BRADENTON, Fla. - Years after Jacksonville's failure to implement pension reform dinged its credit rating, Florida' largest city finally reached a deal expected to save $1.5 billion over 30 years.
Mayor Alvin Brown and the Jacksonville Police and Fire Pension Fund Board of Trustees signed off on an agreement Friday, less than two weeks before Brown leaves office.
The City Council approved the pact earlier this month, after rejecting two prior agreements since 2013.
Under the deal, benefits for new employees and those with less than 20 years of service would change. It also commits Jacksonville to paying a total of $350 million over 13 years - payments over the annual required contributions - to address a $1.7 billion unfunded liability.
"This is a big win for Jacksonville, not just on retirement reform but also for the city's future prosperity," said Brown, a Democrat. "This agreement took a true team effort from various leaders across the city, all focused on what's best for our community."
The deal is a "meaningful compromise" that protects taxpayers and respects police and fire employees, he said.
The city hasn't identified how the additional payments will be funded, though a prior proposal deal to increase contributions from the city's utility, JEA, remains on the table as well as other options such as a potential sales tax increase.
Brown's last day in office is June 30. He was unseated in the May 19 election by Republican Lenny Curry, a businessman and accountant.
Jacksonville's extra payments phase in starting at $5 million the first year, $10 million the second year, $15 million the third year, and then escalate to $32 million a year over the next decade.
The Police and Fire Pension Fund trustees will also make certain contributions.
"This creates the platform going forward," said Walt Bussells, chairman of the board of trustees. "There is no doubt in my mind this reform creates the platform, the sustainable platform, that financially - as tough as it is - we can begin to restore what's been lost to our members."
The inability of Jacksonville to achieve measurable pension reform has taken a toll on the city's credit rating.
Following the council's first rejection of a plan in 2013, Moody's Investors Service downgraded the city's issuer rating to Aa2 from Aa1 primarily because of growing pension payments that negatively affected $2.4 billion dollars of debt.
A second vote rejecting a plan in March was a credit negative, Moody's said.
While the city has historically contributed at or near the annual required contribution as required by state law, the plan's unfunded liabilities grew substantially due to worse-than-expected investment performance, benefit increases, and actuarial factors such as the deferred recognition of asset losses when calculating actuarial funding requirements.
Curry's administration and the council will determine how to fund accelerated catch-up liability payments promised in the reform measure. Curry has previously said that he would not support raising property taxes or using debt to finance the city's liability.