We made history together. Our monumental effort to address Jacksonville’s unfunded pension liability culminated with City Council’s unanimous approval and my signature affixed on pension reform legislation, including contract agreements secured with each of the City’s employee bargaining groups.
All of Jacksonville has reason to be proud, and optimistic about our future. That’s because this was a collaborative effort every step of the way involving citizens, elected officials at the local and state levels, civic, business and faith leaders, union negotiators, and City employees.
As a result of diligent and thoughtful work, extensive community dialogue, and tough negotiations with union leadership, Jacksonville achieved a solution that designates a dedicated revenue stream to properly fund our pension obligations to current and past employees, offers attractive and sustainable retirement benefits to new hires, and provides budget relief for essential services including public safety, economic development and neighborhoods.
Years of failed attempts to address unfunded pension obligations; crippling effects of mounting pension debt on City budgets and services; seemingly unending sacrifices by City employees. All of that is finally behind us. We achieved a historic and sustainable solution that puts our financial future back under our control. Just as important, this is a solution that ensures that Jacksonville doesn’t repeat its past mistakes.
This is an exciting time for Jacksonville, and I am proud to serve as your mayor. I look forward to continuing to work in serving the people of our great city.
Understanding Pension Reform: The Curry Solution
Upon his election in, Mayor Curry committed to the citizens of Jacksonville that he would address the pension liabilities that have long impacted families and communities throughout the city. With a commitment to improving public safety, increasing youth services, enriching neighborhoods and communities, and growing businesses and economic development opportunities, he recognized that a key barrier to these priorities and the future of Jacksonville is rooted in a failure to properly address pension obligations.
Because of the pension debt, minimal investments have been made in integral services that benefit citizens. With a pension resolution, the mayor has the ability to strengthen key services, hire more police officers, bolster crime prevention and intervention programs, more enhancements in city parks, and better invest in neighborhoods.
For too many years, pension debt posed the greatest threat to the city’s financial future. Important City services have been steadily declining for years. Jacksonville owns more than 25% of the total unfunded pension liability of the more than 400 cities and counties throughout Florida. That’s $2.7 Billion in unfunded liability. In a single year (2017), the City is paying $260 Million to its three public pension funds: Police and Fire Pension Fund, Corrections Officers Pension Fund, and General Employee Pension Fund. Without the pension obligations, it would be paying $75 million. The City’s contribution to its three funds represents nearly 30% of the total operating budget – these are dollars that should, but do not support any service to Jacksonville taxpayers.
This problem is not unique to Jacksonville. National research shows that the U.S. faces a disastrous $3.4 Trillion pension funding hole that will strain the finances of cities and states throughout the nation. Many will be forced to cut spending or raise taxes to avoid bankruptcies like those in Detroit and San Bernardino.
The Curry Solution
The Aug. 30 referendum, approved by 65% of voters in 2016, required that the plans be closed to new employees in favor of retirement plans that reflect current market practices. It more fairly balanced employee and City contributions toward the cost of retirement. Current employees would have to contribute a minimum of 10% of their salary for their retirement benefits. The City could receive the proceeds from the ½ penny sales tax only if these prerequisites were met. These funds could only be used for paying down the unfunded liability of these pension funds, and would end once the funds are 100% funded or in 2060.
Frequently Asked Questions
How dire is Jacksonville’s pension situation?
Pension debt has long represented the greatest risk to the city’s future. But it has also been the city’s greatest opportunity.
Jacksonville owns 25 percent of the total unfunded pension liability among the more than 400 cities and counties throughout Florida. In a single year (2017), the City is paying $260 Million to its three public pension funds: Police and Fire Pension Fund, Corrections Officers Pension Fund, and General Employee Pension Fund. Without the pension obligations, it would be paying $75 million. The City’s contribution to its three funds represents nearly 30% of the total operating budget – these are dollars that should, but do not support any service to Jacksonville taxpayers.
How does this solution address the pension issue?
The Curry solution dedicates a funding source to pay the pension debts – eliminating this issue once and for all. It does not add any additional tax burden. It does not raise taxes or the ad valorem rate. And it keeps the sales tax at 7 percent.
It closes current plans to new employees, in favor of retirement plans that reflect current market practices. It increases employee retirement contributions to 10%. And this plan empowers the city to resolve its long-term pension challenge, and contribute to better investments in public safety, youth services, neighborhoods and economic development opportunities.
These dollars can ONLY be used to pay down pension debt, and the tax will end when the plans are 100% funded or by 2060 (whichever comes first).
Where will you invest savings from a pension solution?
This solution is about solving a long-standing financial threat and securing the City’s future to better serve citizens. The mayor is not tying any potential savings from this solution to funding requests from any constituent group.
How do we know this won’t happen again?
With this solution, the funds from this surtax can legally ONLY be used to pay down pension debt – they cannot be used for any other purpose. Once those plans are fully funded, the tax ends. This solution solves the problem once and for all.
Why not implement a new sales tax now?
The mayor does not believe this is the right thing to do, as it will increase the burden on taxpayers. Any additional new sales tax would require approval from the State Legislature and Governor Scott.
Why not raise the millage rate?
Millage rate increases cannot be specifically purposed toward any single purpose. Any following mayor or City Council could come along and designate those dollars for other purposes – bringing the City back to square one.
With this solution, the surtax dollars can ONLY be used to pay down pension debt; they cannot be used for any other purpose. And once those plans are fully funded, the tax ends.
How does a tax starting in 2030 benefit us today?
This solution dedicated a funding source for benefits owed in out years, which drives savings for the City today. New actuarial projections show a $40 million in budget relief in the next budget year (FY 2017-2018).
What changes can city employees expect?
Employee retirement contributions will rise to 10%. The current plans will be closed to new employees, in favor of retirement plans that reflect current market practices.
These changes will help the city address its pension liability burden – which eats up nearly 30 percent of the City’s operating budget – and invest in key priorities and services that improve the lives of Jacksonville residents.
Will you further reduce retirement benefits to employees?
As part of this solution, current employees will be required to increase their retirement contributions to 10% of their salary. Changes to employee benefits were collectively bargained with employee unions. The mayor is committed to ensuring that benefits are reflective of market conditions, attract quality talent, and respect taxpayers. Learn more about collective bargaining negotiations and the mayor's proposals for City employees.
Collective Bargaining Negotiations
The mayor's solution empowers Jacksonville to resolve our city’s long-term pension liability challenge, contributing to greater opportunities for improvements in public safety, youth services, neighborhoods and economic development. The plans recognize the value of City employee contributions, and the financial sacrifices they made over many years, including pay and benefit cuts, lack of raises and other setbacks. The solution provides well-deserved raises for employees in all of collective bargaining groups, along with new retirement plans that will attract and retain future workers.
To learn more about collective bargaining negotiations and the City's proposal to employee unions, visit the Pension Progress page.