By Michael Hallett
The Florida Times-Union is a great paper. I read it every day and frequently use its many excellent series on life in Jacksonville to inform my classes at UNF. What makes a daily newspaper worth the price of subscription is not its national coverage nor even its representation of geopolitics; these stories are largely supplied by wire services amid a small monopoly of global media corporations. What makes a daily newspaper worth the price is its local coverage and that’s why I’m an avid reader of the FTU. For example, Jacksonville would never have responded in the way that it did to the city’s violence crisis of 2006-2008, with formation of the Jacksonville Journey, but for the coverage of the Florida Times-Union. The paper’s constant drumbeat of stories demanded action and the Florida Times-Union made it happen. In a similar way, the Times-Union is now pushing Jacksonville to deal with its longstanding pension crisis–but in ways that are not as constructive as with Journey.
The paper’s coverage of the pension crisis could have been orchestrated in such a way as to not demonize the people involved, without taking a thing away from the facts or the story. This demonization compromised full presentation of the facts and obscured details necessary for understanding the macro-dynamics of the crisis overall. In short, the Times-Union has failed to look systematically at the broadest elements of Jacksonville’s pension crisis, myopically focusing on the Police and Fire Pension Fund (PFPF) while failing to investigate a much more systematic and broad-based insolvency among all three major pension funds in Jacksonville. Ironically, as a result, the Times-Union has dramatically under-reported the pension problem in the city, curiously limiting the vast majority of its reporting and its headlines to the PFPF.
While the city’s PFPF pension liability is a whopping $1.65 billion, the General Employees Pension fund also has a liability of ~$400+ million, while insolvency problems also exist with the Correctional Officers Pension Fund. In addition, a federal lawsuit involving employees excluded from participation in the city’s pension process has added potential liabilities of another $500 million. Needless to say, the city’s pension problems extend well beyond the PFPF. Yet where is the coverage on the problem as a whole? $400 million here, $500 million there, pretty soon you’re talking about a lot of money. While the Times-Union repeatedly characterizes Jacksonville’s “pension crisis” as that of the $1.65 billion Police and Fire Pension Fund–it clearly extends well beyond that, involving a lot more money than that. It’s more like a near $2.5 billion dollar pension liability, not $1.65 billion. All three funds are insolvent, not just the PFPF. THAT is the story. Or at least it should be. “Secret negotiations” had nothing to do with it.
My second problem with the TU’s coverage of Jacksonville’s pension crisis is that the paper seems desperate to convince citizens that lavish benefits thrown at police officers and firefighters are the cause of the current crisis–even when it’s own analysis shows that these benefits are roughly equivalent to employees in surrounding jurisdictions. In a classic case of falsely portraying the extremes as the average, the Times-Union’s coverage has recently emphasized the retirement packages of a few senior employees and the director of the Police and Fire Pension Fund itself, without offering near as detailed a look –or hardly even mentioning–the average take-home retirement made by retired officers and fire fighters. I feel this was unfair. (Click table to enlarge; background story here).
The fact is, that employee benefits in Jacksonville are “comparable” to other jurisdictions. While the Cost of Living Adjustments (COLAs) are indeed higher in Jacksonville–except for COLAs, the benefits package of city employees is generally weaker than other jurisdictions and includes no Social Security. More importantly, these benefits were not negotiated in secret, but signed off upon by multiple Mayors and City Councils over many years. If these benefits were perceived as lavish or somehow unfair, plenty of people had plenty of time to say so and do something about it. But that’s not what happened, not because the COLAs are outrageous for the timeframe in which they were negotiated, but because in fact they are not the main issue. Only recently have the COLAs come to the attention of anyone. The main issue is Jacksonville’s pathologically low millage rate.
Key to Understanding the Crisis: Context Matters
A much more compelling explanation for the current crisis is the fact that the City of Jacksonville has chronically under-funded its overall civic operating budget with an inadequate millage rate–therein failing to pay for the promises made by elected officials over many years. The combination of already extremely low property taxation, a laissez-faire attitude about mounting pension debt, and the dramatic market crash of 2008, all exploded the unfunded liability. Had the City not lived on a knife-edge with pathologically-low millage rates across multiple decades, the crisis would be nowhere near as bad as it is today. Comparatively lower property values in Jacksonville also did not help and would justify a higher millage relative to the benefits promised.
Arguably the single most damaging factor in Jacksonville’s pension crisis is not lavish benefits, but the razor-edge millage rate relative to sometimes flat, sometimes rising property values–amid a laissez-faire attitude about unfunded liability across multiple mayoral administrations and empaneled city councils. But this debt was not driven by either lavish benefits nor “secrecy” in negotiations.
My remaining criticism is that the Times-Union has failed to thoroughly explore the issue of “pension holidays”–documented thoroughly in the JCCI report. While the pattern of tax-cuts shown above is consistent across administrations and city councils, the key to understanding the crisis overall is to examine pension fund reserves relative to taxation and property values at various points in time. See page 7 of JCCI’s 2009 report. With property values rising or stable, unfunded liability on pension debt remained an abstract concern. But the debt was still mounting. Throw into the mix, however, a bare-bones millage taxation rate, creeping pension debt, numerous instances of borrowing against the fund, and a sudden dramatic crash in property values, then you have the makings of a real crisis. It was not lavish benefits–it was a failure to fully fund the benefits agreed upon in public. Jacksonville has not just taken pension holidays–it has been on permanent vacation. But the Times-Union could have elaborated this point and advanced the discussion by pointing out periods of flat versus accelerating debt.
Jacksonville is taking the real “pension holiday” RIGHT NOW
As John Delaney explained in a previous interview, the Settlement Agreement he signed with PFPF increased benefits for employees while achieving a tax cut for the City. But these changes were achieved only by first reducing starting pay for city employees by 3% and reducing the overall number of city employees by about one third. This produced “compounded savings” over many years, generating more in savings than the employee benefits cost in the first place–at the time they were made. Where is that in the Times-Union coverage? You can only understand the pension crisis in Jacksonville relative to the circumstances of various administrations and contexts. The “pension crisis” is not just one story. There are many moving parts to the crisis–and it was not created by evil public employees. As Delaney points out, at any point in time, the term “crisis” is relative according to property values, the millage rate, stock market performance and retirements. Whoever is in charge has to manage it. And arguably right now, we are failing miserably.
In sum, the key to understanding Jacksonville’s pension crisis is not lavish benefits but the city’s longstanding pathologically-low millage rate and laissez-faire attitude about mounting pension debt. But that debt did not rise evenly over the years–and only recently has been exploding exponentially. My personal view is that more fiscal oversight of the city’s pension plans as a whole has been necessary all along–not just the PFPF. Simply demonizing the PFPF and its personnel is both counter-productive and inaccurate. The TU’s coverage of Jacksonville’s pension crisis treats the pension crisis as if it were a conspiracy committed by evil cops and fire fighters getting one over on tax payers. That’s simply not what happened. In fact, all the terms of the pension agreements were signed off upon by multiple elected leaders over many years.
Right now, Jacksonville needs to have the courage to raise its millage rate to a responsible level to get out in front of this debt. Doing so will save taxpayer money.