LTC 387-2013 Updated Results of Pension Impacts from the Reorganization of the Fire Department m MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # 387 - ,2013 LETTER TO COMMISSION
TO: Mayor Matti Herrera Bower and Me bers of the Ci Commission
FROM: Jimmy L. Morales City Manager
SATE: October 23, 2013
SUBJECT: Updated Results of Pension Impacts from the Reorganization of the Fire Department
The purpose of this Letter to the Commission is to provide information that was requested from
the City's pension actuary, Michael Tierney, at the August 29, 2012 City Commission Workshop
on Pension Reform, regarding the impacts to the Fire and Police and Pension Plan as a result
to the reorganization of the Fire Department that was negotiated in the 2009 — 2012 collective
bargaining agreement between the City and the International Association of Fire Fighters, Local
1510 (IAFF).
Please feel free to contact me if you have any questions or need any additional information.
JML /KGB /SC -T /CMG
Attachment
f: \cmgr \$all \ltc 2013 \Itc - pension impact of fire reorganization 10- 21- 13.docx
c�
—i w
-`'
e�
C, -4
rn rQ
7n
T {
Ln
I
i
concqlpts 0
Menagcmenl Ad visors
Benefits SpecieGsts
October 21, 2013
Ms. Sylvia Crespo -Tabak
Human Resources Director
City of Miami Beach
1700 Convention Center Drive
Miami Beach, Florida 33139
Dear Ms. Crespo - Tabak:
CITY OF MIAMI BEACH — PENSION EFFECT OF REORGANIZATION OF
CLASSIFICATIONS IN THE FIRE DEPARTMENT
This report updates the results we prepared last fall estimating the effect on pension
liabilities and related contribution requirements taking into account the reorganization
of classifications in the Fire Department. Actuarial Concepts was retained by the City to
perform this analysis.
The actuarial analysis was based on an October 1, 2012 valuation date and used the
assumptions and methods used by the plan actuary in the then - latest available actuarial
report from 2011. Since only firefighters were affected, the analysis was performed only
on the 172 firefighters that were then actively participating in the plan (excluding
members in DROP), 38 of which were affected by the reorganization. For this purpose,
the combined Police and Fire valuation was split into two separate groups, with pro
rata allocation of assets to develop pro forma unfunded liabilities.
As requested, we have performed additional analysis of the long term effect of the
reorganization.on the pension plan, including a comparison of the future salary increase
expectations over a firefighter's career, both pre- reorganization and post -
reorganization. The purpose of this analysis was to verify that the actuarial analysis
captured all the expected future changes due to the reorganization. City staff was very
helpful in assisting with this analysis, and the employee comparison prepared by City
staff is attached as Exhibit A to this report. We then back tested this comparison for the
38 employees who were affected by the reorganization to make sure the assumed salary
increase assumption used by the plan was sufficient to capture the pay differences due
to the reorganization.
Upon review of the comparison, the general conclusion is that even though employees
were to reach maximum pay five years earlier, it was still before the expected normal
retirement date, and thus the salaries at retirement (upon which the projections were
based) ended up about the same, both pre- reorganization and post - reorganization.
2950 Hallcyon Lane, Suite 402, J icksanvville, FL 32223
Phone: (904) 262- 3020, Fax: (904) 26S -3374
E -mail: ic<zactulriilconcel)ts.com
Ms. Sylvia Crespo -Tabak
October 21, 2013
Page 2
The 38 employees affected by the reorganization with their total pre- reorganization
salary and post- reorganization salary are attached as Exhibit B.
As part of the review of the membership data, we discovered that some post -
reorganization information was based on averages rather than actual individual pay
reported. We have revised our database to use actual premium pays, overtime and off -
duty pay.
With the revision to the post- reorganization data, the revised effect on contribution
requirements is as follows. The first -year increase in contribution requirements is
$407,000 for the first year, payable annually over the next 30 years, assuming a future
payroll growth rate of 3.5% per year. Note that the $407,000 first year estimate will
increase significantly in dollar amount over the next 30 years as payroll increases for
these affected members, although the increased percentage of payroll is assumed to
remain the same.
The valuation results pre- and post- reorganization are summarized below:
Fire Only
Pre - reorganization Post- reorganization Net Changes
(000) (000) (000)
Liabilities
Total APV* of Active Member
Projected Future Benefits (PVB) $ 159,756 $ 166,275 $ 6,519
UAAL ** 30,317 33,272 2,956
Fundin
Normal Cost 7,196 7,435 239
UAAL Amortization 2,207 2,389 182
Service Buyback 1,276 1,298 22
Less Member Contributions 2,127 2,163 36
Total 1st Year Impact 407
*Actuarial Present Value
* *Unfunded Actuarial Accrued Liability - portion of active member PVB assigned to past periods
Sincerely,
i
Michael J. Tierney
�Conc * is
�P
T _
C
o �E
N w O
O C Q
N M
o
O J
N N
E N n
Q) O 'V
p N
Z Z' n @
_T �
@ o y
a
L 2 a
R X 211
U O 2 N p
Y. d @ N ■88881
CL
X Q '■
O C 111891
C
AL o C X CL 11 m O
n v v F « a v N N @ O �C ■��
O r
E -° '
O 0) Z_ o �I1
t L L 0
K-5 E c o .. O@ W N N
d G v E v a vi j c z T N N
cc
;' n O N
3
O o u u v v r �_ E E u u a u E v v- .o C 47 'NO
U c u u6° c v v A E E E ' m o v �° c m. = v ?° O O.X N
CL cu
E
O
_ L m
3 .2)o
O N N
E ° E E E E E C C E y E E E C E A « O U - `
R -5 W s E Q 2 V nQdd¢QQQQS °dddQ Qddd QQQdd a CL rL >.
N C O C N
4^ u @
R Ra w W N
L U L n Q 1 0
- N
y A c O m N m
'0 c N @ Q
M y U y
W M
@ E
x OX @ O
N n o C
O O N N N N N N N N N
O � 7 0_ .O n
• ((S O N O O O O N N N O 1- T n r @
O Q7 @ C
N
v v v _ o N a o
a
�E@�3
O '-
a E w
R C@ N O U
N �l u L aJ N O N
0
• V C° b0 @ N N N 0-0
N W= Un C O
O
Z U O d
CL C � C _� y C
C !U C
4A R 69 fH 49 f�9 f Vi 69 6�9 6 f 69 69 69 69 69 Vi Vi G d O
> @ 0 3
w LL a n�
@ LL @ U
Q + o c 7 .0 CO rte@. M N
� ° ° N O rn .2 N N
O ,> _N N
�, Cn M dCCU� W c. C7S SS aC7SS SS c=. C72 d`,-' uY m n0_2JV
h _ O
v °- c c c i Q❑ a L 1n co O
05 C v O E t U C) L @ U ' N
L
O c�
C @ LL@ C
� ¢4_ - - -- °- - -- ' °cam E EE UN
`u.-' « s c o E E C N 7 7 U C 'tir N
G _ U 'a .A '� - y r'i. N N a) n U
O_ v v v v « •�
y, v v v v O
�r Lil U Ci Li k. C. 'C,. 7- 4, Z {L [z. L?. [i
I
0
o a�
M a
8 Cs
E o °�
O N
0 f O
z 3 C
O N 3
is LL o
E >. 3
x N c
is m
L E E fA
M -a�
v m o Q
c aft
_ m �a/
t n m o O
a
U N V
2 d V m s 3 ~
c c l l m
c � T
a) 0 N 4 c
EA a ° a ° ti E
2 C C w U m 0) X p
N T W m J
o 1° o ._ r U m
c — -1 O E2 — lL •�`
A .O E 7� .� v O .E r` . m
(D T N
is n. cm 3
n.. _ c o o .. _ c° C t3 m
v ~ E O L o N
- -'' om
V aQ - u. y �w r. -
U ,n �_ 2 o y_ n O7 N .(n 3
d x 0)
c H a A c v L O
E o 0 0 o0 0 0 0 -
O 0) O E2
O T
E E E E L N L
(D O 3 N 0
.y. — n n C O
N C m n! E y
E E °_ E ° E E E E a E E E E E E - c E 0) a
- v r r , 5 N y H h ti v O v. vi v , y O L l` W
U N A �
W N Q Z V Q Q Q Q N Q Q Q Q 2 ° N Q Q Q Q h Q Q Q Q Q Q Q n 9 m Q
° axi cn E
L u R ) N E
N
Gz, t L m T U x
O
N G N L m n n�
Emm,
_v R 0 O O O U
a
CC c- V C 3 n ~ O -
W O N m 0 0-
M -o N (O `n �j N
N — n x L N 3
Q O r OC 01 O N N N N `! r N a) N O N
• i'^ N 0h, N L
N N N O N N N O , N N N N N C E C p
N
N N E n—
U N N -- L L L O L L (D Q� x
0 ti N Q C
0000 "oo"
. U ' 0 O N
CC C O n0
a '_� N N N
•� E m L Cl) N U7 m C
G N M M M M o0 — N N N O C C 3
«�
V N 00 00 00 00 H C N U m m n
o � m C m O
M M N Q N E U Q7
N m V O r , ,fi v �. .. C' 0` Q\ D` O O n 3 C U 1 7
O O N w o
cL
> c
n m. 0
c
= o °- � m mQ - o
O C = m U
( y o U ti 'v C 3 p LL m n L CL
W u W c*. VS '72 m o .0
_N N
o _ c Q LL CD
N � m
_ U
m a� m
S E
= N 0 Y
N N n.L N
Q c n
r s s= v A A A A E E E �' 3 3 (U m '
oN E c
CD m
p-. L7 U L7 Lc. L LZ iz L L. Lt Li.. 17 Q Q Q x ,o N Q n
Exhibit B
EMP# Classification (Pre- Total Pay Pre Classification (Post- Total Pay Post
reor Or reor Reorg
15192 FIREFIGHTER II 140,361.11 Lieutenant 130,368.04
14565 FIREFIGHTER II 140,278.25 Lieutenant 130,368.04
15268 FIREFIGHTER II 137,647.95 Lieutenant 130,368.04
16847 FIRE LIEUTENANT 147,104.51 Captain 143,173.57
14705 FIREFIGHTER II 133,981.00 Lieutenant 130,368.04
16565 FIREFIGHTER II 132,788.97 Lieutenant 130,368.04
12759 FIRE LIEUTENANT 155,270.10 Captain 152,948.09
14333 FIREFIGHTER II 132,508.84 Lieutenant 130,368.04
15120 FIREFIGHTER II 131,681.66 Lieutenant 130,368.04
12993 FIRE CAPTAIN 144,203.52 Fire Division Chief 142,965.84
16857 FIREFIGHTER II 127,561.07 Lieutenant 130,368.04
15121 FIRE LIEUTENANT 149,459.58 Captain 152,948.09
14945 FIREFIGHTER II 122,358.42 Lieutenant 126,104.82
17591 FIREFIGHTER II 126,067.01 Lieutenant 130,368.04
17043 FIREFIGHTER II 125,565.05 Lieutenant 130,368.04
16594 FIREFIGHTER II 124,897.94 Lieutenant 130,368.04
14334 FIREFIGHTER II 124,052.43 Lieutenant 130,368.04
18156 FIREFIGHTER II 123,332.74 Lieutenant 130,368.04
16614 FIREFIGHTER II 123,329.35 Lieutenant 130,368.04
17525 FIREFIGHTER II 123,021.94 Lieutenant 130,368.04
16621 FIREFIGHTER II 120,224.16 Lieutenant 130,368.04
16613 FIREFIGHTER II 119,221.27 Lieutenant 130,368.04
16617 FIREFIGHTER II 113,311.39 Lieutenant 126,104.82
15008 FIRE LIEUTENANT 132,603.37 Captain 147,940.67
17594 FIRE LIEUTENANT 127,714.30 Captain 143,173.57
14326 FIRE LIEUTENANT 124,352.13 Captain 143,173.57
16566 FIRE LIEUTENANT 123,644.24 Captain 143,173.57
18149 FIREFIGHTER II 105,877.36 Lieutenant 126,104.82
16611 FIRE LIEUTENANT 131,320.34 Captain 152,948.09
18148 FIREFIGHTER II 108,551.10 Lieutenant 130,368.04
16572 FIREFIGHTER II 108,394.57 Lieutenant 130,368.04
18152 FIREFIGHTER II 107,944.81 Lieutenant 130,368.04
15018 FIREFIGHTER II 120,700.90 Captain 143,173.57
17825 FIREFIGHTER II 102,585.58 Lieutenant 126,104.82
17833 FIREFIGHTER II 106,396.54 Lieutenant 130,368.04
18157 FIREFIGHTER II 106,175.30 Lieutenant 130,368.04
17834 FIREFIGHTER II 99,535.35 Lieutenant 126,104.82
16584 FIRE LIEUTENANT 112,004.92 Captain 143,173.57
i
I
COACP