2013-28300 Reso RESOLUTION NO. 2013-28300
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA RATIFYING A THREE YEAR 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, 2012
THROUGH SEPTEMBER 30,2015;AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE THE AGREEMENT.
WHEREAS, the City is hereby submitting to the Mayor and City Commission the attached
tentative Labor Agreement, recently negotiated between the City and the Fraternal Order of Police,
William Nichols Lodge No. 8 (FOP), for the employees covered by said Agreement for the period
covering October 1, 2012 through September 30, 2015; and
WHEREAS, the previous Labor Agreement was for a three year period from October 1,
2009, through September 30, 2012; and
WHEREAS, Exhibit A to the resolution,is a copy of the contract language changes in
substantial form that reflects the pension and economic issues and the non-economic issues
tentatively agreed to between the City and the FOP; and
WHEREAS, any changes to the substantial form would be non-material in nature as
determined by the City Attorney and the FOP or else would require re-ratification by the City
Commission and FOP;
WHEREAS, the full text of the collective bargaining agreement has not yet been
completed; and
WHEREAS, the FOP bargaining unit has not scheduled the ratification vote among its
members for the proposed Labor Agreement attached.
WHEREAS, since the outcome of the ratification vote will not be made available in time,
the results will be provided to the City Commission under a supplemental memorandum; and
NOW,THEREFORE, BE IT DULY 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 FOP, Williams Nichol Lodge No. 8. (attached
as Exhibit A)for the time period covering October 1, 2012 through September 30,2015, contingent
on any changes being non-material and upon ratification by the FOP bargaining unit.
PASSED AND ADOPTED this da of V�f/ , 2013.
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ATTEST:
R FAEL GRANA 11i4dTI HE R A BOWER
CITY CLERK 1 � MAYOR
Date
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Ratifying A Three Year Labor Agreement Between
The City and the Fraternal Order of Police(FOP),William Nichols Lodge No.8, From October 1,2012 Through September 30,2015.
Key Intended Outcome Supported:
Control costs of payroll including salary and fringes/minimize taxes/ensure expenditure trends are sustainable over the long term.
Item Summary/Recommendation:
After 10 formal negotiation sessions and a number of informal discussions, the City and FOP successfully concluded
negotiations and reached a tentative three (3) year labor Agreement covering the time period of October 1, 2012 through
September 30, 2015. The concessions for existing employees include a zero Cost of Living Adjustment (COLA) for 24
months, the elimination of certain incentive pays and significant changes to pension benefits for current employees including:
benefit multiplier of 3%for first 20 years and 4% thereafter; maximum pension benefit of 85%, 5 year vesting, FAME highest 3
years, normal retirement based on rule of 70 with minimum age 47 (age 48 for post-2010 hires) elimination of buyback of
creditable service excluding military time, state imposed limitations of 300 hours of overtime and elimination of accrued leave
to purchase additional benefits. In addition, FOP has also agreed to pension plan changes for future FOP employees that
include an increase to the employee's pension contribution from 10% to 10.5% of pensionable pay; reduce additional pension
benefit to 11% of employee's salary (consistent with IAFF) increasing the Final Average Monthly Earnings (FAME) from 3
highest to 5 highest years; and automatic membership into the pension plan upon hire. The pension changes will yield a
savings of more than $3.6 million in the first year and $3.8 million in year two.
In exchange for adding an additional step to Police Officer, Sergeant and Lieutenant classifications effective April 1, 2015,
FOP has agreed to employee concessions that will yield equivalent savings of approximately $1 million annually as of
September 30, 2015 in order to offset the annualized impact of the additional steps. These concessions include the
elimination of State Accreditation pay; reduction of Commission of Law Enforcement Accreditation pay from $40 to $20 per
pay period; reduction of shift differential pay by$.25 per hour, reduction of court time minimum hours guarantee from 4 hours
to 3.5 hours. The City has agreed to a 3% Cost of Living Increase on October 1, 2014, a non-pensionable hazardous duty
payment of$100 biweekly, a voluntary annual physical fitness assessment providing a $500 incentive for a rating of"Good" or
better that sunsets upon expiration of the contract, reimplementation of a Sick Sell Back Pilot Program that expires on
September 30, 2015, implementation of Infectious Disease Presumption, changes to promotional testing for Sergeants and
Lieutenants, a job audit for Detention Officer classification and establishment of Post Employment Health Program (PEHP) of
$25.00 per employee at no cost to the City.
Advisory Board Recommendation:
Budget Advisory Committee Pension Reform Initiative Recommendation Report August 2012 j
Financial Information:
Source of Amount Account
Funds: 1 FY 2012/13 Status Quo
2 FY2013/14 Implementation of pension changes for current and future employees; Sick Sell Back
$3,425,242 Program; Implementation of voluntary annual fitness incentive program
3 FY2014/15 Pension changes for current and future employees; Elimination of State Accreditation
(2,439,868) Pay; Reduction of Quality of Life from $67.00 to $26.00; Non-pensionable Hazardous
Duty pay $100 biweekly effective 4/1/15; Sick Sell Back Program, reduction of
Accreditation of Law Enforcement pay from $40 to $20 biweekly; reduction of Court
Overtime to 3.5 minimum hours; Shift Differential reduced by $.25 per hour;
Implementation of additional step effective 4/1/15 for Police Officer, Sergeant and
Lieutenant; 3%salary COLA
OBPI Total $5,865,110
Financial Impact Summary: The 3 year savings represents a per member impact of ($16,854). In addition, these
concessions will yield additional, recurring, long-term savings in future fiscal years. The net present value of savings over 30
ears for both FOP and IAFF is $145 million.
City Clerk's Office Legislative Tracking:
S Ivia Crespo-Tabak, Human Resources Director
Sign-Offs:
Department Director Assistant City Manager City Manager
Sylvia Crespo-Tabak Kathie rooks Jim L. Morales
AGENDA ITEM
MIAMIBEACHDATE
MIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Me ers of the ity Commission
FROM: Jimmy L. Morales, City Manager
DATE: July 17, 2013
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, RATIFYING A HREE (3) YEAR LABOR AGREEMENT BETWEEN
THE CITY OF MIAMI BEACH AND THE FRATERNAL ORDER OF POLICE (FOP)
WILLIAM NICHOLS LODGE NO. 8.9 FOR THE PERIOD FROM OCTOBER 1, 2012
THROUGH SEPTEMBER 30,. 2015; AND AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE THE AGREEMENT
ADMINISTRATIVE RECOMMENDATION
Adopt the Resolution.
BACKGROUND
The City's workforce is divided into seven salary groups: (1) those covered by the American
Federation of State, County and Municipal Employees, Local 1554 (AFSCME) bargaining unit; (2)
those covered by the Communications Workers of America, Local 3178 (CWA) bargaining unit; (3)
those covered by the Government Supervisors Association of Florida/OPEIU, Local 100 (GSA)
bargaining unit; (4) those covered by the Fraternal Order of Police, William Nichols Lodge No. 8
(FOP) bargaining unit; (5) those covered by the International Association of Fire Fighters, Local
1510 (IAFF) bargaining unit; (6) Unclassified; and (7) "Others" (classified service employees not
represented by a bargaining unit).
During the October 1, 2009 — September 30, 2012, collective bargaining process the parties
negotiated changes that resulted in employee givebacks of over $15 million between Fiscal Year
(FY) 2009/2010 and FY 2010/2011 and $20 million when you include FY 2011/2012 (Unclassified
and Others, although not represented by a union, also contributed to the employee giveback total).
These givebacks included a number of pension changes applicable to current and future employees
who participate in the Miami Beach Employees' Retirement Plan (MBERP) and resulted in reducing
the City's pension contributions for the short and long-term.
Pension changes for the Fire and Police Pension Plan were negotiated for implementation in 2010;
however, they were insufficient to address the short-term and increasing benefit cost which, in
recent years, has represented the fastest growing cost in the City's budget.
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 2 of 8
The draft Valuation for the Fire and Police Pension Plan estimates the City's Annual Required
Contribution (ARC) payable October 1, 2014 to be $41.5 million. This represents an increase of$2.2
million in the Fire and Police Pension Plan when compared to last year.
In the adopted FY 2012/13 budget, employee givebacks represented $3.782 million in savings
(approximately $3 million in the General Fund) which were to be allocated among the seven salary
groups. The methodology to allocate the givebacks for each salary group was the proportionate
share of the City's total costs for pension and health benefits for FY 2012/13, as in recent years
these have been major personnel expenditure cost drivers. However, to date, no savings have been
achieved for FY 2013/14 for FOP as negotiations focused on achieving major pension savings going
forward.
ANALYSIS
The FOP collective bargaining agreement for October 1 2009 through September 12 2012
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included employee concessions that provided a savings to the City's budget during the contract
period. The employee concessions agreed to by the FOP generated enough savings to address the
targeted employee givebacks established for the FOP for FY 2009/10 and FY 2011/12. However,
the concessions that were negotiated with the FOP were implemented for an 18-month period and
failed to provide the City with any significant recurring, long-term savings.
FOP's portion of the $3.782 million in employee givebacks for the current fiscal year (FY 2012/13)
was $1,396,000. In addition, the Administration received direction from the City Commission to
negotiate changes to the Fire and Police Pension Plan that would generate a savings of $6 - $8
million from the City's Annual Required Contribution (ARC) in the first year. In addition, any
negotiated pension changes would need to yield recurring, annual savings from the City's ARC, as
well as a reduction to the Unfunded Actuarial Accrued Liability (UAAL).
On September 30, 2012, the 2009-2012 FOP collective bargaining agreement expired. The City and
FOP began meeting in September 2012, to negotiate a successor agreement. After ten formal
negotiation sessions and several informal discussions, on July 5, 2013, the City and FOP reached a
tentative three year agreement covering the period October 1, 2012, through September 30, 2015.
The City initially proposed the Budget Advisory Committee's (BAC) recommendation of a hybrid plan
for new and non-vested employees in the Fire and Police Pension Plan. The BAC recommendation
was anticipated to save $2.5 million in year one and a $74 million net present value over thirty years.
The City actuary updated the estimated figures based on the October 1, 2011 Valuation with an
estimated savings of$3.6 million in year one.
The FOP leadership will schedule a ratification vote on the proposed agreement prior to July 31,
2013. If approved by the majority of the membership, the result of the membership vote will
determine the effective date for ratification of the three year labor agreement.
Pension Adiustments/Chan_ges
The tentative agreement between the FOP provides for several pension changes applicable to
current and future employees, including the following:
• Final Average Monthly Earnings (FAMQ — Effective September 30, 2013, the FAME for
current FOP bargaining unit employees hired prior to ratification of the agreement will have
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 3 of 8
the average of the three (3) highest years; and future employees will have the average of
highest of five (5) years.
• Maximum Benefit — Currently, the maximum pension benefit is 90 percent of pensionable
earnings. Effective September 30, 2013, the maximum benefit will be reduced to 85 percent
of pensionable earnings. Employees, who as of September 30, 2013, have attained a
pension benefit of 85 percent or higher, are eligible to continue to earn the 90 percent
maximum benefit.
• Vestin —The vesting period was reduced from ten to five years.
• Prior Creditable Service — Currently, upon completion of ten years of creditable service
(vesting) with the City, employees can purchase prior creditable service of up to two years of
full-time public safety service as a public safety officer prior to City employment, up to four
years of military service and up to an additional six percent multiplier on the additional
creditable service years purchased; however, the maximum benefit purchased shall not
exceed twelve percent. Effective September 30, 2013, all bargaining unit employees will be
limited to purchasing only military service for up to two years, at three percent each year for a
maximum benefit of six percent. The employee will pay the equivalent of their employee
contribution amount in effect at the time of purchase (10 percent per year of purchase for
employees hired prior to ratification of this agreement and 10.5 percent per year of purchase
for all new employees hired thereafter).
• Probationary Period and Contribution of Pensionable Earnings — All new hires will become
members of the Fire and Police Pension Plan effective on their hire date and will contribute
10.5 percent of their pensionable earnings immediately.
• Overtime, Off-duty and Accrued Leave — In the past, employees were able to apply unused
sick and/or vacation time for inclusion in their salary for pension purposes at the equivalent
rate of their employee pension contribution. For example: for each $100 of unused sick
and/or vacation time (at the member's hourly rate), $90 was applied toward their FAME and
$10 contributed to the pension fund.
As a result of recent changes in Florida statutes, accrued leave can no longer be used to
increase pension benefits and the application of overtime toward their FAME is limited to 300
hours.
• Deferred Retirement Option Plan (DROP) and Retiree COLA — Currently bargaining unit
employees hired prior to July 14, 2010, receive a 2.5 percent annual retiree COLA, unless
they entered the DROP after September 1, 2012, and forfeited the Retiree COLA for years
three and four in the DROP.
Bargaining unit employees hired on or after July 14, 2010, are eligible to receive a 1.5
percent annual Retiree COLA.
Any member who joins the DROP on or after September 30, 2013, will be eligible to receive
a Retiree COLA each year that they participate in the DROP. The rate at which the member
earns his/her annual Retiree COLA shall be based on hire date (2.5 percent for all pre-2010
members and 1.5 percent for all post-2010 members).
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 4 of 8
• DROP and Leave Payouts— Effective October 1, 2013, any bargaining unit member currently
participating in the DROP, or who enters the DROP, may elect to request a full or partial
payment of earned sick and vacation leave balances up to the maximum amount stipulated
in the collective bargaining agreement and applicable pension ordinance. Eligible employees
will have until June 30 of each year to exercise this option, and receive payment during the
first pay period ending in October of the same year. Any amount paid out to an employee
upon entering the DROP will be deducted from the cap for their maximum leave payout upon
leaving the DROP.
• Miami Beach Employees' Retirement Plan (MBERP) Service Transfer— Upon ratification of
the collective bargaining agreement, MBERP members will not be eligible to transfer
creditable service time from MBERP to the Fire and Police Pension Plan if they are
subsequently employed in a classification covered by the FOP bargaining unit.
• Retirement Age — Under the current contract, employees hired prior to July 14 2010, can
retire at either the rule of 70 (age plus creditable years of service) or at age 50. Effective
September 30, 2013, employees hired before July 14, 2010, may retire based on the rule of
70 with a minimum age of 47. Employees hired on or after July 14, 2010, may retire based
on the rule of 70 with a minimum age of 48.
However, because some members who have already purchased additional creditable
serviced may reach the maximum benefit of 85 percent prior to age 47, the City is exploring
how to address these employees such as allowing them to cease their employee contribution
to the pension plan during this period. These impacts, if any, will be presented during the first
reading of the amendment to the pension ordinance, which we anticipate to be at the
September 11, 2013, City Commission meeting.
• Benefit Multiplier— Effective September 30, 2013, the benefit multiplier for all bargaining unit
members shall be three percent for year one through twenty, and four percent per year
thereafter.
Changes for New Employees Hired on or after July 17, 2013
• Employee Pension Contribution = 10.5% of Pensionable Earnings
• FAME = 5 Highest Years
• Enter directly into the Fire and Police Pension Plan upon hire date (vs. currently enter upon
successful completion of probationary period (12 months for Firefighter and 18 months for
Police Officer). .
The aforementioned changes that have been agreed to by'both FOP and IAFF are projected to
generate savings as follows, subject to actuarial confirmation by Buck Consultants, the Fire and
Police Pension Board Actuary:
ARC Savings Unfunded Liability Savings
in Millions) in Millions
Year 1 $5.666 $24.37
Year 2 $6.034 $24.25
Year 3 $6.391 $23.55
Year 4 $7.065 $30.02
Year 5 $7.988 $34.56
Year 6 $8.721 $40.41
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 5 of 8
Further, the projected 30-year net present value savings for these changes is estimated at $145
million. The draft Actuarial Impact Statement by Buck Consultants is provided as Attachment 1.
ECONOMIC PROVISIONS
In addition to the significant pension reform agreed upon for members of the Fire and Police Pension
Plan, the following provides a summary of the remaining items tentatively agreed upon by the City
and FOP. The entire tentative collective bargaining agreement is provided as Attachment 1 to this
memorandum.
• Cost of Living Adiustment (COLA)
• Effective October 1, 2012, there will be no across-the-board wage increases.
• Effective October 1, 2013, there will be no across-the-board wage increases.
• Effective October 1, 2014, there will be a three percent (3%) across-the-board wage
increase that will extend the minimum and maximum of the salary ranges for all
classifications covered by the FOP bargaining unit. The FY 2014/15 estimated impact
to the City from the 3% COLA is $811,156.
• Step Increases
• Effective October 1, 2012, step increases will remain status quo for any employee
who is eligible to receive a step on their anniversary date.
• Effective April 1, 2015, there shall be an additional step added to the maximum of the
pay scales for the classifications of Police Officer, Sergeant of Police and Lieutenant
of Police. Effective April 1, 2015, any member who on April 1, 2014, was at the
maximum of the range of their current classification, will have their salaries adjusted
by being placed into the newly added step for their job classification. This step
increase will adjust the employee's anniversary date to April 1. From thereafter,
employees who reach the maximum of their current classification will be placed into
the newly added step effective on their anniversary date. The estimated impact for FY
2014/15 is $489,882. The annualized impact for FY 2015/16 is $1,003,162. The
implementation of the additional steps was subject to the FOP agreeing to
concessions that would result in equivalent, recurring savings in order to offset the
estimated annualized impact $1,003,162.
• Concessions to Offset the Additional Step Added to the Maximum of the Range for Police
Officer, Sergeant and Lieutenant Classifications Effective April 1, 2015
• Elimination of State Commission for Florida Law Enforcement accreditation pay
effective October 1, 2014 for all members. The estimated savings is ($95,680) in
FY 2014/15 and each year thereafter unless the benefit is renegotiated.
• Reduction of Quality of Life Incentive Pay from $67.00 biweekly to $26.00 biweekly
effective October 1, 2014. The estimated annualized savings is ($392,288), in FY
2014/15 and each year thereafter unless the benefit is renegotiated.
• Reduction of Commission on Accreditation of Law Enforcement Agencies (CALEA)
pay from $40.00 to $20.00 effective September 30, 2015. The estimated annualized
savings is ($191,360) and will be realized in FY 2015/16 and each year thereafter
unless the benefit is renegotiated.
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 6 of 8
• Reduction of Shift Differential Pay by $.25 per hour (Midnight Shift reduced from
$1.00 per hour to $.75 per hour and Afternoon Shift reduced from $.75 per hour to
$.50 per hour effective September 30, 2015. The estimated annualized savings is
($112,994) and will be realized in FY 2015/16 and each year thereafter unless the
benefit is renegotiated.
• Court Time Compensation during an employee's off duty hours reduced from a
four(4) hours minimum to three and one half (3.5) hours minimum effective
September 30, 2015. The estimated annualized savings is ($210,840) and will be
realized in FY 2015/16 and each year thereafter unless the benefit is renegotiated.
* It is important to note that the above referenced concessions will remain as status quo upon
the expiration of the FOP collective bargaining agreement on September 30, 2015.
Therefore, the City will continue to recognize recurring savings based on these concessions
unless the City and FOP collectively bargain changes to these concessions in a successor
agreement.
• Annual Sick Sell Back Pilot Program — Effective October 1, 2013, the City will reinstitute a
Sick Leave Sell Back Program. The purpose of this program is to provide an incentive for
police officers to utilize less sick leave, increase the "show-up rate", thereby decreasing the
need for overtime during staffing shortages and reducing the amount of overtime paid due to
sick call outs. The "show-up rate" has been identified as a significant driver of overtime costs
in the Police Department. The Sick Leave Sellback Program would allow the sell back of up
to ninety-six hours, payable in November of each year that the program is in effect, as long
as the employee retains a minimum of 360 combined sick and vacation leave and meets
other necessary requirements as outlined in the program. The maximum number of sick
leave hours that may be sold back on each sell back date shall be reduced by one hour for
each hour of sick leave the employee used during the applicable annual sell back period
(e.g., if an employee uses ten hours of sick time, then he/she is only eligible to sell back
eighty-six hours. Year 1 of the program will cover the period of October 1, 2013 through
September 30, 2014, with payment to all qualifying participants in November 2014, and year
2 of the program will cover the period of October 1, 2014 through September 30, 2015, with
payment to all qualifying participants in November 2015.
Based on historical participation patterns when the program was in effect during the 2006-
2009 contract, a 50 percent participation assumption would yield a cost for the sellback of
sick hours per participant of $593,520, offset by a reduction in overtime of ($660,000) in FY
2013/14, payable in November 2014; and a cost of $669,402 for the sellback of sick hours
per participant, offset by a reduction in overtime costs of($660,000)for FY 2014/15, payable
in November 2015. The net anticipated impact for FY 2013/14 based on 50 percent
participation, is a savings of ($66,480) and FY 2014/15 represents a net estimated cost of
$9,402. This pilot program will sunset September 30, 2015, with final payments distributed in
November 2015 for the October 1, 2014 through September 30, 2015 Sick Sell Back
Program period.
The maximum exposure based on 100 percent participation in the program is a cost
attributed to sellback of sick hours of $1,187,040 in Year 1, offset by a maximum of overtime
savings of ($1,320,000). In Year 2, the maximum exposure based on 100 percent
participation in the program is a cost attributed to sellback of sick hours of $1,3338,800,
offset by a maximum of overtime savings of($1,320,000).
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 7 of 8
• Hazardous Duty Pay — Effective April 1, 2015, employees covered by the FOP collective
bargaining agreement shall receive a biweekly non-pensionable payment of $100. The
impact for FY 2014/15 is $473,200, with an annualized impact of $946,400 beginning in FY
2015/16. In recent years the State of Florida Division of Retirement has become more
flexible in interpreting language agreed to through the collective bargaining process.
However, there is a risk that the State may determine that this pay must be pensionable.
• Voluntary Physical Fitness Assessment Incentive Program— In September 2014 and again in
September 2015, the City will conduct a voluntary physical fitness assessment, utilizing
Cooper's physical fitness standards. Participants who attain an overall rating of "Good" or
above, shall receive a one-time, non-pensionable fitness incentive payment of $500, payable
in October of the corresponding year. The provisions of this program will sunset upon
expiration of the 2012 — 2015 agreement. The estimated impact assuming all members
would qualify for the payment is $184,000 per year, representing a total impact of $368,000
for the contract period.
• Infectious Disease Presumption — Effective October 1, 2013, the City will implement an
infectious disease presumption whereby, current and future employees will be eligible to be
covered for any condition or impairment of health caused by Human Immunodeficiency
Virus/Acquired Immune Deficiency Syndrome (HIV/Aids), Hepatitis, Pulmonary Tuberculosis
or Meningococcal Meningitis provided that the member submits to either a post-employment
medical screening for current employees or a pre-employment medical screening for future
employees (tested at a medical facility selected by the City) that establishes baseline results
and reveals no evidence of the aforementioned infectious diseases and that there is a
requirement to document the exposure in the line of duty. The FOP Health Trust shall incur
the costs associated with establishing a baseline medical screening for current employees
covered by the Trust. Employees who are not members of the Health Trust, shall incur their
own cost. For all future employees, the City will bear the cost and include the baseline
testing as part of the pre-employment medical screening process. Currently, Worker's
Compensation benefits that are provided by the City cover any member covered by the FOP
collective bargaining agreement who becomes infected by any of the aforementioned
diseases provided that the member must submit reasonable proof that they became infected
in the line of duty. The City and FOP have agreed that contraction of any of the
aforementioned diseases shall be presumed to have been accidental and to have been
suffered in the line of duty, subject to having had a documented incident and other provisions
as outlined in the proposed collective bargaining agreement.
NON-ECONOMIC PROVISIONS
• Dru_glAlcohol Testinq — Last Chance Agreement — The City has agreed to establish an
opportunity for a Last Chance Agreement when a member tests positive for either alcohol or
drugs under the City's drug/alcohol testing policies. The City Manager maintains sole
discretion in determining if a Last Chance Agreement will be proffered. In addition, discipline
can be administered concurrently.
• Promotional Testing
o The City recognizes the value of post secondary education and has agreed with the
FOP to implement a provision whereby points shall be added to an employee's
passing promotional examination score for each completed credit of post secondary
education from an accredited institution of higher learning.
I
City Commission Memorandum
July 17,2013
FOP 2012-2015 Ratified Collective Bargaining Agreement
Page 8 of 8
o The current promotional process requires that a certified promotional eligibility list
remain in effect for eighteen months, while requiring the City to offer a promotional
exam twenty-four months from the date that the promotional eligibility list is certified.
Based on this established process, there is a gap of six months from expiration of the
certified promotional eligibility list to when a new promotional exam is offered to
qualifying Police Officers and Sergeants of Police who wish to apply for a promotion
within the Police Department. The City and FOP have agreed to extend the
expiration of the certified promotional eligibility lists for Sergeants of Police and
Lieutenants of Police from eighteen months to twenty-four months. In addition, the
City shall commence the promotional testing process nine months prior to the
expiration of the promotional eligibility list.
• Job Audit of Detention Officer Classification —The City has agreed to conduct a job audit of
the classification of Detention Officer.
• Establishment of Post Employment Health Program (PEHP) — A Post Employment Health
Program provides employees with a mechanism to establish a savings account for future
medical costs when the employee retires. Effective October 1, 2013, all FOP bargaining unit
members shall begin contributing $25.00 per pay period toward a PEHP. In accordance with
the guidelines of a PEHP, upon implementation, the established contribution rate shall be
mandatory for all bargaining unit members. This benefit incurs no cost to the City, as any
administrative fees/costs shall be incurred by the FOP Health Trust. Upon separation, the
employee shall be required to contribute ten percent of the value of their leave balances to
their PEHP.
CONCLUSION
The terms and conditions of the proposed three year labor agreement between the City and FOP
assumes no financial impact for FY 2012/13; a savings of ($3,425,242) for FY 2013/14; and
($2,439,868)for FY 2014/15. The total estimated three year impact is ($5.865) million.
The significant changes to pension benefits for current employees will result in long-term, recurring
pension savings. Based on the Actuarial Impact Statement provided by Buck Consultants
(Attachment 2), the total pension Plan savings for both Fire and Police which, include changes for
future employees will yield a savings of ($5.66 million) in FY 2013/14 and a savings of ($6.034) in
FY 2014/15, for a total savings of ($11.694) million. Based on percent of payroll, the pension
changes agreed to by FOP of result in a savings of ($3.6 million) in FY 2013/14 and a savings of
($3.84) in FY 2014/15, for a total savings of($7.45) million.
At the time of this writing, FOP has not scheduled the ratification vote of the proposed agreement for
their membership. The Administration recommends adopting the resolution to ratify the three year
labor agreement with the FOP bargaining unit for the time period covering October 1, 2012, through
September 30, 2015, subject to the outcome of the ratification vote for the FOP membership. Exhibit
A to the resolution is a copy of the contract language changes in substantial form. Since the results
of the ratification vote will not be available for the July 17, 2013, City Commission meeting, the
results will be provided to the City Commission as soon as the City receives the certified results.
Attachments
JLM/KGB/SC-T/CMG
T:\AGENDA\2013\July 17TOPTOP 2012-2015 Labor Agreement Memo.docx
ATTACHMENT 1
buckconsultants A Xerox Company
P Y
July 16, 2013
CONFIDENTIAL
Ms. Kathie Brooks
Assistant City Manager
1700 Convention Center Drive
Miami Beach, FL 33139
Dear Kathie:
Actuarial Impact of Proposed Plan Changes to the City Pension Fund for Police Officers
and Firefighters in the City of Miami Beach
As requested, we have calculated the estimated impact of the proposed changes to the City
Pension Fund for Firefighters and Police Officers in the City of Miami Beach (Pension Fund).
Summarized below are the proposed plan changes and the cost impact of these changes.
A combination of the following changes to the Pension Fund:
• Amend the Plan's Final Average Earnings calculation, for participants hired prior to July
175 2013, from the average of the highest 2 years of compensation to the average of the
highest 3 years of compensation effective for fiscal years ending after September 30,
2015.
• Amend the Plan's Final Average Earnings calculation, for participants hired on or after
July 17, 2013, from the average of the highest 3 years of compensation to the average of
the highest 5 years of compensation effective for fiscal years ending after September 30,
2015.
• Extend the Benefit Accrual Rate of 3% per annum up from 15 years of service to 20
years of service with a 4% multiplier for service greater than 20 years, subject to a
maximum pension benefit of 85% of Final Average Earnings. Participants exceeding
85%of their pension benefit at September 30, 2013 will be grandfathered at 90%.
• Amend the rule of 70 (age plus service) criteria to require participants to also attain age
47, for participants hired prior to July 15, 2010, with the exception of three members.
These three members will not be subject to the minimum age requirement under the rule
of 70. For participants hired after July 14, 2010 the rule of 70 (age plus service) will be
amended to require participants to also attain age 48.
•
i
i
Ms. Kathie Brooks
July 15, 2013
Page 2
• Freeze the cost of living adjustment component for salary increases in fiscal years
2012/2013 and 2013/2014 and grant a cost of living adjustment of 3% in fiscal year
2014/2015.
• Change the vesting requirement from 10 years of service to 5 years of service.
• Eliminate the ability to purchase prior creditable service or additional multiplier except
for prior military service up to 2 years at 3%each year for a maximum of 6%. The cost to
the employee would be at 10% for those hired prior to July 17, 2013 and 10.5% for those
hired on or after July 17, 2013.
• Reinstate the annual cost of living adjustment in all years for participants who enter the
DROP on or after September 30, 2013.
• Eliminate the use of accrued leave to purchase additional benefits and cap the maximum
overtime hours that can be used for pensionable pay at 300 hours per Florida statute.
• Eliminate the ability to transfer creditable service from the Miami Beach Employees
Retirement Plan(MBERP)to the Miami Beach Fire and Police Pension Plan.
• Overtime, off-duty and unused sick and/or vacation leave for Police Officers that can be
included in the computation of pensionable pay is limited to 11% of the highest
annualized pay rate for the same salary rank of the member at the time of retirement.
• Eliminate the probationary period for new hires to become participants in the pension
plan.
• Extension of Ranges for Firefighter I, Police Officer, Sergeant of Police and Police
Lieutenant effective April 1, 2015 (Proposed Maximum includes the 3% COLA payable
on October 1, 2014 and 5% additional Step effective April 1, 2015 for eligible members)
Current Current Proposed Proposed
Minimum Maximum Minimum Maximum*
Firefighter I— 455139.11 741,745.85 45,139.11 80,837.64
Day Shift
Police Officer 53,309.01 75,033.33 53,309.01 81,148.55
Police Sergeant 78,748.42 86,852.71 78,748.42 93,931.21
Police 86,852.71 100,532.31 86,852.71 108,725.69
Lieutenant
Ms. Kathie Brooks
July 16, 2013
Page 3
Cost Impact of Plan Changes:
The 30 year cost impact of the combined code changes outlined above is outlined in appendix A
attached to this letter.
Data, assumptions,Methods and Plan Provisions:
The calculations contained in this study are based on the data, assumptions, methods and plan
provisions used for the October 1, 2012 actuarial valuation of the System. The salary scale
assumption has been reduced to reflect the cost of living freeze reference above. I am an
Enrolled Actuary and meet the qualification standards of the American Academy of Actuaries to
render the actuarial opinion contained in this letter.
Please note that any changes to Pension Fund would need to be documented in an impact
statement and submitted to the State for acceptance. If you have any questions, please do not
hesitate to contact me.
Sincerely,
Jos;4 L. Griffin ASA, EA, MAAA, FCA
Director, Consulting Actuary
cc: Mr. David Campbell—Buck Consultants/Atlanta
Mr. Steward Sainvil—Buck Consultants/Atlanta
P:\RetirementNiami Beach Fire and Police\2013\Union Pricing\Correspondence\2013 Union Negotiation Pricings Results-Scenario 5.docx
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