JACKSONVILLE, Florida – Two dozen officials from the City of Jacksonville and nearby municipalities wrestled with the financial crisis around public employee pensions in a Jessie Ball duPont Fund-sponsored seminar at the University of North Florida in August.
The session is part of the Foundations of Local Government program, a series of seminars for public officials in Duval County, Florida, that the Jessie Ball duPont Fund hopes will better equip public policy makers to make tough decisions in the public interest.
“You have very difficult jobs,” Jessie Ball duPont Fund President Sherry Magill told the participants at the Aug. 17 session. “Our goal here is to create a space where you can learn and have conversation about the issues facing you.”
The half-day session, which was open to the public in compliance with Florida open meetings law, offered a mix of presentations and group conversation.
Representatives from the Leroy Collins Institute at Florida State University opened the program with an overview of their research (funded by the Jessie Ball duPont Fund) on municipal pensions throughout Florida, how their asset-liability ratios have changed over time and the reasons behind the current crisis.
Ceasar Mitchell, president of the Atlanta City Council, then discussed the changes that the City of Atlanta recently made to its pension program, the process the city used to achieve those changes and the strategies that helped overcome obstacles.
The audience included elected officials and public employees, including public safety (police and fire department) employees, from the City of Jacksonville and two smaller municipalities within Duval County – Atlantic Beach and Jacksonville Beach. The audience mix resulted in conversation that focused more on policy and issues than on the specifics of any one municipality.
And that is the goal of the Foundations of Local Government program – to give policymakers an opportunity to step back from the political battlefield and gain greater understanding of the problems their communities face.
“We expect our elected officials to make wise public policy,” Magill said, “but they serve part-time and have ‘day jobs’ that compete for their attention, they often don’t have good research to draw on, they have few financial resources to underwrite learning, and they must operate in a political fishbowl that is not conducive to healthy inquiry and debate.”
The Foundations of local Government program began several years ago when the Jessie Ball duPont Fund partnered with UNF’s Department of Political Science and Public Administration to provide an orientation session for newly elected Jacksonville City Council members, with a particular emphasis on the role of philanthropy and nonprofits in the community. A second orientation session was held shortly after the 2011 council elections and many of those participants expressed interest in seminars focused on specific issues.
“We were encouraged that these new council members had an appetite to learn and found the seminar environment a constructive one,” Magill said.
The partnership with an academic institution is critical to the program’s success, Magill said, because it broadens the knowledge base and provides the appropriate environment for learning.
Matthew Corrigan, chair of UNF’s Department of Political Science and Public Administration, noted that the partnership also benefitted the university.
“Our students benefit from these programs, and we couldn’t afford to do them without the underwriting support from the Jessie Ball duPont Fund.”
What’s the Bottom Line on Pensions?
‘Your House Is On Fire,’ Says FSU
JACKSONVILLE, Florida – “Your house is on fire.”
That was the message to public officials from David Matkin of the Leroy Collins Institute at Florida State University when asked “what is the bottom line on public employees pensions?”
The Institute has conducted extensive research on public employee pension funds across the state of Florida and the challenges they are posing for local governments. In short, the costs of providing defined-benefit pensions under current terms are quickly outstripping governments’ ability to cover those costs, forcing tough choices around reducing benefits, increasing employee contributions, increasing taxes or potential insolvency.
“The takeaway from all of this, sitting where we are here in Jacksonville, is that the old 30-and-out defined benefit plan is a dinosaur and it will go away,” said Bill Bishop, president of the Jacksonville City Council. “And the sooner we all recognize this, the sooner we can all come to a sustainable solution.”
In Atlanta, city council recently approved a major overhaul of that city’s pension programs covering general employees and public safety employees. The reform, which will save the city about $25 million a year, calls for employees to increase their contribution to the pension program, reduces cost of living adjustments and puts most new employees in a defined contribution plan.
Currently, according to the Collins Institute, Jacksonville’s annual investment in its general employees pension program covers only 76% of the cost of that plan; and only 52% of the cost of the police and fire pension plan. The “unfunded liability” – essentially the difference between costs that are covered and known costs that are not covered but will come due in the future – is a ticking time bomb for municipalities.
“As a citizen, I was unaware that we had such a high unfunded liability,” said Atlantic Beach City Commissioner Mark Beckenbach. “I’m told this is like a mortgage, but it’s unlike any mortgage that I’ve ever had.”
Ceasar Mitchell, Atlanta City Council President, agreed.
“You cannot keep your head in the sand on this issue,” he said.