2013-3817 Ordinance ORDINANCE IMPLEMENTING PENSION PROVISIONS OF
2012-2015 IAFF AND FOP COLLECTIVE BARGAINING AGREEMENTS
ORDINANCE NO. 2013-3817
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, AMENDING PART I,
SUBPART B, ARTICLE IX, RELATED SPECIAL ACTS, OF THE
MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM
FOR DISABILITY AND RETIREMENT OF MEMBERS OF
POLICE AND FIRE DEPARTMENTS"; IMPLEMENTING
PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING
AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF
MIAMI BEACH, IAFF LOCAL 1510, AND MIAMI BEACH
FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS LODGE
NO. 8; AMENDING SECTION 62 ENTITLED "DEFINITIONS";
AMENDING SECTION 63 ENTITLED "SOURCE OF MONIES
FOR FUND; COMPUTATION OF LIABILITY; USE AND
INVESTMENT OF FUND"; AMENDING SECTION 65 ENTITLED
"COMPUTATION OF CREDITABLE SERVICE; SERVICE
RECORD"; AMENDING SECTION 66 ENTITLED "SERVICE
AND DISABILITY BENEFITS GENERALLY"; AMENDING
SECTION 67 ENTITLED "COST OF LIVING ADJUSTMENT";
AMENDING SECTION 79 ENTITLED "DEFERRED
RETIREMENT OPTION PLAN"; AMENDING SECTION 82
ENTITLED "MILITARY SERVICE"; CREATING A NEW
SECTION 88 ENTITLED "BENEFITS FOR MEMBERS HIRED ON
OR AFTER SEPTEMBER 30 2013, PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN
CONFLICT THEREWITH; AND PROVIDING FOR AN
EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA:
Section 1. Effective September 30, 2013, Section 62 of Part 1, Subpart B, Article IX,
Related Special Acts of the Miami Beach City Code, is amended to read:
Section 62. Definitions
The following words, terms and phrases, when used in this article, shall have the
meanings ascribed to them in this section, except where the context clearly indicates a
different meaning:
Employee means any full time employee who is certified as a firefighter as a condition of
employment in accordance with section 633.35, Florida Statutes, and whose duty it is to
extinguish fires, to protect life or to protect property, and any full time employee who is
certified or required to be certified as a law enforcement officer in compliance with
section 943.1395, Florida Statutes, who is vested with authority to bear arms and make
arrests, and whose primary responsibility is the prevention and detection of crime or the
enforcement of the penal, criminal, traffic, or highway laws of the state.
the G,ty 7 having n sank in s�
s eh depaftmet ethef than reiyi is rank ethef than the.,afid elassifieatien ef seheel guar-d. Unless the), have never- held elassified pesifiefis with the
City,
pufpeses of this System.
Salary, for the purpose of determining member contributions under this System, means
the member's base pay, longevity pay, overtime, shift differential and extra compensation
allowance such as uniform allowance, before reduction for the picked-up member
contributions and before reduction for any amounts contributed in accordance with
sections 125 or 457 of the Internal Revenue Code. Notwithstanding the preceding
sentence, effective September 30, 2013, Salary shall exclude overtime pay in excess of
300 hours per calendar year, payments for unused sick and vacation leave, hazardous
duty pay (when paid), payments relating to the domestic partner tax credit
reimbursement, and payments to police officer members for voluntarily participating in a
physical fitness assessment program offered by the City. However, for periods prior to
October 1, 2000 and solely with respect to May 1993 Members, the term "Salary" shall
refer only to base pay and longevity pay, excluding any payment of overtime, shift
differential or extra compensation allowance such as uniform allowance, but determined
before reduction for the picked-up member contributions and before reduction for any
amounts contributed in accordance with sections 125 or 457 of the Internal Revenue
Code. For purposes of determining the amount of a member's benefit under the System,
Salary shall mean the amount determined under this section as modified by the provisions
of section 66 under which the benefit is being provided. Notwithstanding anything herein
to the contrary, a member's Salary taken into account for any purpose under this System,
including for purposes of determining the amount of a member's benefit and his
contribution to this System, shall not exceed the limitation set forth in section 401(a)(17)
of the Internal Revenue Code as adjusted for changes in the cost of living by the
Secretary of the Treasury of the United States. However, for employees who were
members before the first plan year beginning after December 31, 1995, the limitation on
Salary shall not be less than the amount which was allowed to be taken into account
under this article as in effect on July 1, 1993.
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Section 2. Section 63 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Sec. 63. Source of moneys for fund; computation of liability; use and investment of
fund.
(b) Each member of this System hired before September 30, 2013 shall contribute 10%
of his Salary to the Fund. Each member of this System hired on or after September 30,
2013 shall contribute 10.5% of his Salary to the Fund. The City shall, solely for purposes
of complying with section 414(h) of the Internal Revenue Code, pick up contributions
required to be made by the members under this System. The contributions so picked up
shall be treated as employer contributions for purposes of determining their tax treatment
under the Internal Revenue Code.
(c) All computations of liability in connection with the System shall be based on tables
and rates approved by the Board. The Board shall designate an actuary for the System
who shall recommend such tables and rates for adoption by the Board. The actuary
designated by the Board, on the basis of such tables and rates, shall recommend to the
Board the amounts required to be paid into the System by the City under subsection (a) of
this section. Effective September 30, 2013, there shall be an experience study of each of
the City's pension plans' actuarial assumptions performed by an actuary selected by the
City. The experience study should be conducted at least once every three years to
compare actual experience to the assumptions. The actuary selected by the City shall
make recommendations for any changes in assumptions based on the results of the
experience study, and any deviations from those assumptions by the pension boards shall
be justified to the City Commission. Effective September 30, 2013, the City shall require
5, 10 and 20 year projections of required pension contributions as part of the annual
actuarial valuations for each of the City's pension plans. These projections shall be based
on the current actuarial assumptions for each plan. The projections shall be updated to
reflect the cost of any proposed benefit enhancement before the City Commission agrees
to the enhancement. The cost of these studies shall be funded separately from the annual
contribution to the pension plan.
(d) There shall be a complete actuarial evaluation prepared by the actuary at least every
three years, and the City shall make such adjustments in its contributions as shall be
shown to be required by such actuarial evaluation. The money required to meet all the
obligations of this System over and above the personal contributions from members, is a
liability and obligation of the City. The expenses of the System shall not be separately
budgeted so long as the method is permitted by law. The City commission shall levy
annually, in the manner provided by law, upon all taxable property within the City, such
millage on the assessed valuation thereof as is necessary to produce the amounts required
to be contributed by the City to this System. Effective September 30, 2013, the City shall
fund at least the normal cost of pension. If this exceeds the amount of the actuarially
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determined annual required contribution, the excess should be placed in a pension
stabilization fund, to be made available for future pension shortfalls.
Section 3. Section 65 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Sec. 65. Computation of creditable service; service record.
(a) A member's Creditable Service shall include all periods of employment as an
Employee for which contributions have been made to this System in accordance with
subsection (b) below and section 63(b)
, together
with all service in the uniformed services of the United States required to be included
under section 82; provided, however, that only periods of service in the uniformed
services of the United States for which the member makes the member contributions as
provided for in section 82 shall be Creditable Service for purposes of computing the
amount of the member's benefit from the System. Notwithstanding any provision to the
contrary, in no event shall the same period of service be counted more than once as
Creditable Service under this System, and in no event shall a member receive Creditable
Service under this System for any period of service for which credit has been received
under any other defined benefit retirement plan established by the City.
(b) Employees who become members of this System in order to receive credit for service
rendered prior to their becoming a member shall make contributions to the Fund in the
amount such member would have contributed had he been a member during the period of
service for which credit is being purchased. In order to receive such credit, employees
shall make payment within six months after becoming a member or within such other
period as may be provided in a bargaining agreement covering the member. No
Creditable Service shall be provided under this System for periods of service in another
City retirement plan, nor shall any transfer of service or credit from another City_
retirement plan to this System be allowed. Notwithstanding the fefegei , empleyee
whe tfansfefs te this System whereby the aeeumulated total efedit in any ethe
t��rntom ef the City in tvn r�nfo rvo r� te in CcsJCeZT, jnr� ns-�d in }hntPpl-v1 tCI�IC
efeditable ....v .., time in sueh effief system shall be eensidefed Gfeditable Sen,iee time
under- this System, and sue.h. empleyee need make ne additional eentr-ibutien fef finle
e edited
(c) The Board shall establish the service record of all employees who may be entitled to
participate in the benefits of this System, and shall keep a record thereof.
(d) Members with ten (10) of fnefe yeafs of efeditable sen,i Ptifehase additional
efeditabl.. 1,,1A V undef the System fef tip te two (2y-yefflrs. Of ftill time publie safety
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member- is not entitled te V%, . benefit for- sueh ser-viee ti der- anether- pension pleai,
ef aeeftied siek and/ef annual leave, valued c-A the effipleyee's heufly fate a4 the time ef
must be eempleted within thii4y six (36) menths fellewing September- > > er-within
within the thifty six menth pefied, he/she shall net be eligible fer- sueh pur-ehase in the
future.
City empleyment pufsuafit te seetien 82(b), must be eempleted withiff thifty six (36)
> > of within thk4y six (36) ment
following a i
of-c`1ddifienal er—editable ab1A V 2£$-&S-pT-evided in see iO ( within +L,o
•
Section 4. Section 66 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 66. Service and disability benefits generally.
(a) The Board shall, upon application retire members meeting any one of the following
requirements:
(1) The attainment of age 50.
(2) Permanent and total disability incurred in line of duty in the police or fire
department, or in the unclassified service as provided in section 70, irrespective of the
number of years of Creditable Service;.
(3) Permanent and total disability incurred other than in the line of duty, after five years
of Creditable Service.
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(4). The sum of the member's age and Creditable Service equals at least 70 and the
member retires on or after October 1, 1998; provided, effective September 30, 2013, a
member hired before July 14, 2010 must attain age 47 to be eligible for retirement under
this paragraph (4); and a member hired on or after July 14, 2010 must attain age 48 to be
eligible for retirement under this paragraph (4); and provided further, any member hired
prior to July 14, 2010 who completes a buyback of prior Creditable Service prior to
September 30, 2013 and reaches the maximum pension benefit of 85% of average
monthly Salary prior to attaining age 47, the employee contribution shall cease on the
date such employee reaches the 85% maximum pension benefit, and his/her final average
monthly will be frozen on the same date. Notwithstanding the
any police officer member hired pursuant to a consent decree may retire when the sum of
the member's age and Creditable Service equals at least 70.
(5) Only for periods prior to October 1, 2000 and only in the case of a May 1993
Member, the attainment of age 55 with at least 10 years of Creditable Service.
(b) A.member who attains eligibility for retirement under subsection (a) above on or
before September 30, 2013,
X000, shall be entitled to receive upon retirement under subsection (a), a monthly
pension payable for life equal to:
(1) Three percent of the member's average monthly Salary for each year of the member's
first 15 years of Creditable Service, being computed as to a part of a year on a pro rata
basis to the nearest month; plus
(2) Four percent of the member's average monthly Salary for each year of the member's
Creditable Service in excess of 15 years, being computed as to a part of a year on a pro
rata basis to the nearest month.
(c) A member who does not attain eligibility for retirement under subsection (a) above
on or before September 30, 2013 shall be entitled to receive upon retirement under
subsection(a), a monthly pension payable for life equal to:
(1) Three percent of the member's average monthly alary for each year of the member's
first 20 years of Creditable Service, being computed as to a part of a year on a pro rata
basis to the nearest month; provided in no event shall a member's benefit multiplier for
Creditable Service earned before October 1, 2013 be reduced; plus
(2) Four percent of the member's average monthly Salary for each year of the member's
Creditable Service in excess of 20 years, being_computed as to a part of a year on a pro
rata basis to the nearest month.
Y May Member--who Tefi to OeCeber 2000, shall be-entitled-+CD-tGG�YC
r-e-ment u.n.def subseefien (a) a ffienthly pensien payable for- life equal te thfee
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per-eent ef the member-'s aver-age fneath4y Salary for-eaeh yearr of the fnember-'s Creditable
Ser-viee, being eemputed as to paFt of a year-on a pro rata basis te the nearest me
(d) For purposes of determining a member's benefit, the average monthly Salary of
members who attains eligibility for retirement under subsection (a) above on or before
September 30, 2015 the membe shall be based on the average of the two highest-paid
years of the member prior to the date of retirement or termination, or the average of the
last two paid years of the member prior to the date of retirement or termination,
whichever produces the greater benefit for members employed by the City before May
19, 1993, and shall be based on the average of the three highest paid years of the member
prior to the date of of retirement or termination for May 1993 Members. Effective
September 30, 2015, the average monthly salary for members hired before July 14, 2010
who do not attain eli ig bility for retirement under subsection (a) above on or before
September 30, 2015, shall be based on the average of the three highest paid years of the
member prior to the date of retirement or termination. Members hired on or after July 14,
2010 but prior to September 30, 2013, shall be based on the average of the three him
paid years of the member prior to the date of retirement or termination. Members hired on
or after September 30, 2013, shall be based on the average of the five highest paid years
of the member prior to the date of retirement or termination. For purposes of such
calculation, Salary shall be the Salary upon which the member's contribution to the
System was computed, as provided in paragraphs (1) and(2)below:
(1) With respect to a firefighter member employed before May 19, 1993, and retiring on
or after October 1, 1994, the inclusion of overtime in the member's Salary for the two
highest-paid years or last two years, as the case may be, shall be limited in each year to
an amount which, when combined with compensation for off-duty services and the value
of any accrued sick and/or vacation leave that is included in a member's Salary for
pension contribution and benefit purposes, is equal to 11% of the highest annualized pay
rate for the same salary rank that the member is in at time of retirement. Effective July
145 2010, all compensation received by a firefighter member who is eligible for overtime
pay and who receives pay for off-duty services performed after that date for which
compensation is received through the City shall be included in such member's Salary for
pension contribution and benefit purposes; provided, in no event shall such compensation
for off-duty services, in combination with any overtime pay and the value of any accrued
sick and/or vacation leave included in a member's Salary for pension contribution and
benefit purposes, exceed 11% of the highest annualized pay rate for the same salary rank
that the member is in at time of retirement. For firefighter members who are eligible for
overtime pay and who retire on or after September 30, 2010, upon reaching eligibility for
retirement, a member may elect to apply unused sick and/or vacation leave for inclusion
in the member's Salary for pension contribution and benefit purposes, at a cost of 10% of
the value of the unused sick and/or vacation leave (at the member's current hourly rate).
Provided, in no event shall the value of such unused sick and/or vacation time, when
combined with any overtime pay and compensation for off-duty services included in a
member's Salary for pension contribution and benefit purposes, exceed 11% of the
highest annualized pay rate for the same salary rank that the member is in at time of
retirement. Notwithstanding the foregoing, effective September 30, 2013, overtime pay in
excess of 300 hours per calendar .payments for unused sick and vacation leave,
hazardous duty pay (when paid), and payments relating to the domestic partner tax credit
reimbursement, shall be excluded from a firefighter member's Salary for pension
contribution and benefit purposes.
(2) With respect to a police officer member employed before May 19, 1993, and retiring
on or after October 1, 1994, the inclusion of overtime in the member's Salary for the two
highest paid years or last two years, as the case may be, shall be limited in each year to an
amount which, when combined with compensation for off-duty services and the value of
any accrued sick and/or vacation leave that is included in a member's Salary for pension
contribution and benefit purposes, is equal to 70% of the difference between the
member's annualized pay rate at retirement and the highest annualized pay rate for the
next higher salary rank; but in no event shall such member's accrued benefit on his date
of retirement be less than the benefit he had accrued as of September 30, 1994,
determined under the terms of the System in effect on that date. Effective July 14, 2010,
all compensation received by a police officer member who is eligible for overtime pay
and who receives pay for off-duty services performed after that date for which
compensation is received through the City, shall be included in such member's Salary for
pension contribution and benefit purposes; provided, in no event shall such compensation
for off-duty services, in combination with any overtime pay and the value of any accrued
sick and/or vacation leave included in a member's Salary for pension contribution and
benefit purposes, exceed 70% of the difference between the member's annualized pay rate
at retirement and the highest annualized pay rate for the next higher salary rank; but in no
event shall such member's accrued benefit on his date of retirement be less than the
benefit he had accrued as of September 30, 1994, determined under the terms of the
System in effect on that date. For police officer members who are eligible for overtime
pay and who retire on or after September 30, 2010 and before September 30, 2013, upon
reaching eligibility for retirement, a member may elect to apply unused sick and/or
vacation leave for inclusion in the member's Salary for pension contribution purposes, at
a cost of 10% of the value of the unused sick and/or vacation leave (at the member's
current hourly rate). Provided, in no event shall the value of such unused sick and/or
vacation time, when combined with any overtime pay and compensation for off-duty
services included in a member's Salary for pension contribution and benefit purposes,
exceed 70% of the difference between the member's annualized pay rate at retirement and
the highest annualized pay rate for the next higher salary rank; but in no event shall such
member's accrued benefit on his date of retirement be less than the benefit he had accrued
as of September 30, 1994, determined under the terms of the System in effect on that
date. Notwithstanding the foregoing, effective September 30, 2013, overtime pay in
excess of 300 hours per calendar year, payments for unused sick and vacation leave,
hazardous duty pay (when paid), payments relating to the domestic partner tax credit
reimbursement, and payments for voluntarily participating in a physical fitness
assessment program offered by the City shall be excluded from a police officer member's
Salary for pension contribution and benefit purposes; and in no event shall compensation
for off-duty services, in combination with overtime pay not exceeding 300 hours per
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calendar year, exceed 11% of the highest annualized pay rate for the same salary
that the member is in at time of retirement. Provided, the 11% limitation in the preceding
sentence shall not apply to any member who holds the rank of sergeant or lieutenant on
September 30, 2013, or any police officer who is promoted into the position of police
sergeant prior to the date the 2013 Certified Police Sergeant Promotional Register expires
in 2015.
(e) Notwithstanding anything in this section to the contrary, the benefits provided in this
section shall not exceed 90% of the member's average monthly Salary as defined in
subsection (d) of this section; provided, however, that the benefits for May 1993
Members shall not exceed 80% of such Salary. Notwithstanding the foregoing, effective
September 30, 2013, the benefits provided in this section shall not exceed 85% of the
member's average monthly Salary as defined in subsection (d) of this section; provided,
however, that the benefits for May 1993 Members shall not exceed 80% of such Salary;
and provided further, the benefit of any member who has an accrued benefit in excess of
85% of average monthly as defined in subsection (d) of this section on September
30, 2013 shall not exceed 90% of such Salary.
(f) The minimum pension for a member retiring for permanent and total disability under
subsection (a)(2) of this section shall be 85% of the member's Salary at the time of
disability retirement; provided, however, that the minimum pension for a May 1993
Member shall be 75% of such Salary. The minimum pension for a May 1993 Member
retiring for permanent and total disability under subsection (a)(3) of this section shall be
50% of the member's Salary at the time of the disability retirement.
(g)
If any member eligible for benefits under this article shall terminate his employment
before September 30, 2013 after having completed at least 10 years of Creditable Service
but prior to attaining age 50 years (or after having completed one year of Creditable
Service but before attaining age 55 and completing 10 years of Creditable Service for a
May 1993 Member), and does not withdraw his accumulated contributions in the System,
such member shall be entitled to receive upon attaining age 50 (age 55 or his termination
of employment, if later, for a May 1993 Member) a monthly pension payable for life in
accordance with the provisions of subsection (b) (or subsection (c) for a May 1993
Member) of this section; provided, however, the benefit so determined shall be reduced
for a May 1993 Member by 10% multiplied by the difference between the member's
years of Creditable Service at his date of termination and 10. If the member dies prior to
attaining age 50 (age 55 or his termination of employment, if later, for a May 1993
Member), no benefit shall be payable under subsection (b) (or subsection (c) for a May
1993 Member); instead, the member's estate shall be entitled to all moneys contributed by
the member to this System together with accumulated interest on that sum at the rate of
three percent per annum computed until the date of payment to the member's estate.
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(2) If any member eligible for benefits under this article shall terminate his employment
on or after September 30, 2013 after having completed at least 5 years of Creditable
Service, but prior to attaining age 50 years (or after having completed one year
Creditable Service but before attaining age 55 and completing 10 years of Creditable
Service for a May 1993 Member), and does not withdraw his accumulated contributions
in the System, such member shall be entitled to receive upon attaining age 50 (age 55 or
his termination of employment, if later, for a May 1993 Member) a monthly pension
payable for life in accordance with the provisions of subsection (b) (or subsection (c) for
a May 1993 Member) of this section, provided, however, the benefit so determined shall
be reduced for a May 1993 Member by 10% multiplied by the difference between the
member's years of Creditable Service at his date of termination and 10. If the member
dies prior to attaining adage 55 or his termination of employment, if later, for a May
1993 Member), no benefit shall be payable under subsection (b) (or subsection (c) for a
May 1993 Member); instead, the member's estate shall be entitled to all moneys
contributed by the member to this System together with accumulated interest on that sum
at the rate of three percent per annum computed until the date of payment to the member's
estate.
(h)
(1) Notwithstanding anything in this section to the contrary, the minimum monthly
pension payable for the life of any member who was employed prior to July 1, 1976 and
who retires after attaining age 50 and completing at least 15 years of Creditable Service
or after meeting the requirements of subsection (a)(3) or (a) (4) of this section 66 shall be
equal to:
(A) Three percent of the member's average monthly Salary for each of the first 20
years of his Creditable Service, being computed as to a part of a year on a
pro rata basis to the nearest month; plus
(B) Two and three-quarters percent of the member's average monthly Salary for
each of his years of Creditable Service in excess of 20, being computed as to
a part of a year on a pro rata basis to the nearest month.
(2) For purposes of this subsection (h) the member's average monthly Salary shall be the
Salary upon which the member's contribution to the System was computed for the two
highest paid years of the member prior to his date of retirement.
(3) Notwithstanding anything to the contrary, benefits provided under this subsection (h)
shall not be more than 85% of the average monthly Salary used to compute the benefit
under this subsection.
(4) The minimum pension for a member retiring under this subsection (h) for permanent
and total disability shall be 75% of the member's Salary at the time of his disability
retirement.
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(i) Nothing in this section shall be construed to prevent the City manager or the Board
from initiating action for the compulsory retirement of a member eligible for retirement,
prior to such age, where such member is considered to be unfit for the proper
performance of his duties because of physical or mental incapacity. Upon certification by
the medical board designated by the Board pursuant to section 760) that such member is
mentally or physically incapable of proper performance of duties, the member shall be
automatically retired. Any member who is compulsorily retired by an act of the Board
shall have the right to appeal such retirement to a court of proper jurisdiction. The
member shall defray his own expense in his appeal of such compulsory retirement.
additional six per-een4 0
(6-07/o) benefit multiplier- if the
0
0
in aeeer-danee with see. 82 (b). Fef the pttfpese of this Pufehase, an empleyee may use the
valtie of aeeitued siek and/of anfittal leave, valued at the empleyee's houfly fate at the tifne
6), > 2010, ef
does not eemplete the pur-ehase ef an additional benefit multiplief as pr-evided in this
subseefien (d) within the thifty six ffienth pefied, he/she shall net be eligible fef sueh
pur-ehase in the fittur-e.
Section 5. Section 67 of Part I. Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 67. Cost-of-living adjustment.
(a) In the case of a pensioner who was employed by the City prior to May 19, 1993, or a
beneficiary of such a member who has been receiving a pension for at least one year
under the System as of October 1, 1989, or any subsequent October 1, the amount of
pension payable to him under the System as of such October 1, other than a pension
payable under subsection 66(h)of the System, shall be increased by 2'/2% of the amount
payable to him under the System.
(b) In the case of a pensioner who was a May 1993 Member, or a beneficiary of such a
member, who has been receiving a pension for at least one year under the System as of
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October 1, 1994, or any subsequent October 1, the amount of pension payable to him
under the System as of such October 1, determined without regard to any cost of living
increase previously granted under this section, shall be increased by 11/2%.
(c) In the case of a pensioner who has been receiving a benefit under subsection 66(h) of
the System for at least three years as of July 1, 1982, or any subsequent July 1, the
amount payable to him under the System as of such July 1 shall be increased as of the
next following October 1 by 2%.
(d) In the case of a pensioner or beneficiary who retires after October 1, 1988, under the
System or after October 1 of any subsequent year and who therefore must wait more than
12 months for his first increase, the amount of pension payable to him as of the October 1
next following the first anniversary of the commencement of his pension shall be
increased by a specified percentage, as defined in this subsection, of the amount payable
to him under the System multiplied by a fraction, the numerator of which is the number
of months for which his pension under the System has been paid and the denominator of
which is 12. The specified percentage shall be 21/2% for members and their beneficiaries
and 11/2% for May 1993 Members and their beneficiaries.
(e) For purposes of determining the one-year requirement of subsections (a) and (b) of
this section and the three-year requirement of subsection (c) of this section, the pension
commencement date for a beneficiary receiving a pension as the result of the death of a
retired member who was receiving a pension at the time of his death shall be the date on
which the retired member began to receive his pension.
(f) The provisions of this section shall not apply in the case of a member of the System
who elected in writing prior to the earlier of his date of retirement or January 1, 1990, to
waive his membership in the Police Officers' and Fire Fighters' Supplemental Pension in
accordance with the provisions of section 78-246 or 78-247 of Chapter 78 of Part II of the
Miami Beach City Code as in effect at such date.
(g) Effective September 30, 2010, for members who retire on or after that date, the cost
of living adjustment provided in this Section 67 shall be applied annually on the
anniversary date of the member's retirement.
(h) Notwithstanding the provisions of subsections (a) through (g) above, effective
September 30, 2013 the benefit of members hired before July 14, 2010, and the
beneficiaries of such members, shall be increased by 2.5% annually, commencing on the
anniversary date of the member's retirement, except that members who enter the DROP
on or after September 1, 2012 and before September 30, 2013, and participate in the
DROP for six months or longer shall receive a zero percent (0%) cost of living
adjustment for the third (3rd) and fourth (4th) annual adjustment dates.
(i) Notwithstanding provisions of subsections (a) through (g) above, effective
September 30, 2013 the benefit of members hired on or after July 14, 2010, and the
12
beneficiaries of such members, shall be increased by 1.5% annually, commencing on n the
anniversary date of the member's retirement.
Section 6. Section 79 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 79. Deferred Retirement Option Plan(DROP).
(a) Eligibility. Any active member of the System may enter into the DROP on the first
day of any month following the date upon which the member first becomes eligible for a
normal service retirement, subject to the provisions of this section 79
(b) Conditions of eligibility. Upon becoming eligible to participate in the DROP, a
member who enters the DROP before September 1, 2012 may elect to enter that program
for a period not to exceed 36 months. Notwithstanding, DROP participation for members
who enter the DROP before September 1, 2012 may not continue beyond the date when
the member's combined years of creditable service and time in the DROP equals 352
months (387 months for members who were members prior to July 1, 1976). Members
who enter the DROP on or after September 1, 2012 shall be eligible to participate for a
period not to exceed sixty (60) months. Notwithstanding, for those members who enter
the DROP on or after September 1, 2012, participation may not continue beyond the date
when the member's combined years of creditable service and time in the DROP equals
408 months . Provided also that
participation in DROP shall require the member to complete and submit the following
prior to start of DROP payments:
1. Such forms as may be required by the Board or Plan Administrator. Election of the
DROP is irrevocable once DROP payments begin.
2. A waiver and an irrevocable resignation from employment with the actual date of
termination being the date designated by the member as the end of his/her DROP
participation. The administration and timing of execution and delivery of the waiver and
resignation forms shall meet the requirements of the Age Discrimination in Employment
Act and the Older Worker's Benefits Protection Act, as same may be amended from time
to time.
(c) Conditions of employment for DROP participants. Members shall be subject to
termination of employment while in DROP to the same extent as they were in their pre-
DROP status. A member who has elected the DROP remains an employee during the
DROP period and receives all the benefits of being an employee during the DROP
period, except any form of pension contribution.
(d) Effect of DROP Participation.
13
1. A member's creditable service and his/her accrued benefit under the System shall be
determined on the date of his/her election to participate in the DROP first becomes
effective.
2. The member shall not accrue any additional creditable service while he/she is a
participant in the DROP, or after termination of participation in the DROP.
3. A DROP participant is not eligible for disability benefits from the Plan.
4. A member may participate in the DROP only once.
5. Effective with the start date of a member's DROP participation, contributions to the
Pension Plan by the member and the normal cost contribution to the Pension Plan by the
City, on behalf of the member, shall cease.
(e) Payments to DROP account. A DROP account shall be created for each member who
elects to participate in the DROP. A DROP account shall consist of amounts transferred
to the DROP from the Plan, which include the monthly retirement benefits, including any
future cost of living increases, that would have been payable had the member elected to
cease employment and receive a normal retirement benefit upon commencing
participation in the DROP, and earnings on those amounts. Provided, members who enter
the DROP on or after September 1, 2012 and before September 30, 2013 shall receive a
zero percent (0%) cost of living adjustment for the third (3rd) and fourth (4th) annual
adjustment dates, regardless of whether the member remains in the DROP for the
maximum five-year period. Provided further, any such member who exits the DROP
within six (6) months following the date of DROP entry, shall be eligible for the cost of
living adjustment as otherwise provided in section 67.
(f) DROP account earnings.
1. Members may direct their DROP account balance to any of the investment options
offered and approved by the Board. Any losses incurred by the participant shall not be
made up by the City or the Pension Plan. The selection of these programs shall be made
by the participant on forms provided by the Board. Any and all interest and or earnings
shall be credited to the participant's DROP account.
2. A member's DROP account shall only be credited or debited with earnings while the
member is a participant in the DROP and, depending on the DROP Account Payment
Options selected, after the member dies, retires, or terminates employment with the City
of Miami Beach.
(g) Payment of DROP account funds. Upon termination of a member's employment (for
any reason, whether by retirement, resignation, discharge, disability, or death), the
retirement benefits payable to the member or to the member's beneficiary shall be paid to
the member or beneficiary and shall no longer be paid to the member's DROP account.
14
No p a Y ments will be made from the DROP account until the member terminates
employment.
(h) DROP account payment options. Following the termination of a member's
employment, the member shall select one of the following options to begin to receive
payment from his/her DROP account. Said selection shall occur no later than 30 days
prior to the end of the DROP participation period or within 30 days following the
termination of a member's employment if said termination of employment occurs prior to
the end of the DROP participation period:
1. Lump sum: All accrued DROP benefits, plus interest, shall be paid from the DROP in
a single lump sum payment.
2. Partial lump sum: A member designated portion of accrued DROP benefits, plus
interest, shall be paid from the DROP in a partial lump sum payment with the remainder
being directly rolled over into an eligible retirement plan.
3. Direct rollover: All accrued DROP benefits, plus interest, shall be paid from the
DROP directly to the custodian of an eligible retirement.
4. Other method(s) of payment that are in compliance with the Internal Revenue Code
and adopted by the Board.
(i) Death of DROP participant. If a DROP participant dies before his/her account
balances are paid out in full, the participant member's designated beneficiary shall have
the same rights as the member to elect and receive the pay-out options set forth in
Paragraph (h), above. DROP payments to a beneficiary shall be in addition to any other
retirement benefits payable to the beneficiary.
0) Administration of DROP accounts.
1. The Board shall make such administrative rules as are necessary for the efficient
operation of DROP, but shall neither create any rule that is inconsistent with the this
section 79, nor any rule that would be a mandatory subject of collective bargaining.
2. At all times, the DROP will be administered so that the System remains qualified
under the Internal Revenue Code and is in compliance with the Internal Revenue Code
and applicable laws and regulations.
(k) A member who enters the DROP on or after September 30, 2013 shall retain the
earned balance of accrued sick and vacation leave as of date of entry into the DROP, and
shall continue to earn sick and vacation leave during the DROP period, in accordance
with the collective bargaining agreement between the City and IAFF, and between the
City and FOP, as applicable. While in the DROP, the member shall have the one-time
option of receiving_payment for accrued sick and/or vacation leave, up to the maximum
pLayout pon separation of employment allowed b t�pplicable collective bargaining
15
agreement; provided, the member shall retain at least one hundred twenty (120) hours of
accrued sick leave after such payment. The one-time election to receive payment of leave
balances shall be made in any one year of the DROP, by notifying the City no later than
June 30 of that year an alternate date as determined by the City and the president
of the respective bargaining unit). Payment will be made after the first pay period ending
in October of the same year. Upon final separation from employment with the City, a
member who has participated in the DROP shall be eligible to receive payment for the
balance of all accrued sick and vacation leave as of the date of final separation, up to the
maximum provided in the collective bargaining agreement, as reduced by the prior
payout, if any. In no event shall payments for accrued sick or vacation leave be included
in such member's Salary for the purposes of contributions and benefits under the System.
Section 7. Section 82 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 82. Military service.
(a) Any member of the System or any probationary employee in the fire or police
department who is absent from the service of the City because of service in the uniformed
services of the United States (as defined in the Uniformed Services Employment and
Reemployment Rights Act of 1994) who returns to the service of the City having applied
to return while his reemployment rights were protected by law, shall be entitled to all
retirement rights and privileges under this system if such member, or such probationary
employee after he becomes a member, contributes the amount such member or
probationary employee would have contributed had he been a member during the period of
service in the uniformed services for which credit is being purchased, and creditable
toward service retirement as provided in this section. The amount of any such
contributions shall be determined based on the member's Salary in effect immediately prior
to such period of absence and the terms of the System in effect at that time. The member
shall make any such payments to the System during a repayment period equal to the lesser
of(i) three times the member's period of absence for service in the uniformed services or
(ii) five years. The repayment period shall begin on the later of(i) the date the member is
reemployed by the City and (ii) the date the City notifies the member of his rights under
this section.
(b) " member- Effective September 30, 2013, members, who have has at least 5 2$ years
of Creditable Service and who entitled te r-eeeive-benefits under the System on the
applicable effective date, may contribute an additional amount to the System in order to
receive service credit for h-i-s years of active military service in the U.S. Army, Navy, Air
Force, Marines or Coast Guard occurring prior to their his date of employment with the
City. A member may purchase up to twos years of such service. The price for each such
year shall be 10% (10.5% for members hired on or after September 30, 2013) of the
aggregate of the member'shis Salary during the 12 calendar months immediately preceding
the date of such purchase; and such price shall be prorated accordingly if a member's
election includes a fractional year of service. Any additional benefits attributable to service
16
purchased under this subsection (b) shall be at the benefit multiplier rate of 3% per year of
Creditable Service, with a total maximum additional benefit of 6% based on two years of
Creditable Service purchased
. The purchase of
Creditable Service under this subsection (b) must be completed within 36 months
following September 30, 2013, or the date a member completes 5 years of Creditable
Service, whichever occurs later. A member who does not complete and fully pay for the
purchase of Creditable Service under this subsection (b) within 36 months following
September.30, 2013, or the date a member completes 5 years of Creditable Service, if later,
shall not receive Creditable Service for more than the amount for which payment has been
made, and shall not be eligible to purchase Creditable Service for prior military service in
the future.
Section 8. A new Section 88 of Part 1, Subpart B, Article IX, Related Special Acts of the
Miami Beach City Code, is created to read:
Section 88. Benefits for members hired on or after September 30, 2013.
Notwithstanding any other provision of the System, the pension benefits for members hired
on or after September 30. 2013 shall be as provided in the sections 61 through 86, except
as follows:
(a) The benefit multiplier shall be three percent (3%) for each year of creditable service
for the first 20 years of service, and four percent (4%) for each year of creditable service
after 20 years of creditable service.
(b) The normal retirement date shall be as provided in sec. 66, except that a member must
attain age 48 to be eligible for "Rule of 70" retirement.
(c) Final average monthly salary shall be based on the five (5) highest paid years or last
five (5) years as the case may be, prior to retirement or separation from employment.
(d) The cost of living adjustment shall be one and one-half percent(1.5%) annually.
Section 9. Conflicts and Severability.
(a) All Ordinances, and parts of ordinances, in conflict herewith shall be and
the same, are hereby repealed.
(b) In the event any article, section, paragraph, sentence, clause, or phrase of
this Ordinance shall be adjudicated invalid or unconstitutional, such adjudication shall in
no manner affect the other articles, sections, paragraphs, sentences, clauses or phrases of
this Ordinance, which shall be and remain in full force and effect as fully as if the item so
adjudged invalid or unconstitutional was not originally a part hereof.
Section 10. Effective Date. This Ordinance shall take effect ten days following
adoption, except as otherwise specified herein.
17 .
PASSED and ADOPTED by the City.Commission of the City of Miami Beach
this 30t++day of .fie -e ;2011' ;
Mayor
Attest:
B
(Seal) INCORP. ORATED-
- -- _- _ - �C 96 •�%
F
APPROVED AS TO
- FORIA& LANGUAGE
& FOR FXFCUTTON
C4 Alto Date
COMMISSION ITEM SUMMARY
Condensed Title:
An Ordinance Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Amending Part I, Subpart B, Article Ix,
Related Special Acts, Of The Miami Beach City Code Entitled "Pension System For Disability And Retirement Of Members Of
Police And Fire Departments"; Implementing Provisions Of The 2012-2015 Collective Bargaining Agreements Between The
City And Fire Fighters Of Miami Beach, IAFF Local 1510, And Miami Beach Fraternal Order Of Police, William Nichols Lodge
No. 8; Amending Section 62 Entitled "Definitions"; Amending Section 63 Entitled "Source Of Monies For Fund; Computation Of
Liability; Use And Investment Of Fund"; Amending Section 65 Entitled "Computation Of Creditable Service; Service Record";
Amending Section 66 Entitled "Service And Disability Benefits Generally"; Amending Section 67 Entitled "Cost Of Living
Adjustment"; Amending Section 79 Entitled "Deferred Retirement Option Plan"; Amending Section 82 Entitled "Military Service";
Creating A New Section 88 Entitled "Benefits For Members Hired On Or After September 30, 2013, Providing For Severability;
Repealing All Ordinances In Conflict Therewith; And Providing For An Effective Date.
Key Intended Outcome Supported:
Attract and maintain a Workforce of Excellence.
Item Summa /Recommendation:
Second Reading
The Commission ratified a three-year labor agreement, October 1, 2012 through September 30, 2015, between the City and the
IAFF on July 17, 2013. On September 11, 2013, the City Commission adopted a resolution ratifying an amended three-year
labor agreement covering the period of October 1, 2012 through September 30, 2015, between the City and the FOP. Included
in the individual agreements are significant pension changes for both current and future employees that will yield short-term and
long-term recurring savings. The pension changes include the following for current employees: Final Average Monthly Earnings
(FAME) will be based on the 3 highest years; the maximum benefit is capped at 85 percent of pensionable earnings,
grandfathering anyone who has already exceeded that percentage to a maximum of 90 percent; 5-year vesting period, buy
back of prior creditable service limited to two years of military service with a maximum benefit multiplier of 6percent; elimination
of the ability to utilize accrued leave to purchase additional benefits, maximum overtime applied toward pensionable earnings
not to exceed 300 hours; implementing the retiree cost of living adjustment (COLA) while participating in the 5 year Deferred
Retirement Option Plan (DROP) with the ability to receive a one-time leave settlement payout while in DROP; a benefit
multiplier of 3% for the first 20 years and 4 percent thereafter, 47 is the minimum retirement age for pre-July 2010 employees
and 48 for post-July 2010 members.
The changes for new employees hired on or after September 30, 2013 also include: all new hires will become members of the
plan immediately upon employment, employee contribution will rise to 10.5 percent of pensionable earnings, FAME will be
based on the highest 5 years. In addition, no employee will be permitted to transfer from the general employee's pension plan
into the Fire and Police Pension Plan. In addition, the City Commission adopted the Budget Advisory Committee's
recommended pension policies and guidelines at the July 17, 2013 City Commission meeting. The relating policies are also
included in the proposed amendment to the Fire and Police Pension ordinance.
Advisory Board Recommendation:
Budget Advisory Committee Pension Reform Recommendation Report of August 29, 2012
Financial Information:
Source of Amount
Funds: 1 FY2012/2013
$0
FY2013/2014 Reduction of the City's Annual Required Contribution
2 ($5.66 Million) attributed to pension changes.
oe
3 FY2014/2015 Reduction of the City's Annual Required
$6.02 Million Contribution attributed to pension changes.
OBPI Total ($11.68 Million)
Financial Impact Summary: The projected 30-year net present value savings for these changes is estimated at
approximately$140 million. The Actuarial Impact Statement by Buck Consultants is provided as Attachment 1 and the
Actuarial 30 year analysis is provided as Attachment 2. The estimated 5-year impact is a savings of$32.02 million.
The total savings for FY2013/2014 is$5.66 million, of which, approximately $430,000 has already been recognized in
the October 1, 2012 adopted Actuarial Valuation Report see Attachment 3).
City Clerk's Office Legislative Tracking:
S Ivia Cres o-Tabak, Human Resources Director
Sign-Offs:
Department Director Assistant City M ager City Janager
SLY vi Crespo-Tabak Kat ' B oks Jimmy Morales
s�� a.J•D--�-
MIAAAIBEACH AGE DA ITEM ��DATE -3v-(3
MIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
CO MISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and M bers oft City Commission
FROM: Jimmy L. Morales, City Manager
DATE: September 30, 2013 SECOND READING
SUBJECT: AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, AMENDING PART I, SUBPART B, ARTICLE IX, RELATED SPECIAL
ACTS, OF THE MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM FOR
DISABILITY AND RETIREMENT OF MEMBERS OF POLICE AND FIRE DEPARTMENTS";
IMPLEMENTING PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING
AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF MIAMI BEACH, IAFF
LOCAL 1510,AND MIAMI BEACH FRATERNAL ORDER OF POLICE,WILLIAM NICHOLS
LODGE NO.8;AMENDING SECTION 62 ENTITLED"DEFINITIONS",AMENDING SECTION
63 ENTITLED "SOURCE OF MONIES FOR FUND; COMPUTATION OF LIABILITY; USE
AND INVESTMENT OF FUND";AMENDING SECTION 65 ENTITLED"COMPUTATION OF
CREDITABLE SERVICE; SERVICE RECORD"; AMENDING SECTION 66 ENTITLED
"SERVICE AND DISABILITY BENEFITS GENERALLY"; AMENDING SECTION 67
ENTITLED "COST OF LIVING ADJUSTMENT"; AMENDING SECTION 79 ENTITLED
"DEFERRED RETIREMENT OPTION PLAN"; AMENDING SECTION 82 ENTITLED
"MILITARY SERVICE"; CREATING A NEW SECTION 88 ENTITLED "BENEFITS FOR
MEMBERS HIRED ON OR AFTER SEPTEMBER 30, 2013, PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND
PROVIDING FOR AN EFFECTIVE DATE.
ADMINISTRATION RECOMMENDATION
The Administration recommends adopting the ordinance.
BACKGROUND
The City's workforce is divided into seven salary groups: (1)those covered by the American Federation
of State, County and Municipal Employees, Local 1554(AFSCME) bargaining unit; (2)those covered by
the Communications Workers of America, Local 3178 (CWA) bargaining unit; (3)those covered by the
Government Supervisors Association of Florida/OPEIU, Local 100 (GSA) bargaining unit; (4) those
covered by the Fraternal Order of Police, William Nichols Lodge No. 8 (FOP) bargaining unit; (5)those
covered by the International Association of Fire Fighters, Local 1510 (IAFF) bargaining unit; (6) those
employees who are at-will and are known as unclassified; and (7)"Others"(classified service employees
not represented by a bargaining unit).
City Commission Memorandum
September 30,2013
Fire and Police Pension-1St Reading
Page 2 of 6
On September 30, 2012, the three-year collective bargaining agreement between the City of Miami
Beach and the IAFF (covering the period of October 1, 2009 through September 30, 2012) expired.
Negotiations for a successor agreement began on September 19, 2012. On July 17, 2013, the City
Commission ratified a three-year collective bargaining agreement covering the period of October 1,2012
through September 30, 2015, between the City of Miami Beach and the IAFF, subject to the IAFF
ratifying the agreement among their membership, which if passed, would determine the effective
ratification date. Subsequently, on August 7, 2013, the IAFF confirmed the passage of the contract by
the majority of their voting membership.
On September 30, 2012, the three-year collective bargaining agreement between the City of Miami
Beach and the FOP(covering the period of October 1, 2009 through September 30, 2012)also expired.
Negotiations for a successor agreement began on September 19, 2012. On July 19, 2013, the City
Commission ratified a three-year collective bargaining agreement covering the period of October 1,2012
through September 30, 2015, between the City of Miami Beach and the FOP,subject to the FOP ratifying
the agreement among their membership,which if passed,would determine the effective ratification date.
The agreement ratified by the City Commission included two substantive changes (which were made
from the dais and approved by a vote of 6:1)from the terms that were tentatively agreed upon between
the City and the FOP. These changes included implementing for all members, excluding any current
police sergeants or police lieutenants, that the total maximum pension benefit could not exceed eleven
percent of the member's salary upon retirement and implementing a voluntary fitness program on a
quarterly basis available to all FOP bargaining unit members. Based on the changes made on the floor
during the City Commission meeting,the FOP and the City renegotiated certain provisions of the contract
that was ratified on July 19, 2013. On September 11, 2013, the City Commission adopted a resolution
accepting the amended2012-2015 collective bargaining agreement with the FOP that had been
previously ratified on July 19, 2013.
In the adopted FY 2012/13 budget, employee givebacks represented $3.782 million in savings
(approximately $3 million in the General Fund) which were to be allocated among the seven salary
groups. The methodology to allocate the givebacks for each salary group was the proportionate share of
the City's total costs for pension and health benefits for FY 2012/13, as in recent years these have been
major personnel expenditure cost drivers. However, no significant savings were achieved for FY
2012/13 from any employee group covered by a bargaining unit.
The prior collective bargaining agreements (October 1, 2009-September 30, 2012) between the City
and IAFF and the City and FOP, included a number of pension changes for the Fire and Police Pension
Plan that were implemented in 2010; however, these pension changes did not significantly impact
existing employees and were insufficient to address the short term and increasing benefit cost which, in
recent years, has represented the fastest growing cost in the City's budget. The adopted October 1,
2012 Actuarial Valuation Report for the Fire and Police Pension Plan estimates the City's Annual
Required Contribution (ARC)payable October 1, 2013,to be$41.08 million.This represents an increase
of$1.8 million in the Fire and Police Pension Plan when compared to last year.
The City initially proposed the Budget Advisory Committee's(BAC)August 29,2012, recommendation of
a hybrid plan for new and non-vested employees in the Fire and Police Pension Plan. The BAC
recommendation was anticipated to save $2.5 million in year one and a $74 million net present value
over thirty years based on the October 1, 2010, Valuation Report data. The City's actuary updated the
estimated figures based on the October 1, 2011, Valuation with an estimated savings of$3.6 million in
year one.
City Commission Memorandum
September 30,2013
Fire and Police Pension—1St Reading
Page 3 of 6
The Administration received direction from the City Commission to negotiate changes to the Fire and
Police Pension Plan that would generate a savings of$6-$8 million from the City's ARC in the first year.
In addition, any negotiated pension changes would need to yield recurring, annual savings from the City's
ARC, as well as a reduction to the Unfunded Actuarial Accrued Liability (UAAL).
ANALYSIS
After numerous negotiations, the City reached agreements with both the IAFF and the FOP which
include significant pension changes for both current and future employees who participate in the Fire and
Police Pension Plan. These changes include the follow:
Pension Adjustments/Changes
(Note: The effective date for the following proposed changes is September 30, 2013. unless otherwise
noted.)
• Final Average Monthly Earnings jFAMQ—Effective September 30, 2015, the FAME for current
IAFF and FOP bargaining unit employees hired prior to September 30,2013,will be based on the
average of the three(3)highest years; and employees hired on or after September 30, 20131 will
be based on the average of the five (5) highest years.
• Maximum Benefit—Currently, the maximum pension benefit for post May 1993 members is 90
percent of pensionable earnings. Effective September 30, 2013, the maximum benefit will be
reduced to 85 percent of pensionable earnings for all post May 1993 members. Employees,who
as of September 30, 2013, have attained a pension benefit of 85 percent or higher,are eligible to
continue to earn the 90 percent maximum benefit. In addition,any police officer member who was
hired due to a consent decree shall also be grandfathered and may continue to earn the 90
percent maximum benefit.
• Vestin_g—The vesting period was reduced from ten to five years.
• Prior Creditable Service—Currently, upon completion of ten years of creditable service(vesting)
with the City, employees can purchase prior creditable service of up to two years of full-time
public safety service as a public safety officer prior to City employment, up to four years of military
service and up to an additional six percent multiplier on the additional creditable service years
purchased; however, the maximum benefit purchased cannot exceed twelve percent. Effective
September 30, 2013, all bargaining unit employees participating in the Fire and Police Pension
Plan will be limited to purchasing only up to two years of military service , at three percent each
year for a maximum benefit of six percent. The employee will pay the equivalent of their
employee contribution amount in effect at the time of purchase(10 percent per year of purchase
for employees hired prior to ratification.of their respective collective bargaining agreement and
10.5 percent per year of purchase for all employees hired thereafter).
• Probationary Period and Contribution of Pensionable Earnings — All new hires will become
members of the Fire and Police Pension Plan effective upon their hire date and will start
contributing 10.5 percent of their pensionable earnings immediately.
City Commission Memorandum
September 30, 2013
Fire and Police Pension—15t Reading
Page 4 of 6
• Overtime, Off-duty, Accrued Leave and Other Pays—In the past, employees were able to apply
unused sick and/or vacation time for inclusion in their salary for pension purposes at the
equivalent rate of their employee pension contributions. For example: for each $100 of unused
sick and/or vacation time(at the member's hourly rate), $90 was applied toward their FAME and
$10 contributed to the pension fund.
As a result of recent changes in Florida statutes, accrued leave can no longer be used to
increase pension benefits and the application of overtime toward the FAME is limited to a
maximum of 300 hours.As part of the agreement between the City and the FOP,the definition of
salary excludes any payments relating to hazardous duty pay, domestic partner tax credit
reimbursements, and any payments to police officer members for voluntarily participation in a
physical fitness assessment program offered by the City.
• Deferred Retirement Option Plan (DROP) and Retiree COLA — Currently bargaining unit
employees hired prior to July 14, 2010, receive a 2.5 percent annual retiree COLA, unless they
entered the DROP after September 1, 2012, and forfeited the retiree COLA for years three and
four in the DROP.
Bargaining unit employees hired on or after July 14, 2010, are eligible to receive a 1.5 percent
annual retiree COLA.
Any member who joins the DROP on or after September 30, 2013, will be eligible to receive a
retiree COLA each year that they participate in the DROP. The rate at which the member earns
his/her annual retiree COLA shall be based on hire date (2.5 percent for all pre-2010 members
and 1.5 percent for all post-2010 members).
• DROP and Leave Payouts— Effective October 1, 2013, any bargaining unit member currently
participating in the DROP, or who enters the DROP, may elect to request a full or partial payment
of earned sick and vacation leave balances up to the maximum amount stipulated in each of the
respective collective bargaining agreements and applicable pension ordinance. Eligible
employees will have until June 30 of each year to exercise this option, and receive payment
during the first pay period ending in October of the same year. Any amount paid out to an
employee upon entering the DROP will be deducted from the cap for their maximum leave payout
upon leaving the DROP.
• Miami Beach Employees'Retirement Plan(MBERP) Service Transfer—Upon ratification of the
collective bargaining agreement, MBERP members will not be eligible to transfer creditable
service time from MBERP to the Fire and Police Pension Plan if they are subsequently employed
in a classification covered by the IAFF or FOP bargaining units.
• Retirement Age—Under the current contracts, employees hired prior to July 14 2010, can retire
at either the rule of 70 (age plus creditable years of service) or at age 50. Effective September
30, 2013, employees hired before July 14, 2010, may retire based on the rule of 70 with a
minimum age of 47. Employees hired on or after July 14, 2010, may retire based on the rule of 70
with a minimum age of 48.
However, because some members who have already purchased additional creditable service
may reach the maximum benefit of 85 percent prior to age 47, the City has agreed that upon
reaching maximum pension benefit,the employees will cease making their pension contribution
and their FAME will freeze at the same time.
City Commission Memorandum
September 30, 2013
Fire and Police Pension—1 st Reading
Page 5 of 6
• Benefit Multiplier— Effective September 30, 2013, the benefit multiplier for all bargaining unit
(IAFF and FOP) members shall be three percent for years one through twenty, and four percent
per year thereafter.
Changes for New Employees Hired After Ratification
• Employee pension contribution; 10.5% of pensionable earnings
• FAME; 5 highest years
• Enter directly into the Fire and Police Pension Plan upon hire date (vs. currently enter upon
successful completion of probationary period (12 months for Firefighter and 18 months for
Police Officer).
According to Buck Consultants, the actuary for the Fire and Police Pension Plan, the aforementioned
changes that have been agreed to by both FOP and IAFF are projected to generate savings as follows:
ARC Savings Unfunded Liability Savings
in Millions) (in Millions
Year 1 $5.66 $24.36
Year 2 $6.02 $24.23
Year 3 $6.35 $23.51
Year 4 $6.99 $29.95
Year 5 $7.00 $34.44
Year 6 $8.66 $40.22
Further, the projected 30-year net present value savings for these changes is estimated at
approximately$140 million. The Actuarial Impact Statement by Buck Consultants which represents the
savings to the City's ARC payable on October 1, 2013 is provided as Attachment 1. It should be noted
that the Actuarial analysis for all of the negotiated pension changes for FOP and IAFF has since been
revised from when it was presented at first reading during the September 11, 2013 City Commission
meeting. The negotiated terms and conditions with both the IAFF and the FOP included a retiree COLA
adjustment in years three and four of the five year DROP for all members who enter the DROP on or
after September 30, 2013., Although this benefit was negotiated with both the IAFF and the FOP, the
actuaries initial analysis failed to take this into account. The actuary has revised the thirty year Actuarial
analysis to include this negotiated benefit and is provided as Attachment 2.
At the July 17, 2013 City Commission meeting, the City Commission adopted a number of policies and
guidelines relating to the City's two pension plans(Attachment 2). Therefore, included in the proposed
amendments to the Fire and Police Pension ordinance are the following pension policies:
• The City shall fund at least the normal cost of pension. If this exceeds the amount of the
actuarially determined annual required contribution, the excess should be placed in a pension
stabilization fund, to be made available for future pension shortfalls.
• The City should require 5, 10 and 20 year projections of required pension contributions as part of
the annual actuarial valuations for each of the City's pension plans. These projections shall be
based on the current actuarial assumptions for each plan. The projections shall be updated to
reflect the cost of any proposed benefit enhancement before the City Commission agrees to the
City Commission Memorandum
September 30,2013
Fire and Police Pension—1St Reading
Page 6 of 6
enhancement. The cost of these studies shall be funded separately from the annual contribution
to the pension plan
• There shall be an experience study of each of the City's pension plans' actuarial assumptions
performed by an actuary that is independent from the pension board. The experience study
should be conducted at least once every three years to compare actual experience to the
assumptions. The independent actuary shall make recommendations for any changes in
assumptions based on the results of the experience study, and any deviations from those
assumptions by the pension boards shall be justified to the City Commission.
CONCLUSION
The terms and conditions of the ratified three year labor agreement between the City and IAFF and the
agreement with the City and FOP includes significant changes to pension benefits for current employees
that will result in long-term, recurring pension savings. Based on the Actuarial Impact Statement provided
by Buck Consultants (Attachment 1), the total pension Plan savings for both Fire and Police which,
include changes for future employees,will yield a savings of($5.66 million) in FY 2013/14 and a savings
of($6.034) in FY 2014/15,for a total savings of($11.694)million over the term of the contacts,and$140
million in net present value savings over thirty years. It should be noted that on September 19, 2013,the
Fire and Police Pension Board adopted the October 1, 2012 valuation report. This report included a
revised salary assumption attributed to the zero salary cost of living adjustments for both IAFF and FOP
applicable in FY 2012/2013 and FY 2013/2014. This revised assumption reduced the City's ARC
payable on October 1, 2013, by approximately $430,000. The initial impact statement provided at the
September 11, 2013 Commission meeting included this as part of the total savings ($5.66 million)
applicable for FY 2013/2014. Since the salary assumption has already been included in the adopted
valuation report, the revised impact statement reflects a savings of ($5.24). However, the pension
changes agreed to by the IAFF and the FOP still results in a total savings for FY 2013/2014 of$5.66
million. The actuary has provided written confirmation which is included as Attachment 3.
As previously stated, the City and IAFF ratified a three- year labor agreement August 17, 2013. On
September 11, 2013,the City Commission adopted a resolution accepting the amended 2012-2015 labor
agreement between the City and FOP. On September 11, 2013, the FOP confirmed that the
membership ratified the agreement with 62 percent of the voting membership in favor of the contract.
The Administration recommends adopting the ordinance in order to effectuate the pension changes that
were agreed upon with both the IAFF and the FOP.
Attachment
,� 1
JLM/I< B/SC-T/C G
T:\AGENDA\2013\September 11\September 30 HR ItemsTire and Police Pension Ordinance\Fire and Police Pension 2nd Reading Memo.doc
ATTACHMENT 1
buckconsultants A Xerox Company
P Y
September 26, 2013
CONFIDENTIAL
Mrs. Celia B. Locke
Executive Director
City Pension Fund/Firefighters & Police Officers
City of Miami Beach
1691 Michigan Avenue, Suite 355
Miami Beach, FL 33139-2573
Actuarial_Impact Statement for Ordinance Amendments to the City Pension Fund for
Police Officers and Firefighters in the City of Miami Beach
Dear Celia:
This letter provides the estimated actuarial impact of the changes negotiated with the Police
Officers and Firefighters bargaining units that will affect the Ordinance relating to the City
Pension Fund for Police Officers and Firefighters in the City of Miami Beach (Pension Fund)
effective September 30, 2013.
Summarized below are the plan changes and the cost impact of these changes. The following
changes will become effective September 30, 2013 unless otherwise stated below.
• The average monthly salary for members hired prior to July 14, 2014 and retiring on or
before September 30, 2015 shall be based on the average of the two highest paid years of
the member prior to the date of retirement or termination. Members hired prior to July
14, 2014 and retiring after September 30, 2015 shall be based on the average of the three
highest paid years of the member prior to the date of retirement or termination. Members
hired on or after July 14, 2010 but prior to September 30, 2013 shall be based on the
average of the three highest paid years of the member prior to the date of retirement or
termination. Members hired on or after September 30, 2013 shall be based on the average
of the five highest paid years of the member prior to the date of retirement or termination.
• Members retiring after September 30, 2013 shall be entitled to receive upon retirement a
monthly pension payable for life equal to (1) 3% of the members average monthly salary
for each year of the member's first 20 years of creditable service computed on a pro rata
basis to the nearest month, provided in no event shall a member's benefit multiplier for
creditable service earned before October 1, 2013 be reduced plus (2) 4% of the members
average monthly salary for each year of the member's creditable service in excess of 20
years computed on a pro rata basis to the nearest month.
Ms. Kathie Brooks
September 4, 2013
Page 2
• Members benefit shall not exceed 85% of the members average monthly salary provided
however that benefit for May 1993 members shall not exceed 80% of their average
monthly salary and provided also that any member who has an accrued benefit in excess
of 85% of their average monthly salary on September 30, 2013 shall not exceed 90% of
their average monthly salary.
• In addition to the rule of 70, members hired before July 14, 2010 must attain age 47 to be
eligible for retirement and members hired on or after July 14, 2010 must attain age 48 to
be eligible for retirement. Notwithstanding the preceding sentence, any police officer
member hired pursuant to a consent decree may retiree when the sum of the member's
age and creditable service equals at least 70.
• Any member hired prior to July 14, 2010 who completes a buyback of prior creditable
service prior to September 30, 2013 and reaches the maximum pension benefit of 85% of
average monthly salary prior to attaining age 47 will have their contribution cease of the
date such employee reaches the 85% maximum pension benefit and his/her final average
monthly salary will be frozen on the same date.
• If any member eligible for benefits terminate his/her employment on or after September
30, 2013 after having completed at least 5 years of creditable service but prior to attaining
age 50 years (or after having completed one year of creditable service, but before
attaining age 55 and completing 10 years of creditable service for a May 1993 member),
and does not withdraw his accumulated contributions in the System, such a member shall
be entitled to receive upon attaining age 50 (age 55 of his termination of employment, if
later, for a May 1993 member) a monthly pension payable for life.
• Members of the System hired prior to September 30, 2013 shall contribute 10% of their
salary to the Pension Fund. Members of the System hired on or after September 30, 2013
shall contribute 10.5%of their salary to the Pension Fund.
• Members will no longer be able to purchase an additional multiplier or pre-employment
public safety service as a police officer or firefighter.
• Effective September 30, 2013, members with at least 5 years of creditable service under
the System may contribute an additional amount of 10% for those hired prior to July 17,
2013 and 10.5% for those hired on or after July 17, 2013 to receive credit for their pre-
employment military service. A member may purchase up to two years of such pre-
employment military service at a 3% multiplier for each year. The purchase of pre-
employment military service must be completed the later of 36 months following
September 30, 2013 or the date the member completes 5 years of creditable service.
Ms. Celia B Locke
September 26, 2013
Page 3
• The benefits of members hired before July 14, 2010, and the beneficiaries of such
members, shall be increased by 2.5 % annually, commencing on the anniversary date of
the member's retirement, except that members who enter the DROP on or after
September 1, 2012 and before September 30, 2013, and participate in the DROP for six
months or longer shall receive a zero percent (0%) cost of living adjustment for the third
(3rd) and fourth (4th) annual adjustment dates. The benefits of members hired on or after
July 14, 2010, and the beneficiaries of such members, shall be increased by 1.5 %
annually, commencing on the anniversary date of the member's retirement.
• Pensionable salary shall exclude overtime pay in excess of 300 hours per calendar year,
payments used for unused sick and vacation leave, hazardous duty pay (when paid),
payments relating to domestic partner tax credit reimbursement, and payments to police
officer members for voluntarily participating in a physical fitness assessment program
offered by the City.
• No creditable service shall be provided under this System for periods of service in
another City retirement plan, nor shall any transfer of service or credit from another City
retirement plan be allowed.
• Police officer member's compensation for off-duty services, in combination with
overtime pay not exceeding 300 hours per calendar year, shall not exceed 11% of the
highest annualized pay rate for the same salary rank that the member is in at the time of
retirement. The 11% limitation shall not apply to any member who holds the rank of
sergeant or lieutenant on September 30, 2013, or any police officer promoted to the rank
of sergeant prior to the date the 2013 Certified Police Sergeant Promotional Register
expires in 2015.
• Extension of Ranges for Firefighter I, Police Officer, Sergeant of Police and Police
Lieutenant effective April 1, 2015 (Proposed Maximum includes the 3% COLA payable
on October 1, 2014 and 5%additional Step effective April 1, 2015 for eligible members)
Current Current Proposed Proposed
Minimum Maximum Minimum Maximum*
Firefighter I— 45,139.11 74,745.85 45,139.11 80,837.64
Day Shift
Police Officer 53,309.01 75,033.33 53,309.01 81,148.55
Police Sergeant 78,748.42 86,852.71 78,748.42 93,931.21
Police 86,852.71 100,532.31 86,852.71 108,725.69
Lieutenant
Ms. Celia B Locke
September 26 2013
Page 4
Actuarial Impact
The proposed changes will be enacted during fiscal year 2013, so changes to required
contributions will be based on October 1, 2012 actuarial valuation with funding to commence in
fiscal 2014. The actuarial impact shown in this letter is based on the October 1, 2012 actuarial
valuation. All assumptions and methods are consistent with the October 1, 2012 actuarial
valuation, with one exception. Due to the cap in pensionable salary excluding overtime hours in
excess of 300 hours, we expect there would be a change in the load for overtime and other pays
used to compute pensionable pay from base pay. To reflect this, we changed the load for
overtime and other pays from 18%to 16%.
Following is the actuarial impact of the proposed changes:
Current Proposed
Plan Plan Change
Annual Cost
Normal Cost $15,069,445 $13,828,117 ($1,241,328)
Amortization 23,986,250 22,832,807 (1,153,443)
Interest Adjustment 3,297,845 3,106,263 (191,582)
Expected Service Buyback 2,778,819 127,363 (2,651,456)
Administrative Expense 697,141 697,141 0
EOY Total Annual Cost $459829,500 $409591,691 ($592379809)
Expected Member Contributions $4,631,365 $4,631,365 $0
Expected Share Plan Contributions 120,549 120,549 0
EOY Estimated City Contributions 41,077,586 35,839,777 0
EOY Total Annual Cost $4598299500 $4095919691 ($592379809)
Annual Cost(as a % of Projected Payroll)
Total Required Contribution 98.95% 87.65% (11.30%)
Expected Member Contributions 10.00% 10.00% 0%
Expected State Contributions 0.26% 0.26% 0%
Expected City Contributions 88.69% 77.39% (11.30%)
The above impact assumes that State contributions available to offset the City's contribution will
not be affected by these changes. The Division of Retirement will review the treatment of State
contributions upon their review of the actuarial impact statement.
Ms. Celia B Locke
September 26, 2013
Page 5
Data, assumptions,Methods and Plan Provisions:
The calculations contained in this study are based on the data, assumptions, methods and plan
provisions used for the October 1, 2012 actuarial valuation of the System. The salary scale
assumption has been reduced to reflect the cost of living freeze reference above. I am an
Enrolled Actuary and meet the qualification standards of the American Academy of Actuaries to
render the actuarial opinion contained in this letter.
Actuarial Certification
The calculation of the actuarial impact for the plan changes were performed in accordance with
the standards of practice prescribed by the Actuarial Standards Board. The member data,
assumptions, and methods are the same as those shown in the Actuarial Valuation Report as of
October 1, 2012, with the exception of the load for overtime and other pays discussed above. I
am a Member of the Academy of Actuaries and meet the Academy's qualification standards to
issue this Statement of Actuarial Opinion.
Please let us know if you have any questions or need anything further.
Sincerely,
Joseph L. Griffin ASA, EA, MAAA, FCA
Director, Consulting Actuary
cc: Mr. David Campbell—Buck Consultants/Atlanta
Mr. Steward Sainvil—Buck Consultants/Atlanta
PARetirement\Miami Beach Fire and Police\2013\Union Pricing\Correspondence\2013 Union Negotiation Pricings Results-Scenario S.docx
00993-0001 RET03
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ATTACHMENT 3
buckcionsultants A Xerox Company
September 27, 2013
Carla Maglio Gomez
City of Miami Beach
Human Resources Assistant Director
1700 Convention Center Drive
Miami Beach, FL 33139
Reconciliation of Change to the Annual Required City Contribution for FY2014 for the
City Pension Fund for Firefighters and Police in the City of Miami Beach
Dear Ms. Gomez:
Outlined below is a summary of the change in the fiscal year 2014 City Annual Required
Contribution (ARC) for the City Pension Fund for Police Officers and Firefighters in the City of
Miami Beach (Pension Fund). The change in the ARC is a result of the negotiations with both
the Police Officer and Firefighters union which led to amendments in the Ordinance and changes
to the assumptions based on the expected salary increases over the three year period of the
bargained agreements.
Change in the Annual Required Contribution
We presented the preliminary ARC in February of $41,505,104 which was prior to any
negotiated savings with the Unions. The final valuation report presented and adopted by the
Board on September 19, 2013 showed a reduced ARC of$41,077,586. This ARC reflected only
the COLA concession of 0% for fiscal years 2013 to 2014 and a 3% COLA for fiscal year 2015.
This was the only the change that could have been reflected in the valuation report since the
proposed ordinance changes had not yet be passed by the City Commission.
The change in the COLA is considered an assumption change and is appropriately reflected in
the valuation report. All changes requiring an amendment to the ordinance have to be reflected in
an actuarial impact statement. The actuarial impact statement submitted shows a final ARC for
fiscal year 2014 of$35,839,777 and assumes that the proposed changes to the ordinance will be
passed by the City Commission on or before September 30, 2013. The assumption change
reflected in the actuarial valuation (savings of$427k) in combination with the actuarial impact
statement savings of$5,237k) reflects a total fiscal year 2014 ARC savings of$5.66m.
Table A shown on the next page shows a reconciliation of the total fiscal year 2014 ARC
savings.
200 Galleria Parkway NW, Suite 1900 • Atlanta,GA 30339-5945
770.955.2488 • 770.933.8336(fax)
Ms. Carla Maglio Gomez
September 27, 2013
Page 2
TABLE A
Change in Annual Required Contribution for Fiscal Year 2014
1. ARC (preliminary at Feb 2013) $41,505,104
2. ARC (per valuation report) $41,077,586
3. Initial Savings(0%COLA FY13&14, 3%COLA FY15) ($427,518)
4. ARC (based on Impact Statement) $35,839,777
5. Additional Savings ($5,237,809)
6. Total Savings ($5,665,327)
Actuarial Impact Statement
Per Florida Statutes any change that is made to an ordinance that results in a change in the
pension benefits paid to members of a retirement system has to be documented via an Actuarial
Impact Statement. The Actuarial Impact Statement shows the change in the annual required
contribution resulting from the changes in the pension plan ordinance. The Actuarial Impact
Statement has to be prepared and submitted to the Florida Division of Retirement in the
Department of Management Service for documentation purposes.
As a result, the changes negotiated with the Police Officers and Firefighters unions earlier this
year were split to show the changes that had to be documented in an Actuarial Impact Statement
($5.23m) and the changes reflected in the valuation report ($0.43m) that were not required to be
documented in the Actuarial Impact Statement. As shown above, the sum total of both savings
was $5.66m for fiscal year 2014.
Very truly yours,
David P. Ca bell
Consultant
DC:cj
CAMiami Beach Fire and Police\2013\Correspondence\Reconciliation of ARC FY2014.docx
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