we can do it for our people.
The firemen have offered many other solutions to the problem at:
www.truthaboutpensions.net
I agree with StephenDare! that these pensions, which have been in existence and healthy since the 1930's, ARE sustainable. Tampa and Orlando have solved this problem. The State of Florida has one of the healthiest pensions in the country. ALL of those funds offer better benefits than the Jacksonville fund.
This is about political will...and money. We find the money for scam hotel deals and stadium pools. But we pretend that we can't afford to pay the pensions that were promised to our employees. That's not only dishonest, it's immoral.
Quote from: stephendare on August 18, 2013, 05:11:35 PM
Quote from: JFman00 on August 18, 2013, 05:08:58 PM
You have to be kidding.http://mobile.reuters.com/article/idUSTRE81718S20120208?irpc=932
The airline, a unit of AMR Corp, proposes to terminate its four underfunded pension plans as part of its bankruptcy proceedings, replacing them with a 401(k) offering. The pension plans' assets and liabilities would be transferred to the Pension Benefit Guarantee Corp (PBGC), the government-sponsored agency that insures most private sector defined benefit pensions.
The plans, which cover pilots, flight attendants, agents and ground crews, have an estimated total of $8.3 billion in assets and $18.5 billion in liabilities. American told employees this week it expects 90 percent of its workers to receive full benefits.
That's a reduction in debt. And that's a corporation that had an existing entity onto which it could offload its debt. Even then, there will be fewer benefits paid than originally promised. I have been on my phone this entire time but I challenge YOU to show me I'm wrong. You've literally brought 0 numbers, from any source, to the table.
Im not the one making a claim, and I don't have to prove you wrong.
There are no numbers that back this whole 'Pension is unsustainable' claim, JFMan.
Simple as that.
Your argument fails.
Stephen why do you waste time and effort arguing points that either dont exist or that have no relevancy to the issue?
If you truly believe in the system that we have, yet dont fully understand the numbers, then please explain your proposal to expand the current system as a means out of the trap. I am sure we would all like to hear it. I expect links, charts and oh yes a white paper. We are all waiting.
When I say unsustainable I mean that if nothing changes, the city will eventually be unable to meet its obligations. Indeed, if you read far far back I propose a general way to make them sustainable which is cut future benefits (matching retirement fund), raise taxes, and cut services. (somehow that's a Fox News worthy proposal from the way certain people read it).
For numbers.
http://www.coj.net/retirement-reform/docs/rr-taskforce/background-information/jcci-cityfinances.aspx
Yes, this is JCCI, but their methodology is outlined. Don't worry, more sources follow.
Page 23: For the FY2010 budget, pension obligations will likely exceed 10 percent of the City's General Fund Budget. On October 1, 2008, the total unfunded liability was estimated to exceed $1.4 billion – when the Dow Jones stock market measure was at 10,850. After October, the market declined 40 percent before beginning to climb back, further impacting pension funds and increasing the unfunded liability. The projected pension costs are expected to rise rapidly for at least the next 20 years as the current unfunded liabilities are paid down.
http://apps2.coj.net/City_Council_Public_Notices_Repository/20090721%20Pension%20Sustainability%20Comm%20Mtg%20Min.doc
SPECIAL COMMITTEE ON CITY PENSION SUSTAINABILITY MEETING MINUTES TUESDAY, JULY 21, 2009
The recently retired state actuary has been negotiating with the City in recent years regarding several of the City's pension plan assumptions, including the 8.4 % assumed rate of investment return for the GEPP (8.5% for the PFPF) and the edition of the mortality tables being used.
John Keane asked Mr. Miller to provide him with the actuarial assumptions that factor into the calculations resulting in the $1.3 billion future pension obligation cost figure that has featured prominently in the Mayor's recent speeches on the proposed budget.
Mr. Keane echoed Mr. Miller's earlier comments about the state actuary questioning the City's actuarial assumptions, and noted that both the PFPF and the City have spent considerable time negotiating with both the outgoing and incoming state actuary about what are reasonable and prudent assumptions. A reduction in the assumed rate of return from 8.5% to 8% or even 7.75% would add tens of millions of dollars to the already daunting pension contribution figures. [note: DIJA, S&P 500, NASDAQ rates of return over the last 50 years. (http://larrycheng.com/2010/01/01/u-s-stock-performance-over-50-years/) The discount rate stands at 7.75%]
Alan Mosley stated that the charts distributed earlier by Mr. Miller indicate that, regardless of how the investment markets and the UAAL fluctuate over the next 30 years, the growth in "normal" pension costs is also unsustainable for the City budget over that period as well.
http://apps2.coj.net/City_Council_Public_Notices_Repository/20090317%20Pension%20Reform%20Comm%20Mtg%20Min.doc
The City's required contribution to the GEPP is projected to increase from $28.3 million in FY07-08 to $38.6 million in FY09-10, while its contribution to the Corrections pension is projected to increase from $4.2 million in FY07-08 to $9.1 million in FY09-10. The plan was 83.6% funded as of October 1, 2008. Mr. Miller and the committee discussed the 8.4% assumed rate of return for the plan and the fact that many other jurisdictions and the State of Florida have lower assumptions (7.75% to 8%) built into their plans.
Dick Cohee, Deputy Executive Director of the Police and Fire Pension Fund (PFPF) presented the current status of the fund which was 49% funded as of the time of the last actuarial report, down from 64% the previous year due to the state of the investment markets.
http://www.coj.net/departments/finance/docs/accounting/2012-city-of-jacksonville-cafr-sec.aspx
2012 CoJ Comprehensive Annual Financial Report
[2012 numbers not available, a 2012 actuarial valuation of the PFPF is out there but not available online, I'd love to see it.]
Police and Fire Pension Plan as of 9/30/2011 (numbers in thousands)
Actuarial Value of Assets 1,042,241
Actuarial Accrued Liability 2,427,198
Unfunded Actuarial Accrued Liability 1,384,957
Funded Ratio 42.94%
http://www.coj.net/retirement-reform/docs/rr-taskforce/background-information/12-2012-summit-strategies-report-pfpf.aspx
Dec 2012 memo from Summit Strategies group
- As of October 1, 2011, the Fund was 38% funded (market value divided by Actuarial Accrued Liability).
The funded status is expected to improve to 53% by October 1, 2022 assuming: a compounded annual return of 7.75% is achieved over the 10 year investment time horizon, and required contributions of $1.87 billion are timely made. - If the 7.75% annual return is not achived, the funded status at the end of the forecast period will be lower than expected and contribution requirements will be greater than expected.
- An unconstrained portfolio, one able to invest without the statuatory restrictions, produces an expected return of 7.0% but with significantly lower volatility. Even without the statuatory restrictions, achieving a 7.75% return will be difficult in the current low interest rate, high volatility environment absent taking excess risk.
http://www.coj.net/retirement-reform/docs/may-2013/retirementreform-actuarialanalysis.aspx
Milliman actuarial analysis of the MPS, May 2013
We note that the results of the 2011 valuation prepared by Pension Board Consultants, Inc. measured the Plan's total actuarial liabilities (funded and unfunded) at approximately $2.4 billion.
http://www.coj.net/retirement-reform/docs/rr-taskforce/other-points-of-view/civiccouncil-6192013.aspx
Jacksonville Civic Council response to Mayor Brown's plan, June 2013
The City's cash contributions to the Police and Fire Pension Plan for the period 2002-2010, averaged $36 million per year. In the current year, the City will contribute $122 million - 13% of the operating budget.
[goes on to repeat the numbers from the JCCI study which for some reason should be entirely ignored]
http://www.thefiscaltimes.com/~/~/media/Fiscal-Times/Research-Center/Budget-Impact/Academic%20Papers/2010/10/13/NMRLocal20101011.ashx?pid=%7B2714ECAC-F955-4339-8A13-EA5793353400%7D
The Crisis in Local Government Pensions in the United States*
ROBERT NOVY‐MARX, UNIVERSITY OF ROCHESTER AND NBER [BS Physics from Swarthmore, PhD Finance from the ultra-conservative institution of UC Berkeley, former Booth professor]
JOSHUA RAUH, KELLOGG SCHOOL OF MANAGEMENT AND NBER [Currently at the Stanford Hoover Institute, Netspar (Network for Studies on Pensions, Aging and Retirement in the Netherlands) research fellow, BA Econ from Yale, PhD Econ from MIT, former Booth professor]
October 2010
We calculate the present value of local government employee pension liabilities as of June 2009 for approximately 2/3rds of the universe of local government employees. Using local government accounting methods, the total unfunded liability in these areas is $190 billion or over $7,000 per municipal household. When government accounting is corrected by discounting already‐promised benefits at zerocoupon Treasury yields, the total unfunded obligation is $383 billion or over $14,000 per local household. If on a per‐member basis the unfunded liability is the same for the 1/3rd of workers covered by municipal plans not in our sample, the total unfunded liability for all municipal plans in the U.S. is $574 billion. This unfunded promise is above and beyond the roughly $3 trillion (or almost $27,000 per household) unfunded liability of all state‐sponsored pension plans in the U.S. Many U.S. cities are therefore carrying substantial off‐balance‐sheet debt in the form of unfunded pension obligations. We also identify 6 major municipalities whose current pension assets would only be sufficient to pay already‐promised benefits through 2020, and 20 whose current pension assets would only be sufficient to pay already‐promised benefits through 2025.
[See Jacksonville in Table 6 and Table 7. No, I don't know where they're getting their numbers from, just showing that the JCCI and City provided numbers are not gross exaggerations compared to other estimates out there]
Quote from: JayBird on August 18, 2013, 06:36:48 PM
Quote from: JFman00 on August 18, 2013, 05:08:58 PM
You have to be kidding.http://mobile.reuters.com/article/idUSTRE81718S20120208?irpc=932
The airline, a unit of AMR Corp, proposes to terminate its four underfunded pension plans as part of its bankruptcy proceedings, replacing them with a 401(k) offering. The pension plans' assets and liabilities would be transferred to the Pension Benefit Guarantee Corp (PBGC), the government-sponsored agency that insures most private sector defined benefit pensions.
The plans, which cover pilots, flight attendants, agents and ground crews, have an estimated total of $8.3 billion in assets and $18.5 billion in liabilities. American told employees this week it expects 90 percent of its workers to receive full benefits.
That's a reduction in debt. And that's a corporation that had an existing entity onto which it could offload its debt. Even then, there will be fewer benefits paid than originally promised. I have been on my phone this entire time but I challenge YOU to show me I'm wrong. You've literally brought 0 numbers, from any source, to the table.
Keep in mind that a municipality claiming bankruptcy is not the same, nor is it treated the same as a corporation filing. The tax law has different chapters for a reason. It would seem JFMan that you are in favor of COJ exercising such opportunity if Detroit proves successful, which is very dangerous. That means one term be used to buy buy buy, and the following term can be use to file file file. A horrible pattern.
If that is your belief, you are not alone, but it is a dangerous slippery slope to get caught on.
I don't think bankruptcy is at all desirable. The entire point of voluntary restructuring is to prevent such a thing and bankruptcy should be a last resort. Why? Because bankruptcy is worse for everyone. It's worse for the pensioners, worse for the taxpayers and worse for business.
I was trying to illustrate what could happen if we continue waiting to reform benefits and institute other changes (tax increases, service cuts). Without a doubt Detroit is going to be an interesting case and show whether state-law mandated pensions can be touched in bankruptcy, but if they can't how exactly is Detroit supposed to provide other services? I have a very, very, very difficult time believing that raising taxes alone would be political possible, let alone at increases sufficient to permanently solve the problem (even given the already rosy assumptions).
Quote from: NotNow on August 18, 2013, 07:19:02 PM
JFmann00,
Just a few things that could be done:
1. Dedicate 1 mill of property taxes to the pension unfunded liability.
2. Transfer unused and idle real estate to the PFPF.
3. Hire enough police and firefighters to stop the excessive use of overtime (which costs more than salary but does not contribute to the pension fund).
4. Ban the replacement of PFPF positions with AMIO's or "friends of Alvin".
5. Float a bond. If we can do it for football and concerts, we can do it for our people.
The firemen have offered many other solutions to the problem at:
www.truthaboutpensions.net
I agree with StephenDare! that these pensions, which have been in existence and healthy since the 1930's, ARE sustainable. Tampa and Orlando have solved this problem. The State of Florida has one of the healthiest pensions in the country. ALL of those funds offer better benefits than the Jacksonville fund.
This is about political will...and money. We find the money for scam hotel deals and stadium pools. But we pretend that we can't afford to pay the pensions that were promised to our employees. That's not only dishonest, it's immoral.
When I say unsustainable, I mean if nothing (benefits, taxes) changes. At numerous points throughout this discussion I've floated ideas on how to make the system sustainable. The other cases mentioned are doing well now precisely because they behaved responsibly in the past. As I've tried to illustrate Jacksonville is in a bad situation because the irresponsibility in the past has a "blossoming" effect as time passes.
Quote from: stephendare on August 18, 2013, 04:58:29 PM
Quote from: JFman00 on August 18, 2013, 04:48:57 PM
Probably a lot less of it.
hmm. I never ran across that during the seven years that I ran a bankruptcy practice JFMan. Sounds like you are speculating to me.
Why do the terms voluntary restructuring, and debt haircut exist if principal is always sacrosanct? With the housing downturn, weren't creditors accepting loses on their loans when they foreclosed?
Quote
So are you going to admit that youve pronounced the pension 'unsustainable' based on a belief so unfactually based that it approaches a religious quality?
You havent seen the numbers. Any numbers. On the other hand, you've heard from an actual cop who disagrees with you, and you admit that the problem is that the city skipped payments.
At no point have I disagreed on what caused the city to get to this point.
Quote
Further, youve admitted in principle that the debt is still a valid debt.
But you think the problem is that the pension itself is 'unsustainable' as a result of number you havent seen, in a report that hasnt been printed, from a group that you keep incorrectly identifying as "JCCI"?
Here's a link to the JCCI study, see page 23: http://www.coj.net/retirement-reform/docs/rr-taskforce/background-information/jcci-cityfinances.aspx
Quote
In reality the problem has nothing to do with 'the pension'.
Jacksonville skipped a few payments while voting itself a tax decrease. Not very smart in the long run as it turns out.
Now it will have to pay those obligations. Probably by restoring its former rate of taxation.
Please show me that restoring the former rate of taxation is sufficient, numbers detailing the non-existent problem in previous posts
Quote
It sounds like you have a political bias and have tried to insert that bias into a conversation about 'pensions' regardless of the actual math or history.
My political bias consists of starting with a problem (already a difficult task with people like climate-change deniers), defining a range of possible solutions and only then making a value judgement on which solution is better than the other. Nothing frustrates me more than people who refuse to even acknowledge options because they personally don't like them.
QuoteIts a good thing both of us are fairly patient people, or else this conversation might have actually turned out less than civil! :)
As for me, Im going to reserve opinions on how much debt the city owes its public safety employees until I can see the actual math.
But in the meantime, Im not going to pretend that we don't owe the money. Or that we don't need them.
Nice chatting with you, but I don't see the conversation going any further until there are some actual numbers produced.
As a public sector worker I don't think I'll ever see the promised reward of the defined benefit plan that doesn't kick in until 20 years. I'd rather get matching contributions to a personal fund so that even if the defined benefit plan goes away for whatever reason, I have something to count on. I wasn't even born when most of these plans were enacted and I wasn't able to vote until they already appeared like they were trouble. Why should I bear the full brunt of service cuts and tax increases to give benefits I won't get and didn't vote for?
At the same time, I acknowledge that not only would it be cruel to slash DB pensions to the bone, it's politically impossible. I've proposed the solutions I have not because they're what would be best for me, but ones that would appear to be both politically feasible and sustainable in the long run. I have a hard time believing that the average citizen would agree that the number one priority of government is to pay pensions. Indeed say that pensions are sacrosanct all you want, but here's a very real case: Tale of Prichard pension program (http://www.koreatimes.co.kr/www/news/biz/2013/07/333_129130.html) (yes, weird source, but author is a professor at the University of Southern Alabama and breaks down what happened quite well)
Also btw if you go to Pembroke Pines website (10th largest city in Florida) they have active requests to bid out all facility and ROW maintenance, water utilities operations and the entire Parks Department to private contractors. It takes a little research but its there.
What are all of these?http://www.metrojacksonville.com/forum/index.php/topic,19329.msg342250.html#msg342250
Or the JCCI study I linked to here:
http://www.metrojacksonville.com/forum/index.php/topic,19329.msg342255.html#msg342255
Action is being pursued based on these numbers. The math isn't shown because that's what actuaries are hired for. You can say they don't exist all you like but you have yet to do anything to support your conclusions. I've provided sources and extracts that support what I'm saying. You say "they say the exact same thing I have" yet don't provide any quotes or numbers. At all. The city is taking action based on the assumption that there is a problem. If you disagree, prove them wrong.
When you're in a leaky boat that might be sinking, you probably want to stop sinking. You don't wait to start bailing water until you know where you're leaking, what caused the leak, how big the leak is and what the best material to stop the leak is.
If you want to critique the source, question the methods, question the raw data and question the analysis of subject matter experts, you can join climate change deniers and creationists and go pound sand. Those of us who want to keep the boat afloat will take these numbers and come up with what we see as a solution you probably won't like because you weren't a constructive participant from step one (framing the issue, determining problem, identifying the scope of the problem). Your contribution so far is to say "you're wrong, I'm right".
Still no numbers, no math, no sources, no quotes.
When the city is choosing between paying the cops we have now, and paying ones that are retired, your priority is the ones that are retired. OF COURSE, everyone wishes there was more money to go around and that the choice didn't have to be made. PLEASE ask for a tax increase, I'd support one (to a point). But you give me a number, any number for how much tax rates would have to go up for the city to both pay it's existing obligations and maintain city services. I'd wager that increase would be so high it'd take someone holding an axe over people/politicians heads to pass it. If you're not willing to consider any other options besides a tax increase, please show me how much more I need to pay.
I'm from Illinois. My best friend works in the Democratic governor's office as a budget analyst. I can tell you that at both the state level the choice has been to raise taxes and cut services. It is not enough. The State increased income tax by 66% in 2011, yet the "problem" is not fixed. Illinois is struggling with a nearly $100 billion unfunded liability for its five retirement funds. Lawmakers ended the spring legislative session on May 31 at an impasse on pension reform. Pension payments are squeezing spending for core state services, such as education and healthcare. (http://www.reuters.com/article/2013/07/09/usa-illinois-pensions-idUSL1N0FF1YY20130709) Gov. Quinn called a special session of the legislature in June and is trying to suspend their pay, legislature suing to get their pay reinstated, no progress on pensions.
If I understand your argument correctly, the State's number one priority should be to fund pensions. Whether they do that by tax increases, or reducing services, oh well.
I also want to add that NO ONE benefits from exaggerating the issue. Every possible choice is politically unpopular and more money gets taken out of pockets that weren't expecting it regardless of whose pocket it is. Please, blame whoever you want, point fingers. Whoever you're pointing at was probably complicit at some point. Deny that there's a problem at all? Prepare to be making even more difficult choices in the future. It's precisely this optimistic "oh, the markets will turn around and the problem will solve itself in the future" that got us here in the first place.
I wish I had that attitude. I'd order every credit card in the book, max them out, make minimum payments, but say "I should've been earning more money. Don't worry, I'll make more money in the future and be able to pay it off then".
This is like a phone tree except there's no "press zero for more options". You just have the same replies over and over no matter what's said.
What I'm saying is "I need a car to get to work in order to make the money to pay you. Sure, I could pay you everything I have, but if I lose my job, good luck getting what you're owed." What's the point of government if they don't provide services to citizens? Again, when the city is laying off police officers to pay retired cops, it's hard to make the claim that you care about public safety or even about public-sector workers. You're saying you value former public-sector workers against everything else.
At no point have I argued we should stop paying pensions, but it's evident to everyone but you that paying them 100% of what they've been promised and maintaining the system that made this even an issue isn't going to be politically possible.
I can't help but appreciate the irony that you found this a "great article", yet it begins references the study I "haven't seen, hasn't been printed" from the group I "incorrectly identify" as JCCI. The article details the ways in which the Mayor's proposal was insufficiently radical. It states in clear language what I've been attempting to prove all along:
"Ultimately, the fallacy of this situation is that is that new employees will contribute to a comfortable retirement for current city employees with no 'shared sacrifice' being incurred by tenured employees as pre-tax contributions will increase from 7 to 10%. And with proposed cuts to essential city services likely, coupled with the likelihood of less hiring being done by the city, means that unfunded liabilities will, at some point, call for more taxes which the Mayor stands firm on not doing."
"Also, we need to understand that the problems of the past can be addressed if we as a community embrace the idea of 'shared sacrifice'. We can't get back the money squandered yesteryear, but we can contribute to creating a better city tomorrow. As well city employees who have tenure can contribute to a better situation for future city employees by understanding that an austere plan for them will not only deprive our city of being able to entice the best and brightest into government service, but that their future security in retirement depends on fiscally stable Jacksonville as well."
How is any of this different from what I've been saying? You can keep trying to poke holes in what I'm saying without supporting anything of your own, but what are you really accomplishing? When I discuss things with people I disagree with, I usually learn something new. So far all I've learned is that I can just safely assume that whatever I say will be considered wrong no matter what it is.
Does it matter? You'll just disagree.
Quote from: stephendare on August 19, 2013, 04:55:45 PM
Thats the weakest argument ive ever heard.
What is 'broken' is not the Pension. Its the looter mentality of our local taxation. We leech off the state and the feds in order to not pay local taxes, and there is this unrealistic expectation that we can continue to do this in a national economic downturn.
Well we cant, and its time to pay the piper.
However this whole idea of "fuck the cops, I don't want to pay them what we agreed to pay' is not only not an option legally, its immoral.
The city needs and deserves protection more than a handful of politicians need to look like they are magically going to feed the multitude with five loaves of bread and two fishes.
I believe that I have supported that mentality from the beginning. That's why I support privatizing non public safety privatization. Please provide math that supports your proposal to expand the city's workforce by 500 employees with money that we do not have as well as other major cities that have successfully implemented this "Greek Plan." You can start with Detroit and work your way down the list.
Privatizing non public safety EMPLOYEES
What do you mean looter mentality? The city pays the lowest taxes already and has pulled every trick it can to keep taxes low. As a result they is no money budgeted next year to maintain roads but there is going to be a loan to give money to the Jaguars to be paid back using the "bed tax". Guess who is going to pay if there is not enough revenue from the bed tax - Shad Khan?
We give investors years of property tax breaks on the hope that a few jobs might be created. Who pays for that? Who pays for "pension holidays"? Who pays for the cost overruns when we privatize the building of municipal buildings through "public/private partnerships"?
Quote from: theduvalprogressive on August 20, 2013, 10:05:30 PM
What do you mean looter mentality? The city pays the lowest taxes already and has pulled every trick it can to keep taxes low. As a result they is no money budgeted next year to maintain roads but there is going to be a loan to give money to the Jaguars to be paid back using the "bed tax". Guess who is going to pay if there is not enough revenue from the bed tax - Shad Khan?
We give investors years of property tax breaks on the hope that a few jobs might be created. Who pays for that? Who pays for "pension holidays"? Who pays for the cost overruns when we privatize the building of municipal buildings through "public/private partnerships"?
Quote from: SunKing on August 21, 2013, 08:06:48 AM
Quote from: theduvalprogressive on August 20, 2013, 10:05:30 PM
What do you mean looter mentality? The city pays the lowest taxes already and has pulled every trick it can to keep taxes low. As a result they is no money budgeted next year to maintain roads but there is going to be a loan to give money to the Jaguars to be paid back using the "bed tax". Guess who is going to pay if there is not enough revenue from the bed tax - Shad Khan?
We give investors years of property tax breaks on the hope that a few jobs might be created. Who pays for that? Who pays for "pension holidays"? Who pays for the cost overruns when we privatize the building of municipal buildings through "public/private partnerships"?
Not sure your point here? The bed tax makes sense. Its a tax on out of town visitors used specifically to support growth in the tourist sector. I say the team and Khan are doing more than anyone else to elevate this city's image to out of town visitors.
Are you saying that you would prefer that the city discontinue tax credits for businesses locating Downtown? What about the Historic Tax Credit?
And finally I'm glad you mentioned our courthouse bc that is the perfect example of public mismanagement. Private enterprise can't afford cost overruns like that. They can't just raise taxes to pay for it. Are you suggesting that the City should just build its own building?
Is your point that private enterprise is somehow inherently bad and that government should just do everything?
I'm just jumping in to this thread and am having a difficult time following the back and forth. Is there any question that we are in need of more significant pension reform than what the mayor has proposed? Or is the debate here simply over whether past & current employees should have their benefits reduced as part of the solution? Thanks in advance for educating the newbie.
Quote from: kbhanson3 on August 21, 2013, 08:45:54 AM
I'm just jumping in to this thread and am having a difficult time following the back and forth. Is there any question that we are in need of more significant pension reform than what the mayor has proposed? Or is the debate here simply over whether past & current employees should have their benefits reduced as part of the solution? Thanks in advance for educating the newbie.
No kidding!
My point is simply that privatization of non public safety employees is the first step toward municipal pension reform.
Quote from: SunKing on August 21, 2013, 09:26:25 AM
Quote from: kbhanson3 on August 21, 2013, 08:45:54 AM
I'm just jumping in to this thread and am having a difficult time following the back and forth. Is there any question that we are in need of more significant pension reform than what the mayor has proposed? Or is the debate here simply over whether past & current employees should have their benefits reduced as part of the solution? Thanks in advance for educating the newbie.
No kidding!
My point is simply that privatization of non public safety employees is the first step toward municipal pension reform.
I too got lost in the back and forth on what the back and forth was about. However, based on this statement, I do agree with that viewpoint.
This press release entitled "Remaining Focused on Retirement Reform" was sent yesterday from the Mayor's Office:
Dear Friends:
With the renewed efforts of the Jacksonville Retirement Reform Task Force, we are moving forward again toward financial sustainability.
In early July, 11 community leaders selflessly agreed to serve on the task force to examine a retirement reform agreement that would have lowered City pension costs by $1.2 billion over the next 30 years, including $45 million next year and $100 million over the next 5 years.
Our retirement reform agreement included some of the most significant benefit concessions in the recent history of the state of Florida. The agreement would have seen the funded status of the plan increase from 38 percent to 71 percent.
Unfortunately, just as the panel was getting to work, City Council rejected the plan. Nine Council members fought valiantly to give both the task force and their own Finance Committee the time needed for a comprehensive review, but their efforts fell short.
Despite that action, I remain hopeful that we will achieve a sustainable retirement reform solution that is fair to both taxpayers and city employees.
And we must do this now, not later.
The City's total retirement costs for all three pension plans will top $180 million next year. Those obligations account for nearly 20 percent of general fund spending and pressure our city budget
A decade ago, the City contribution to the Police and Fire Pension Fund was less than $10 million.
This year, it is $148 million.
A decade ago, the Police and Fire Pension Fund had an unfunded liability of just under $500 million.
Today, that unfunded liability has grown to more than $1.5 billion.
Numbers like these have drawn the attention of financial experts. In fact, three major ratings agencies cite retirement costs as a threat to Jacksonville's financial future.
We must seize this opportunity to solve the City of Jacksonville's retirement challenge once and for all. I will continue to lead on this issue and look forward to working with all of the stakeholders to achieve a sustainable result that protects taxpayers and respects city employees.
You can learn more about this critical financial issue and our efforts to date by visiting the Retirement Reform page on coj.net.
Sincerely,
Alvin Brown
I received this bulk email as well. Seems to me the Mayor used a lot of words and numbers regarding pension reform, but failed to say what his new plan is. In his letter he also said to visit his "retirement reform page". I did that, what I found was the same plan that was rejected by the council from 2011. Hard to figure out what has changed and what his new effort to deal with the pension problem now might be. Can anyone enlighten me here? Am I missing something important?
What he is not mentioning is that they're really reforming pensions. They're just figuring out a way to keep current pensions paid for and letting the city at some point down the line figure out the rest in the future. The number he mentioned are no different than before the council voted down "pension reform". It sounds more like he is simply trying to push the same thing through using a slightly altered approach.
Quote from: theduvalprogressive on August 22, 2013, 07:23:09 PM
What he is not mentioning is that they're really reforming pensions. They're just figuring out a way to keep current pensions paid for and letting the city at some point down the line figure out the rest in the future. The number he mentioned are no different than before the council voted down "pension reform". It sounds more like he is simply trying to push the same thing through using a slightly altered approach.
I would completely agree. I do believe the message is more about political posturing as opposed to coming at the budget problem with a new plan.