Ordinance 93-2860 ORDINANCE NO. 93-2860
AN ORDINANCE OF THE CITY OF MIAMI BEACH,
FLORIDA, AMENDING ORDINANCE NO. 1901 WHICH
ESTABLISHED THE GENERAL EMPLOYEES PENSION
SYSTEM, ESTABLISHING A BENEFIT LEVEL FOR
EMPLOYEES WITHIN THE CLASSIFICATIONS OF"OTHER"
AND ENTERING THE SYSTEM ON OR AFTER AUGUST 1,
1993; PROVIDING AN IRREVOCABLE OPTION FOR SAID
EMPLOYEES ENTERING THE SYSTEM ON OR AFTER
AUGUST 1, 1993 TO ELECT TO REJECT MEMBERSHIP IN
THIS SYSTEM AND ELECT TO JOIN THE DEFINED
CONTRIBUTION RETIREMENT SYSTEM; PROVIDING FOR
A CONTRIBUTION RATE OF TEN PERCENT FOR SAID
EMPLOYEES; PROVIDING FOR A REPEALER,
SEVERABILITY AND AN EFFECTIVE DATE.
Whereas, the City of Miami Beach, Florida has established the General Employees
Retirement System (the "System") with the passage of Ordinance 1901 which has been
amended from time to time, and,
Whereas, the City Commission of said City desires to amend this System to establish
a level of benefits for persons entering the System on or after August 1, 1993.
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA:
SECTION 1 - Article 2.09 of Ordinance 1901 is amended to read as follows:
2.09 "Final Average Monthly Earnings"means, in the case of a person who became
a Member of the System on or after November 1, 1976, one-twelfth of the average
annual earnings of the Member during the three highest paid years of his creditable
service; in the case of a person who became a Member prior to November 1, 1976
or who retires after October 1, 1990, this term means one-twelfth of his average
annual earnings during the two highest paid years of his creditable service.
Notwithstanding the foregoing, for any person who is in a classification within the
AFSCME bargaining unit who entered service with the City on or after April 30,
1993; or for any person who is in the "Other" classification who entered service with
the City on or after August 1. 1993, this term means one-twelfth of the average
annual earnings of the Member during the three highest paid years of service as an
Employee.
SECTION 2 - Section 3.04 of Ordinance 1901 is amended to read as follows:
3.04 All individuals holding the position of either City Manager or City Attorney,
•
shall have the option to reject membership in the plan provided herein and to be a
member in a retirement program with any public trust fund named by the aforesaid
individuals and approved by the City Commission. Any employee within the
classifications within the AFSCME bargaining unit entering service with the City on
or after April 30, 1993; or any employee within the classification of "Other" who
entered service with the City on or after August 1. 1993, and would otherwise
become a Member of this retirement system, shall have an irrevocable option to
reject membership in the plan provided herein, and select the Defined Contribution
Retirement System.
SECTION 3 - Article 5.01 of Ordinance 1901 is amended by adding Subsection (f)
to read as follows:
5.01(f) Notwithstanding the above subsections, a person who entered service
with the City on or after April 30, 1993, and is within the classifications of the
AFSCME bargaining unit or a person who entered service with the City on or after
August 1. 1993 and who is in the classification of "Other" shall be eligible to retire
with full benefits upon the completion of more than ten (10) years of creditable
service and the attainment of the sixtieth anniversary of his birth. For persons
eligible to retire under this paragraph, the retirement allowance shall be computed
as follows: final average monthly earnings multiplied by three percent (3%) per year
of creditable service to a maximum of eighty percent (80%) of such final average
monthly earnings. Persons with ten (10) or less years of creditable service may retire
with a reduced benefit. For persons with less than ten (10) years of creditable
service, the retirement allowance shall be computed as follows: Final average
monthly earnings multiplied by three percent (3%) per year of creditable service
multiplied by ten percent (10%) multiplied by years of creditable service to a
maximum of ten.
SECTION 4 - Article 5.03 of Ordinance 1901 is amended by adding Subsection (c)
to read as follows:
5.03(c) Notwithstanding the above subsections, any Member who entered
service with the City on or after April 30, 1993, who is in the classifications within
the AFSCME bargaining unit or any Member who entered service with the City on
or after August 1, 1993 and who is in the classification of"Other" and whose service
with the City is terminated voluntarily or involuntarily, prior to the attainment of his
sixtieth anniversary of his birth but after the completion of ten (10) or more years
of creditable service shall be entitled, in lieu of a refund of his accumulated
employee contributions, to apply for a vested retirement allowance. The vested
retirement allowance shall be a deferred allowance commencing on the first day of
a
the calendar month coincident with or next following the sixtieth anniversary of his
birth and shall be computed in accordance with the provisions of Article 5.01(f)
above.
SECTION 5 - Article 5.04(d) of Ordinance 1901 is amended to read as follows:
5.04(d) The allowance payable to a disability Retirant prior to his normal
retirement date shall not be less than thirty-five percent (35%) of his final average
monthly earnings as defined in Section 2.09 as of the date of his disability if an
ordinary disability retirement allowance is payable, and not less than seventy-five
percent (75%) of such final average monthly earnings of a service connected
disability retirement is payable. For any Member who is in the classifications within
the AFSCME bargaining unit and who entered service with the City on or after April
30, 19933-or any Member who is in the classification of "Other" and who entered
service with the City on or after August 1. 1993, the allowance payable on a service
connected disability retirement shall not be less than sixty percent (60%) of his final
average monthly earnings. The allowance payable to a disability Retirant after his
normal retirement date shall be an amount computed as a normal service retirement
on the basis of the final average monthly earnings and number of years of creditable
service he would have had if he had continued in service without interruption until
his normal retirement date at the maximum rate of pay in effect at the time of his
retirement for the classification at which he retired provided that such allowance
shall not exceed the amount payable to him as a disability retirement allowance prior
to his retirement date or not less than his normal retirement benefit at his normal
retirement date. "Normal Retirement Date" as used in this Section 5.04 means the
date determined in accordance with Section 5.01 (a) on the assumption that the
disability retirement is deemed to be active service as an Employee for this purpose.
SECTION 6 - Section 6.02 is amended by adding subsection (d) to read as follows:
6.02(d) Notwithstanding subsections (a), (b) and (c) above, after April 1, 1993,
all persons in service with the City and who are in the classifications within the
AFSCME bargaining unit and after August 1. 1993. all persons in service with the
City and who are in the classification of "Other" shall contribute to the System ten
percent (10%) of their covered earnings throughout their service as an Employee.
SECTION 7 - REPEALER All Ordinances or parts of Ordinances in conflict
herewith be and the same are hereby repealed.
SECTION 8 - SEVERABILITY If any section, subsection, sentence, clause or
phrase of this Ordinance is held to be invalid or unconstitutional by any court of competent
jurisdiction, then said holding shall in no way affect the validity of the remaining portions
of this ordinance.
SECTION 9 - EFFECTIVE DATE This Ordinance shall become effective ten (10)
days after its adoption.
Passed and adopted this 28th day of July , 1992.
Attest: IVLUAL.
vice-Mayor
City Clerk
1st reading 7/14/93
2nd reading 7/28/93
Approved as to Form:
L/3 1 '4- c
City Attorney
CITY OF MIAMI BEACH
C Tv HALL 1700 CONVENTION CENTER DRIVE MoAIM1'BEACH FLORIDA 33'39
OFFICE OF THE CITY MANAGER TELEPHONE. (305) 673-7010
FAX: (305) 673-7782
COMMISSION MEMORANDUM NO. "4°3-6)3
July 28, 1993
To: Mayor Seymour Gelber and
Members of the City Commission
From: Roger M. Carl .i+ OtAk....
City Manager
Subject: Amendments to the Pension System for General Employees of the City of
Miami Beach for Members in the Classification of "Other"
Administrative Recommendation:
The Administration recommends that the City Commission adopt the two ordinances
amending the General Employees Pension System for the "Other" members after a public
hearing on second reading on July 28, 1993.
Background:
These two ordinances are prepared in accordance with the anticipated savings to
be achieved in the FY 92/93 Adopted Budget. There are two ordinances amending
Ordinance 1901, The General Employees Pension System as it relates to members in the
classification of "Other". The "Other" classification are civil service employees who are in
confidential positions and are not included in the bargaining groups of AFSCME or
Benevolent. There are currently seventy-two (72) employees in this group and they are
principally the first line supervisory positions along with some technical positions. The
employees in this group have historically received the salary and benefit changes that had
been negotiated with the Employee's Benevolent Association. However, since no resolution
has been achieved with that union, the administration is recommending that the historic
relationship be severed and these employees be given the same salary and benefit changes
that were previously granted to members of the AFSCME union.
The first retirement related ordinance implements the recommendations of the
Pension Systems Review Committee and institutes a bifurcated pension system for all Other
employees with a reduced benefit for new members of the system. The recommendations
of this Committee were to decrease the benefit accrual rate to three percent annually, with
a retirement age of sixty, vest the benefit incrementally over ten years, modify the
AGENDA
ITEM
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calculation of final average monthly earnings to an average of the three highest years,
reduce disability benefits and raise the contribution rate to ten percent for all employees.
The second retirement related ordinance provides a retirement window with an incentive
to encourage eligible employees to retire.
These two ordinances, which should be considered a package, will accomplish two
necessary goals. First, the retirement incentive should produce two years of employee
turnover (anticipated to be 9 employees) immediately. The resulting savings from replacing
a portion of the early retired employees (anticipated to be 8 employees) at lower salary
and benefit levels will provide the expense reductions anticipated within the FY 92/93
Adopted Budget. Second, the two years of turnover will allow the accomplishment of
diversity Goals for "Other" employees covered by the General Employees Retirement
System within budget limitations and much sooner than otherwise would be possible without
an early retirement program.
Analysis:
The financial effect of these two Ordinances in conjunction with the amended salary
ordinance for new hires of general employees of the City will be an approximate forty
percent (40%) reduction in salary cost for new employees.This is accomplished because the
existing salary plan has a twenty-five percent (25%) range from minimum to maximum and
the retiring employees are typically at the maximum salary for their respective positions.
With the reduction of fifteen percent (15%) in the salary plan, new employees starting at
the entry level for a position will be starting at a salary forty percent (40%) lower than
the employee that they are replacing. Additionally, the changes in the pension system will
save approximately five percent (5%) of salary as a contribution to the pension system.
Members of the City Commission should also be aware that the retirement incentive
will produce a cost for the one-time payout amount of the employees accumulated leave
balances (which they may elect to receive 50% upon separation and 50% in December or
January depending on their tax situation) which will be more than offset by the savings
produced from salary and benefit reductions. These payout amounts have been considered
in the net savings projected in the FY 92/93 Proposed Budget to be achieved through the
retirement incentive program.
There are nineteen (19) personas from a total of seventy-two employees (72) in the
"Other" classification who would be eligible for the retirement incentive. The retirement
incentive option would be available to the eligible employees for a sixty day period (the
• "Election Period") from the effective date of the ordinance and would provide credit for two
years of creditable service for all employees over normal retirement age or credit for two
years of age if the employee is within two years of the normal retirement age within the
r 41
period. Seventeen (17) of these employees are over age fifty and would be eligible for the
additional service credits and two (2) employees will be within two years of normal
retirement during the Election Period and would be eligible for additional age credit.
The nineteen (19) employees have combined salaries of$647,047 annually and leave
balances for those employees total $254,405. It is anticipated that fifty percent (50% or 9
employees) of those eligible for the incentive will accept the benefit and retire. The
retiring employees will have salaries of approximately $320,000 and it is anticipated that
approximately eighty percent (80%) of the retiring employees (or 7) will be replaced. With
the new salary structure and anticipating hiring at the entry level for the positions, the
salaries for the new hires will be $192,000 annually saving the City $128,000 in salary cost
annually. The new level of benefits in the pension system will produce a savings of$16,000
the first year and will grow each year as the bifurcated plan becomes the only plan over
time. The total of $144,000 in annual savings will be offset in the first year by the payout
on leave settlements of $125,000 (50% of $254,405). It is anticipated that the payout on
leave settlements due to option to defer payment for tax reasons will amount to 75% or
$94,000 this fiscal year and 25% or $31,000 next fiscal year, producing a net savings for
the first twelve months of $19,000 or fifteen percent (2%) of the projected savings from
pension plans projected in the FY 92/93 Adopted Budget. The second year, without the
payout of the leave settlements, the savings would be $150,000 based on additional
employees turnover and performance reviews and the amount would annually increase with
the additional employee turnover. The effect of these two ordinances and the salary
ordinance working together produces savings three and one half times greater than the
effect of only implementing the bifurcated pension system recommended by the Pension
Systems Review Committee.
Conclusion:
The savings of $19,000 the first year and $150,000 the second year with the ability
to more quickly achieve the diversity commitment of the City of Miami Beach provides the
justification for approval of these two ordinances. To accomplish these changes prior to
the summer recess, the Administration requests that the City Commission hold the Public
Hearing and second reading of the Ordinance on July 28, 1993.
RMC/RJN/me
45
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