Councilman shares mayor's pension concerns
Lenny Curry says city may owe $45M more annually for pensions
JACKSONVILLE, Fla. – The Jacksonville City Council vice president has joined Mayor Lenny Curry in sounding an alarm concerning an additional $45 million per year in pension costs.
The city is paying $150 million into the pension deficit this year. That number increases each year.
On Friday, Councilman John Crescimbeni showed News4Jax documents he found, detailing an exchange between actuaries for the fund and for the state back in 2014.
Even then, Crescimbeni said, the state showed concern about an assumption that the city payroll would increase by more than 3 percent -- when the city had cut wages in 2010.
"Why would the actuary use that formula knowing full well we had a pay cut in 2010 to general employees, followed by pay cuts to police and firefighters in years thereafter. And some of those folks have never gotten a pay restoration since then. Some of them have crept back up with step-raises. It's absurd," Crescimbeni said.
Crescimbeni also said he believes taxpayers, quote, "have had it up to their eyeballs" with the pension fund's mismanagement.
Mayor: City may owe $45M more annually for pensions
Earlier this week, Curry said he had discovered that the deficit on the city of Jacksonville's pension fund has been calculated using standards that seem to violate Florida law, which could put the city on the hook for up to $45 million more per year in pension costs.
Curry said his discovery that the city's actuary has been using an illegal method to calculate the pension debt will not blow up the new pension deal that voters approved in August to increase sales taxes in Jacksonville.
The mayor pointed a finger at the pension board, saying the board either screwed up accidentally or intentionally, and either is unacceptable.
"I'm frustrated. It's more nonsense coming out of the pension fund board. It appears that the actuary has not been using standards under Florida law regarding our pension obligation. If that's correct, if I'm right on that, that's going to cost the city another $44 to $45 million a year," Curry said.
At this point, it's unclear what was being done that was illegal, but Curry said he is in communication with the city's general counsel to figure out what happened.
"We're still gathering facts. The current actuary that works for the pension fund board, (who) will be leaving in January, did some sort of true-up that says, 'Here is how it's done, we're going to do it this way now, and this is what it's going to cost each year,'" Curry said.
In a letter to the city's general counsel, Jason Gabriel, Curry called it "disturbing news" that showed "reckless disregard for the taxpayers coming from the pension fund board."
“We need to know who knew this incorrect method was being used? Is there any documentation justifying a deviation from standard practice under Florida law? Did the pension fund board know? Were they trying to make the pension crisis look less severe? What is the remedy?" Curry wrote.
Crescimbeni said Wednesday that he is also working to find out what happened.
“When it comes to the police and fire pension fund, nothing surprises me,” he said. “I don't have enough information or facts to clearly understand what they are alleging.”
Officials said the figures just aren't adding up. Officials said they hoped those payments would pay down the $1.7 billion police and fire pension fund, which is one of the three funds that have the city in a $2.8 billion hole.
It turns out the amount the city has been paying each year may not be enough, and the deficit could even be more.
The problem is, Curry says, the extra money isn't there.
“To wake up and to be told it is a potential $45 million a year cost laid at the feet of the city, laid at the feet of taxpayers, because the actuary wasn't following standards under state law, it's just tiring, and the people are tired of it, too,” Curry said.
The new executive director of the pension board said the board was not trying to hide anything, and that the report that caught Curry's attention is a draft that could change.
“I want to work with the mayor’s office and the general counsel to get the answers to the questions the mayor has asked,” Timothy Johnson said.
Jarmon Welch, the pension actuary, pointed the finger back at the mayor, saying Curry's policies related to the pension give the board less money to work with, and the mayor is just stoking controversy for the problems the mayor created.
"I've written a letter to three senior people at the board of trustees that says this idiot mayor is not being properly, is writing things like this to stir up controversy, trying to point the finger somewhere else," Welch said.
Nothing has been done illegally, according to Welch.
“I am going to continue to ask the tough questions,” Curry said. “They can continue with the foul language and the personal attacks. It doesn't change the facts that they have to answer questions.”
Steve Zona, president of the Jacksonville Fraternal Order of Police Lodge, released a statement Thursday on the recent comments made regarding the pension status, asking, "Who knew what when?"
All sides plan to meet and see if there really is a problem with the numbers and what can be done to fix it. For now, it looks like it will be taxpayers who could fork out more in the next budget round.
This latest development in the city's ongoing struggle with the pension debt comes as Curry was trying to sell the city's nine unions on a voter-approved plan that would allow the city to use future revenue from a half-cent sales tax if the unions agree to close their pensions to new employees and replace them with 401(k)-type retirement plans.
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