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92-2800 Ordinance ORDINANCE NO. 92-2800 AN ORDINANCE OF THE CITY OF MIANI BEACH, FLORIDA, AMENDING ORDINANCE NO. 88-2603, WHICH CREATED A RETIREMENT SYSTEM FOR UNCLASSIFIED EMPLOYEES AND ELECTED OFFICIALS, BY PROVIDING THAT ADMINISTRATIVE EXPENSES OF THE PLAN SHALL BE PAID FROM THE PLAN, PROVIDING FOR A REPEALER, SEVERABILITY AND AN EFFECTIVE DATE. WHEREAS, the City of Miami Beach, Florida, created a retirement system known as the Retirement system for UnClassified Employees and Elected Officials of the city of Miami Beach with the passage of Ordinance No. 88-2603, as the same has been amended, and, WHEREAS, the City desires that the administrative and investment expenses of the Retirement System be paid from the assets of the Retirement System rather than directly from the City, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF KIANI BEACH, FLORIDA: SECTION 1. That section 6.03 of Ordinance 88-2603 be amended to read as follows: 6.03 Contributions by City (a) It is the intent of this Ordinance that the City contribute to the Unclassified System each year the amounts actuarially determined to be required, in addition to contributions by Members, to cover the cost of the benefits provided by the Unclassified System. In addition Provided. however. administrative expenses shall be paid by the ~ Unclassified System. Administrative expenses shall include. but not be limited to. all attorneys fees and costs incurred by or on behalf of the Unclassified Svstem. (b) An Actuarial investigation of the Unclassified System shall be made annually to determine the contribution payable by the City. On the basis of regular interest and of such mortality and service tables as shall be adopted by the Board of Trustees, the actuary shall determine, immediately after making each valuation, the percentage of the compensation of all Members required, in addition to contributions payable by such Members, as contributions payable by the City to provide the benefits of the Unclassified System currently accruing to such Members; the rate per centum so determined shall be known as the "normal contribution rate" and the contributions based on this rate shall be known as "normal contributions". In addition, the actuary shall determine the part of the liabilities for benefits under the Unclassified System not covered by assets in hand, future contributions of Members and future normal contributions of the city and this amount shall be known as the "unfunded accrued liability"; the percentage of compensation of Members determined to be payable on account of such liability shall be known as the "accrued liability contributions rate". Also. the actuary shall determine the percentage of compensation necessary to provide for ~ayrnent of the administrative expenses of the Unclassified System and this rate shall be known as the "administrative cost rate". The actuary shall recommend on the basis of each valuation a normal contribution rate, and an accrued liability contribution rate and an administrative cost contribution rate. 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, 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 4. EFFECTIVE DATE This ordinance shall become effective 10 days after adoption. PASSED AND ADOPTED this 16th FORM A~VED LEgA( DEPI / .. -------""'-',. ~~ 70Ze/ / t' ATTEST: .-'_.'_' .m ...") \,c.\.v~~ <E:../~'nvv-- CITY CLERK 1st reading 9/2/92 2nd reading 9/16/92 C:\ordinance\aam.exp 2 C:TY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 CITY OF MIAMI BEACH COMMISSION MEMORANDUM NO. TELEPHONE: (305) 673-7010 FAX: (305t-873-7782 6tl-92.R~ OFFICE OF THE CITY MANAGER TO: Mayor Seymour Gelber and Members of the City Commission DATE: September 16, 1992 FROM: Roger M. ea..o/;// ;/j ~_ City Managi?(jJ{;rA-fj&' SUBJECT: Amendments to the Unclassified Employees and Elected Officials Retirement System providing for all administrative costs to be paid from the System Administrative Recommendation The Administration recommends that the City Commission adopt this Ordinance on second reading after the public hearing on September 16, 1992. Backiround The costs associated with the administratipn of the City's three pension systems is in excess of $2 million annually. The Administration believes that these cost associated principally with fees and costs incurred in the investment process as well as othe!' administrative costs associated with the plan should be charged against the income produced by the investment process. The administrative costs in the Unclassified Employees and Elected Officials Retirement System, which is the only plan that can be changed without bargaining, is $260,000 annually. Analysis The Board of the Unclassified Plan has had the actuary for the System review the costs associated with the administration of the System and what impact would inure to the System if these costs were assumed by the System. The actuary's report indicated that the required funding of the System would need to be increased by $105,000 if it assumed this $260,000 in additional costs. The amendment proposed herein would save the City $155,000 in the FY 92/93 Budget. The reason that the fee absorption lowers the cost is that the fees associated with the production of investment income are assumed to be paid from that income with no overall reduction in the rate of return. A corollary benefit of the transfers of these costs is that the Board of the Unclassified Plan will now be responsible for enhancing the earnings of the Plan 116 3 AGENDA ITEM R-3.-t< Cf-ih-Cf2. DATE Conclusion The savings of $155,000 which is already anticipated in the FY 92/93 Proposed Budget is one of the many savings which must be achieved to bring the City back to financial health. Therefor, your approval is recommended. j '. '1