OFFICE OF THE CITY COUNCIL

CHERYL L. BROWN 117 WEST DUVAL STREET, SUITE 425

DIRECTOR 4^TH FLOOR, CITY HALL

OFFICE (904) 630-1452 JACKSONVILLE, FLORIDA 32202

FAX (904) 630-2906

E-MAIL: CLBROWN@coj.net

FINANCE COMMITTEE BUDGET HEARING MINUTES

August 10, 2012

9:00 a.m.

Location: City Council Chamber, 1^st floor, City Hall – St. James Building; 117 West Duval Street

In attendance:

John Crescimbeni, Greg Anderson (dep. 1:30 p.m.), Lori Boyer, Johnny Gaffney, Bill Gulliford, Stephen Joost and Clay Yarborough

Also: Council Members Matt Schellenberg, Reginald Brown, Warren Jones (arr. 9:25), Robin Lumb (arr. 9:22), Kimberly Daniels (arr. 9:18), Don Redman (arr. 9:44), Doyle Carter (arr. 10:45) and Ray Holt (arr. 11:57); Kirk Sherman and Kim Taylor – Council Auditor’s Office; Cindy Laquidara and Peggy Sidman – Office of General Counsel; Ronnie Belton, Glenn Hansen and Angela Moyer – Finance Department; Jessica Deal – Mayor’s Office; Jessica Stephens – Legislative Services Division; Jeff Clements – City Council Research Division, David Bauerlein – Florida Times-Union; David Chapman – Financial News and Daily Record; Kevin Meerschaert – WJCT; Maxine Person – Sheriff’s Office; Steve Cassada – Council Staff Services; Tony Bates – Concerned Taxpayers of Duval County;

Meeting Convened: 9:04 a.m.

Chairman Crescimbeni announced that the Special Council Contingency balance after yesterday’s meeting is a deficit of $7.2 million. Mr. Crescimbeni distributed copies of the City’s contract for its annual contribution to the Jacksonville Chamber of Commerce as discussed yesterday. Mr. Crescimbeni questioned Budget Officer Glenn Hansen about an e-mail report he had received from a City employee stating that employees of the Administration and Finance Department had been informed that some were being transferred to other departments and were given specific destinations, only to learn that the positions in their new departments were being eliminated. The chairman asked if the Information Technology Division and Fleet Operations had achieved the administration’s requested 10-15% reductions. Mr. Hansen will bring that information to a future meeting. Chairman Crescimbeni directed that responses to questions posed by the Finance Committee be brought back to the next meeting. Council Member Boyer questioned why the Administrative Services Division is being decentralized. Mr. Hansen responded that the administration feels that it makes better operational sense for administrative employees to be assigned to each department where they can develop expertise in that department’s operations.

References from this point refer to Council Auditor’s Handout for Meeting #2, August 10, 2012 unless otherwise noted.

Office of General Counsel

Council Auditor Kirk Sherman gave an overview of the Office of General Counsel’s (OGC) budget, noting that the office is eliminating 8 positions, most of which are associated with the worker’s compensation function which is being outsourced. General Counsel Cindy Laquidara reported that her office is experiencing a great deal of turnover and is finding it hard to hire new employees given the tremendous uncertainty surrounding the City’s finances. She is converting some clerical positions to paralegals to remove some of the paperwork burden from attorneys, but the City’s pay scale for paralegals can’t compete with the private sector so they are attracting few applicants.

Motion (Yarborough): pursuant to the City Charter, create an office of legislative counsel for the City Council and transfer the 5 employees of the OGC’s Land Use and Legislative Affairs groups to the City Council budget.

Chairman Crescimbeni discouraged undertaking administrative reorganizations in the budget ordinance. Council Member Joost stated that since the General Counsel has the power to issue legal opinions that are binding on all parts of the City government, having separate counsel may have no practical effect if all conflicts are resolved by a decision of the General Counsel. Chairman Crescimbeni stated that the portion of the Ordinance Code dealing with the hiring of outside counsel is very confusing and needs re-writing. General Counsel Cindy Laquidara stated that even if the Council were to create an office of legislative counsel, it could not simply move existing employees out of the General Counsel’s Office without their consent. Council Members Yarborough and Brown said that they would introduce separate legislation to create an office of legislative counsel.

Health Department

Tim Lawther, Assistant Director of the Duval County Health Department explained the department’s request for a $400,000 increase in local grant match funds for community-based health programs that divert patients from using hospital emergency rooms for their primary care needs. He also strongly opposed the budget’s proposed removal of funding for 3 security guards at the department’s 6^th Street buildings. The buildings are City-owned and the City has traditionally paid for the guard service there.

In response to a question from Council Member Boyer about how the City pre-authorizes grant applications that it will have to later match, Kirk Sherman reported that departments may apply for grants on their own, but then must get City Council approval to accept and utilize the grant funds and appropriate grant matches. Council Members Boyer and Gaffney requested additional information from the Health Department on its community health programs and data collection efforts.

Motion (Joost): on p. 5, restore $151,060 for security guard service to the Health Department budget but put the funds “below the line” pending receipt of further information on safety and liability issues at the facility – approved.

Council Member Boyer requested a tally of the aggregate amount of money the City spends on indigent care in all its forms – the direct Shands Jacksonville indigent care annual allocation, Medicaid match, Health Department grant matches, etc.

Jacksonville Human Rights Commission

In response to a question from Council Member Boyer about whether the administration had followed up on a pledge made last year in the budget hearing process to look at options for the future of the Human Rights Commission, including the possibility of folding it into another City department, CFO Ronnie Belton stated that the administration had considered those options and had resolved to leave the HRC as a stand-alone entity. HRC Executive Director Charlene Taylor-Hill answered questions from the committee about the commission’s operations, its relationships with state and federal anti-discrimination agencies, and a $100,000 ITD internal service charge increase in the proposed budget. Ms. Hill explained that the ITD charge is for a new case management system that ITD developed for the commission, but for which she was not expecting the charge. ITD had told her that the work had been done for another department and would be available to the HRC at no charge. The committee engaged in considerable discussion of the purpose and necessity of the Human Rights Commission.

Jacksonville Housing Finance Commission

In response to a question, Kirk Sherman explained that the Housing Finance Commission’s budget tends to be cyclical. The basic operating expenses remain the same from year to year, but the budget expands and contracts as housing bonds are issued and funds loaned and recouped. Elaine Spencer, Chief of the Housing and Community Development Division, explained the commission’s shared employees and the grant allocations that cover their salaries.

Motion (Anderson): on p. 10, delete $20,000 in salaries, plus associated employee benefit costs, and 2,080 part time hours from the Housing Finance Commission budget – approved.

General Employees’ Pension Plan

In response to a question, Patrick Greive, Chief Investment Officer in the Administration and Finance Department, reported that there were approximately 4,600 retirees and 6,100 active employees in the GEPP as of October 1, 2011. Mr. Greive discussed the plan’s investment management fees and legal expenses. Chairman Crescimbeni recommended that the plan discontinue sending paper checks to retirees, switch all payments to electronic fund transfer, and discontinue sending paper deposit slips to those retirees already receiving their funds by EFT.

Correctional Officers’ Pension Plan

Mr. Sherman reported that the Correctional Officers Pension Plan shares administrative personnel and expenses with the GEPP, which are allocated on a pro rata basis. The committee discussed COPP’s investment management firms, practices and costs. Council Member Gulliford requested comparative pension plan administration costs for the GEPP and COPP from around the state as was recently reported in the newspaper for the Police and Fire Pension Fund.

Police and Fire Pension Fund

Mr. Sherman noted that FY2013 is an option year (occuring once every 4 years) for the City to buy the Jake Godbold Building from the PFPF, which he strongly recommends. The City is paying 11.9% interest on its investment in the building and the ultimate purchase price continues to go up each year until the City exercises its option. He understands that the General Counsel is in the process of rendering a legal opinion on whether the City’s contract with the PFPF requires the City to purchase the building after 44 years, which was his understanding of the agreement. Mr. Sherman also strongly urged the committee to recommend that the City pay the full $122 million in unfunded accrued liability for the PFPF now and not put off the inevitable, despite the difficulty of the budget. The plan had 2,004 retirees and 2,890 active members as of October 1, 2011. CFO Ronnie Belton said the administration had some questions about the Godbold Building contract and was seeking clarification from the General Counsel’s office. A decision on purchasing the building in this option year will be made before the 2013 deadline.

Mr. Sherman noted that the General Counsel is working on a legal opinion on the legality of the PFPF Executive Director contributing to a special senior executive retirement fund while already receiving retirement benefits from the PFPF. John Keane, Executive Director of the fund, stated that he and the former Deputy Executive Director of the fund, the late Dick Cohee, were ineligible to be members of either the General Employees’ Pension Plan or the Florida Retirement System, so the PFPF board came up with an alternative pension plan for their particular situation. In response to a question from Chairman Crescimbeni about why the PFPF’s administrative expenses are higher than the those of the GEPP despite a smaller membership, Mr. Keane stated that a portion of the administrative costs of the GEPP And COPP are subsidized by the General Fund in the form of a portion of the salaries of administrative personnel in the Administration and Finance Department. Council Member Crescimbeni stated that he had received a ruling from the General Counsel yesterday saying that the City Council can control the administrative budget of the PFPF. Council Member Gulliford suggested that consideration be given to transferring real estate assets, such as the old county courthouse site on Bay Street, to the PFPF. He also suggested the need to consider the effect of the Godbold Building lease on the PFPF’s assets and unfunded liability before determining whether to purchase the building.

Motion (Yarborough): on p. 22, maintain the FY12 salaries for the five PFPF proposed to receive salary increases for FY13, reducing the PFPF salary budget by $86,544.

Motion (Joost): direct the Office of General Counsel to obtain clear legal finality (either by means of a binding legal opinion or through court action) to determine whether the City Council can or cannot control the PFPF’s administrative costs budget.

John Keane stated that the PFPF is legally obligated under its 30-year agreement with the City to report its budget to the Council; the Council has no substantive control over that budget. General Counsel Cindy Laquidara said that the City Council can only control the amount of the overall budget for the fund, but cannot set specific salaries or cap legal fees for the fund. The Council determines a reasonable budget amount for fund administration; the PFPF board sets the specifics within that overall appropriation.

Motion (Boyer): amend the Yarborough motion to reduce the salary amount (and associated benefits) for the PFPF Deputy Director position the $86,198 if the fund hires a new employee to fill that position.

Cindy Laquidara stated that she believes that if the City Council were to make an unreasonable decision on PFPF administrative costs then the fund’s board would have a legal cause of action to compel the City Council appropriate a reasonable amount.

Motion (Yarborough): on p. 24, amend the original Yarborough motion to appropriate $650,000 for PFPF administrative costs and put that amount “below the line” – approved.

In response to a question raised earlier in the day, Budget Officer Glenn Hansen reported that federal law prohibits the City from requiring all retirees to receive their pension benefits via electronic fund transfer. The City must provide a paper check if requested. Mr. Hansen also reported that the City is not required to fund the security guards for the Health Department facility discussed earlier.

Meeting adjourned: 1:47 p.m.

Minutes: Jeff Clements, Council Research Division

8.14.12 Posted: 6:00 p.m.

Tape: Finance budget hearing 8.10.12

Legislative Services Division

Attachments: Council Auditor’s Handout for Meeting #2, August 10, 2012

8.10.12