99-23430 RESO
RESOLUTION NO.
99-23430
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA TO RATIFY REVISION OF THE
MEMORANDUM OF UNDERSTANDING AND REVISION OF THE
CURRENT LABOR AGREEMENT BETWEEN THE CITY OF MIAMI
BEACH AND THE FRATERNAL ORDER OF POLICE, WILLIAM
NICHOLS LODGE NO.8 (FOP), CONCERNING A SECOND WINDOW
PERIOD FROM JANUARY 1, 2000 THROUGH MARCH 31, 2000 FOR
ELIGIBLE EMPLOYEES TO BUY BACK PREVIOUS CITY CREDITABLE
PENSION SERVICE TIME FOR PROVISIONAL OR PROBATIONARY
TIME AND FOR ELIGIBLE CURRENT EMPLOYEES TO BEGIN THEIR
PARTICIPATION IN THE DEFERRED RETIREMENT OPTION
PROGRAM (DROP) AT ANY POINT BETWEEN OCTOBER 1, 1998 AND
MARCH 31, 2000 AND AUTHORIZE THE MAYOR AND CITY CLERK TO
EXECUTE THE AGREEMENT.
WHEREAS, the City Manager has submitted to the Mayor and City Commission a revision of the
Memorandum of Understanding and a revision of the current Labor Agreement between the City of Miami
Beach, Florida and the Fraternal Order of Police, William Nichols Lodge No.8 (FOP), the bargaining agent
certified by the Public Employees Relations Commission (PERC) for the employees covered by said
agreement; and
WHEREAS, the current Labor Agreement was ratified on September 23, 1998; and
WHEREAS, some changes to the Deferred Retirement Option Plan (DROP) provisions and buy back
of creditable service time have been negotiated; and
WHEREAS, the Fraternal Order of Police, William Nichols Lodge No. 8 (FOP) bargaining unit
ratified the attached revisions and the City Manager recommends that the City Commission ratify and
authorize the execution of the Agreement between the City and the Fraternal Order of Police, William Nichols
Lodge No.8 (FOP); and,
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the attached revision of the
Memorandum of Understanding and the revision of the current Labor Agreement between the City of Miami
Beach and the Fraternal Order of Police, William Nichols Lodge No.8 (FOP) for the period from October
1, 1997 through September 30, 2000, are hereby ratified and that the Mayor and City Clerk are hereby
authorized to execute the Agreement.
ADOPTED this 15th day of
December
,1999
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Neisen Kasdin, Mayor
ATTEST:
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Jut) CI:' I'a.t ( (( {/~
Robert Parcher, City Clerk
APPROVED AS TO FORM &
LANGUAGE & FOR EXECUTION
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C ty Attorney
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Date
REVISION OF THE CURRENT AGREEMENT BETWEEN THE FRATERNAL ORDER
OF POLICE, WILLIAM NICHOLS LODGE NO.8 (FOP)
AND THE CITY OF MIAMI BEACH, FLORIDA
The Fraternal Order of Police, William Nichols Lodge No.8 (FOP) and the City of Miami Beach,
Florida (City), agree to the following revisions of Article 8, Section 20 Pension of the current Labor
Agreement and the Memorandum of Understanding, Article A, Deferred Retirement Option Plan
(DROP):
Current Labor Agreement
Section 8.20 Pension.
a)
Effective October 1, 1998, the pre-May 19, 1993 Supplemental Plan shall be
amended to include a Rule of 70 age and service option wherein employees whose
age and length of service in years combine to sum equal to or greater than 70 will be
eligible to retire and collect the pension to which their length of service entitles them
without any penalty. This provision is subject to the following conditions:
1)
The Board of Trustees of the Pension Fund for Firefighters and Police Officers in the
City of Miami Beach adopts a change in the Actuarial Asset Valuation Method
wherein the ratio of the Actuarial Asset Value is one-hundred percent (100%) of
Market Value, and;
2)
The resulting decrease in the City's contribution for 1998/99 is equal to or greater
than the actuarial determined cost for this benefit.
b)
Effective on September 30, 2000, the Tier B Pension Plan shall be eliminated and
those sworn personnel covered under the Tier B Pension Plan shall be eligible for
benefits as set forth in the pre-May 19, 1993, Supplemental Plan. Current employees
covered under the Tier B Pension Plan shall be allowed to purchase their
probationary time during the period of June 30, 2000 through September 30, 2000.
A second window period shall occur from January 1. 2000 throu~h March 31. 2000.
and the current employees not in the Tier B Pension Plan shall have the option of
buyin~ back previous City service. CUrrent employees not in the Tier B Pension Phm.
but who are members of the System may elect. by written notice served on the Board
of Trustees. before the e}\piration of the window period. to receive creditable pension
service time for all past service in any department of the City of Miami Beach.
whether the same was provisional or probationary service time. Any member so
electin~ shall have included in his creditable pension service time under the System
that portion of such time for which the member pays into the Fund the amount such
member would have contributed had he been a member durin~ the period of service
for which credit is bein~ purchased. plus three percent (3%) interest per year.
excludin~ interest for the first six (6) months of being a member of the Pension Plan.
REVISION OF FOP/CITY AGREEMENT
page 2
APPROVED AS TO FORM
&FOR~
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c{fy A torney
& LANGUAGE
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Date
The member shall be allowed creditable pension service time for only that portion
of said service time for which he has actually paid his share of the cost into the fund
within the time permitted.
Memorandum of Understanding
A) DEFERRED RETIREMENT OPTION PLAN (DROP)
11. Eligibility Exceptions
a) A one-time "window period" shall occur for 45 days from the effective date
of the DROP.
b) During the window and subject to the other eligible conditions expressed
herein, employees with more than 315 months (350 months for employees
who were Plan members prior to July 1, 1976) of creditable service may elect
to enter the DROP for a term not to exceed 36 months.
c) Members with more than 315 months (350 months for employees who were
Plan members prior to July I, 1976) of creditable service as of the effective
date of DROP who choose not to participate in DROP during this one-time
window period shall forfeit the right to exceed the total service limits set
forth in paragraph 2 (Conditions of Eligibility) above.
d} A second window period shall occur from January 1. 2000 through March
31. 2000. Paragraphs b) and c) above shall be in effect during this additional
window period. Current eligible employees not in the Tier B Pension Plan
(including employees who have previously elected to participate in the
DROP) shall have the option to begin their participation in the DROP at any
point between October 1. 1998 and March 31. 2000. All other eligibility and
participation conditions shall apply to any member choosing to begin
retroactively his participation in the DROP. as of the beginning date of the
employee's participation in the DROP.
Approved:
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For the FOP
(Bernie Ruder, FOP President)
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For the City of Miami Beach
(Mary Greenwood, Executive
Assistant to the City Manager/
I :J -. A - CZ Labor Relations)
Date
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Date
A~~EST: () I
J11,uA ~ \llel\.. J)jV-
Robert Parcher, City Clerk
Neise
sd1n, Mayor
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Memorandum of Understanding
between
City of Miami Beach and Fraternal Order of Police
The adoption and implementation of this Agreement is contingent upon the Police and Fire
Pension Board adopting the 100% "fresh start" provision referenced in Section 8.20 (a)(1) of the
1997/2000 collective bargaining agreement on or before September 2, 1998. It is the intent of
the parties that the Police and Fire Pension Board adopt the 100% "fresh start" actuarial asset
valuation method and that the Police and Fire Pension Board will not take any action to reverse
the adoption of the 100% "fresh start" actuarial asset valuation method during the respective
valuation period.
A) A Deferred Retirement Option Plan shall be created and eligible members of the
bargaining unit may elect to participate in it subject to the following:
DEFERRED RETIREMENT OPTION PLAN {DROP}
1. Eligibility - Any active employee member of the Miami Beach Police and Firefighters
Pension Plan may enter into the DROP on the first day of any month following the date
upon which the employee first became eligible for a normal service retirement, subject
to the conditions expressed herein or as modified from time to time.
2. Conditions of Eligibility - Upon becoming eligible to participate in the DROP, an
employee may elect to enter that program for a period not to exceed 36 months.
Notwithstanding, participation may not continue beyond the date when the employee's
combined years of creditable service and time in the DROP equals 352 months (387
months for employees who were Plan members prior to July 1, 1976), except for those
persons entering the DROP under the window period set forth in Paragraph 11 below.
Provided also that participation in DROP shall require the employee to complete and
submit the following prior to start of DROP payments.
a) Such forms as may be required by the Pension Board of Trustee's Plan
Administrator. Election in the DROP is irrevocable once DROP payments begin.
b) A waiver and an irrevocable resignation from employment with the actual date of
termination being the date designated by the employee 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.
3. Conditions of Employment for DROP Participants - Employees shall be subject to
termination of employment while in DROP to the same extent as they were in their
pre-DROP status. A person 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.
continued...
DROP PLAN
Page 2 of 4 Pages
4. Effect of DROP Participation
a) An employee's credited service and his/her accrued benefit under the Pension
Plan shall be determined on the date of his/her election to participate in the
DROP first becomes effective.
b) The employee shall not accrue any additional credited service while he/she is a
participant in the DROP, or after termination of participation in the DROP.
c) A DROP participant is not eligible for disability benefits from the Plan.
d) An employee may participate in the DROP only once.
e) Effective with the start date of an employee's DROP participation, contributions
to the Pension Plan by the employee and the normal cost contribution to the
Pension Plan by the City, on behalf of the employee, shall cease.
5. 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.
6. DROP Account Earnings
a) A member's DROP account shall be credited or debited at a rate equal to the
actual net rate of investment return realized by the Pension Plan; provided,
however, no DROP account will be credited with earnings that exceed the return
that would be produced by the annual assumed earnings rate as established for
the Pension Plan. Any excess earnings shall be retained by the Pension Fund.
"Net investment return" for the purpose of this paragraph is the total return of the
assets in which the member's DROP account is invested by the Board of
Trustees net of brokerage commissions, investment management fees,
transaction costs, and DROP account administrations costs. The actual DROP
account administration costs shall be determined by the City's Internal Auditor in
consultation with the Board of Trustees.
b) 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.
continued...
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DROP PLAN
Page 3 of 4 Pages
7. 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. No payments will be made from the DROP account until the member
terminates employment.
8. DROP Account Payment Options - Following the termination of a participant's
employment, the participant 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 participant's employment if said termination of employment occurs prior
to the end of the DROP participation period:
a) Lump Sum - All accrued DROP benefits, plus interest, shall be paid from the
DROP in a single lump sum payment.
b) 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.
c) Direct Rollover - All accrued DROP benefits, plus interest, shall be paid from
the DROP directly to the custodian of an eligible retirement plan.
d) Other method(s) of payment that are in compliance with the Internal Revenue
Code and adopted by the Pension Board of Trustees.
9. Death of DROP Participant - If a DROP member 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 8,
above. DROP payments to a beneficiary shall be in addition to any other retirement
benefits payable to the beneficiary.
10. Administration of DROP Accounts
a) The Pension Board of Trustees 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 legislation creating the Drop, nor any rule that would
be a mandatory subject of collective bargaining.
b) At all times, the DROP will be administered so that the Plan remains qualified
under the Internal Revenue Code and is in compliance with the Internal Revenue
Code and applicable laws and regulations.
continued.. .
?
DROP PLAN
Page 4 of 4 Pages
11. Eligibility Exceptions
a) A one-time "window period" shall occur for 45 days from the effective date of the
DROP.
b) During the window and subject to the other eligible conditions expressed herein,
employees with more than 315 months (350 months for employees who were
Plan members prior to July 1, 1976) of creditable service may elect to enter the
DROP for a term not to exceed 36 months.
c) Members with more than 315 months (350 months for employees who were Plan
members prior to July 1, 1976) of creditable service as of the effective date of
DROP who choose not to participate in DROP during this one-time window
period shall forfeit the right to exceed the total service limits set forth in
paragraph 2 (Conditions of Eligibility) above.
12. If any provision of this DROP should be found invalid, unlawful, or not enforceable by
reason of any existing or subsequently enacted legislation, or by judicial authority, or by
an IRS regulation/ruling, the City and the Union agree to meet within 30 days of such
determination for the purpose of negotiating a resolution to the invalid provision(s).
B) The parties agree that Article 8, Section 8.20(c)(3) is withdrawn and that discussion
shall be held rega'rding Section 8.20(c)(2).
FOR THE FOP
FOR THE CITY
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Dennis Ward
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Richard W. Bender .
a:\FOP-NEG6/97/DROP0901.PRP
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
http:\\ci.miami-beach.fl.us
TO:
FROM:
SUB.JECT:
COMMISSION MEMORANDUM NO. q 3S.Q'1
Mayor Neisen O. Kasdin and
Members of the City emission
DATE: December 15, 1999
Sergio Rodriguez
City Manager
A RESOL N OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA TO RATIFY REVISION OF THE
MEMORANDUM OF UNDERSTANDING AND REVISION OF THE
CURRENT LABOR AGREEMENT BETWEEN THE CITY OF MIAMI
BEACH AND THE FRATERNAL ORDER OF POLICE, WILLIAM
NICHOLS LODGE NO.8 (FOP), CONCERNING A SECOND WINDOW
PERIOD FROM JANUARY 1, 2000 THROUGH MARCH 31, 2000 FOR
ELIGIBLE EMPLOYEES TO BUY BACK PREVIOUS CITY CREDIT ABLE
PENSION SERVICE TIME FOR PROVISIONAL OR PROBATIONARY
TIME AND FOR ELIGIBLE CURRENT EMPLOYEES TO BEGIN THEIR
PARTICIPATION IN THE DEFERRED RETIREMENT OPTION
PROGRAM (DROP) AT ANY POINT BETWEEN OCTOBER 1, 1998 AND
MARCH 31, 2000 AND AUTHORIZE THE MAYOR AND CITY CLERK TO
EXECUTE THE AGREEMENT.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANAL YSIS
The City of Miami Beach and the Fraternal Order of Police, William Nichols Lodge No.8 (FOP),
have negotiated two (2) revisions concerning the Fire and Police Pension Plan. One revision
concerns retroactivity in the Deferred Retirement Option Plan (DROP), and the other involves
employees' buying back provisional and probationary time.
Revision 1: Retroactivity
The current DROP allows eligible employees to enter the DROP on or after October 1, 1999, and
they must make the election by December 17, 1999. This revision to the DROP will allow eligible
employees to enter the DROP on or after October 1, 1998, and they may do so during the second
window period between January 1, 2000 and March 31, 2000. Additionally, this revision would
apply to current employees not in the Tier B Pension Plan, including employees who have previously
elected to participate in the DROP. An actuarial impact study was prepared, and this "backdrop"
would be expected to be a "no cost item." The employees who participate in the DROP retroactively
would have their pension benefits calculated as of the date of participation and would receive a
reimbursement for pension deductions from their paychecks after the effective date. The City would
have received its share of contributions too, except that the City was not required to make any
contributions for this period.
Agenda Item R 1 L
1;;(-tS"cr9
Date
Commission Memorandum
December 15, 1999
Ratification of Revisions of the DROP
Page 2
ANAL YSIS, continued
Revision 2: Buybacks
This revision of the Collective Bargaining Agreement allows employees in the Fire and Police
Pension Fund to receive creditable service time for past service for provisional or probationary time.
Currently, an employee would not receive credit for provisional time and would have to pay back
for probationary time within six (6) months of becoming a member. The revision allows a one-time
window from January 1, 2000 to March 31, 2000 during which an employee may buy back this time,
including interest of three percent (3%) per year, excluding the first six (6) months, since there is a
grace period. The FOP wanted to be able to buy back creditable service time at any time, but the City
only agreed to a one-time window at this point, as recommended by the City's pension attorney,
James Linn.
According to the actuarial impact study for the FOP, the annual cost is estimated at .9% of the total
police payroll, or about $175,000. Even though the employee pays interest of three percent (3%)
each year, the actual cost is higher. The Administration is recommending these buybacks at this
time because of the more than $3.7 million saved in the retirement plan as a result of merging the
Base and Supplemental Plans.
N\<O ~
SR:MG:amh
F:IHUMAILABORRELIAMH\COMMEMOIFRA TIFY WPD
Enclosures
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200 Galleria Parkway. NW.
Atlanta, Georgia 30;339~5945
Suite '200
April 29, 1999
Police Officer Bernie Ruder
President, FOP Miami Beach Lodge
407 Lincoln Road, Suite 2C
Miami Beach, FL 33139
Mr. Richard W. Bender
Executive Assistant to City Manager/
Labor Relations City Hall
1700 Convention Center Drive
. Miami Beach, FL 33139
Dear Police Officer Ruder and Mr. Bender:
As requested, we are writing to provide an estimate of the City's annual cost if members of
the Base and Supplemental plans are permitted to purchase probationary time with the City
in any capacity, including as a police officer, at any time prior to retirement or termination
of employment, rather than, as currently, in the six months immediately after the time is
completed. Our calculations are based on the data submitted for the October 1, 1998
actuarial valuation of the plans and certain other information about member hire and entry
dates contained in the 1998 annual report to the State of Florida. We have used the
assumptions used for the recent valuations, assuming the plans are still sep~ate. We have
not included the cost of buy backs for Tier B members (post-May 19, 1993) since that
benefit was a part of a prior bargaining agreement. The potential members affected include
about 90 police officers with approximately 12 months' probationary time on average.
In our calculations we have assumed that the contribution made by the member will be
based on the salary at the end of the probationary period and will be made at the Base Plan
member rate (6% or 8%) unless he is a member of the Supplemental plan only (with a 10%
rate), and charged 3 % interest from date previously due to date of payment. Except for
those not members of the Base plan, the deposit will be made to the Base plan, although
the service will count for benefits in both plans. We understand there are several different
types of buy backs possible, including buyback of probationary time as a police officer,
purchase of probationary time as a general employee who later transferred to police status,
service of a former City employee of any kind who was refunded contributions but has
since been rehired, and service as a fonner temporary or part time employee of the City
who became full time at some later date. We assume that, since in the current buyback
setup some members have purchased time that was not actually needed because they
eventually "maxed out" by the time they retired, members will delay purchase until
immediately prior to retirement, and purchase service only ifit is needed for them to
become eligible for the Rule of70 and/or to increase the benefit. Thus, although these
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Police Officer Bernie Ruder
Mr. Richard W. Bender
April 29, 1999
Page 2
calculations include only the current 90 affected members by assuming all other active
members have already purchased this service, all future new members would be expected
to delay the buyback until determined to be needed, so that the ongoing cost may be
slightly, but not materially, different from our estimates. We also have assumed that the
purchase of this service will not affect the current utilization of the military buyback
provision, although presumably the proposed buyback would be less expensive for the
member, particularly if the purchased service is at the 4% accrual rate rather than at the 3%
rate for military time.
Based on the assumptions and other information provided to us, we estimate that the
annual cost, if all affected members who at date of retirement need service for either
eligibility or a higher benefit actually purchase that service, would be about .9% ofthe
total police officer payroll, or about $175,000. However, since much of the cost would go
to the Base plan, which is already "overfunded", the actual annual contribution increase
would be about $75,000 to the Supplemental plan. If the plans are merged, there would be
no net increase in cost due, again, to extra accumulated funding in the combined plan.
Please let us know if you wish to discuss any issues further.
Very truly yours,
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Zanese B. Duncan
Consulting Actuary
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Copy to: Mrs. Celia B. Locke
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CONSULTANTS