By David Bauerlein
The Florida Times-Union
JACKSONVILLE, Fla. — Jacksonville’s Police and Fire Pension Fund has drawn all the hue and cry in the city’s latest stab at pension reform, but according to the LeRoy Collins Institute, the city’s pension plan for correction officers is the one getting an “F” grade.
The think tank, located on the Florida State University campus, handed out a “D” for the financial health of the Police and Fire Pension Fund and a “C” to the city’s general employee pension plan.
Elsewhere in Northeast Florida, Fernandina Beach got “F” grades for its pension plans.
St. Augustine and Palatka stood out with “A” ratings for their police pension plans.
The recently released report card by the the institute took stock of 151 municipal pension plans across the state, updating a previous assessment done in 2011.
The report concluded that overall, the financial health of pension plans has gotten worse, with a bigger share of them falling into the “D” and “F” categories.
“Many cities are in urgent need of reform that will help reverse this decline in healthy pension funds and get more plans headed toward the honor roll,” said David Matkin, assistant professor at University of Albany-SUNY, who wrote the report.
Chris Hand, chief of staff for Jacksonville Mayor Alvin Brown, said Brown intends to propose reforms to the pension plans for corrections officers and general employees. But he said the first order of business will be the Police and Fire Pension Fund because the city will contribute $153 million to it this year.
The financial impact on the city’s general fund — which pays for daily city services, including public safety, libraries and parks — is less for the other pension plans. The city will fork over $21.5 million from the general fund for the general employees pension plan and $17.6 milion for the correction officers plan.
Fernandina Beach City Manager Joe Gerrity said his city will evaluate changes to its pension plans. “We’re very concerned about them,” he said. “We’re moving forward with at least doing a study, and I’m sure there will be some reforms coming out of that study.”
Fernandina Beach’s general employee pension plan has banked enough to cover 57 percent of its future pension obligations, and the funding level for its police and firefighter plan is at 55 percent, according to a report compiled by the Florida Department of Management Services.
In addition to funding levels, the LeRoy Collins Institute also measured the impact of pensions on city budgets, the rate of investment returns assumed by the pension plans, and how much employees contributed to their pension plans.
For instance, the Jacksonville Police and Fire Pension Fund and the city’s Correction Officers Pension Plan both fare poorly in terms of funding future pension obligations, with funding ratios of 43 percent and 45 percent respectively. But the institute report gave them credit because those enrolled in the programs contribute more than 5 percent of their salaries, which is the benchmark used by the study. Jacksonville Police and firefighters contribute 7 percent of salaries, while corrections officer contribute 8 percent.
The Police and Fire Pension Fund got up to a “D” rating because it adopted conservative assumptions for what its investments will earn. The study gives credit to pension plans that assume investment returns will be 7.75 percent or less. The Police and Fire Pension Fund projects 7 percent returns.
The LeRoy Collins report used data from the Florida Department of Management Services, which shows Jacksonville assumes 8.25 percent investment returns for the correction officers and general employees pension plans.
But the city has since scaled back that expectation and is banking now on 7.75 percent returns.
The Police and Fire Pension Fund is an independent city agency overseen by a five-member board.
The general employee and correction officer plans are run by the city’s retirement system administrative officer and have advisory boards.
The LeRoy Collins report does not assess pension plans covering county employees because they are part of the Florida Retirement System.
David Bauerlein: (904) 359-4581
Making the pension grade
The LeRoy Collins Institute handed out grades for the fiscal soundness of municipal pension plans statewide. The chart also shows the percentage of future pension obligations that pension plans can pay for over a multi-year period. The unfunded liability is the amount the cities owe their pension plans to fulfill that obligation. The figures are a financial snapshot and will change over time based on investments returns earned by pension plans.
Pension plan Grade Funding level for future obligations Unfunded liability
Atlantic Beach general employees C 74 percent $4.3 million
Atlantic Beach police D 65 percent $3.7 million
Fernandina Beach general employees F 57 percent $9.6 million
Fernandina Beach police/firefighters F 55 percent $11.8 million
Jacksonville corrections officers F 45 percent $150.1 million
Jacksonville general employees C 62 percent $947.3 million
Jacksonville police/firefighters D 43 percent $1.65 billion
Neptune Beach police/firefighters C 75 percent $2 million
Orange Park firefighters D 77 percent $1.3 million
Orange Park general employees D 54 percent $3.5 million
Orange Park police D 73 percent $3.7 million
Palatka firefighters D 71 percent $2.4 million
Palatka general employees D 72 percent $5.9 million
Palatka police A 90 percent $966,000
St. Augustine general employees B 74 percent $8.9 million
St. Augustine police A 95 percent $681,000
Sources: LeRoy Collins Institute, Florida Department of Management Services, city of Jacksonville. JEA, the city-owned utility, shoulders part of the pension cost for the Jacksonville General Employees Pension Plan.