FOR IMMEDIATE RELEASE

The Concerned Taxpayers of Duval Co. (CTDC) and Curtis Lee, one of its directors and Chair of the Public Employee Compensation Committee, filed an amended complaint on August 23, against the City of Jacksonville, and the Jacksonville Police & Fire Pension Fund (PFPF).

The lawsuit and amended complaint, among other things, allege that all existing agreements between the City and the PFPF, as well as proposed legislation that was presented by former Mayor Peyton and which is still pending before City Council, were negotiated in violation of state labor law, and state Sunshine Law, and are therefore void. The Lawsuit also seeks to enjoin future violations. The agreements at issue provide generous pension benefits to persons employed and formerly employed by the Jacksonville Sheriffs’ Office and the Jacksonville Fire & Rescue Department. These pension benefits have been in the news in recent years, as they are very costly to taxpayers, and because the PFPF has approximately a $1 billion funding deficit.

Mr. Lee stated as follows: “The City and PFPF are badly mismanaging the public pensions resulting in huge costs to City taxpayers. Currently, public pensions cost each Jacksonville resident more than $150 per year, and this cost keeps escalating. It is our goal that this lawsuit will assist in causing a fundamental reconsideration of a broken pension system.”

Joe Andrews, Vice President of CTDC adds, “For years the PFPF and City engaged in clandestine negotiations in violation of State Sunshine and Labor laws. The consequence of these illegal agreements is an unsustainable liability to Taxpayers. Had these negotiations been conducted in accordance to the law, it is doubtless that the results would have been more favorable to Taxpayers.”

More information is available from Curtis Lee (594 – 6192) or Robert Dees (357-3660). Additional information is also available on the CTDC website at www.jaxtaxpayers.org

The Concerned Taxpayers of Duval County, Inc. is a not for profit corporation dedicated to serving the community as a watchdog group, to oppose corruption, waste, and tomfoolery in government.

Paid for by the Concerned Taxpayers of Duval County, Inc., P. O. Box 2307, Jacksonville, FL 32202

904-351-8126

www.jaxtaxpayers.org

Concerned Taxpayers of Duval County, Inc.,

P. O. Box 2307, Jacksonville, FL 32202

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THE CONCERNED TAXPAYERS OF DUVAL COUNTY

904-351-8126
www.jaxtaxpayers.org
Concerned Taxpayers of Duval County, Inc.,
P. O. Box 2307, Jacksonville, FL 32202
FOR IMMEDIATE RELEASE

The Concerned Taxpayers of Duval County Inc. (CTDC) filed a lawsuit against the City of Jacksonville and the Jacksonville Police and Fire Pension Fund (PFPF) on June 3rd 2011.  The lawsuit was filed in Circuit Court, Duval County and is docketed at 2011-CA-004348.   For a copy of the complaint, please go here.

Curtis Lee, Chairman of the Public Employees Compensation Committee (PECC) and Director of CTDC, is also a plaintiff in the lawsuit, which seeks declaratory judgment and injunctive relief concerning contract negotiations conducted in violation of state labor laws and the Florida Sunshine Law.

Mr. Lee says that “for more than 10 years, the PFPF and the City have collectively bargained retirement benefits on behalf of PFPF members and future members, in violation of Florida labor law.  Additionally, these negotiations were conducted in secret without public notice or opportunity for the public to observe, as required by the Sunshine Law.  The City’s pension system is broken.  Unless serious pension reform occurs, where pension benefits are negotiated in a transparent fashion as required by state law, the pension crisis will only cost taxpayers more in the future.”

Victor Wilhelm Jr., President of CTDC, adds: “Mr. Lee and CTDC have been attempting to educate the mayor, the administration and the City Council about the unsustainable nature of the public pension status quo, how this harms taxpayers, and what can be done to reduce costs.  Unfortunately, we have what appears to be a pattern and practice of violations of the Sunshine and labor laws, all for the benefit of insiders.”

Mr. Lee and CTDC have retained the services of Robert Dees, Esq., of Milam Howard Nicandri Dees and Gillam to pursue this lawsuit.  Mr. Dees has more than 25 years of experience in Sunshine Law litigation.

Additional information about the suit is available from Mr. Lee at 904-594-6192 or Mr. Dees at 904-357-3660, or at www.jaxtaxpayers.org

The Concerned Taxpayers of Duval County, Inc. is a not for profit corporation dedicated to serving the community as a watchdog group, to oppose corruption, waste, and tomfoolery in government.

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The following is a longer version of articles that have appeared recently in the Folio Weekly and Florida Times Union.

I am a retired attorney, and first started working on private sector pension matters 30 years ago. I have researched Jacksonville’s three public employee pension plans, and am dismayed about the mistakes and fiscal irresponsibility that occurred. Jacksonville is now in the midst of a pension crisis. For example, these public employee pension plans have unfunded liabilities (deficits) totaling about $1.7 billion – about $2,000 per resident. And, in fiscal 2012, more than $140 million will be paid into these plans (over $150 per resident – more than a tripling of costs in about 6 years). About 90% of this payment will come from taxes. The rest will be paid by City residents via JEA bills.

Public pension costs will represent about 14% of Jacksonville’s General Fund budget.

How did things get so bad? There are many reasons, which boil down to the usual suspects – politics, greed, and mediocre investment returns. Let’s now delve deeper.

We’ll start in 1935. The Social Security Act of 1935 (SSA), which has been amended many times, has permitted state and local governments not to pay Social Security (FICA) taxes, and not to have their employees pay FICA taxes or be covered by Social Security. However, many state and local governments then instituted defined benefit pension plans, i.e., traditional pension plans, for their employees. My understanding is that Jacksonville first adopted such a plan in 1937. Jacksonville thus opted out of Social Security and instead provided pension benefits for public employees.

A defined benefit pension plan (DBP) provides benefits that are normally payable under this type of formula: multiply years of credited employment times a stated percentage times final average salary. For long-service employees, DBP plans provide retirement benefits that replace percentages of salary. In Jacksonville, the maximum salary replacement for public employees is 80%, and many public employees retiring in their early to mid 50s get this 80%. Some Jacksonville employees (police, fire and corrections) can and do retire in their 40s at 60% or greater salary replacement levels. Plus, Jacksonville’s retired employees receive what are called cost-of-living adjustments (COLAs). These are, in reality, 3% annual increases, regardless of actual inflation.

And so, in broad brush, this is what Jacksonville’s more than 8,000 public employees get in lieu of Social Security. I will now briefly explain how they greatly benefited because Jacksonville long ago opted out of Social Security.
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DBP = defined benefit plan
DCP = defined contribution plan
UAAL = unfunded actuarial accrued liability
PFPF = Jacksonville Police & Fire Pension Fund
GEPP = General Employees’ Pension Plan
COPP = Corrections Officers Pension Plan
COLA = cost of living adjustment

11/4/10

Dear Members of the TRUE Commission,

Thank you for this opportunity to speak to you concerning the problems associated with Jacksonville’s public employee pension plans. Some of you know me or have heard me speak on similar topics before. I am a retired attorney who worked in the private sector since 1980 and spent a great deal of time working on many aspects of corporate pension plans – legal work, administrative work, and investment work. When I worked in the private sector, I managed for many years a corporate pension plan.

I first started getting involved with Jacksonville’s pension problems more than a year ago and since then have done a great deal of research and have attempted to help publicize and hopefully help fix the city’s horrendous pension plan related problems. As part of my efforts, I have spoken to the City Council, its committees, and on television and have had several articles and letters published in the Florida Times Union and several smaller newspapers.

Let’s start with definitions and an overview. There are two broad types of pension plans – defined benefit plans (DBP) and defined contribution plans (DCP). DBPs are traditional pension plans. An employee earns a benefit expressed as an annual benefit, and that benefit is based on years of credited service times final average salary times a formula. There are many varieties of DBPs, but they all have a big problem – they are hard to budget for. Costs to employers bounce around, but usually increase. Employer costs especially are prone to increase when the assets that they invest to back their promises – the pension plan’s assets – perform poorly as they have done for most of the last decade.

DCPs include 401 (K) plans and are fundamentally different. The employer contributes a known amount or rate to an employee’s account and therefore the employer’s costs are much more stable and much easier to budget. The contributions are invested and the benefit to the employee depends on what his or her account is worth at a later date. There are numerous other differences between DBPs and DCPs that I will not discuss now.

Because of the high and highly variable costs of DBPs, the private sector has largely stopped using them. The public sector, however, still overwhelmingly uses DBPs. In recent years, these public sector DBPs have caused many problems for taxpayers – costs have zoomed due to mediocre investment returns, politicians and public employees have resisted reform (benefit formula reductions), and scandals periodically emerge – you may have read about “pay to play” scandals where public pension plan managers get gifts or campaign contributions from investment firms that they hire to manage public pension plan assets.
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