OFFICE OF THE CITY COUNCIL
CHERYL L. BROWN 117 WEST
DUVAL STREET, SUITE 425
DIRECTOR 4TH FLOOR, CITY
HALL
OFFICE (904) 630-1452 JACKSONVILLE, FLORIDA 32202
FAX (904) 630-2906
E-MAIL: CLBROWN@coj.net
Joint Rules and Finance Committee
Meeting Minutes
November 24, 2014
10:00 a.m.
Location: City Council Chamber, 1st floor, City Hall –
St. James Building; 117 West Duval Street,
Finance Committee: Council Members Richard Clark (Chair),
Matt Schellenberg, Lori Boyer, Reggie Brown (arr. 10:14), John Crescimbeni,
Kimberly Daniels (arr. 10:43), Bill Gulliford, Ray Holt (arr. 10:41), Jim Love
(temporary appointment to replace excused committee member Doyle Carter), and
Council President Clay Yarborough Excused: Doyle Carter
Rules Committee: Council Members Bill Gulliford (Chair), Johnny Gaffney (arr. 10.55);
Stephen Joost, Robin Lumb, Don Redman (arr. 10:11), Matt Schellenberg, Council
President Clay Yarborough, Denise Lee (temporary
appointment to replace excused committee member Warren Jones Excused:
Warren Jones
Also: Council
Member Greg Anderson (arr. 12:45 p.m.); Kirk Sherman, Kyle Billy, Phillip Peterson
and Brian Parks – Council Auditor’s Office; Juliette Williams – Legislative
Services Division; Jason Gabriel, Peggy Sidman, Paige Johnston, Steve Durden –
Office of General Counsel; Jeff Clements – Council Research Division; Chris
Hand, Teresa Eichner and Margo Klosterman – Mayor’s Office; Jim Linn – pension
counsel; Ronnie Belton, Glenn Hansen and Joey Greive – Finance Department
Meeting Convened: 10:04 a.m.
2014-701
(amending Ordinance Code regarding powers of Fire Marshal to declare emergency
and order evacuation of premises for unsafe or hazardous conditions) – deferred.
2014-704
(resolution encouraging Council President to consider replacing current City
Council appointees to the Police and Fire Pension Fund board of trustees) – deferred.
2014-386 (amending
the Police and Fire Pension Fund benefits)
In response to a question,
Council Auditor Kirk Sherman stated that is office has made a cursory review of
the Carlucci/Appleby proposal for funding a pay-down of the PFPF unfunded
accrued liability but is awaiting further information (actuarial tables) to do
a full analysis. Finance Chairman Richard Clark said it was not his intention
to take up that funding proposal for discussion today. The committees will work
through the proposed council member amendments and see how far they get.
Council Member Schellenberg asked the Council Auditor to accompany JEA
representatives on their upcoming trip to New York to discuss potential JEA
funding contributions for pension liability pay-down to hear the discussion
first-hand and ask clarifying questions if necessary.
Gulliford amendment #1
Council Member Lumb framed
the debate over potential amendments to the proposed agreement as an exercise
in practical politics – how far does the Council think it can amend the deal as
negotiated before the Police and Fire Pension Fund board will refuse the
changes and scuttle the agreement? General Counsel Jason Gabriel clarified that
the provision in the agreement regarding Council’s 10-year waiver of its
statutory right to unilaterally impose a benefit upon collective bargaining
impasse applies only to setting pension benefits; all other collective
bargaining aspects (salary, working conditions, etc.) are still limited to a
maximum of 3 years pursuant to state law and are subject to current impasse
procedures and rights. Mayor’s Chief of Staff Chris Hand said that it was the
intent of the parties during the negotiation process that once the agreement is
signed by all parties, the PFPF board will remove itself from the negotiating
process and the City will deal directly with the police and firefighter unions.
Council Member Crescimbeni suggested that the City seek a declaratory judgment on
the legal status of the so-called “30-year agreement” and then proceed from
that answer. He believes the Council’s authority to impose benefits at the end
of an impasse process is a very valuable power and should not be bargained
away. In response to a question from Council Member Lumb, Jason Gabriel stated
that the rulings in the Denton v. City of
Jacksonville court case dealt only with the application of the Government
in the Sunshine Law to the 2013 mediated settlement and not to the current
publicly negotiated agreement.
Mr. Gabriel stated that
litigation to resolve the status of the “30-year agreement” could take 3 to 5
years and that the Council could continue to collectively bargain over pensions
along with salary and other benefits and working conditions along the way.
Council Member Joost advocated for agreeing to the proposed agreement as a fair
settlement that brings clarity and certainty for the next 10 years, which will
save tens of millions of dollars. Council Members Crescimbeni, Boyer, Brown,
Schellenberg and Gulliford requested the General Counsel’s Office to draft
legislation for their introduction directing the filing of legal action for a
declaratory judgment on the enforceability of the current agreement. Council
members expressed varying opinions about whether it would be better to accept
the negotiated agreement or to take the status of the “30-year agreement” to
court. Council Member Gulliford stated that the Police and Fire Pension Fund
board has not yet ratified the agreement and urged the council members not to
bind a future council’s hands with a 10-year agreement as the current council
has had its hands bound by an agreement of previous councils.
Gulliford amendment #1: agreement
expires on September 30, 2017 or 3 years from effective start date.
Finance –
failed 5-5 (President Yarborough voting, Council Member Love temporarily
appointed to replace excused member Doyle Carter)
Rules –
failed 3-4 (President Yarborough voting)
Gulliford amendment #2: COLA shall be the lesser of 1.5% or the Social
Security COLA, beginning January 1 following employment separation.
The committees debated
whether amending the cost of living allowance (COLA) would be a “deal breaker”
with the PFPF board and discussed what would constitute a fair but not overly
generous COLA. Lumb amendment: amend
to provide that the PFPF COLA is indexed to the Social Security annual COLA
with a maximum annual increase of 4%, with the initiation of the COLA benefit
being delayed until 5 years after an employee’s retirement or upon the retiree
reaching age 55, whichever comes first; with the revised COLA applying to new
hires and to current employees with less than 20 years of service.
Boyer friendly amendment to Lumb amendment: clarify that all amendments will apply to both the
agreement and to the Ordinance Code and any other documents which embody the
terms of the agreement
Gulliford #2 with Lumb amendment and Boyer friendly
amendment: Finance – approved 8-2; Rules
– approved 5-2
Gulliford amendment #3: Strike the provision that City Council shall not take
unilateral action on any matter in conflict with this Agreement.
The committees debated the
value of Council retaining the power to unilaterally impose a benefit at the
conclusion of collective bargaining and an impasse proceeding and whether or
not this amendment would be a “deal breaker” with the PFPF board. Jason Gabriel
stated that the PFPF board had agreed to the pension plan governance and
funding changes so the only real effect of the impasse authority waiver is with
regard to pension benefits. He noted that all matters which by law are a
legitimate subject of collective bargaining can still be bargained; the Council
would only be waiving its right to unilaterally impose a benefit change upon
impasse for a period of time.
Boyer friendly amendment: clarify that pension benefits can be negotiated every
3 years (no change from current status, per Jason Gabriel)
Gulliford #3
with Boyer friendly amendment: Finance
– approved 8-2; Rules – approved 4-3
Gulliford #4: PFPF
pension trustees shall have 10 years of professional finance experience;
trustees shall be limited to two 4-year terms; trustees shall not be a
participant in or enrolled in a public pension, either government or
institutional.
Crescimbeni friendly amendment: clarify that all City Council-confirmed appointees are
term limited; clarify that “public pension” means one of the 3 City pension
plans.
Gulliford #4 with the Crescimbeni friendly amendment:
Finance – approved 10-0; Rules – approved 7-0
Gulliford amendment #5: strike reference to freezing the current Senior Staff
Pension Plan and providing participants with benefits equal to or less than the
FRS Special Risk Plan
In response to a question
from Council Member Gulliford, Jason Gabriel acknowledged that former General
Counsel Cindy Laquidara had ruled that the Senior Staff Pension Plan was not an
authorized retirement plan, and Mr. Gulliford expressed his belief that the
agreement should not attempt to preserve that illegal plan. Council Member
Crescimbeni said he understood that an attorney in the General Counsel’s Office
had, shortly after the Laquidara ruling, prepared a legal filing that would
have clarified that status of that plan, but the filing of the challenge never
took place. He asked Mr. Gabriel to research whether the City can recover the
assets of the Senior Staff Pension Plan and can take action against the law
firm that provided the opinion to the PFPF board that such a plan was legal.
Council Member Boyer pointed out Sec. 108.504 of the Ordinance Code which says
that City Council may direct the General Counsel to conduct civil litigation.
Gulliford #5:
Finance – approved 7-2; Rules – approved 7-0
The joint committees were in recess from 12:55 to 1:23
p.m.
Gulliford amendment #6: Strike paragraphs 3, 4 and 5 of Subpart D of the
agreement (Additional Unfunded Liability Payments); insert language that the City will continue seeking a
permanent funding source for the UAAL with a target of $40 million per year or
$400 million over 10 years.
Council Member Clark
advocated for stripping out any mention of the unfunded accrued liability from
2014-386 and dealing with funding that liability in separate legislation. He
does not believe that either the additional JEA contribution proposal or the
new City/JEA bonding proposal are viable solutions to the problem. Council
Member Joost noted that the City’s intergovernmental agreement with the JEA
expires in 2016 and with it the guarantee that the City will receive at least a
$2.5 million increase in annual contribution from the JEA regardless of utility
sales; that arrangement will be subject to new negotiations between the JEA and
the City. Council Member Lumb noted the availability of several potential
funding options, including the adoption of a fire/EMS sales tax, an increase in
the JEA franchise fee, or asking the Florida Legislature to authorize a new
local option sales tax to local governments specifically to deal with their
unfunded pension liabilities. It was noted that a change in the JEA franchise
fee must, according to JEA’s Charter (Article 21, City Charter), be initiated
by the Mayor and approved by a 2/3 majority vote of City Council.
Council Member Daniels asked
former Council President Matt Carlucci to come to the podium and explain the
financing arrangement that he and Charlie Appleby, a member of the Mayor’s
Retirement Reform Task Force, have been developing that has been reported in
the media. Council Member Lee strongly objected to the presentation as being
not germane to the Gulliford amendment.
Gulliford amendment: Ord. 2014-386 shall not become effective until such time as a
permanent funding source has been advanced by the Mayor and adopted by City
Council that provides for a minimum of $40 million per year to be used solely
to reduce the PFPF’s unfunded liability over 10 consecutive years.
Joost friendly amendment: $40 million or the net present value equivalent
thereof (equaling $400 million over 10 years)
Boyer friendly amendment: the effective date of all provisions of the
agreement shall be when a funding source for the unfunded liability is
identified and adopted by Council.
Gulliford amendment #6 as thrice amended: Finance –
approved 8-0; Rules – approved 4-0
Boyer amendments #1 and #2: Withdrawn – duplicated unsuccessful Gulliford
amendment #1
Council Member Boyer
suggested that the bill be amended to remove any references to the so-called
“30-year agreement” so as to eliminate any potential future interpretation that
2014-386 in any way ratifies or endorses any aspects of that agreement.
Boyer new amendment: clarify that the Council is approving a new agreement,
and is not ratifying or otherwise endorsing any aspects of the 30-year
agreement (i.e. by removing references to the 30-year agreement from Whereas clauses)
Finance – approved
8-0; Rules – approved 5-0
Schellenberg amendments #1 – 5: deferred in the absence of the sponsor
The committees agreed to hold
another joint meeting on Tuesday, November 25th at 3:00 p.m. to
continue consideration of amendments.
In response to a question
from Council Member Boyer about whether the City could make prospective changes
to the DROP benefits of current employees who have not yet enrolled in the DROP
plan, pension expert Jim Linn stated that the City could, but there are
persuasive arguments both ways. In response to another question about whether
the City could change the rate of return percentage or the length of time over
which an employee could eventually draw on their DROP account after the
employee is enrolled in DROP, Mr. Linn said that once an employee has entered
the DROP plan then their benefit is fixed.
Crescimbeni amendment #1: add a provision requiring the Executive Director of
the PFPF to file a Form 1 financial disclosure form
Finance –
approved 7-0; Rules – approved 5-0
Crescimbeni amendment #2: add a requirement that once the City Council passes
2014-386, the PFPF board must ratify it by January 1, 2015 or it becomes null
and void.
Joost friendly amendment: change the date to January 15, 2015
Finance –
approved 7-0; Rules – approved 5-0
Meeting Adjourned: 3:01 p.m.
Minutes: Jeff Clements, Council Research Division
11.25.14 Posted 11:00 a.m.
Tapes: Special CIP Committee – LSD
11.25.14
Materials: Special CIP Committee handouts
11.25.14