Sheriff’s wish list – Remove unfunded pension liability

City needs to deal with “elephant in the room”

By Kate A. Hallock
Resident Community News

When it comes to your wish list of city spending, where you put your financial priorities is directly related to what you believe is the number one function of local government.
In the case of the current budget battle, Sheriff John Rutherford wants residents to know that the good news is that while crime in Jacksonville is at its lowest in 41 years, the bad news is that the number of officers is also at its lowest since he took office in 2003.

Should Mayor Alvin Brown’s 14 percent across-the-board budget cuts be enforced, Sheriff Rutherford would be forced to cut hundreds of officers from the current roster of 1,603 in order to meet the mandatory $29 million reduction in his budget – more bad news.

A significant portion – 26 percent – of the Jacksonville Sheriff’s Office (JSO) 2012-2013 $366.76 million budget included a $96.4 million unfunded pension liability. It’s expected that the 2013-2014 budget won’t be much different, including the unfunded liability, which is part of the line item for personnel.

In a report published by the Jacksonville Community Council Inc. (JCCI) in early 2012, an advocacy task force on city finances chaired by J.F. Bryan IV indicated that the largest threat to the City’s financial health was the “huge unfunded liability in the employee pension programs, last reported to be over $1.6 billion and requiring an ever greater funding contribution from the City with each passing year.” The report went on to state that the amount required to fund the pension plans (for FY2011-2012) was nearly 12 percent of the entire General Fund budget and, if left unattended, was expected to grow to $180 million by 2016 and to $350 million by 2026.

Furthermore, in that Final Implementation Report, it stated that the “true elephant in the room” in regard to the City’s financial crisis was the Unfunded Actuarial Accrued Liability (UAAL) which, if not sufficiently funded, will cause the City to “eventually drown in a sea of pension debt.”

“It’s important to see how the pension issue is driving the whole budget discussion, not just for the Sheriff’s office, but for the whole city,” said Rutherford at a recent presentation called “The Future of Public Safety in Jacksonville – A Thoughtful Look at the City’s Budget, Pension and the Unfunded Liability.”

At the presentation the Sheriff shared statistics of all kinds. From populations and crime rates to millage rates and officer response times among top U.S. and major Florida cities, Rutherford said that Jacksonville ranks high where you don’t want it to because, in part, it ranks the lowest in millage rates (10.0353) among Florida’s largest cities and Northeast Florida counties. “We could have raised another 2, 2.5 mills and still be tied with the bottom,” he noted.

The pensions subcommittee of the two-year JCCI-sponsored task force presented a series of options to then-Mayor John Peyton and City Council. One of the many options proposed included a dedicated millage amount, such as one to two mills, to the unfunded liability.

Most of the growth in NE Florida has been in St. Johns County, which has the highest millage at 21.8822. “People want to live in a community that has the quality of life they’re looking for, not just low taxes,” stated Rutherford. “It’s not just about low taxes. It’s a balancing act.”

A low millage affects all budgets and for the JSO, that results in the lowest police budget among major cities in Florida with a per capita spending of $326; a combined city/county spend would be $310 per capita. “And that does not include the unfunded pension liability that is in the JSO budget,” the Sheriff said.

“It’s such a driver [the unfunded pension liability], it creates an unrealistic picture,” Rutherford continued. “The JSO’s portion of that unfunded liability is projected to be $96.4 million on an actual $2.8 billion unfunded liability for all City employee pension programs combined.”

“The pension plan proposed by the Mayor was insufficient because it didn’t address the pension liability,” declared Rutherford. “It’s disingenuous to try to balance the $96.4 million pension hole on the backs of the men and women’s benefits.”

The Sheriff wants to make the budget more transparent; and he wants to have the pension liability pulled out of his budget. “The JSO is lean and efficient; it was the first law enforcement agency in the country to go Lean Six Sigma,” Rutherford said. “This is not about the pension benefits; it’s about the unfunded liability.” [Lean Six Sigma is a managerial concept that eliminates in seven kinds of wastes (Transportation, Inventory, Motion, Waiting, Overproduction, Over-processing and Defects).]

At a Sheriff’s Advisory Committee meeting in Ortega last month, Undersheriff Dwain Senterfitt presented the same concerns. “The JSO prepared the budget they needed to run the office; it was a realistic plan, not a wish list or a fantasy,” he told the audience.

According to Senterfitt, the problem with the Mayor’s budget was the decision to have across-the-board cuts, putting law enforcement in the same category as other services, when it comes to funding or cutting.

“That’s the easy way out, not the right way to find cuts. You have to prioritize,” Senterfitt noted. “The number one function of local government is public safety.”

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