The Jacksonville Electric Authority (JEA) has agreed to help the city in its efforts to fund its pension system – but there are a few strings attached.
JEA would make a one-time, $120 million payment to the city’s pension fund. In return, JEA wants the city to slash the utility’s future contributions and let it create its own pension plan for employees. (Since JEA is a public utility, it’s employees belong to the city’s pension plan.)
More from First Coast News:
The [JEA] board voted unanimously to support the deal on Tuesday following little debate, but months of work studying to determine if it was a good move for the authority.
The JEA, in turn for providing $120 million, would see its annual contributions to the city slashed plus allow the JEA to break away and create its own pension plan for its employees.
Mayor Alvin Brown has touted the JEA option as a good move because the city could match the $120 million to make a lump sump payment to drive down the pension obligations that push $1.6 billion.
The Jacksonville City Council still needs to approve the agreement.
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Jacksonville public utility company JEA is back on board with the city’s pension reform plan.
The company is helping to finance much of the city’s current reform proposal; JEA will make a $120 million lump sum payments to the city’s Police and Fire Pension Fund.
Last week, it was unclear whether JEA would go through with the plan.
More from the Florida Times-Union:
After a series of fast-paced negotiations between Mayor Alvin Brown’s administration and top JEA officials, prompted by a public rift last month, a plan to use the financial wherewithal of JEA and the city to pay the hefty price tag of Jacksonville pension reform is back on track.
JEA audit and finance committee members Thursday unanimously approved an agreement that stipulates the utility would — in exchange for financial and administrative concessions — make a $120 million lump sum payment to the city. Brown wants the city to use that payment, plus an additional $120 million the city would borrow, to more quickly pay down the $1.62 billion debt to the Police and Fire Pension Fund.
JEA’s annual general fund contribution currently increases by $2.5 million each year, maxing out at a total $114.2 million in 2016. That contribution formula — which expires next year — means that even as JEA’s revenues have declined in recent years, its contribution to the city has ballooned, a gulf that has become a top concern for JEA officials in recent years.
In exchange for borrowing $120 million for pension reform, however, the city had agreed to, in broad terms, reduce those JEA contributions by $2.5 million for the next several years and ultimately revert to a formula linked to JEA revenues.
JEA’s participation isn’t yet fully guaranteed; the utility’s board will meet later this month to vote on its participation.
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