2014-3848 Ordinance ORDINANCE IMPLEMENTING PENSION PROVISIONS OF
2012-2015 IAFF AND FOP COLLECTIVE BARGAINING AGREEMENTS
ORDINANCE NO. 2014-3848
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, AMENDING PART I, SUBPART B, ARTICLE IX, RELATED
SPECIAL ACTS, OF THE MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM
FOR DISABILITY AND RETIREMENT OF MEMBERS OF POLICE AND FIRE
DEPARTMENTS"; IMPLEMENTING PROVISIONS OF THE 2012-2015 COLLECTIVE
BARGAINING AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF MIAMI
BEACH, (IAFF) LOCAL 1510, AND MIAMI BEACH FRATERNAL ORDER OF POLICE,
WILLIAM NICHOLS LODGE NO. 8 (FOP); IMPLEMENTING RECOMMENDATIONS
OF THE BUDGET ADVISORY COMMITTEE, A MEMORANDUM OF
UNDERSTANDING AND OTHER CHANGES; AMENDING SECTION 63 ENTITLED
"SOURCE OF MONIES FOR FUND; COMPUTATION OF LIABILITY; USE AND
INVESTMENT OF FUND"; SERVICE RECORD"; AND AMENDING SECTION 66
ENTITLED "SERVICE AND DISABILITY BENEFITS GENERALLY"; PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND
PROVIDING FOR AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA:
Section 1. Effective September 30, 2013, Section 62 of Part 1, Subpart B, Article IX, Related Special
Acts of the Miami Beach City Code, is amended to read:
Section 62. Definitions
The following words, terms and phrases, when used in this article, shall have the meanings ascribed to
them in this section, except where the context clearly indicates a different meaning:
Employee means any full time employee who is�certified as a firefighter as a condition of employment in
accordance with section 633.35, Florida Statutes, and whose duty it is to extinguish fires, to protect life or
to protect property, and any full time employee who is certified or required to be certified as a law
enforcement officer in compliance with section 943.1395, Florida Statutes, who is vested with authority to .
bear arms and make arrests, and whose primary responsibility is the prevention and detection of crime or
the enforcement of the penal, criminal, traffic,, or highway laws of the state. The foregoing definition
applies to employees hired on or after September 30, 2013. Notwithstanding the foregoing definition,
any employee hired before September 30, 2013 whose initial employment with the City was in the
unclassified service and who continuously remained a member of the unclassifed service after that date
shall remain a member of the Miami Beach Employees Retirement Plan for as long as employed as an
unclassified employee, and shall not be eligible to participate in this System.
Salary, for the purpose of determining member contributions under this System, means the member's
base pay, longevity pay, overtime, shift differential and extra compensation allowance such as uniform
allowance, before reduction for the picked-up member contributions and before reduction for any
amounts contributed in accordance with sections 125 or 457 of the Internal Revenue Code.
Notwithstanding the preceding sentence, effective September 30, 2013, Salary shall exclude overtime
pay in excess of 300 hours per calendar year, payments for unused sick and vacation leave, hazardous
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duty pay (when paid), payments relating to the domestic partner tax credit reimbursement, and
payments to police officer members for voluntarily participating in a physical fitness assessment
program offered by the City. However, for periods prior to October 1, 2000 and solely with respect to
May 1993 Members, the term "Salary" shall refer only to base pay and longevity pay, excluding any
payment of overtime, shift differential or extra compensation allowance such as uniform allowance, but
determined before reduction for the picked-up member contributions and before reduction for any
amounts contributed in accordance with sections 125 or 457 of the Internal Revenue Code. For
purposes of determining the amount of a member's benefit under the System, Salary shall mean the
amount determined under this section as modified by the provisions of section 66 under which the
benefit is being provided. Notwithstanding anything herein to the contrary, a member's Salary taken into
account for any purpose under this System, including for purposes of determining the amount of a
member's benefit and his contribution to this System, shall not exceed the limitation set forth in section
401(a)(17) of the Internal Revenue Code as adjusted for changes in the cost of living by the Secretary
of the Treasury of the United States. However, for employees who were members before the first plan
year beginning after December 31, 1995, the limitation on Salary shall not be less than the amount
which was allowed to be taken into account under this article as in effect on July 1, 1993.
Section 2. Section 63 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami Beach City
Code, is amended to read:
Sec. 63. Source of moneys for fund; computation of liability; use and investment of fund.
(b) Each member of this System hired before September 30, 2013 shall contribute 10% of his Salary to
the Fund. Each member of this System hired on or after September 30, 2013 shall contribute 10.5% of
his Salary to the Fund. The City shall, solely for purposes of complying with section 414(h) of the
Internal Revenue Code, pick up contributions required to be made by the members under this System.
The contributions so picked up shall be treated as employer contributions for purposes of determining
their tax treatment under the Internal Revenue Code.
(c) All computations of liability in connection with the System shall be based on tables and rates
approved by the Board. The Board shall designate an actuary for the System who shall recommend
such tables and rates for adoption by the Board. The actuary designated by the Board, on the basis of
such tables and rates, shall recommend to the Board the amounts required to be paid into the System
by the City under subsection (a) of this section. Emer-n September 30, 29 During the three year
period beginning October 1, 2013, and at least once every three years thereafter, there shall be an
experience study of eaGh of the Gity'S P8R6iGR plaRS' the System's actuarial assumptions performed by
an actuary selected by the City. Theme . study 6he uld be rVendur-n-ted at least GRGe G4 rye
o-Gnmr»re aGtual expei w e to the ssu1T1F�;� The actuary selected by the City shall make
recommendations for any changes in assumptions based on the results of the experience study, aP4
In the event the Board of Trustees or plan actuary disagrees with the recommended assumption
changes, the Board or plan actuary shall present the basis of their disagreement and justify and
deviation from the recommended assumptions to the City Commission. Effective September 30, 2013,
the City shall require 5, 10 and 20 year projections of required pension contributions as part of the
annual actuarial valuations for each of the City's pension plans. These projections shall be based on
the current actuarial assumptions for each plan. The projections shall be updated to reflect the cost of
any proposed benefit enhancement before the City Commission agrees to the enhancement. The cost
of these studies shall be funded separately from the annual contribution to the pension plan.
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(d)' There shall be a complete actuarial evaluation prepared by the actuary at least every three years,
and the City shall make such adjustments in its contributions as shall be shown to be required by such
actuarial evaluation. The money required to meet all the obligations of this System over and above the
personal contributions from members, is a liability and obligation of the City. The expenses of the
System shall not be separately budgeted so long as the method is permitted by law. The City
commission shall levy annually, in the manner provided by law, upon all taxable property within the
City, such millage on the assessed valuation thereof as is necessary to produce the amounts required
to be contributed by the City to this System. Effective September 30, 2013, the City shall fund at least
the normal cost of the pension the System, net of member contributions and state premium tax
revenues. If the net City normal cost for any Plan year exceeds the City's annual required contribution
as determined in accordance with Part VII, Chapter 112, Florida Statutes, the excess shall be held in
reserve as part of the Fund assets, designated as the pension stabilization fund, and shall be used to
offset the City's annual required contribution in any Plan year as determined by the City. The pension
stabilization fund shall be accounted for separately and not included as assets of the Fund for plan
valuation purposes, and shall be annually credited or debited with gains and losses at the same rate of
return as the overall net market rate of return on Fund investments. if this exceeds the ame in+ of the
sfa_hi_I_izatiGR fund, to he made available { DR sheF fRaIs
Section 3. Section 65 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami Beach City
Code, is amended to read:
Sec. 65. Computation of creditable service; service record.
(a) A member's Creditable Service shall include all periods of employment as an Employee for which
contributions have been made to this System in accordance with subsection (b) below and section
63(b), together with all service in the uniformed services of the United States required to be included
under section 82; provided, however, that only periods of service in the uniformed services of the
United States for which the member makes the member contributions as provided for in section 82 shall
be Creditable Service for purposes of computing the amount of the member's benefit from the System.
Notwithstanding any provision to the contrary, in no event shall the same period of service be counted
more than once as Creditable Service under this System, and in no event shall a member receive
Creditable Service under this System for any period of service for which credit has been received under
any other defined benefit retirement plan established by the City.
(b) Employees who become members of this System in order to receive credit for service rendered
prior to their becoming a member shall make contributions to the Fund in the amount such member
would have contributed had he been a member during the period of service for which credit is being
purchased. In order to receive such credit, employees shall make payment within six months after
becoming a member or within such other period as may be provided in a bargaining agreement
covering the member. No Creditable Service shall be provided under this System for periods of service
in another City retirement plan, nor shall any transfer of service or credit from another City retirement
plan to this System be allowed.
(c) The Board shall establish the service record of all employees who may be entitled to participate in
the benefits of this System, and shall keep a record thereof.
Section 4. Section 66 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami Beach City
Code, is amended to read:
Section 66. Service and disability benefits generally.
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(a) The Board shall, upon application retire members meeting any one of the following requirements:
(1) The attainment of age 50.
(2) Permanent and total disability incurred in line of duty in the police or fire department, or in the
unclassified service as provided in section 70, irrespective of the number of years of Creditable
Service;.
(3) Permanent and total disability incurred other than in the line of duty, after five years of Creditable
Service.
(4) The sum of the member's age and Creditable Service equals at least 70 and the member retires on
or after October 1, 1998; provided, effective September 30, 2013, a member hired before July 14, 2010
must attain age 47 to be eligible for retirement under this paragraph (4); and a member hired on or after
July 14, 2010 must attain age 48 to be eligible for retirement under this paragraph (4); and provided
further, any member hired prior to July 14, 2010 who completes a buyback of prior Creditable Service
prior to September 30, 2013 and reaches the maximum pension benefit of 85% of average monthly
Salary prior to attaining age 47, the employee contribution shall cease on the date such employee
reaches the 85% maximum pension benefit, and his/her final average monthly Salary will be frozen on
the same date. Notwithstanding the preceding sentence, any police officer member; and effective
January 16, 2014, any firefighter member hired pursuant to a consent decree may retire when the sum
of the member's age and Creditable Service equals at least 70.
(5) Only for periods prior to October 1, 2000 and only in the case of a May 1993 Member, the
attainment of age 55 with at least 10 years of Creditable Service.
(b) A member who attains eligibility for retirement under subsection (a) above on or before September
30, 2013 shall be entitled to receive upon retirement under subsection (a), a monthly pension payable
for life equal to:
(1) Three percent of the member's average monthly Salary for each year of the member's first 15 years
of Creditable Service, being computed as to a part of a year on a pro rata basis to the nearest month;
plus
(2) Four percent of the member's average monthly Salary for each year of the member's Creditable
Service in excess of 15 years, being computed as to a part of a year on a pro rata basis to the nearest
month.
(c) A member who does not attain eligibility for retirement under subsection (a) above on or before
September 30, 2013 shall be entitled to receive upon retirement under subsection (a), a monthly
pension payable for life equal to:
(1) Three percent of the member's average monthly Salary for each year of the member's first 20 years
of Creditable Service, being computed as to a part of a year on a pro rata basis to the nearest month;
provided in no event shall a member's benefit multiplier for Creditable Service earned before October
1, 2013 be reduced; plus
(2) Four percent of the member's average monthly Salary for each year of the member's Creditable
Service in excess of 20 years, being computed as to a part of a year on a pro rata basis to the nearest
month.
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(d) For purposes of determining a member's benefit, the average monthly Salary of members who
attains eligibility for retirement under subsection (a) above on or before September 30, 2015 shall be
based on the average of the two highest-paid years of the member prior to the date of retirement or
termination, or the average of the last two paid years of the member prior to the date of retirement or
termination, whichever produces the greater benefit for members employed by the City before May 19,
1993, and shall be based on the average of the three highest paid years of the member prior to the
date of f retirement or termination for May 1993 Members. Effective September 30, 2015, the average
monthly salary for members hired before July 14, 2010 who do not attain eligibility for retirement under
subsection (a) above on or before September 30, 2015, shall be based on the average of the three
highest paid ,years or the average of the last three (3) years of the member prior to the date of
retirement or termination, whichever produces the greater benefit. The average monthly salary for
Members " emb hired on or after July 14, 2010 but prior to September 30, 2013, shall be based on
the average of the three highest paid years or the average of the last three (3) years of the member
prior to the date of retirement or termination, whichever produces the greater benefit. The average
monthly salary for Members hired on or after September 30, 2013, shall be based on the average of the
fives highest paid years or the average of the last five (5) years of the member prior to the date of
retirement or termination, whichever produces the greater benefit. For purposes of such calculation,
Salary shall be the Salary upon which the member's contribution to the System was computed, as
provided in paragraphs (1) and (2) below:
PASSED AND DULY ADOPTED by the Mayor and City Commission of the City of Miami Beach,
Florida, this day of Mar , 2014.
_ r
Philip Levine
Mayor
APPROVED AS M
ATTES FORM& tANG AGE
& FOR EXECUTION
Rafael E. anad
City Clerk
a ' , •' •.�, 0tv Atiornoy Date
`� :Iij�CCRr
ORATED:
x 70
t:\agenda\2014\march\fire and police�pb" ion\f&p pension ordinance 2nd reading.docx
5
COMMISSION ITEM SUMMARY
Condensed Title:
An Ordinance Amending Part I, Subpart B, Article IX, Related Special Acts, of The Miami Beach City Code Entitled "Pension System for
Disability and Retirement of Members of Police And Fire Departments; Amending Section 63 Entitled "Source of Monies for Fund;
Computation of Liability; Use and Investment of Fund"; Service Record"; And Amending Section 66 Entitled "Service and Disability Benefits
Generally"
Key Intended Outcome Supported:
Attract and maintain a workforce of excellence,control costs of payroll including salary and fringes/minimize taxes/ensure expenditure trends
are sustainable over the long term
Item Summa /Recommendation:
Second Reading—Public Hearing
On September 30, 2013, the City Commission adopted Ordinance#2013-3817, amending provisions in the Fire and Police Pension Plan to
reflect what had been negotiated with the International Association of Firefighters (IAFF) and the Fraternal Order of Police (FOP). Following
adoption of the ordinance, both the IAFF and FOP raised concerns regarding the definition of the Final Average Monthly Earnings (FAME)
retirement benefit for members hired prior to September 30, 2013, since they believed the ordinance should have maintained the previously
existing language;that the FAME would be based on the average of the highest three or the last three years of a member's employment. The
adopted ordinance provides for the average of the highest three years and is silent on the subject of the last three years. Upon the
administration's inquiry, Buck Consultants, the actuary for the Fire and Police Pension Plan, advised that its actuarial analysis did not change
the FAME calculation of the three last years for members hired prior to September 30,2013.
It is important to note that the previous pension ordinance reflected the FAME based on the average of the two highest years or two last years
for members hired prior to July 14, 2010. Additionally, the Fire and Police Pension ordinance adopted at the September 30, 2013, City
Commission meeting based the FAME for employees hired on or after September 30,2013, on the average of the five (5) highest or five last
years. After numerous discussions between the parties, the City agreed that the omission of the "last three years" was not intentional and
therefore recommends that the definition of the FAME for members hired prior to September 30, 2013, be amended to include both the
highest three years and the last three years of employment.
On October 2013, the City was served with both a grievance and an unfair labor practice (ULP) charge in which the aggrieved party alleged
that a retirement benefit negotiated for members hired as a result of a consent decree had been unilaterally altered by the administration
eliminating IAFF members from eligibility. After consulting with the City's and the IAFF's legal counsel, the parties met and negotiated a
Memorandum of Understanding (MOU),that made members hired under the consent decree eligible for retirement under the Rule of 70 with
no minimum age requirement. The IAFF confirmed on December 6, 2013, that the MOU was ratified by the membership with 115 voting
members in support of the MOU and 23 against.
Ordinance 2013-3817 also amended the definition of"employee" as a Plan member to allow new firefighters and police officers to join the
pension plan upon employment, rather than at the end of their probationary period. The Chief of Police is a member of the Miami Beach
Employees' Retirement Plan (MBERP) because he never held a classified position in the police department and was, therefore, ineligible to
join the Fire and Police Pension Plan. According to the pension attorney for the Fire and Police Pension Plan,the recently amended definition
of employee excluded the Chief of Police from joining the Fire and Police Pension Plan because he was not hired on or after September 30,
3013. The proposed ordinance seeks to clarify the definition of employee by specifically excluding any unclassified fire or police employee
who was hired before September 30, 2013 whose initial employment with the City was in the unclassified service and who continuously
remained a member of the unclassified service after that date to remain a member of MBERP. Any law enforcement or fire employee hired
into the unclassified service after September 30, 2013, is, however, eligible to be a member of the Fire and Police Pension Plan. According to
the Pension Board actuary for the Plan there will not be a financial impact for this change. An impact statement from the Plan's actuary is
provided as an attachment. After adoption of the ordinance on September 30, 2013, the City's pension actuary, Michael Tierney, provided
revised language concerning the Budget Advisory Committee's recommended pension policies and guidelines adopted by the City
Commission on July 17, 2013. Given that the administration is recommending amending the Fire and Police Pension ordinance, these
revisions are also included in the proposed ordinance amendment. The Administration recommends adopting the proposed ordinance.
Advisory Board Recommendation:
Bud et Advisory Committee Pension Reform Recommendation Report of August 29,2012
Financial Information:
Source of Amount
Funds: 1 FY2013/2014 N/A
2 FY2014/2015 N/A
3 FY2015/2016 N/A
OBPI Total N/A
Financial Impact Summary:According to the City's actuary,the changes to the ordinance will not have a financial impact on the
City.
City Clerk's Office Legislative Tracking:
S Ivia Cres o-Tabak, Human Resources Director
Sign-Offs.
Department Director AssistankCVy Manager City M a er
SYIV* Crespo-Ta�pk �th' Brooks immy L. orates
:W ENDA\2014\M rch\Fire and Police Pensi n\Fire and P ice Pension Ordinance Summary 2nd Reading.do
�`� II
AGENDA
Q M RS
I l V �.U B EAC H DATE
NAIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members of t kCity ission
FROM: Jimmy L. Morales, City Manager
DATE: March 5, 2014 S EADING — PUBLIC HEARING
SUBJECT: AN ORDINANCE OF THE MAYOR ND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, AMENDING PA T , SUBPART B, ARTICLE IX, RELATED SPECIAL
ACTS, OF THE MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM FOR
DISABILITY AND RETIREMENT OF MEMBERS OF POLICE AND FIRE DEPARTMENTS99;
IMPLEMENTING PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING
AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF MIAMI BEACH, (IAFF)
LOCAL 15109 AND MIAMI BEACH FRATERNAL ORDER OF POLICE,WILLIAM NICHOLS
LODGE NO. 8 (FOP); IMPLEMENTING RECOMMENDATIONS OF THE BUDGET
ADVISORY COMMITTEE, A MEMORANDUM OF UNDERSTANDING AND OTHER
CHANGES; AMENDING SECTION 63 ENTITLED "SOURCE OF MONIES FOR FUND;
COMPUTATION OF LIABILITY; USE AND INVESTMENT OF FUND";SERVICE RECORD";
AND AMENDING SECTION 66 ENTITLED "SERVICE AND DISABILITY BENEFITS
GENERALLY"; PROVIDING FOR SEVERABILITY; REPEALING ALL ORDINANCES IN
CONFLICT THEREWITH; AND PROVIDING FOR AN EFFECTIVE DATE.
ADMINISTRATION RECOMMENDATION
The administration recommends adopting the proposed ordinance that was approved on first reading
during the February 12, 2014, City Commission meeting.
BACKGROUND
On July 17, 2013, the City Commission ratified a collective bargaining agreement covering the period
October 1, 2012 through September 30, 2015, between the City of Miami Beach and the IAFF,subject to
ratification by the IAFF membership. On August 7, 2013, the IAFF confirmed ratification of the contract
by a majority of their voting membership.
On July 19, 2013, the City Commission ratified a collective bargaining agreement covering the period
October 1, 2012 through September 30, 2015, between the City of Miami Beach and the FOP,subject to
ratification by the FOP membership. On September 11, 2013,the City Commission adopted a resolution
accepting the amended 2012-2015 collective bargaining agreement with the FOP. The FOP
membership ratified the amended contract with 175 voting in favor and 108 against.
The administration had 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, negotiated pension changes were to yield recurring,
annual savings from the City's ARC, as well as a reduction to the Unfunded Actuarial Accrued Liability
(UAAL).
City Commission Memorandum
March 5, 2014
Fire and Police Pension—2nd Reading
Page 2 of 4
Information in the memorandum accompanying Ordinance 2013-3817, focused on highlighting the
changes that reflected upon the successful negotiation of terms and conditions in line with the direction
the administration had received. They included, but were not limited to:
• Increasing the number of years for the computation of the Final Average Monthly Earnings
(FAME) for employees hired after September 30, 2013;
• Reducing the maximum benefit from 90 to 85 percent of pensionable earnings with a finite
number of employees excluded from this change;
• Reducing the vesting period from ten to five years;
• Limiting the purchase of prior creditable service to military service;
• Applying statutory changes where overtime toward the FAME is limited to a maximum of 300
hours per year and the dollar value of accrued leave cannot be used to increase the pension
benefit; and
• All new hires to become members of the Fire and Police Pension Plan effective upon their hire
date and will start contributing 10.5 percent of their pensionable earnings immediately, rather
than at the end of their probationary periods.
At the July 17, 2013, City Commission meeting, the Commission adopted a number of policies and
guidelines relating to the City's two pension plans. Therefore, included in the amendments to the Fire
and Police Pension ordinance were the following pension policies:
• The City shall fund at least the normal cost of pension. If this exceeds the amount of the
actuarially determined annual required contribution, the excess should be placed in a pension
stabilization fund, to be made available for future pension shortfalls.
• The City should require 5, 10 and 20 year projections of required pension contributions as part of
the annual actuarial valuations for each of the City's pension plans. These projections shall be
based on the current actuarial assumptions for each plan. The projections shall be updated to
reflect the cost of any proposed benefit enhancement before the City Commission agrees to the
enhancement. The cost of these studies shall be funded separately from the annual contribution
to the pension plan
• There shall be an experience study of each of the City's pension plans' actuarial assumptions
performed by an actuary that is independent from the pension board. The experience study
should be conducted at least once every three years to compare actual experience to the
assumptions. The independent actuary shall make recommendations for any changes in
assumptions based on the results of the experience study, and any deviations from those
assumptions by the pension boards shall be justified to the City Commission.
Ordinance 2013-3817 incorporated language to address these adopted policies and guidelines.
ANALYSIS
To allow new firefighters and police officers to join the pension plan upon employment, rather than at the
end of their probationary period, the definition of employee had to be changed in the ordinance. The
proposed and subsequently adopted language read as follows:"Employee means any full time employee
who is certified as a firefighter as a condition of employment in accordance with section 633.35, Florida
Statutes, and whose duty it is to extinguish fires, to protect life or to protect property, and any full time
City Commission Memorandum
March 5,2014
Fire and Police Pension—2nd Reading
Page 3 of 4
employee who is certified or required to be certified as a law enforcement officer in compliance with
section 943.1395, Florida Statutes, who is vested with authority to bear arms and make arrests, and
whose primary responsibility is the prevention and detection of crime of the enforcement of the penal,
criminal, traffic, or highway laws of the state. R°^uhgy-n embe r of the °°I,rs° depaFtme nt °r fir°
than e*v;1*aR Fank -:;nd etheF than the GlassefiGateen ef srheel QuaFd. Unless they-have nevef-held
The new definition of employee changed the status by requiring any certified firefighter or police officer
whose position is in the unclassified salary group, who is hired on or after September 30, 2013, to
become a member of the Fire and Police Pension Plan. The current Chief of Police is a member of the
Miami Beach Employees' Retirement Plan (MBERP) because he never held a classified position in the
police department and was, therefore, ineligible to join the Fire and Police Pension Plan. Based on a
legal opinion from the Fire and Policy Pension Plan attorney and the City's pension attorney,the recent
amendment to the definition of employee excluded the Chief of Police because he was not hired on or
after September 30, 2013. The proposed ordinance aims to clarify the recently amended definition by
stating that any employee hired prior to September 30, 2013 whose initial employment with the City was
in the unclassified service and who continuously remained a member of the unclassified service after
that date shall remain a member of the MBERP for as long as employee as an unclassified employee,
and shall not be eligible to participate in the Fire and Police Pension Plan.
When the vesting period was reduced from ten to five year, the actuarial finding was that there was no
real impact on the plan because their evaluation included only classified service employees who tend to
have long careers with the City. However, the inadvertent inclusion of unclassified personnel in the
definition of employee allows someone to come to the City late in his or her career and retire with full
benefits at age 50 with only five years of service. The actuary for the Fire and Police Pension Plan has
stated that there will not be a financial impact to the City for this this change.A financial impact statement
from the Plan's pension actuary is provided as "Attachment 1" to this memorandum.
Following adoption of the amended Fire and Police Pension ordinance, leadership from both the IAFF
and FOP raised a concern relating to the newly adopted pension ordinance, which was ultimately
determined to be a scrivener's error, concerning a member's Final Average Monthly Earnings (FAME).
According to the unions, both IAFF And FOP had negotiated that effective September 30, 2013, the
FAME for IAFF and FOP bargaining unit employees hired prior to September 30, 2013,would be based
on the average of the three highest years or the three last years of employment; and employees hired on
or after September 30, 2013, would be based on the average of the five highest years or the last five
years of employment. However,the amended ordinance only reflected the"highest years"for employees
hired before September 30, 2013.
Upon the administration's inquiry, Buck Consultants, the actuary for the Fire and Police Pension Plan
advised that its actuarial analysis did not change the FAME calculation of the three last years for
members hired prior to September 30, 2013.The actuarial impact statement is provided as"Attachment
2" to this memorandum.
It is important to note that until the revisions approved September 30, 2013, the pension benefits for
employees hired prior to July 14, 2010, reflected the FAME to be based on the average of the two
highest years or last two years of employment. In addition, the Fire and Police Pension ordinance
adopted September 30, 2013,did provide employees hired on or after September 30,2013,a retirement
benefit reflecting their FAME based on the average of the five highest or five last years. After numerous
City Commission Memorandum
March 5, 2014
Fire and Police Pension—2nd Reading
Page 4 of 4
discussions between the City and the IAFF and FOP Union leadership,the City agreed to recommend a
revision to the ordinance so that members hired prior to September 30, 2013, would have their FAME
calculations based on the three highest or last three years of employment, whichever is greater.
On October 2013,the City was served with both a grievance and an unfair labor practice charge(ULP)in
which the aggrieved party alleged that a retirement benefit negotiated for members hired as a result of a
consent decree had been unilaterally altered by the administration eliminating IAFF members from
eligibility. The benefit allowed members hired as a result of the consent decree to be grandfathered,
permitting them to maintain their retirement age eligibility at 47 and the Rule of 70,with no minimum age
requirement.
After consulting with the City's counsel and counsel for the IAFF,the parties negotiated and entered into
a Memorandum of Understanding (MOU)that made members hired under the consent decree eligible for
retirement under the Rule of 70 with no minimum age requirement. Since the MOU changed terms and
conditions of employment, it was subject to ratification by the union membership. On December 6,2013,
the IAFF confirmed that the MOU was ratified by the membership with 115 voting members in support of
the MOU and 23 against. The MOU was ratified by resolution at the January 15,2014, City Commission
meeting.
The Fire and Police Pension Plan actuary has advised that implementing this change for members
covered by the IAFF hired as a result of the consent decree will not result in any significant impact to the
Plan, as there are only two members who qualify.
In late October 2013,the City's pension actuary, Michael Tierney provided the City with revised language
concerning the pension policies and guidelines for both of the City's pension plans and adopted by the
City Commission on July 17, 2013. Given that the administration is recommending changes to the Fire
and Police Pension Plan ordinance, the revised language for the pension policies and guidelines have
been included in the proposed ordinance amendment.
CONCLUSION
The administration recommends that the City Commission approve the proposed ordinance amending
certain retirement benefits for Fire and Police Pension Plan members covered by the IAFF that are
consistent with benefits granted certain members covered by the FOP;amending the FAME for members
hired prior to September 30, 2013 to be based on the average of the three highest or three last years of
employment; amending language concerning the BAC's adopted pension policies and guidelines as
recommended by the City's pension actuary and amending the Plan provisions regarding unclassified
employees to facilitate recruitment of command staff members. The administration recommends
adopting the proposed ordinance.
Attachments
JLM/KGB/SC-T/CMG
t:\agenda\2014\march\fire and police pension\fire and police pension ordinance clarification memo 2nd reading.doc
ATTACHMENT 'I
.buckoonsultants .A.Xerox.Company
February 10, 2014
CONFIDENTIAL
Mrs. Celia B. Locke
Executive Director
City Pension Fund/Firefighters &Police Officers
City of Miami Beach
1691 Michigan Avenue, Suite 355
Miami Beach, FL 33139-2573
Actuarial Impact Statement Regarding Participation Eligibility for Unclassified Employees
to the City Pension Fund for Police Officers and Firefighters in the City of Miami Beach
Dear Celia:
We have reviewed the attached underlined changes to the ordinance for which we provided an
Actuarial Impact Statement in our September 30,2013 letter.
The amendment as outlined has no actuarial impact on the Pension Fund.
Please let us know if you have any questions or need anything further.
Sincerely,
i ph L. Griffin ASA,EA, MAAA, FCA
Director, Atlanta Retirement Practice Leader
Encl:
cc: Ms. Carla Gomez—City of Miami Beach
Mr. Timothy Bowen—Buck Consultants/Atlanta
Mr. David Campbell—Buck Consultants/Atlanta
P:\Retirement\Miami Beach Fire and Police\2013\Union Pricing\Correspondence\2013 Miami Beach Police and Fire-Impact Statement Unclassified Employees.docx
00993-0001 RET03
200 Galleria Parkway NW,Suite 1900 a Atlanta,GA 30339-5945
770.955.2488 • 770.933.8336(fax)
ATTACHMENT 2
b ' C k nsultants� A Xerox Company
January 14, 2014
CONFIDENTIAL.
Mrs. Celia B. Locke
Executive Director
City Pension Fund/Firefighters &Police Officers
City of Miami Beach
1691 Michigan Avenue, Suite 355
Miami Beach, FL 33139-2573
Actuarial Impact Statement for Language Amendment to the City Pension Fund for Police
Officers and Firefighters in the City of NUami Beach
Dear Celia:
We have reviewed the language that revises the final average monthly earnings (FAME) for tier
A and B participants from"highest 3 years"to"highest or last 3 years".
Actuarial Impact
The change in the language to include"or last 3 years" in the determination of the FAME has no
actuarial impact on the Pension Fund.
Please let us know if you have any questions or need anything further.
Sincerely,
Joseg L. Griffin ASA, EA, MAAA, FCA
Director,Atlanta Retirement Practice Leader
cc: Ms. Carla Gomez—City of Miami Beach
Mr. David Campbell—Buck Consultants/Atlanta
Mr. Steward Sainvil—Buck Consultants/Atlanta
PARetirement\Miami Beach Fire and Police\2013\Union Pricing\Coirespondence\2013 Union Negotiation Pricings Results-Scenario 5.docx
00993-0001 RET03
200 Galleria Parkway NW,Suite 1900 o Atlanta,GA 30339-5945
770.955.2488 a 770.933.8336(fax)
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