Ordinance 93-2840ORDINANCE NO. 93-2840
AN ORDINANCE OF THE CITY OF MIAMI BEACH,
FLORIDA, AMENDING ORDINANCE 1901 WHICH CREATED
THE GENERAL EMPLOYEES PENSION SYSTEM, BY
AMENDING SECTION 5.02, EARLY RETIREMENT
ALLOWANCE, BY PROVIDING A PERIOD DURING WHICH
A RETIREMENT INCENTIVE WILL BE OFFERED TO
QUALIFYING EMPLOYEES WITHIN THE CLASSIFICATIONS
OF EMPLOYEES UNDER THE AMERICAN FEDERATION OF
STATE, COUNTY AND MUNICIPAL EMPLOYEES
BARGAINING UNIT, PROVIDING FOR A REPEALER,
SEVERABILITY AND AN EFFECTIVE DATE.
Whereas, the City Commission of the City of Miami Beach, Florida, adopted
Ordinance 1901 which created the General Employees Pension System, and,
Whereas, the City Commission is desirous of reducing the number of employees who
qualify for membership in the System, and,
Whereas, the reduction in membership can be accomplished on a voluntary basis by
offering an incentive for existing employees to retire; and,
Whereas, the City has bargained collectively with the American Federation of State,
County and Municipal Employees ("AFSCME"),
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA:
SECTION 1 - That Section 5.02 of Ordinance 1901 be amended to read as follows:
5.02 Early Service Retirement Allowance
AU) (a) Any Member may retire prior to his normal retirement date on an
early service retirement allowance on the first day of the calendar month next
following receipt of written application therefor by the Board, provided that, at the
time of such retirement, he has attained fifty (50) years of age and the sum of his
attained age (last birthday) and the number of his full years of creditable service is
not less than seventy-five (75).
(2) () The early service retirement allowance shall be an immediate
allowance commencing as of the date of the Member's retirement and shall be equal
to:
(a) (-1) In the case of a person who became a Member of the System on or
after November 1, 1976, the actuarial equivalent of a deferred retirement allowance
commencing on his normal retirement date and computed in accordance with Section
5.01 on the basis of his final average monthly earnings and creditable service as of
the date of his retirement;
(b) (2) In the case of a person who became a Member of the System prior to
November 1, 1976, the actuarial equivalent of a deferred allowance commencing on
the first day of the calendar month coincident with or next following the date as of
which he attains age 55 and computed in accordance with Section 5.01 on the basis
of his final average monthly earnings and creditable as of the date of his retirement,
including the adjustment, if any, required in accordance with paragraph (d) of
Section 5.01.
B. Commencing on the effective date of this Ordinance and for sixty (60) days
thereafter (the "Election Period"), an Employee who is a Member ("Employee Member")
of this System and is in a classification within the AFSCME bargaining unit who meets one
of the criteria set forth below will have an irrevocable option to elect one and only one of
the following:
(1) If an Employee Member within the Election Period. has attained the normal
retirement age and completed five (5) years of creditable service. said Employee
Member shall have the irrevocable option to retire during the Election Period. and
receive, as an inducement. credit for two years of additional creditable service in
addition to any creditable service the Employee Member may have earned. or,
(2) If an Employee Member. within the Election Period. shall have completed five
(5) years of creditable service and is within two (2) years of the normal retirement
date. said Employee Member shall have an irrevocable option to retire within the
Election Period. and receive. as an inducement. credit for two (2) years of additional
age in addition to the age previously attained by the Employee Member.
SECTION 2 - REPEALER All Ordinances or parts of Ordinances in conflict
herewith be and the same are hereby repealed.
SECTION 3 - SEVERABILITY If any section, subsection, 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 4 - EFFECTIVE DATE This Ordinance shall be effective ten days after
its adoption.
Passed and adopted this 21st day of April , 199
Attest:
City Clerk
Appro d as to Form;
City Attorney
1st reading 4/8/93
2nd reading 4/21/93
Mayor
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673-7010
FAX: (305) 673-7782
COMMISSION MEMORANDUM NO. a OO -co
To: Mayor Seymour Gelber and
Members of the City Commission
From: Roger M. C
City Manager
April 21, 1993
Subject: Amendments to the Pension System for General Employees of the City of
Miami Beach for Members of the American Federation of State, County and
Municipal Employees ("AFSCME")
Administrative Recommendation:
The Administration recommends that the City Commission adopt the two ordinances
amending the General Employees Pension System for the AFSCME members on second
reading after a Public Hearing and second reading.
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 of the
AFSCME bargaining unit. The first retirement related ordinance implements the
recommendations of the Pension Systems Review Committee and institutes a bifurcated
pension system for all AFSCME 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 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 31 employees) immediately. The resulting savings from replacing
a portion of the early retired employees (anticipated to be 25 employees) at lower salary
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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 AFSCME 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 sixty-two (62) persons from a total of two hundred and forty employees
(240) in the AFSCME unit 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 period. Forty-seven (47) of these employees are over age fifty and would be
eligible for the additional service credits and seventeen (17) employees will be within two
years of normal retirement during the Election Period and would be eligible for additional
age credit.
The sixty-two (62) employees have combined salaries of $1,460,189 annually and
leave balances for those employees total $507,919. It is anticipated that fifty percent (50%
or 31 employees) of those eligible for the incentive will accept the benefit and retire. The
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retiring employees will have salaries of approximately $730,000 and it is anticipated that
approximately eighty percent (80%) of the retiring employees (or 25) 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 $350,000 annually saving the City $380,000 in salary cost
annually. The new level of benefits in the pension system will produce a savings of $37,000
the first year and will grow each year as the bifurcated plan becomes the only plan over
time. The total of $417,000 in annual savings will be offset in the first year by the payout
on leave settlements of $254,000 (50% of $507,919). it is anticipated that the payout on
leave settlements due to option to defer payment for tax reasons will amount to 75% or
$190,500 this fiscal year and 25% or $63,500 next fiscal year, producing a net savings for
the first twelve months of $163,000 or fifteen percent (15%) 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 $425,000 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 $163,000 the first year and $425,000 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.
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