Loading...
2010-27457 ResoRESOLUTION NO.'; 2010-27457 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA RATIFYING A REVISED THREE YEAR LABOR AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND THE GOVERNMENT SUPERVISORS ASSOCIATION OF FLORIDA/OPEIU LOCAL 100 (GSA), FOR THE PERIOD FROM OCTOBER 1, 2009 THROUGH SEPTEMBER 30, 2012; AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE THE AGREEMENT WHEREAS, the City Manager is hereby submitting to the Mayor and City Commission the attached Labor Agreement, recently negotiated between the City and the Government Supervisors Association of Florida/OPEIU Local 100 (GSA), for the employees covered by said Agreement; and WHEREAS, the previous Labor Agreement was for a three year period from October 1, 2006, through September 30, 2009; and WHEREAS, on January 13, 2010 the City Commission approved a resolution ratifying a three (3) year labor agreement between the City and GSA covering the time period of October 1, 2009 through September 30, 2012; and WHEREAS, the GSA membership is scheduled to hold a ratification vote on the attached Labor Agreement among its members for the proposed Agreement on Monday, July 12, 2010; and NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, hereby approving and authorizing the Administration to amend the three (3) year labor Agreement with the GSA bargaining unit for the time period covering October 1, 2009 through September 30, 2012. PASSED AND ADOPTED THIS ~y~Gt DAY OF V N! 2010. .,~+ P CITY CLERK MAY R T:WGENDA12010\July 14\Regular\GSA Resolution Amended 3 Year Agreement.doc APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION City Att /O Date COMMISSION ITEM SUMMARY Condensed Title: A Resolution Of The Mayor And City Commission Ratifying A Revised Three Year Labor Agreement Between The City And The Government Supervisors Association (GSA), For The Period From October 1, 2009 Through September 30, 2012. Ke Intended Outcome Su orted: Control costs of payroll including salary & fringes/ minimize taxes/ ensure expenditure trends are sustainable over the long term. Su ortin Data (Surve s, Environmental Scan, etc N/A Should the City Commission adopt the resolution to ratify the amended three (3) years successor labor Agreement between the Citv and the GSA baroaininq unit? Item 5umm To help address the challenges being faced during the FY2009/10 and the FY2010/11 budget years, the City Commission requested the Administration to budget for specific employee givebacks that would effectuate a cost savings of approximately $15.3 million over the two fiscal years, which was to be divided up proportionately amongst each of the City's seven (7) salary groups. GSA's target for their portion of employee givebacks for the two fiscal years was approximately $608,000. On January 14, 2010, the City Commission ratified a three (3) year labor Agreement (Agreement) between the City and GSA for the time period covering October 1, 2009 through September 30, 2012. The ratified Agreement included certain terms and conditions applicable for the first year of the Agreement, with reopeners immediately upon ratification to address further pension reform and all other economic provisions for the remaining two (2) years of the term of the Agreement. The terms and conditions applicable for year one (1) of the Agreement included a zero Cost of Living Adjustment (COLA); a twelve (12) month freeze on merits; and an additional two percent (2%) employee contribution towards pension, which began on January 18, 2010. In addition, the annual must use vacation cap and the maximum amount of annual leave paid upon separation, retirement, termination or death for GSA members was increased. After two (2) negotiation sessions, the City and GSA reached a tentative amended Agreement pertaining to the reopener provisions of the Agreement. GSA has agreed to certain employee concessions which will yield significant recurring savings towards the City's operating budget. These additional employee concessions include a zero COLA for FY 2010/11; an additional twelve (12) month freeze on merits; and an additional employee pension contribution of two percent (2%). In addition, consistent with the administration's continuing efforts to implement pension reform, GSA has also agreed to pension plan reform for current and future GSA employees. The City has agreed to certain concessions that include no lay-offs for GSA bargaining unit members through September, 2012. The value for the proposed successor Agreement is estimated to generate a savings of over $1.1 million through the full term of the Agreement. In addition, these concessions will yield additional, term Adviso Board Recommendation: Financial Information: Source of Amount Account Funds: 1 Year 1 ($102,500) Freeze on Merits, Additional 2% Pension Contribution, Change of FAME, Zero COLA 2 Year 2 ($466,096) Freeze on Merits, Additional 2% Pension Contribution, Change of FAME, Zero COLA 3 Year 3 ($600,610) 2% Max on Merits, Additional 2% Pension Contribution, Change of FAME, 3% COLA on April 1, 2012; Pension Changes for Future Em to ees OBPI Total $1,169,206 Financial Impact Summary: The savings for FY 2009/2010 and FY 2010/2011 total $568,596. This represents a per person impact of $9,321 to each member of the GSA bargaining unit. Savings for the three (3) year agreement total $1,169,206. In addition, these concessions will field additional, recurring, long term savings in future fiscal years. Cit Clerk's Office Le islative Trackin Ramiro In uanzo, Human Resources Director Si n-Offs• Department Director Assistant City_'Manager City Manager Ramiro In uanzo Hilda Fernandez Jor a .Gonzalez T:\AGENDA\2010Wu1y 14\Regular\GSA 2009-2012 Reopener Amended labor Agreement Summary.doc U R,-~~ ITEM // aATE 7~r '~~ m MIAMIBEACH City of Miami Beaeh, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM To: Mayor Matti Herrera Bower and Members of the City Commission FROM: Jorge M. Gonzalez, City Manager DATE: July 14, 2010 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA RATIFYING A REVISED THREE YEAR LABOR AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND THE GOVERNMENT SUPERVISORS ASSOCIATION OF FLORIDA/OPEIU LOCAL 100 (GSA), FOR THE PERIOD FROM OCTOBER 1, 2009 THROUGH SEPTEMBER 30, 2012; AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE THE AGREEMENT. ADMINISTRATIVE RECOMMENDATION Adopt the resolution. BACKGROUND During the July 2009 Finance and Citywide Projects Committee (Committee) budget preparation meetings for the FY2009/2010 Budget, the Committee requested that all City of Miami Beach employees make certain financial concessions to help address the challenges being faced during the FY2009/2010 budget cycle and beyond. The Committee requested the Administration to budget for specific employee givebacks for FY2009/2010, which would in turn effectuate a cost savings of approximately $4.3 million (approximately $3.5 million savings attributed to the General Fund and $800,000 from various enterprise funds). Furthermore, in 2010 the City Commission directed the Administration to secure and budget for an additional $11 million in savings attributed to employee givebacks for FY2010/2011. Therefore, the total amount of employee givebacks for both the FY2009/2010 and FY2010/201 t is $15.3 million. The City currently has a total of seven (7) salary groups who represent employees: (1) the American Federation of State, County and Municipal Employees, Local 1554 (AFSCME); (2) the Communications Workers of America, Local 3178 (CWA); (3) the Government Supervisors Association of Florida/OPEIU, Local 100 (GSA); (4) the Fraternal Order of Police, William Nichols Lodge No. 8 (FOP); (5) the International Association of Fire Fighters, Local 1510 (IAFF) (6) Unclassified and (7) OTHERS (Classified employees not represented by a bargaining unit). Based upon the direction received from the City Commission, the $15.3 million savings in employee concessions for FY2009/2010 and FY2010/2011 combined was to be divided up proportionately amongst each of the seven (7) salary groups based on total budgeted payroll and a proportionate share of the preliminary FY2010/2011 City's Annual Required Contributions to both of the City's pension plans. In addition, the City Commission also directed the Administration to negotiate with the respective unions for pension reform to both of the City's pension plans (the Miami Beach Fire Fighters and Police Officers (Fire and Police) Pension Plan and the Miami Beach Employees' Retirement Plan (MBERP)), in order to obtain recurring savings for future years in each of the pension plans. City Commission Memorandum July 14, 2010 GSA 2009-2012 Collective Bargaining Agreement Reopener Page 2 of 6 ANALYSIS On October 29, 2009, after a total of seven (7) sessions held, negotiators for the City and the Government Supervisors Association of Florida/OPEIU Local 100 (GSA) successfully concluded negotiations for a three (3) year successor Collective Bargaining Agreement (Agreement). The term of the Agreement was for three (3) years, from October 1, 2009 through September 30, 2012, with reopener provisions for the second and third years of the contract for pension adjustments/changes and other economic related articles. While the negotiators for the City and GSA were obliged to represent the best interests of their respective stakeholders, the shared goal was to produce an equitable Agreement that still addressed the financial needs of the City. The significant changes in the ratified GSA Agreement included: (1) no across-the-board wage increases (COLA); (2) a freeze on merit salary increases for any GSA bargaining unit member during the time period covering October 1, 2009 through September 30, 2010; (3) beginning on January 18, 2010 an additional two percent (2%) increase to the employee's pension contribution for all active GSA members who participate in the Miami Beach Employees' Retirement Plan (MBERP); (4) adjustments to the vacation leave accrual caps for GSA members, increasing the annual "must use" cap from 360 to 500 hours and the maximum amount of annual leave paid upon separation, retirement, termination or death from 480 to 620 hours. In addition, the ratified Agreement provided for immediate reopeners on all economic provisions applicable for the time period covering October 1, 2010 through September 30, 2012, which included. but were not limited to the discussions of any future across-the-board wage adjustments and/or merit salary increases, as well as a discussion on pension adjustments. Based on the direction from the City Commission, GSA's portion towards the FY2009/2010 and FY2010/2011 employee givebacks totaled approximately $600,000. Based on the terms and conditions agreed to between the City and GSA, the City estimates the value of GSA's portion of employee givebacks to total $568,596 for FY2009/2010 and FY2010/2011 combined. This represents a per person impact of $9,321 to each member of the GSA bargaining unit. 1n addition, the value for the proposed successor Agreement is estimated to generate a savings of approximately $1.2 million for the entire three (3) year Agreement. More importantly, these negotiated amendments represent long-term, recurring savings for future fiscal years. On June 3, 2010, the negotiation teams for the City and GSA began negotiations for the economic reopener provisions applicable for years two (2) and three (3) of the ratified Collective Bargaining Agreement. After two (2) negotiation sessions the City and GSA reached a tentative agreement. The GSA membership is scheduled to hold a ratification vote among its members for the proposed Agreement on Monday, July 12, 2010. Because the outcome of the ratification vote was not known at the time of this writing, the results will be provided to the City Commission under a supplemental memorandum. The agreed upon terms for years two (2) and three (3) of the GSA contract are provided below: Wages • Cost of Living Adjustment (COLA) -For year one (1) of the ratified Collective Bargaining Agreement (FY2009/2010), no GSA bargaining unit member received a COLA. For year two (2) of the proposed amended Agreement (FY2010/2011) there shall be no across-the-board wage increases (COLA) for any GSA bargaining unit members. Gabriel, Roeder and Smith (GRS), the actuary for MBERP, has estimated that the City's Annual Required Contribution (ARC) due on October 1, 2010 would be reduced by approximately $300,000 if no COLA were provided to any active plan participants for FY2009/2010. Furthermore, an additional City Commission Memorandum July 14, 2010 GSA 2009-2012 Collective Bargaining Agreement Reopener Page 3 of 6 $600,000 savings will be realized to the City's ARC due on October 1, 2011 if no COLA were provided to any active plan participants in FY2010/2011. The zero COLA for just the GSA members will generate a savings of approximately $15,000 to the City's ARC payment due on October 1, 2010, and approximately an additional $24,000 on the City's ARC payment due on October 1, 2011. For FY2009/2010 and FY2010/2011, the total amount is approximately $39,000 savings on the City's ARC payments. For year three (3) of the contract, no GSA bargaining unit member shall receive a COLA until the first full pay period ending in April 2012, when all active GSA Bargaining Unit members will receive an across-the-board COLA of three percent (3%). In addition, effective with the three percent (3%) COLA, the minimum and maximum pay rates of the salary ranges for all job classifications covered by the GSA bargaining unit will be adjusted accordingly. The City estimates the cost impact of this COLA to be approximately $70,000 towards the City's FY2011/2012 operating budget. Performance Merit Increases -GSA has agreed to extend the freeze on merits for their bargaining unit members for an additional 12 months through FY2010/2011 for a total of 24 months of no merit adjustments. Based on this agreement, effective with the first pay period beginning in October 2010 and ending on September 30, 2011, there shall not be any merit salary increases for any GSA bargaining unit member. Effective with the first full pay period of October 2011, merit salary increases will be reinstated for the remaining term of the Agreement. However, the maximum merit salary increase a GSA bargaining unit member will be eligible to receive will be reduced from four percent (4%) to a maximum of two percent (2%), based on their annual performance appraisal score. It is estimated that the savings related to the merits resuming at a maximum of two percent (2%) instead of four percent (4%) for the GSA will be approximately $43,000. The value of the wage concessions (COLA and merits) made by GSA total approximately $717,000 over the term of the three (3) year Agreement. Approximately $355,000 will be realized during FY2009/2010 and FY2010/2011. This represents a per person impact of $9,321 to each member of the GSA bargaining unit. In addition, approximately $362,000 will be realized during FY2011/2012, primarily due to the compounding effect of no merits in FY2009/2010 and FY2010/2011. These concessions will yield additional, recurring, long-term savings in future fiscal years. Pension • Employee Pension Contribution - In January 2010, the City Commission authorized the Administration to effectuate a two percent (2%) increase in employee pension contributions for those employees covered by GSA, as well as the Unclassified and "Others" salary groups simultaneously. This increase became effective with the pay period that began on January 18, 2010. During the March 10, 2010 City Commission meeting, the City Commission authorized the Administration to create an Agency Account (where the City acts on behalf of the employee in collecting the funds and transmitting those funds to the appropriate agency) for the purposes of maintaining the additional two percent (2%) employee pension contribution for the salary groups listed above until such time as the employee contribution for all members of the MBERP was finalized. This means an increase to the required employee contribution from ten percent (10%) to twelve percent (12%) of earnings for "Tier A" employees (hired prior to August 1, 1993), and an increase to the required employee contribution from eight percent (8%) to ten percent (i0%) of earnings for "Tier B" employees (hired on or after August 1, 1993). This contribution will continue through the remaining term of the GSA Collective Bargaining Agreement. City Commission Memorandum July 14, 2010 GSA 2009-2012 Collective Bargaining Agreement Reopener Page 4 of 6 During the negotiations for the economic reopeners, GSA raised concerns that their members began contributing the additional two percent (2%) employee pension contribution well before employees in the other Classified bargaining units (AFSCME and CWA). The City and GSA have agreed as part of the proposed amended Agreement to start the additional pension contribution upon the ratification of the American Federation of State, County and Municipal Employees, Local 1554 (AFSCME) successor Collective Bargaining Agreement (being presented to the City Commission during the July 14, 2010 City Commission meeting). Any funds already collected from GSA members will be refunded to them. The estimated amount to be refunded to the GSA members, which covers the time period of January 18, 2010 through July 18, 2010, is approximately $41,250. The City estimates the additional two percent (2%) contribution from GSA to be approximately $112,500 for FY2009/2010 and FY2010/2011 combined (net of the reduction of the refund). In addition, the City will realize an additional savings of approximately $90,000 to be applied in FY2011/2012. The total savings derived from GSA's additional two percent (2%} employee pension contribution for the entire term of the Contract will be approximately $202,500. Pension Plan Adjustments/Changes - As previously mentioned above, the City Commission directed the Administration to implement changes to the City's two employee pension plans (Fire and Police Pension and the Miami Beach Employees' Retirement Plan (MBERP)} which would effectuate recurring savings in the overall reduction to the City's Annual Required Contribution (ARC), as well as a reduction in the Unfunded Accrued Actuarial Liability (UUAL). In keeping with the spirit of treating similar groups of employees in a consistent manner, the Administration has been negotiating with the respective general employee labor unions (AFSCME, GSA and CWA) to implement changes to MBERP for current and future employees that are the same for all general employees, including the Unclassified and "Others" employees. The target for pension reform for the general employees' salary groups applicable towards FY2010/2011 is approximately $2.3 million. After assessing a number of options to reach the target savings, the City determined that changing the Final Average Monthly Earnings (FAME), which is currently one twelfth (1/12) of the average annual earnings of the Member during the two 2 highest paid years of creditable service, to one twelfth (1/12) of the average annual earnings of the Member during the five 5 highest years of creditable services, would yield the approximate target savings for MBERP. The City recognizes that there are a number of employees who have reached or are very close to reaching retirement age eligibility. In order to minimize the impacts of this pension change, the City has agreed to implement the FAME change in a phased-in approach. Upon implementation, those employees who are twenty four (24) months or less away from retirement age eligibility will maintain a two (2) year FAME; those employees who are between twenty-four (24) and thirty-six (36} months away from retirement age eligibility will have a three (3) year FAME calculation; those employees who are between thirty-six (36) months and forty-eight (48) months away from retirement age eligibility will have a four (4) year FAME calculation; and any employees who are forty-eight (48) months or more away from retirement age eligibility will have a five (5) year FAME calculation. By changing the FAME (phased-in) for all current employees who participate in MBERP from the employee's two (2) highest years to the employee's five (5) highest years, the pension board actuary, (Gabriel, Roeder, and Smith (GRS)), estimates that the City would generate a savings to the City's ARC for FY2010/2011 of approximately $1.9 million. This amount is recurring and City Commission Memorandum July 14, 2010 GSA 2009-2012 Collective Bargaining Agreement Reopener Page 5 of 6 continues for future years, resulting in additional, recurring, long-term savings. GSA's portion of the $1.9 million in savings was based on their proportionate share of payroll as of March 2010. The estimated savings for adjusting the FAME for those employees covered under the GSA bargaining unit would be approximately $101,375 for FY2010/2011. This change alone for current GSA employees would yield an additional savings of $103,572 for FY2011/2012, thus providing a total savings from changes to FAME of approximately $204,947 for the entire term of the Agreement. In addition, GRS has indicated that these savings will continue in perpetuity as long as the revised FAME formula remains in effect. Attached is a copy of GRS' Supplemental Actuarial Valuation Report for the additional proposed benefit changes to the MBERP for the change in FAME (Attachment "A"). In addition to changing the FAME, GSA has also agreed to the following pension plan changes for any employees covered under the GSA bargaining unit that are hired after the amendment to the City's pension ordinance: • The normal retirement date will be age 55 with at least thirty (30) years of creditable service, or age 62 with at least five (5) years of creditable service. • The early retirement date will be the date on which the member's age plus years of creditable service equal 75, with a minimum age of 55. • The Final Average Monthly Earnings (FAME) will be an average of the highest five (5) years of employment. • The benefit multiplier will be two and one half percent (2.5%) multiplied by the member's years of creditable service, subject to a maximum of 80% of the member's FAME. • The retiree Cost of Living Adjustment (COLA) will be one and one half percent (1.5%) per year, with the first adjustment deferred to one (1) year after the end of the DROP. • The employee contribution will be ten percent (10%) of salary. • The standard form of benefit is a lifetime annuity. • Members who separate from City employment with five (5} or more years of creditable service but prior to the normal or early retirement date will be eligible to receive a normal retirement benefit at age 62. • Employees will be eligible to enter the Deferred Retirement Option Plan (DROP) at the normal retirement age specified above and may participate in the DROP for a maximum of five (5) years. GRS has stated that the implementation of the pension changes for any employees hired after the amendment to the City's pension ordinance will not generate any immediate savings for the next fiscal year. However, future savings will be realized beginning in FY2011/2012 with approximately $900,000 (1.92% of payroll) in savings towards the City's ARC. The pension actuary has estimated that the City will realize an additional annual reduction of seven tenths percent (.7%) per year of payroll applied as a reduction towards the City's ARC in perpetuity. Again, this is for all employees hired after the amendment to the City pension ordinance who participate in MBERP, not just those covered under the GSA bargaining unit. GSA's portion of the $900,000 in savings was based on their proportionate share of payroll as of March 2010. The estimated savings for the pension changes for future employees covered under the GSA bargaining unit would be approximately $45,000 to be applied in FY2011/FY2012. Attached is a copy of GRS' Supplemental Actuarial Valuation Report for the additional proposed benefit changes to the MBERP for future employees (Attachment "B"). City Commission Memorandum July 14, 2010 GSA 2009-2012 Collective Bargaining Agreement Reopener Page 6 of 6 Other Economic and Contractual Provisions Reduction in Force - In exchange for the employee concessions agreed to by the GSA bargaining unit, the City has agreed that all GSA bargaining unit members will be guaranteed a job with the City for the time period of October 1, 2010 through September 30, 2012. During this time period, no employee covered under the GSA Bargaining Unit will be separated from the City for reasons other than disciplinary action or voluntary separation. In the event that there is an impact to a GSA Bargaining Unit member's position for the time period referenced above, the impacted employee will be offered an alternative position with the City for which they meet the minimum qualifications. If the impacted employee's base hourly rate is above the maximum base hourly rate of the position being offered to them, that employee will remain at their current hourly base rate even if that hourly base rate exceeds the maximum hourly base rate of the position being offered to them. In addition, the impacted employee will have their recall rights to the previously held position extended for an additional year; the employee's recall rights will exist for up to two (2) years after the date of the impact occurred. CONCLUSION The terms and conditions of the proposed amended three (3) year labor Agreement include GSA employee concessions that total $568,596 for FY2009/FY2010 and FY2010/2011 with a total savings of $1.17M for the three (3) year contract, while working towards our goal of achieving pension reform with both short-term and long-term implications. The Administration recommends adopting the Resolution to ratify the amended three (3) year labor Agreement with the GSA bargaining unit for the time period covering October 1, 2009 through September 30, 2012. JMG/HMF/RI/cg T:\AGENDA\2010\July 14\Regular\GSA 2009-2012 Reopener Amended Labor Agreement Memo.doc R Gabriel Roeder Smith & Company One East Broward $lvd. 954.527.1616 phone Consultants & Actuaries Suite 505 954.525.0083 fax Ft. Lauderdale, FL 33301-1827 www.gabrielroeder.com June 4, 2010 M R In z L- r. arruro guanzo ~;; ~ ; _ . Human Resources Director i cr ~ ~~ City of Miami Beach ° i4t ~ 1700 Convention Center Drive ~ ~ Miami Beach, Florida 33139 ~, .~ F?f l a ~ Re: Supplemental Actuarial Valuation Report for Additional Proposed Benefit Changes t~'the~+liami Beach Employees' Retirement Plan °~' Dear Ramiro: As requested, please fmd the enclosed tables summarizing the financial effect of the following proposed changes to the Miami Beach General Employees' Retirement System: Change final average earnings period from two to five years, except for members who are less than five years away from normal retirement eligibility. Members who are eligible for normal retirement in two years or less will have average earnings of two years. Members who are eligible for normal retirement in three years will have average earnings of three years. Members who are eligible for normal retirement in four years will have average earnings of four years. Change final average earnings from two to five years for all members except CWA members. We have also included aten-year projection of the required contribution under current plan provisions and each of the scenarios described above. When performing these projections, we assumed that there would be no gains and losses or assumption changes after September 30, 2009. In actuality, there will likely be losses due to investments over the next four years. This report is intended to describe the financial effect of the proposed plan changes. No statement in this report is intended to be interpreted as a recommendation in favor of the changes, or in opposition to them. The calculations are based upon assumptions regarding future events, which may or may not materialize. They are also based upon present and proposed plan provisions that are outlined in the report. If you have reason to believe that the assumptions that were used are unreasonable, that the plan provisions are incorrectly described, that important plan provisions relevant to this proposal are not described, or that conditions have changed since the calculations were made, you should contact the author of this report prior to relying on information in the report. If you have reason to believe that the information provided in this report is inaccurate, or is in any way incomplete, or if you need further information in order to make an informed decision on the subject matter of this report, please contact the author of the report prior to making such decision. Attachment } ~,A~~ Mr. Ramiro Inguanzo June 4, 2010 Page 2 of 2 In the event that more than one plan change is being considered, it is very important to remember that the results of separate actuarial valuations cannot generally be added together to produce a correct estimate of the combined effect of all of the changes. The total savings can be considerably smaller than the sum of the parts due to the interaction of various plan provisions with each other, and with the assumptions that must be used. We welcome your questions and comments. Sincerely yours, J. Stephen Palmquist, ASA Senior Consultant & Actuary JSP/ma Enclosures Gabriel Roeder Smith & Company SUPPLEMENTAL ACTUARIAL VALUATION REPORT Plan City of Miami Beach Employees' Retirement Plan Valuation Date October 1, 2009 Date. of Report June 4, 2010 Report Requested by City of Miami Beach Prepared by J. Stephen Palmquist Group Valued All active and inactive members. Plan Provisions Being Considered for Change Present Plan Provisions Before Chan e • Earnings are averaged over the two highest paid years. Pro osed Plan Chan es Earnings would be averaged over the five highest paid years except for members who are within less than five years away from normal retirement eligibility as of October 1, 2009. Members who are eligible for normal retirement in two years or less will have average earnings of two years. Members who are eligible for normal retirement in three years will have average earnings of three years. Members who are eligible for normal retirement in four years will have average earnings of four years. Earnings would be averaged over the five highest paid years except for CWA members. Participants Affected The changes would apply to active members as of the date of the amending ordinance. Actuarial Assumptions and Methods Same as October 1, 2009 Revised Actuarial Valuation Report . Some of the key assumptions/methods are: Investment return - 8.35% per year Salary increase - 6% per year Cost Method -Entry Age Normal Cost Method Amortization.Period for Any Increase in Actuarial Accrued Liability 30 years. Summary of Data Used in Report Same as data used in October 1, 2009 Revised Actuarial Valuation Report. Actuarial Impact of Proposal(s) See attached page(s). Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to Previously None Other Cost Considerations None Possible Conflicts With IRS Qualification Rules None As indicated below, the undersigned are Members of the American Academy of Actuaries (MAAA) and meet the Qualification Standards of the Academy of Actuaries to render the actuarial opinion herein. By J. Stephen Palmquist, A, MAAA, FCA Enrolled Actuary No. 08-1560 By -yY~ R . Melissa R. Algayer, FCA Enrolled Actuary No. 08-6467 ~. a y a~ d O W v v .~ 0 U q .~ w v w O .^! 0 ... a ~ °O o ~ a i ~ o , ~ rn p o ~ .~ ~ .~ w > o -d ~ N ~ ~ _ a i ~ ~ ~ ~ ~ ~ ~ ~ o ov, ' ~ a ~ ~ ~ ~ a~ q ~ o -~y O oo N N ~ '~ ~ 4r U b Q ~ N ~ ~ U N ~--~ U " ~ ~ ~ ~ v i L. ~ , y , ~ 1 V Q ~ ~ ~ ..O ~ ~ Q ~ "d r ~ "d . y ~ cC b ~ N ~ N ~ ~ ~ N ++ O O y eC U ,~ ~ bA ~ U a ~ ~ y ~ ~ ~ ~ ~ . 3 ~ ~ 0 5 • ~ ~ ° ~ ~ ~° dr U ~ ~ n ~ ~ ~ + + ~ R; O M O p oo y 0 0 y ~+ ++ O ~, ~ ~ OMO ~ O .~ .3~ L7. U s~ 00 ~ ~ ~,, F"' ~ m U U A 69 ~ ~,,, ~ «S U ~ .s." ~" ,~ .~ N '~ N ~ '~ ~3 a ~, ~ ~ ~ 0 ° w~ 4. ` ° ~ ., ~, ~ ~ ~ ~ o ~ 0 ~ ~ ~ 0 ~ w .~ ~ 5 .~ o .., .ti a, o a~ a~ ~_ ~ ' ~ ,,., ~ ~ ~ ~ ~~ 3 ~ N 3 ~ ~ ~ a~ ~; , a ~ ~ ~ H O ~: o U 4r W , ~, ~ U O ti ~ O ~ cj~ Q "G N N ~v> .~ •5 0 .~ ~ ~ ~ oA U c~ ~ cam, 0 ~ ~ ~ ~ v ~ .., ~° ~ a~ a o c~ ~ +.., ~ a. N ~ ~ ~ U x y ~ o N p0 L, CMG _ ~.r .'~ U Q c N V) y U ~ y t~G 4.i ~ ~ cad ~ M , O pp ~ W C 0 ~ ~ v ~ >, Cy, ~ V O O ~ v~ ~ q ~ U ' cd ~ ~ ~ O b4 >' >' ~ j b A O ~ ~ U U b O H Q~ N ~ ~ , U , y ~y ~ Y O U ^~ N U ~° w U 3 H.~ ¢,~ Q 0 N -~ Projection of Annual Cost (Savings) Fiscal Year Ending 9/30 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Final Average Earnings of Two, Three, Four, or Five Years Based on Years Until Normal Retirement Final Average Earnings of Two Years for CWA Members; Final Average Earnings of Five Years for Non-CWA Members of Payroll (2.12) (2.09) (2.05) (2.03) (1.99) (1.97) (1.94) (1.91) (1.89) (1.87) (1.84) Of Dollar Amount Payroll $ (1,883,038) (2.68) (1,933,335) (2.65) (1,984,518) (2.61) (2,037,751) (2.59) (2,093,112) (2.55) (2,150,688) (2.52) (2,210,567) (2.49) (2,272,841) (2.47) (2,337,606) (2.44) (2,404,962) (2.41) (2,475,011) (2.39) Dollar Amount $ (1,490,804) (1,523,116) (1,559,450) (1,597,239) (1,636,538) (1,677,410) (1,719,916) (1,764,123) (1,810,099) (1,857,914) (1,907,640) Note: As indicated in the cover letter, these projections have been prepared as though there would be no experience gains or losses or assumption changes after 9/30/2009. This assumption was made in order to keep the projections simple and uncluttered. GRS Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone Consultants & Actuaries Suite SOS 954.525.0083 fax Ft. Lauderdale, FL 33301-1827 www,gabrielroeder.com June 4, 2010 S ~ --• ~„ x o ~- Mr. Ramiro Inguanzo ~; i ~`°) Human Resources Director ~ c ~ %"~'7 City of Miami Beach ~ ~ ~ ~` 1700 Convention Center Drive r'' ~ w ° ~~ Miami Beach, Florida 33139 n 3 N ~ Re: .Supplemental Actuarial Valuation Report for Additional Proposed Benefit Changes t~t11e Miami Beach Employees' Retirement Plan Dear Ramiro: As requested, enclosed is a 10-year projection of cost savings assuming the proposed changes listed below apply to new hires of the Miami Beach Employees' Retirement Plan. When performing these projections, we assumed that there would be no gains and losses or assumption changes after September 30, 2009. In actuality, there will likely be losses due to investments over the next four years. • Normal Retirement Age of 55 plus 30 years of service or 62 with 5 years of service • Early Retirement eligibility of "Rule of 75" with a minimum of age 55 • Multiplier of 2.5% for all service • Final average earnings of five years • Normal form of payment of life annuity • Extend DROP to 5 years • Retiree COLA of 1.5% (no COLA while in the DROP) • Employee contributions of 10% Since the Normal Retirement Age would be raised, we used the same normal retirement probabilities that are currently used for Tier B members. All other assumptions and provisions are the same as outlined in the October 1, 2009 report. This report is intended to describe the financial effect of the proposed plan changes. No statement in this report is intended to be interpreted as a recommendation in favor of the changes, or in opposition to them. The calculations are based upon assumptions regarding future events, which may or may not materialize. They are also based upon present and proposed plan provisions that are outlined in the report. If you have reason to believe that the assumptions that were used are unreasonable, that the plan provisions are incorrectly described, that important plan provisions relevant to this proposal are not described, or that conditions have changed since the calculations were made, you should contact the author of this report prior to relying on information in the report. , Attachment .~B» Mr. Ramiro Inguanzo June 4, 2010 Page 2 of 2 If you have reason to believe that the information provided in this report is inaccurate, or is in any way incomplete, or if you need further information in order to make an informed decision on the subject matter of this report, please contact the author of the report prior to making such decision. We welcome your questions and comments. Sincerely yours, C J. Stephen Palmquist, ASA Senior Consultant & Actuary JSP/ma Enclosure Gabriel Roeder Smith & Company Projection of Annual Cost (Savings) New Benefit Structure for New Entrants Fiscal Year Ending Dollar % of 9/30 Amount Payroll 2011 $ - - 2012 (910,469) (1.25) 2013 (1,451,167) (1.91) 2014 (2,OS7,69S) (2.61) 2015 (2,573,495) (3.14) 2016 (3,118,987) (3.66) 2017 (3,627,SS7) (4.09) 2018 (4,163,830) (4.52} 2019 (4,779,456) (4.99) 2020 (5,376,792) (5.39) 2021 (5,994,726) (5.78) Benefit Structure for New Entrants: • Normal Retirement Age of SS plus 30 years of service or 62 with S years of service • Early Retirement eligibility of "Rule of 7S" with a minimum of age SS • Multiplier of 2.S% for all service • Final average earnings of five years • Normal form of payment of life annuity • Extend DROP to S years • Retiree COLA of 1.S% (no COLA while in the DROP) • Employee contributions of 10% Note: As indicated in the cover letter, these projections have been prepared as though there would be no experience gains or losses or assumption changes after 9/30/2009. This assumption was made in order to keep the projections simple and uncluttered.