Mayor unveils pension reform plan for city employees

Published On: Oct 30 2012 03:05:13 PM EDT
Updated On: Oct 30 2012 10:01:45 PM EDT

Plan projected to save $1.05B over 30 years.

JACKSONVILLE, Fla. -

One day after he unveiled his retirement reform proposal for police employees in the Police and Fire Pension Plan, Mayor Alvin Brown unveiled his reform proposal for certain city of Jacksonville employees in the General Employees Retirement Plan in a collective bargaining meeting with the American Federation of State County and Municipal Employees.

"Our city employees deserve a retirement system that is sustainable," Brown said in a news release. "The current system is broken. We have to fix it to respect and protect employees and taxpayers."

Currently, the GERP has a significant level of unfunded liability, according to the release. In October 2005, assets in the GERP were worth $225 million less than its total pension obligations. By October 2011, that deficit had grown to more than $635 million. Under-funding earned the GERP a "C" grade in a 2011 study by the Leroy Collins Institute at Florida State University.

DOCUMENT: City workers pension reform fact sheet

Brown said he would reform the retirement system in two ways. First, as with his initial proposal with police employees in the PFPF, it would address the under-funding of pension benefits by making the assumed rate of return on GERP investments more realistic, Brown said. Right now, GERP assumes that its investments will earn an 8.25 percent return. Brown proposes to lower that assumed rate of return to 7 percent (net 6.5 percent).

Second, Brown proposes benefit changes that would apply to all new employees and many current employees. His proposal will not affect any former city of Jacksonville employees who are already retired or any current employees who are already eligible for full retirement at the time the new plan is implemented.

It will not affect retirement benefits already earned by any current employees through the date the plan is implemented, although it will modify the future benefits they earn after the new plan is implemented.

Brown's retirement reform plan is projected to save $10 million in its first year and $1.05 billion over 30 years, according to the news release. Employees, however, will have to increase their contributions from 8 percent to 12 percent, and to get full benefits, they would have to retire after 30 years of service and be at least 62 years old.

Brown spoke Tuesday to union leaders who represent city clerks, librarians, dispatchers and other blue collar jobs. He told them he's pushing for major change.

"You need to hear it from me that benefits in the future will be modified and that changes will take place," Brown said.

The union's executive board is just now getting a look at the plan, and some say they don't like what they see.

"Lack of money, lack of positions, lack of opportunities for employees to advance," said Alecia Tromble, of the union's executive board.

Earlier this year, Brown and two civilian unions -- AFSCME and the Jacksonville Supervisors Association -- reached agreement on new labor contracts that are projected to produce nearly $5 million in combined savings for the next three years. Those agreements, ratified by City Council, did not specifically address retirement benefits but required that the city and unions hold meetings over the balance of 2012 to reopen and discuss that subject to see if agreement is possible.

The first of those meetings was with AFSCME on Tuesday, with another to follow on Thursday with JSA. Meetings are also scheduled in November with two unions that have not yet reached economic agreements with the city -- the Communication Workers of America and Laborers International Union of North America.

"Our previous negotiations were a great example of teamwork," Brown said. "If we work together again, I am hopeful that we can achieve retirement reform that is sustainable for our employees and our taxpayers."

The mayor presented a similar plan to the police union Monday that calls for another $1.5 billion in savings. The mayor wants to bargain with the police union, but its president, Nelson Cuba, says no way. He says the mayor  needs to talk to the pension board and says this pension reform is just trouble.

"I truly believe he wants to dismantle the sheriff's department and public safety," Cuba said. "I don't think public safety matters to him. I don't care what he says. Actions speak louder than words."

"I am very optimistic, humbly optimistic, that in the end we will have an agreement that will work for the hard working city employees," Brown said.

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