Ordinance 93-2839ORDINANCE NO. 93-2839
AN ORDINANCE OF THE CITY OF MIAMI BEACH,
FLORIDA, AMENDING ORDINANCE NO. 1901 WHICH
ESTABLISHED THE GENERAL EMPLOYEES PENSION
SYSTEM, ESTABLISHING A BENEFIT LEVEL FOR
EMPLOYEES WITHIN THE CLASSIFICATIONS OF
EMPLOYEES UNDER THE AMERICAN FEDERATION OF
STATE, COUNTY AND MUNICIPAL EMPLOYEES
BARGAINING UNIT AND ENTERING THE SYSTEM ON OR
AFTER APRIL 30, 1993; PROVIDING AN IRREVOCABLE
OPTION FOR SAID EMPLOYEES ENTERING THE SYSTEM
ON OR AFTER APRIL 30, 1993 TO ELECT TO REJECT
MEMBERSHIP IN THIS SYSTEM AND ELECT TO JOIN THE
DEFINED CONTRIBUTION RETIREMENT SYSTEM;
PROVIDING FOR A CONTRIBUTION RATE OF TEN
PERCENT FOR SAID EMPLOYEES; PROVIDING FOR A
REPEALER, SEVERABILITY AND AN EFFECTIVE DATE.
Whereas, the City of Miami Beach, Florida has established the General Employees
Retirement System (the "System") with the passage of Ordinance 1901 which has been
amended from time to time, and,
Whereas, the City Commission of said City desires to amend this System to establish
a level of benefits for persons entering the System on or after April 30, 1993; and,
Whereas, the employees under the classification within the American Federation of
State, County and Municipal Employees bargaining unit have collectively bargained and
have consented to the change in benefits,
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA:
SECTION 1- That Article 2.04 of Ordinance 1901 be amended by adding subsection
(g) which will read as:
2.04(g) Persons who have elected to join the defined contribution retirement
plan authorized under Section 401(a) of the Internal Revenue Code of 1986 as
amended. which plan is sponsored by the City (the "Defined Contribution Retirement
System").
SECTION 2 - That Article 2 of Ordinance 1901 be amended by adding Section 2.20
to read as follows:
2.20 Persons in classifications covered by the American Federation of State,
County and Municipal Employees ("AFSCME"), in classifications covered by the
Miami Beach Employees Benevolent Association ("MBEBA") and in classifications
in the "Other" group shall have the same meanings as in Ordinance 789. the
Classified Employee's Salary Ordinance.
SECTION 3 - That Article 2.09 of Ordinance 1901 be amended to read as follows:
2.09 "Final Average Monthly Earnings" means, in the case of a person who became
a Member of the System on or after November 1, 1976, one -twelfth of the average
annual earnings of the Member during the three highest paid years of his creditable
service; in the case of a person who became a Member prior to November 1, 1976
or who retires after October 1, 1990, this term means one -twelfth of his average
annual earnings during the two highest paid years of his creditable service.
Notwithstanding the foregoing, for any person who is in a classification within the
AFSCME bargaining unit who entered service with the City on or after April 30,
1993, this term means one -twelfth of the average annual earnings of the Member
during the three highest paid years of service as an Employee.
SECTION 4 - That Section 3.04 of Ordinance 1901 be amended to read as follows:
3.04 All individuals holding the position of either City Manager or City Attorney,
shall have the option to reject membership in the plan provided herein and to be a
member in a retirement program with any public trust fund named by the aforesaid
individuals and approved by the City Commission. Any employee within the
classifications within the AFSCME bargaining unit entering service with the City on
or after April 30. 1993. and would otherwise become a Member of this retirement
system. shall have an irrevocable option to reject membership in the plan provided
herein. and select the Defined Contribution Retirement System.
SECTION 5 - That Article 5.01 of Ordinance 1901 be amended by adding Subsection
(f) to read as follows:
5.01(0 Notwithstanding the above subsections. a person who entered service
with the City on or after April 30. 1993. and is within the classifications of the
AFSCME bargaining unit shall be eligible to retire with full benefits upon the
completion of more than ten (10) years of creditable service and the attainment of
the sixtieth anniversary of his birth. For persons eligible to retire under this
paragraph, the retirement allowance shall be computed as follows: final average
monthly earnings multiplied by three percent (3%) per year of creditable service to
a maximum of eighty percent (80%) of such final average monthly earnings. Persons
with ten (10) or less years of creditable service may retire with a reduced benefit.
For persons with less than ten (10) years of creditable service, the retirement
allowance shall be computed as follows: Final average monthly earnings multiplied
by three percent (3%) per year of creditable service multiplied by ten percent (10%)
multiplied by years of creditable service to a maximum of ten.
SECTION 6 - That Article 5.03 of Ordinance 1901 be amended by adding Subsection
(c) to read as follows:
5.03(c) Notwithstanding the above subsections. any Member who entered
service with the City on or after April 30. 1993. who is in the classifications within
the AFSCME bargaining unit and whose service with the City is terminated
voluntarily or involuntarily, prior to the attainment of his sixtieth anniversary of his
birth but after the completion of ten (10) or more years of creditable service shall
be entitled. in lieu of a refund of his accumulated employee contributions. to apply
for a vested retirement allowance. The vested retirement allowance shall be a
deferred allowance commencing on the first day of the calendar month coincident
with or next following the sixtieth anniversary of his birth and shall be computed in
accordance with the provisions of Article 5.01(f) above.
SECTION 7 - That Article 5.04(d) of Ordinance 1901 be amended to read as
follows:
5.04(d) The allowance payable to a disability Retirant prior to his normal
retirement date shall not be less than thirty-five percent (35%) of his final average
monthly earnings as defined in Section 2.09 as of the date of his disability if an
ordinary disability retirement allowance is payable, and not less than seventy-five
percent (75%) of such final average monthly earnings of a service connected
disability retirement is payable. For any Member who is in the classifications within
the AFSCME bargaining unit and who entered service with the City on or after April
30. 1993. the allowance payable on a service connected disability retirement shall not
be less than sixty percent (60%) of his final average monthly earnings. The allowance
payable to a disability Retirant after his normal retirement date shall be an amount
computed as a normal service retirement on the basis of the final average monthly
earnings and number of years of creditable service he would have had if he had
continued in service without interruption until his normal retirement date at the
maximum rate of pay in effect at the time of his retirement for the classification at
which he retired provided that such allowance shall not exceed the amount payable
to him as a disability retirement allowance prior to his retirement date or not less
than his normal retirement benefit at his normal retirement date. "Normal
Retirement Date' as used in this Section 5.04 means the date determined in
accordance with Section 5.01 (a) on the assumption that the disability retirement is
deemed to be active service as an Employee for this purpose.
SECTION 8 - That Section 6.02 be amended by adding Subsection (d) to read as
follows:
6.02(d) Notwithstanding subsections (a), (b) and (c) above. after April 1, 1993,
all persons entering service with the City and who are in the classifications within
the AFSCME bargaining unit shall contribute to the System ten percent (10%) of
their covered earnings throughout their service as an Employee.
SECTION 9 - REPEALER All Ordinances or parts of Ordinances in conflict
herewith be and the same are hereby repealed.
SECTION 10 - SEVERABILITY If any section, subsection, sentence, clause or
phrase of this Ordinance is held to be invalid or unconstitutional by any court of competent
jurisdiction, then said holding shall in no way affect the validity of the remaining portions
of this ordinance.
SECTION 11 - EFFECTIVE DATE This Ordinance shall become effective ten (10)
days after its adoption.
Attest:
Passed and adopted this 21st day of April , 199
if/
City Clerk
1st reading 4/8/93
2nd reading 4/21/93
Approv as .to Form:
City Attorney
Mayor
CITY OF MIAMI BEACH
C'TY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
OFFICE OF THE CITY MANAGER
TELEPHONE: (305) 673-7010
FAX: (305) 673-7782
COMMISSION MEMORANDUM NO. a oo-a3
To: Mayor Seymour Gelber and
Members of the City Commission
From: Roger M. Car
City Manager
April 21, 1993
Subject: Amendments to the Pension System for General Employees of the City of
Miami Beach for Members of the American Federation of State, County and
Municipal Employees ("AFSCME")
Administrative Recommendation:
The Administration recommends that the City Commission adopt the two ordinances
amending the General Employees Pension System for the AFSCME members on second
reading after a Public Hearing and second reading.
Background:
These two ordinances are prepared in accordance with the anticipated savings to
be achieved in the FY 92/93 Adopted Budget. There are two ordinances amending
Ordinance 1901, The General Employees Pension System as it relates to members of the
AFSCME bargaining unit. The first retirement related ordinance implements the
recommendations of the Pension Systems Review Committee and institutes a bifurcated
pension system for all AFSCME employees with a reduced benefit for new members of the
system. The recommendations of this Committee were to decrease the benefit accrual rate
to three percent annually, with a retirement age of sixty, vest the benefit incrementally over
ten years, modify the calculation of final average monthly earnings to an average of the
three highest years, reduce disability benefits and raise the contribution rate to ten percent
for all employees. The second retirement related ordinance provides a retirement window
with an incentive to encourage eligible employees to retire.
These two ordinances, which should be considered a package, will accomplish two
necessary goals. First, the retirement incentive should produce two years of employee
turnover (anticipated to be 31 employees) immediately. The resulting savings from replacing
a portion of the early retired employees (anticipated to be 25 employees) at lower salary
AGENDA
ITEM
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and benefit levels will provide the expense reductions anticipated within the FY 92/93
Adopted Budget. Second, the two years of turnover will allow the accomplishment of
diversity Goals for AFSCME employees covered by the General Employees Retirement
System within budget limitations and much sooner than otherwise would be possible without
an early retirement program.
Analysis;
The financial effect of these two Ordinances in conjunction with the amended salary
ordinance for new hires of general employees of the City will be an approximate forty
percent (40%) reduction in salary cost for new employees. This is accomplished because the
existing salary plan has a twenty-five percent (25%) range from minimum to maximum and
the retiring employees are typically at the maximum salary for their respective positions.
With the reduction of fifteen percent (15%) in the salary plan, new employees starting at
the entry level for a position will be starting at a salary forty percent (40%) lower than
the employee that they are replacing. Additionally, the changes in the pension system will
save approximately five percent (5%) of salary as a contribution to the pension system.
Members of the City Commission should also be aware that the retirement incentive
will produce a cost for the one-time payout amount of the employees accumulated leave
balances (which they may elect to receive 50% upon separation and 50% in December or
January depending on their tax situation) which will be more than offset by the savings
produced from salary and benefit reductions. These payout amounts have been considered
in the net savings projected in the FY 92/93 Proposed Budget to be achieved through the
retirement incentive program.
There are sixty-two (62) persons from a total of two hundred and forty employees
(240) in the AFSCME unit who would be eligible for the retirement incentive. The
retirement incentive option would be available to the eligible employees for a sixty day
period (the "Election Period") from the effective date of the ordinance and would provide
credit for two years of creditable service for all employees over normal retirement age or
credit for two years of age if the employee is within two years of the normal retirement age
within the period. Forty-seven (47) of these employees are over age fifty and would be
eligible for the additional service credits and seventeen (17) employees will be within two
years of normal retirement during the Election Period and would be eligible for additional
age credit.
The sixty-two (62) employees have combined salaries of $1,460,189 annually and
leave balances for those employees total $507,919. It is anticipated that fifty percent (50%
or 31 employees) of those eligible for the incentive will accept the benefit and retire. The
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retiring employees will have salaries of approximately $730,000 and it is anticipated that
approximately eighty percent (80%) of the retiring employees (or 25) will be replaced. With
the new salary structure and anticipating hiring at the entry level for the positions, the
salaries for the new hires will be $350,000 annually saving the City $380,000 in salary cost
annually. The new level of benefits in the pension system will produce a savings of $37,000
the first year and will grow each year as the bifurcated plan becomes the only plan over
time. The total of $417,000 in annual savings will be offset in the first year by the payout
on leave settlements of $254,000 (50% of $5017,919). It is anticipated that the payout on
leave settlements due to option to defer payment for tax reasons will amount to 75% or
$190,500 this fiscal year and 25% or $63,500 next fiscal year, producing a net savings for
the first twelve months of $163,000 or fifteen percent (15%) of the projected savings from
pension plans projected in the FY 92/93 Adopted Budget. The second year, without the
payout of the leave settlements, the savings would be $425,000 based on additional
employees turnover and performance reviews and the amount would annually increase with
the additional employee turnover. The effect of these two ordinances and the salary
ordinance working together produces savings three and one half times greater than the
effect of only implementing the bifurcated pension system recommended by the Pension
Systems Review Committee.
Conclusion:
The savings of $163,000 the first year and $425,000 the second year with the ability
to more quickly achieve the diversity commitment of the City of Miami Beach provides the
justification for approval of these two ordinances.
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