Interesting fact, Brown wanted the City and JEA to go into more debt to pay for part of the pension crisis. Just like he wants to move a high balance of debt from one credit card to another. Nice balance transfer, yet, the debt is still there.....with no way.....to pay for it.
http://jacksonville.com/news/metro/2015-04-27/story/brown-vs-curry-jacksonville-pension-crisis-where-they-stand (http://jacksonville.com/news/metro/2015-04-27/story/brown-vs-curry-jacksonville-pension-crisis-where-they-stand)
"I'm with Alvin", "I'm all out of leadership"
Brown's pension plans are as bad as his budgets. He never should have tossed Peyton's plan, now we're 4 more years in the hole and no closer to a workable solution.
QuoteCause nothing is better for a city's safety and freedom from corruption than a bunch of cops who need money.
When they come for you in your time of need, you can tell the cops in the hospital how much you appreciate them. Cause moral is pretty low now and 4 more years is going to help?
Nope, I'm with Lenny. We need change, real change from 4 years with your boy Brown.
QuoteThe whole 'crisis' has pretty much been bs from the beginning, and just part of a nationwide assault on public service unions. It never had a sound mathematical basis, and the time elapsed since the identification of this phony 'crisis' has proven that. Doing nothing, the obligation has still decreased anyways.
I think we see the real motivation to keep Brown. He is a preserver of the unions. Not once have we seen any real riffs in the unions with the Mayor, like we saw under Peyton and Delaney. Brown plays favorites with the unions. Keeps the peace with them. When in fact the unions represent a small number of people in the community. It will be interesting to see how many union members come out and vote on May 19.
QuoteThe whole 'crisis' has pretty much been bs from the beginning
The pension crisis isn't made up. It's mathematically not sustainable.
QuoteThank you, but no thank you to this clown getting his hands on our city administration.
Right on comrade, it would be such a shame to have someone lead our city that can actually balance a ledger. ::)
QuoteIn fact the JEA has been underpaying the city for the past twenty years
So you realize then that in relation to revenues (which have been declining the last few years), JEA's contibution to COJ has actually been increasing (which is also not sustainable for JEA)? And that JEA's contribution agreement expires in 2016, at which time a new negotation b/w JEA and COJ will begin. So by packaging up pension reform with this funny business of going into debt in exchange for JEA concessions (IE their future contribution rate), that the Mayor's office is effectively absolving themselves of having to go toe to toe with JEA in a year from now. Not to mention that over the length of the agreement as proposed, COJ will get FAR less revenue from JEA. It's a political game that is being played, instead of exhibiting real leadership on the issue.
Then there is this issue of going into more debt in order to pay down existing debt. That's like falling down a hole and deciding that your best course of action would be to dig your way to China instead of using a rope to climb back up. You don't even need to be an accountant to figure out the fallacy in that line of thinking.
Your hero's glimmering suit of armor looks far less shiny when you take the helmet off.
My understanding of Brown's pension deal is it will ultimately result in way less money to Jacksonville from JEA. We're trading an upfront cash dump for much lower payments.
Not good.
Brown's plan would be a sweet deal for JEA, but getting out of debt by taking on even more debt is crazy, especially when it requires trusting an administration that can't even figure out how to buy a boat.
I'd say Brown's armor still looks nice and shiny, there's just nothing inside it.
It's an awesome deal for JEA, because they'd get to pay the city less of an annual contribution after giving over their lump sum. It sucks for the city, since we'd just be covering our pension debt with new debt, plus we'd have less annual revenue from JEA for the future. If you don't see the problem with this, I don't know what to tell you.
You literally have no idea what you are talking about. I'll highlight the undisputed facts.
Fact:
Less than half of future pension payments are funded. There is a deficit in the current pension of around $1.6 billion (about $1.3 billion in assets versus liabilities of around $2.9 billion). Even if the stock market soars (which frankly isn't going to happen), there is an unsustainable gap in funding.
That deficit will only get worse because there are less people paying into the system. Retirement plans work by current workers paying the benefits of retired workers (kind of like a Ponzi scheme). Fact: At the turn of the century, there were about 2.5 workers for every current retiree. Now that ratio is about 1.5 workers to every retiree. Meaning, there are less and less people feeding the beast. Coupled with the Fact: that current retirees are guaranteed a 3% cost of living adjustment to their benefit payout every year. Inflation is essentially zero right now (and hasn't been higher than 3% since 2007), which further increases the pension liability. That 3% COLA has stayed in place for every new hire entering the system. It needs to be eliminated (at the very least, for new hires) for the current pension funding shortfall to have any hope of just treading water.
Fact: COJ will throw about $150mm at the pension in FY2015 (give or take a few million). A little over 20% of the entire COJ budget is dedicated to pension benefits. The pension fund's liability is going to continue to grow (employees entering DROP have skyrocketed in recent years). It doesn't take a calculator to realize that $150mm/yr isn't even going to stop the leak, nonetheless fix the dam. Do you really believe that dedicating 40-45% of the City's budget should just go to paying retirement benefits of around 4,000 people in a few years from now? Because that's the path we are heading down now.
I think the final Peyton plan was pretty good, not perfect, but good. But what's done is done. We need a new plan, we're paying too much money into our debt at the expense of other things the city needs.
QuoteYou do know that the Pension Gap has steadily gotten smaller, right?
That is utterly false.
At the turn of the century, the pension's assets could cover 87% of its liabilties. Today the pension's assets can only cover 43% of its liabilities.
Trying to dispute these facts is literally ridiculous.
Quote from: stephendare on April 28, 2015, 03:30:47 PM
yawn. sources and math please.
Quote from: fieldafm on April 28, 2015, 03:27:12 PM
You literally have no idea what you are talking about. I'll highlight the undisputed facts.
Fact:
Less than half of future pension payments are funded. There is a deficit in the current pension of around $1.6 billion (about $1.3 billion in assets versus liabilities of around $2.9 billion). Even if the stock market soars (which frankly isn't going to happen), there is an unsustainable gap in funding.
That deficit will only get worse because there are less people paying into the system. Retirement plans work by current workers paying the benefits of retired workers (kind of like a Ponzi scheme). Fact: At the turn of the century, there were about 2.5 workers for every current retiree. Now that ratio is about 1.5 workers to every retiree. Meaning, there are less and less people feeding the beast. Coupled with the Fact: that current retirees are guaranteed a 3% cost of living adjustment to their benefit payout every year. Inflation is essentially zero right now (and hasn't been higher than 3% since 2007), which further increases the pension liability. That 3% COLA has stayed in place for every new hire entering the system. It needs to be eliminated (at the very least, for new hires) for the current pension funding shortfall to have any hope of just treading water.
Fact: COJ will throw about $150mm at the pension in FY2015 (give or take a few million). A little over 20% of the entire COJ budget is dedicated to pension benefits. The pension fund's liability is going to continue to grow (employees entering DROP have skyrocketed in recent years). It doesn't take a calculator to realize that $150mm/yr isn't even going to stop the leak, nonetheless fix the dam. Do you really believe that dedicating 40-45% of the City's budget should just go to paying retirement benefits of around 4,000 people in a few years from now? Because that's the path we are heading down now.
btw. quoted for posterity
http://www.coj.net/departments/police-fire-pension-fund/annual-report/actuarial-valuation-as-of-oct-1,-2014.aspx (http://www.coj.net/departments/police-fire-pension-fund/annual-report/actuarial-valuation-as-of-oct-1,-2014.aspx)
Page 4, line 3. Unfunded liability=$1.6billion. That's straight from the actuarial report put together by the plan adminstrator.
Math is hard, so I understand that the conepts of positive and negative numbers confuse people.
The people who borrowed the money were mayor Payton and Mayor Delaney. When they decided to take "" holidays" from paying the pensions because they thought they could effectively manage the money to a greater extent than the bills from the pensions would be . They in effect borrowed the money from the police officers and other city workers. Refinancing is not the same as adding debt. This spin that brown should be measured by his job cleaning up the previous mayors mess is crazy. They created a hard problem solve.
Quote from: stephendare on April 28, 2015, 04:00:14 PM
Quote from: fieldafm on April 28, 2015, 03:41:38 PM
Quote from: stephendare on April 28, 2015, 03:30:47 PM
yawn. sources and math please.
Quote from: fieldafm on April 28, 2015, 03:27:12 PM
You literally have no idea what you are talking about. I'll highlight the undisputed facts.
Fact:
Less than half of future pension payments are funded. There is a deficit in the current pension of around $1.6 billion (about $1.3 billion in assets versus liabilities of around $2.9 billion). Even if the stock market soars (which frankly isn't going to happen), there is an unsustainable gap in funding.
That deficit will only get worse because there are less people paying into the system. Retirement plans work by current workers paying the benefits of retired workers (kind of like a Ponzi scheme). Fact: At the turn of the century, there were about 2.5 workers for every current retiree. Now that ratio is about 1.5 workers to every retiree. Meaning, there are less and less people feeding the beast. Coupled with the Fact: that current retirees are guaranteed a 3% cost of living adjustment to their benefit payout every year. Inflation is essentially zero right now (and hasn't been higher than 3% since 2007), which further increases the pension liability. That 3% COLA has stayed in place for every new hire entering the system. It needs to be eliminated (at the very least, for new hires) for the current pension funding shortfall to have any hope of just treading water.
Fact: COJ will throw about $150mm at the pension in FY2015 (give or take a few million). A little over 20% of the entire COJ budget is dedicated to pension benefits. The pension fund's liability is going to continue to grow (employees entering DROP have skyrocketed in recent years). It doesn't take a calculator to realize that $150mm/yr isn't even going to stop the leak, nonetheless fix the dam. Do you really believe that dedicating 40-45% of the City's budget should just go to paying retirement benefits of around 4,000 people in a few years from now? Because that's the path we are heading down now.
btw. quoted for posterity
http://www.coj.net/departments/police-fire-pension-fund/annual-report/actuarial-valuation-as-of-oct-1,-2014.aspx (http://www.coj.net/departments/police-fire-pension-fund/annual-report/actuarial-valuation-as-of-oct-1,-2014.aspx)
Page 4, line 3. Unfunded liability=$1.6billion. That's straight from the actuarial report put together by the plan adminstrator.
Math is hard, so I understand that the conepts of positive and negative numbers confuse people.
Math can be so hard for some people. Especially when they haven't actually bothered to check it. I find that when they haven't actually checked the assumptions they usually have to rely on semantics to make it seem like they know what they are talking about.
Like pretending that the statement that the gap has narrowed wasn't referring to 'since it was originally labelled a crisis' and pretending instead that it referred to a figure long ago in the past before new negotiations changed the parameters of the obligations. Very weak, mike. Very weak. You should probably mark down whoever is sending you stuff from the Curry campaign to repost here as a buffoon.
Interestingly, you seem to have missed literally the opening statement of the report you used as you Exhibit 1.
(http://photos.metrojacksonville.com/Other/Misc2/i-VmhgF3G/0/O/pensionstatement.jpg)
Now, while many people find Math hard, I find that some people find English even harder.
So you will forgive me if I wonder which part of "It should be understood that the costs and actuarial present values presented in the report depend upon forecasts of future events, and that they, therefor, depend upon elements of subjective judgement. Due regard should thus be given to the reasonableness of alternative values and conclusions" that you didn't understand the first time that you didn't read it?
Perhaps you can explain why your cited expert reference is not agreeing with your bold and definitive statements?
I highlighted the actual passage in red. Perhaps that will help you actually see and read it.
Try reading it aloud. I find that sometimes makes things easier to understand.
I'm not going to say anything derogatory at this point because your total ignorance of finance is clear. For your own benefit, please understand that you do not fully comprehend what you are arguing about at this point.
If I said those same things, I should be fired because I am a financial profesional that knows better.
A statement of actuarial opinion (besides being legally required) doesn't mean that every number in the preceding document was simply made up. Balance sheets are simply snapshots of a point in time. Tomorrow, the stock market may crash and the assets would therefore plummet.
Quote from: fieldafm on April 28, 2015, 04:38:19 PM
A statement of actuarial opinion (besides being legally required) doesn't mean that every number in the preceding document was simply made up. Balance sheets are simply snapshots of a point in time. Tomorrow, the stock market may crash and the assets would therefore plummet.
You would think with all his knowledge he would put it to good use such as running for office, which he has indicated he would do in the past.
QuoteRefinancing is not the same as adding debt.
The scheme Brown proposed whereas the City would borrower an additional $120 million (along with JEA taking a cash advance on their own credit card of another $120 million in exchange for returning less taxpayer money over the next 20 years) would represent new debt. The deal proposed wouldn't refinance existing debt. That's now a one time payment that would reduce the unfunded liability by less than 20% (if this was a cash payment, it would reduce the current carrying costs of borrowing money to fill the gaps, however you have to pay interest on the new debt so reductions in carrying costs aren't as significant under this proposal.. servicing costs on the pension liability have more than doubled in the last 10 years, from $65mm in 2006 to $190mm today). The proposal would stop the leaking by adjusting new hire benefits, there's no question about that. The additional revenue to pay down another significant portion of the gap would come from existing workers contributing more of their pay to the pension fund, unless we hire 400 new police officers in the next couple of years while everyone stops retiring (an unlikely scenario). The key there is finding a manageable solution for contribution and accrual rate changes among existing workers. Keep in mind also that the fund isn't going to produce 10% annual returns forever.
Meanwhile, less JEA money would be going into the general fund for the next two decades. About 11% of the City's cash comes from JEA revenue transfers. That means less money to mow the grass, fix potholes and hire police officers (remember, current employees pay the benefits for current retirees).
Quote from: fieldafm on April 28, 2015, 08:52:17 PM
QuoteRefinancing is not the same as adding debt.
The scheme Brown proposed whereas the City would borrower an additional $120 million (along with JEA taking a cash advance on their own credit card of another $120 million in exchange for returning less taxpayer money over the next 20 years) would represent new debt. The deal proposed wouldn't refinance existing debt. That's now a one time payment that would reduce the unfunded liability by less than 20% (if this was a cash payment, it would reduce the current carrying costs of borrowing money to fill the gaps, however you have to pay interest on the new debt so reductions in carrying costs aren't as significant under this proposal.. servicing costs on the pension liability have more than doubled in the last 10 years, from $65mm in 2006 to $190mm today). The proposal would stop the leaking by adjusting new hire benefits, there's no question about that. The additional revenue to pay down another significant portion of the gap would come from existing workers contributing more of their pay to the pension fund, unless we hire 400 new police officers in the next couple of years while everyone stops retiring (an unlikely scenario). The key there is finding a manageable solution for contribution and accrual rate changes among existing workers. Keep in mind also that the fund isn't going to produce 10% annual returns forever.
Meanwhile, less JEA money would be going into the general fund for the next two decades. About 11% of the City's cash comes from JEA revenue transfers. That means less money to mow the grass, fix potholes and hire police officers (remember, current employees pay the benefits for current retirees).
Respectfully to my friend Mike Field, he is incorrect. It is not a "scheme", and the proposal would refinance existing debt. Sounds like a good excuse for Mike and me to have a beer and talk pension economics.
The Police and Fire Pension Fund (PFPF) currently has an unfunded liability of approximately $1.62 Billion. The City is obligated by law to pay that pension debt and we make an annual debt repayment as part of our Annual Required Contribution (ARC) to the PFPF. That debt accrues at a rate of 7%.
After meeting for nearly a year to recommend solutions to the City's police and fire pension challenges, the Jacksonville Retirement Reform Task Force recommended that the City accelerate its payment of the unfunded liability by approximately $40 million/year, or $400 million over 10 years. That recommendation ultimately became part of the City's tentative agreement with the Police and Fire Pension Fund.
The Carlucci/Appleby Plan (named for its creators, former Council President Matt Carlucci and long-time business executive Charlie Appleby) makes sense as a way to meet that additional funding obligation. Rather than pay $400 million over 10 years, the City would pay the net present value equivalent ($300 million) up front. Since the PFPF had already agreed to transfer approximately $60 million, the City's up-front payment would be $240 million.
JEA would provide $120 million, and has certified that the payment would have no impact on utility rates.
The City would refinance the other $120 million in existing debt (at a rate closer to 3.5% than the 7% we currently pay) so we can put that amount toward the unfunded liability up front.
Let's be clear: the City owes that $120 million no matter what. But if we pay it over time as part of the ARC at a higher rate, the cost of that debt is higher than if we pay it up front at a lower rate. Plus, it gives an immediate boost to the Funded Status of the PFPF as the City and Fund continue to work toward an 80% or higher status.
As for the annual JEA contribution, let's be clear about two things.
First, the credit rating agencies have repeatedly told JEA that their biggest vulnerability is the amount of its annual contribution to the City, which is viewed as on the high side for a public utility. They have urged them to move back toward a system where JEA pays based on the formula calculation set forth in the City of Jacksonville Charter.
Second, the current COJ-JEA funding arrangement expires on September 30, 2016. if a new COJ-JEA funding arrangement is not in place by that time, the JEA contribution could revert to the formula contribution -- which could mean an immediate loss of nearly $30 million in annual revenue. The Carlucci/Appleby Plan represents a far more gradual shift to the formula-based approach in the Charter.
The detailed financial analyses of the Carlucci/Appleby Plan show that if it was the funding source for a retirement reform agreement, the City would save $1.3 Billion over the next 30 years. That takes into account the change in the annual JEA contribution.
Mike or anyone else, I'm happy to discuss in more detail. But seeing as how we are pushing 1 AM, let's have that discussion tomorrow or another time.
While I freely admit I know very little about the plan that was proposed, I was lead to understand that it's numbers were based on the wrong basis and that was the real reason it was not well liked. If it was based on the wrong actuary, for instance, there would be no way it would succeed and perhaps it could even make things worse or at the very least, the chances if it succeeding would be greatly diminished.
Can anyone make sensible comments on that?
Quote from: strider on April 29, 2015, 08:47:04 AM
While I freely admit I know very little about the plan that was proposed, I was lead to understand that it's numbers were based on the wrong basis and that was the real reason it was not well liked. If it was based on the wrong actuary, for instance, there would be no way it would succeed and perhaps it could even make things worse or at the very least, the chances if it succeeding would be greatly diminished.
Can anyone make sensible comments on that?
Strider, I am happy to help. The retirement reform numbers were not on the wrong actuarial basis. The City's actuary, Miliman, is one of the most respected actuarial firms in the nation and also serves as the actuary for the Florida Retirement System (FRS). They checked the actuarial assumptions made by the Police and Fire Pension Fund actuary and determined that they were reasonable.
You may be referring to the fact that some Council members questioned whether the Police and Fire Pension Fund was using the correct mortality tables. Robert Dezube of Miliman comprehensively addressed that concern. If someone can tell me how to post documents here (I'm still a "Newbie"), I will happily share his memorandum to City Council on that issue.
City Council approves long-awaited forensic audit of troubled Police and Fire Pension fund.
(http://i.imgur.com/0PpDG5h.jpg)
For full story click this link: http://jacksonville.com/news/metro/2015-04-28/story/city-council-approves-long-awaited-forensic-audit-troubled-police-and#.VUA7MrQGBTc.twitter
Mayor chief of staff Chris Hand (from left), city councilman and mayoral candidate Bill Bishop and former city council president Matt Carlucci participate in a discussion on pension reform Monday, January 26, 2015 during a Meninak Club meeting in Jacksonville, Florida. Also participating in the debate was Police and Fire Pension Fund Executive Director John Keane. Will.Dickey@jacksonville.com
Will.Dickey@jacksonville.com
Mayor chief of staff Chris Hand (from left), city councilman and mayoral candidate Bill Bishop and former city council president Matt Carlucci participate in a discussion on pension reform Monday, January 26, 2015 during a Meninak Club meeting in Jacksonville, Florida. Also participating in the debate was Police and Fire Pension Fund Executive Director John Keane.
A nationally recognized expert in pension and investment forensics is set to sign an $85,000 deal with the city of Jacksonville so he can investigate the troubled Police and Fire Pension Fund.
Edward 'Ted" Siedle is founder of Benchmark Financial Services, Inc. and was named by global finance magazine Institutional Investor as one of the 40 most influential people in the U.S. pension debate. He said Tuesday he is eager to start as soon as possible.
Quote from: Chris Hand on April 29, 2015, 01:04:22 AM
Respectfully to my friend Mike Field, he is incorrect. It is not a "scheme"
I hate the term scheme when used like this....but it is correct to use it interchangeably with plan, proposal, etc. For example, my company has an employee bonus scheme.
damn. while i appreciate the required need for a forensics audit etc. but how many damn studies\audits\analysis does a city need to make some sort of agreeable head way on this issue? This is been an issue for decades and still no headway there has got to be some middle ground here. Its no wonder that our cities credit rating has been downgraded. This is all just political bs vs actually wanting to solve the problem.
I dont disagree with you Stephen but i thought the pension was a part of that decision:
"The review comes in the wake of Moody's updating its rating methodology, putting more weight on a city's debt and pension issues."
http://www.bizjournals.com/jacksonville/news/2014/01/21/moodys-considers-downgrading.html