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R5A-CWA Unclassified And Others - MBERP Pension -Weithorn-COMMISSION ITEM SUMMARY Condensed Title: An ordinance amending Ordinance 2006-3504, Miami Beach Employees' Retirement Plan, for Communications Workers of America (CWA) bargaining unit members and members not covered by a collective bargaining unit, extending the DROP to five ears and eliminatin the bu back of prior creditable service. Ke Intended Outcome Supported: Item Summa /Recommendation: Second Hearing Public Meeting The City and CWA reached a three-year labor agreement covering the period October 1, 2012, through September 30, 2015, which calls for pension changes, in an effort to maximize the savings, the Administration is recommending that the same provisions apply to members not covered by a collective bargaining unit. (Employees belonging to the Unclassified and Others salary groups.) The pension changes include: extending the Deferred Retirement Option Program (DROP) for pre- 2010 members from three to five years and eliminating the ability to purchase prior creditable service effective September 30, 2013. The extension of the DROP yields saving to the City's ARC because participants are not eligible for the annual retiree COLA while in the DROP. In addition, there the decrease in the actual contributions the City makes since employees in the DROP are no longer earning retirement benefits. On average, there are 157 employees who elect to purchase additional creditable service each year. The actuarial impact to the City is significantly higher than what the member pays for the benefit. An updated impact statement from the plan's actuary, reflecting the savings attributable to these three salary groups will be rovided as a su lemental item, Financial Information: Source of Amount Funds: 1 FY2012/2013 Impact on salaries attributed to extending the DROP $ 8,000 (:w FY2013/2014 Reduction to the City's Annual Required Contribution to MBERP represented by 2 ($471 ,000) $584,000 in pension saving due to DROP extension which is offset by $113,000 in salary increases FY2014/20 Reduction to the City's Annual Required Contribution to MBERP payable October 1, 3 15 2015, represented by $855,000 in pension savings ($584,000 from DROP and {$448,000) $271,000 from elimination of buyback), which is offset by $407,000 in salary increases OBPI Total ($911 ,000) Financial Impact Summary: The full actuarial cost of purchasing two years of service to a 45 year old member with ten years of credited service and an annual salary of $60,000 is approximately $38,000; yet, the member pays $12,000 in either cash, accrued leave or a combination thereof. The difference of $26,000 ($4.082 million each year for 157 buybacks) is recognized as an experience loss and is funded by additional City contributions over time. The effect on the Annual Required Contribution (ARC) due to this member's service purchase is an increase of about $2,300 the first year after the buyback and for each of the 30 years thereafter. Based on trends, the average annual impact of $2,300 per member represents $361,000 to the City in each year (for 157 buybacks per year of which $271,000 is attributed to CWA, Unclassified and Others), yielding an increased savings in the long-term. The budget included $84,000 in increased salaries from excluding the DROP offset by pension savings of $233,000, based on the impact for CWA only. Estimates have since been refined and updated to include the impacts of Unclassified and Others, for an estimated salary increase of $113,000, offset by pension savings of $584,000 for a net savings of $471,000 for FY 2013/14. Assistant City M _, Kathie G, Brooks MIAMI BEACH 455 Jimm L. Morales AGENDA ITEM ---~.R~S_A-=_ DATE Cf-/J-13 & MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gav TO: FROM: DATE: SUBJECT: COMMISSION MEMORANDUM Mayor Matti Herrera Bower and Memdrf the City Commission Jimmy L. Morales, City Manage'/1-,j- September 11, 2013 SECOND HEARING PUBLIC READING AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, IMPLEMENTING PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY AND THE COMMUNICATIONS WORKERS OF AMERICA1 (CWA) LOCAL 3178; IMPLEMENTING SIMILAR RETIREMENT PLAN AMENDMENTS FOR MEMBERS WHO ARE NOT INCLUDED IN ANY BARGAINING UNIT; AMENDING THE MIAMI BEACH EMPLOYEES' RETIREMENT PLAN CREATED BY ORDINANCE 2006-3504; AMENDING SECTION 2.26 OF THE PLAN BY EXTENDING THE DEFERRED RETIREMENT OPTION PLAN (PLAN) PROGRAM FROM THREE (3) TO FIVE (5) YEARS FOR ELIGIBLE MEMBERS; AMENDING SECTION 5.13 TO REFLECT AMENDED ELIGIBILITY AND PARTICIPATION REQUIREMENTS AND AMENDED DROP PLAN FEATURES; AMENDING SECTION 4.03 BY ELIMINATING THE PURCHASE OF ADDITIONAL CREDITABLE SERVICE FOR CERTAIN MEMBERS; PROVIDING FOR SEVERABILITY; REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND PROVIDING AN EFFECTIVE DATE. ADMINISTRATION RECOMMENDATION The Administration recommends approval of the ordinance. BACKGROUND In 2010, the Administration negotiated changes to pension benefits for then current and future employees who participate in the Miami Beach Employees' Retirement Plan (MBERP). These changes were included in the labor agreements entered into by the City with the: American Federation of State, County and Municipal Employees (AFSCME), Communications Workers of America (CWA), Local 3178, and Government Supervisors Association of Florida (GSAF). In keeping with the spirit of treating similar groups of employees consistently, these contractual changes were also applied to all members of the Plan not covered by a collective bargaining unit. The changes to MBERP implemented in 2010 included an increase of two percent to the employee's pension annual contribution. This increase was implemented for the general 456 Commission Memorandum September 11,2013 MBERP Pension Ordinance CWA 2nd Reading Page 2 of8 employee salary groups as follows: Unclassified and Others in January 2010, employees covered by the AFSCME and GSAF collective bargaining units in July 2010, and employees covered by the CWA collective bargaining unit in November 2010. The additional employee contribution remains in effect for incumbents in all salary groups except employees covered by the AFSCME collective bargaining agreement (CBA), which expired April 30, 2013, and the provision sunsetted. The Final Average Monthly Earnings (FAME) increased from two to five years for current (Tier A and Tier B members) and future employees (Tier C members), phasing in those members who were between two and four years from normal retirement age, so as not to adversely impact them. The change in FAME yielded a reduction of approximately $1.9 million in the City's annual Actuarial Required Contribution (ARC). Gabriel, Roeder and Smith (GRS), the actuary for MBERP, estimated that the change in FAME for all members will yield an annual savings ranging from $1.49 million to $2.275 million per year (approximately 2.12 percent of payroll) each year over the next ten years. Additional pension related changes were negotiated for all employees hired after September 30, 2010 (November 2010 for employees whose classifications are covered by the CWA collective bargaining unit). The changes for new employees (Tier C) included: • Normal retirement -Age 55 with a minimum of thirty years of creditable service, or age 62 with a minimum of five years of creditable service. • The early retirement date will be the date on which the member's age plus years of creditable service equals 75, with a minimum age of 55. • The FAME will be an average of the highest five (5) years of employment. • The benefit multiplier will be two and one half percent 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 per year, with the first adjustment deferred to one year after the end of the Deferred Retirement Option Plan (DROP). • The employee contribution will be ten percent of pensionable salary. • The standard form of benefit is a lifetime annuity. • Members who separate from City employment with five 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 DROP at the normal retirement age specified above and may participate in the DROP for a maximum of five years. (The five year DROP is applicable to those CWA bargaining unit employees who were hired on or after October 27, 2010.) 457 Commission Memorandum September 11, 2013 MBERP Pension Ordinance CWA 2nd Reading Page 3 of 8 The annual savings toward the ARC and attributed to the changes for future employees beginning in FY 2011/2012, was approximately $900,000 (1.92 percent of payroll). GRS estimated that the City would realize an additional annual reduction of seven-tenths percent, per payroll in perpetuity. These savings will vary from a low of $910,000 in FY2011/2012 to as much as $5.995 million in FY2020/2021. The negotiating teams for the City and CWA began meeting in September 2012, to negotiate a successor agreement since the 2009-2012 collective bargaining agreement expired on September 30, 2012. After 15 negotiation sessions, on June 28, 2013, the City and CWA reached a tentative three year agreement covering the time period of October 1, 2012 through September 30, 2015. Shortly thereafter, 84 percent of the CWA membership that voted ratified the agreement. The City Commission did the same on July 17, 2013. Pursuant to the negotiated terms and condition of the agreement between the City of Miami Beach and CWA, the Administration proposed this ordinance amendment on first reading also at the Commission meeting on July 17, 2013. ANALYSIS The pension changes recently negotiated with CWA are expected to generate a savings toward the City's ARC, as well as savings applicable to the Unfunded Actuarial Accrued Liability (UAAL). The City is still negotiating with AFSCME and GSAF and the agreement with CWA is contingent upon negotiating a parallel provision regarding the elimination of the creditable service buyback provision with at least one of the two unions. Given that savings will be greater if changes apply to all members of the Plan, the pension changes negotiated with the CWA should also be implemented for those members not covered by a collective bargaining unit (Unclassified and "Others" salary groups). The City and CWA have agreed to the following: Extension of the Deferred Retirement Option Plan (DROP) A DROP is an arrangement used by many public organizations under which employees who would otherwise retire and collect benefits pursuant to the employer's defined benefit (pension) retirement plan continue working for a fixed number of years. Instead of having the compensation and additional years of service taken into account for purposes of the defined benefit plan formula, the employees have a sum of money, equal to their monthly retirement benefit, credited during their extended employment to an interest bearing account under the employer's retirement plan. No further contributions are made to the employees' pensions but as long as they remain in the DROP, they continue earning their full salaries and all other applicable incentive pays and employment benefits, if any. If these employees are not exempt from the provisions of the Fair Labor Standards Act (FLSA) they earn overtime if they work more than 40 hours in one week and they are also eligible for merit increases and salary COLAs in effective during their years in 458 Commission Memorandum September 11, 2013 MBERP Pension Ordinance CWA 2"d Reading Page 4 of 8 the DROP. When the employees leave at the end of the DROP period, they collect their deferred retirement benefit contributions from the interest bearing account. At that point, they start collecting the monthly benefits they earned based on earlier years of service under the defined benefit plan. While participating in the DROP, employees are not eligible for the retiree COLA. There are two reasons why the DROP yields savings to the City's ARC. The first, is that participants are not eligible for the annual retiree COLA The second is that there is a decrease in the actual contribution the City makes for each employee in the DROP. Currently, there is a three year DROP for Tier A and Tier B members and a five year DROP for Tier C (post-201 0) members. The City and the CWA have agreed to extend the DROP period for Tier A and Tier B (pre-201 0) members from three to five years effective July 17, 2013. The City intends to extend the DROP period to all pre-2010 members currently participating in the DROP, except for pre-2010 members covered by the AFSCME and GSAF collective bargaining units. Current DROP participants whose period ends between July 17, 2013 and July 16, 2016, shall be given a one-time opportunity to submit an irrevocable amended election form provided by the Board, within thirty calendar days from the effective date of the ordinance, extending their DROP to a maximum of five years. Members of the unclassified salary group must have their intent to extend their DROP periods approved by the City Manager. According to GRS, the total estimated impact from extending the DROP period for all pre-201 0 members represents a reduction in the present value of future benefits of approximately $7.8 million. This means the Plan would be expected to pay out $7.8 million less, in today's dollars, to current members of the Plan, (see Attachment 1 ). Based on the Actuarial Impact Statement provided by GRS (Attachment 1) if the amendment to the ordinance also applied to AFSCME and GSAF bargaining unit employees, the City's ARC payable on October 1, 2014, would be reduced by approximately $778,000. That savings includes a reduction in the amortization payments on the Unfunded Actuarial Accrued Liability (UAAL) of approximately $6.076 million over the next 30 years. The reduced payments on the UAAL will decrease the ARC by approximately $540,000 each year for the next 30 years. Additionally, the normal cost will decrease by approximately $238,000, which represents 0.34 percent of total covered payroll for all members or 0.38 percent of Tier A and B members' covered payroll. The reduction of 0.38 percent in Tier A and B members' covered payroll will continue until all such members have retired. The funded ratio will increase by approximately 0.6 percent. It is estimated that the CWA bargaining unit employees, unclassified and "others" salary groups comprise approximately 75 percent of the MBERP membership. Therefore, it is estimated that the pension changes applicable to these salary groups will yield a savings of $584,000 off the ARC payable on October 1, 2014. The City continues to negotiate with AFSCME and GSAF and the goal is to obtain consistent 459 Commission Memorandum September 11, 2013 MBERP Pension Ordinance CWA 2nd Reading Page 5 of 8 pension reforms for all of the general employees' salary groups. If successful, the City would realize the full savings of $778,000 from the ARC payable on October 1, 2014. The analysis provided by the pension actuary does not take into account the fiscal impact associated with salary earnings. By extending the DROP to five (5) years, long term employees, earning higher salaries, will remain employed with the City longer, requiring the City to pay their higher salaries for a longer period. However, since new employees would not be hired to replace those in the DROP, the City may accrue some savings since it will not be contributing toward retirement benefits. Quantifying the fiscal impact from a salary perspective is difficult since there is no true way to forecast assumptions regarding which employees will choose to extend their DROP participation and who will choose to separate. There are 53 members in the MBERP DROP. The following chart illustrates the effect on salaries if the DROP period is extended. To get to these numbers, the salary of each DROP member was compared to the entry level salary of a new incumbent in the classification ultimately affected by the DROP participant's retirement. For example, when a Lifeguard Lieutenant retires, his/her position becomes available to an incumbent in a feeder classification and the domino effect leads to the City ultimately hiring a new entry level Lifeguard I. In such an example, the impact is the difference between the Lifeguard Lieutenant's salaries and Lifeguard I entry level salary. For illustrative purposes, the assumption is that all current DROP participants whose period is extended take advantage of the opportunity and remain employed with the City. Note that the numbers related to pension savings and salary costs associated with these changes were refined between the first and second reading of the ordinance. The Administration has requested an updated Actuarial Impact Statement from GRS reflecting only the savings attributable to the three salary groups identified herein. The update will be provided as a supplemental item. FY 2012/13 FY FY 2013/14 FY FY 2014/15 FY Salary Group Eligible 2012/13 Newly 2013/14 Newly 2014/15 Total Incumbents Cost Eligible Cost Eligible Cost Incumbents Incumbents AFSCME 0 $ -3 $ 9,413 2 $ 52,696 $ 62,109 CWA 2 $7,590 5 $ 69,793 9 $261,212 $338,595 GSAF 0 $ -0 $ -2 $ 34,333 $ 34,333 Unclassified 0 $ -3 $ 43,145 9 $145,426 $188,571 Others 0 $ -0 0 $ -0 Total $7,590 $122,351 $493,667 $623,608 Total CWA and $7,590 $112,938 $406,638 $527,166 Unclassified 460 Commission Memorandum September 11, 2013 MBERP Pension Ordinance CWA 2nd Reading Page 6 of 8 Elimination of Two Year Past SeNice Option The CWA agreed to eliminate the provision that permits bargaining unit members to purchase up to two years of prior creditable service effective September 30, 2013, provided that either AFSCME or GSAF agrees to a parallel provision in their respective contracts. Currently, any member with five or more years of service can purchase up to two years of creditable service earned prior to the member's date of hire by the City. Such benefit is contingent upon the member not receiving a pension benefit for the same period under another retirement plan (§112.65, Florida State Statutes). Eligible prior service includes: (1) military service in the United States Armed Forces or Coast Guard; (2) full-time employment with another governmental entity; or (3) full-time employment in the private sector performing the same or similar duties the member performs for the City at the time of his/her additional service purchase. Members who exercise this option pay ten percent of their annual rate of pensionable earnings multiplied by the number of years and fractions of a year purchased. On average, there are 157 employees who elect to purchase additional creditable service in the MBERP each year. The true actuarial impact is significantly higher than what the member pays for the benefit. The ultimate cost of the prior creditable service purchase provision is measured by the difference between the full actuarial cost of the time purchased and the amount a member pays (e.g., ten percent of pay for each year purchased). The full actuarial cost to purchase the maximum of two years of service to a 45 year old member with ten years of credited service and an annual salary of $60,000 is approximately $38,000; yet pursuant to current provisions, the member pays $12,000. The difference of $26,000 is recognized as an experience loss and is funded by additional City contributions over time. The explanation in the previous paragraph assumes that all actuarial plan assumptions included in the Actuarial Valuation Report are met each year. The effect on the ARC due to this member's service purchase is an increase of about $2,300, for the first year. Based on trends, the average annual impact of $2,300 per member who exercises a two year prior service purchase represents $361 ,000 to the City each year based on an average of 157 buybacks per year, of which $271,000 is attributed to CWA, unclassified and others. This impact is compounded each year that buybacks are allowed as shown in the table below. FY 2013/14 backs FY 2014/15 B backs FY 2015/16 cks Total $271,000 $271,000 $271,000 $271,000 $542,000 $813,000 According to GRS, elimination of this benefit provides significant long-term savings to the plan although there will be losses due to service purchases in fiscal year ending September 30, 2013, that will be reflected in the October 1, 2013, Actuarial Valuation, since elimination of the service purchase provision will not be effective until September 30, 2013. 461 ---------------· ·----- Commission Memorandum September 11, 2013 MBERP Pension Ordinance CWA 2nd Reading Page 7 of 8 The Budget Advisory Committee's (BAC) Recommendation on Pension Reform Report from August 2012 included recommended policies and guidelines for the City to adopt in order to establish thresholds which, if not met, would require the City to take prompt and appropriate measures to meet the guideline criteria. At the July 17, 2013, City Commission meeting, the Commission approved Resolution No. 2013-28290, adopting the BAG's policies and guidelines in order to ensure long term pension reform. The adopted policy statements include, but are not limited to: • 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. When this ordinance is revised again, upon conclusion of negotiations with GSAF and AFSCME, the pension policies adopted via Resolution No. 2013-28290 will be incorporated. CONCLUSION The leadership negotiating for the CWA has agreed to the aforementioned pension changes. A contract ratification vote for the CWA membership was held on July 15, 2013. The results of the ratification vote resulted in 84 percent of the members who voted supported the proposed agreement. The Administration recommends amending Ordinance No. 2006-3504, the Miami Beach Employees' Retirement Plan by extending the DROP for pre-201 0 members from three to five years; and eliminating the two year past service buyback option for members covered by the CWA collective bargaining agreement, as well as the unclassified and "others" salary groups. Implementing the described changes for these three (3) salary groups, will provide additional pension savings in the short and long term. The City will continue to bargain with AFSCME and GSAF and seek pension savings applicable to all plan members. GRS prepared an Actuarial Impact Statement to be submitted to the State of Florida Division of Retirement which reflects the proposed changes to the MBERP ordinance 462 Commission Memorandum September 11, 2013 MBERP Pension Ordinance CWA 2nd Reading Page 8 of 8 for all plan members upon approval of the amended ordinance at first reading. Should the City not reach agreement with AFSCME and GSAF regarding parallel pension reform in their respective labor contracts, the Actuarial Impact Statement will have to be amended accordingly. Based on the foregoing, the Administration recommends that the City Commission approve the ordinc.r. ,,{ J LM/rdB/SC: T /CMG T:\AGENDA\2013\September 11\CWA\CWA 2012-2015 MBERP Pension DROP and Buyback Memo 2nd Reading.docx 463 GRS July 15, 2013 Ms. Carla Gomez <.abnd Ho..:dcr Smirh IX Cmnpam CuJ: ..,ul u:n-, 0:.. ,\.,__ 1 u~u :l\ Assistant Director, Human Resources City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 ATTACHMENT 1 On~ East Broward Blvd. Suite 505 Ft. Lauderdale, FL :tHOI·l ~04 95.:1.527.1616 phone 9.'i4.525 0081 fax www.gabrielrocder.cnm Re: Actuarial Impact Statement for Proposed Changes to the Miami Beach Employeest Retirement Plan Dear Carla: As requested, we have prepared the enclosed Actuarial Impact Statement showing the financial effect of the following proposed changes to the Miami Beach General Employees' Retirement System: I. The maximum period for participation in the Deferred Retirement Option Program (DROP) would be extended from three to five years for members hired before October l, 2010 (i.e., Tier A and Tier B members). This extension would apply to all active members in Tiers A and B who elect to participate in the DROP in the future as well as current DROP members. The 2.5% COLA is not payable while members are in the DROP. 2. The option for members to purchase up to 2-years of credited service would be eliminated. The Statement must be filed with the Division of Retirement before the final public hearing on the ordinance. Please have a member of the Board of Trustees sign the Statement. Then send the Statement along with a copy of the proposed ordinance to Tallahassee. With regard to item 2 above, the employer portion of the cost for members to purchase service is not prefunded. Therefore, eliminating the service purchase provision will not have an immediate financial effect on the Plan. When we prepare our annual valuation, any increases to the liability due to service purchased during the previous year are reflected in the net gain/loss for the year, which is amortized over 30 years. The ultimate cost of the current service purchase provision is measured by the difference between the full actuarial cost of the service purchased and the amount that members currently pay to purchase service (i.e., 1 0% of pay for each year purchased). As an example, the full actuarial cost to purchase the maximum of 2 years of service for a member who is currently age 45 with 10 years of credited service and an annual salary of $60,000 is approximately $38,000. Under the current provisions, the member pays $12,000. The difference of $26,000 is funded by additional City contributions over time. In this example, the effect on the annual required contribution due to the service purchase is an increase of about $2,300 for the first year. This assumes that all of our actuarial assumptions as described in the October I, 2012 Actuarial Valuation Report are met each year. The impact on the total gain/loss varies each year depending on the demographics and the specific benefit provisions that apply to members who purchased service. Eliminating the service purchase provision will mean that any losses due to service purchases will not occur in future years. Please note, however, that there will likely be losses due to service purchases in fiscal year ending September 30, 2013 that will be reflected in the October I, 2013 Actuarial Valuation, since elimination of the service purchase provision will not be effective until September 30,2013. 464 Ms. Carla Gomez July 15, 2013 Page2 Summary ofFindings • • The present value of future benefits decreases by approximately $7.8 million . The Plan would be expected to pay out $7.8 million less, in today's dollars, to current members of the Plan. This can be viewed as the total cost impact due to the extension of the DROP if the actuarial assumptions are met each year. There is a decrease in the first year Annual Required Contribution for the City that is comprised of a reduction in the amortization payments on the Unfunded Accrued Liability and a reduction in the normal cost. The Unfunded Accrued Liability decreased by approximately $6.1 million. This reduction will decrease the annual required contribution by approximately $540,000 each of the next 30 years. The first year normal cost will decrease by approximately $238,000 which is 0.34% of total covered payroll (0.3Wl/o of Tier A and B member covered payroll). The reduction of 0.38% of Tier A and Tier B member covered payroll wi11 exist until all Tler A and Tier B members have retired. The first year required employer contribution would decrease by approximately $778,000 or 1.19% ofNon-DROP payroll. The funded ratio will increase from 66.1% to 66.7%. Other Cost Consideratio• • As of October I. 2012 the Market Value of Assets exceeds the Acruarial Value by $2.07 million. This difference will be recognized over the next several years. Once all the gains and losses through September 30, 2012 are fully recognized in the Actuarial Value of Assets, the contribution rate will decrease by roughly 0.3% of non-DROP payroll unless there are further gains or losses. Additional Disclosures This report was prepared at the request of the City with the Board•s permission and is intended for use by the City and the Retirement Plan, and those designated or approved by them. This report may be provided to parties other than the City and Retirement Plan only in its entirety and only with their permission. 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. This report should not be relied on for any purpose other than the purpose described above. The calculations in this report are based upon infonnation furnished by the Plan Administrator for the October 1, 2012 Actuarial Valuation concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We reviewed this information for internal and year-to-year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the Plan Administrator. The calculations are based upon assumptions regarding future events, which may or may not materialize. They are also based on the assumptions, methods, and plan provisions outlined in this report. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of Gabriel Roeder Smith & Company 465 Ms. Carla Gomez July 15,2013 Page 3 an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. 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 the report prior to relying on information in the report. The undersigned actuaries are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The undersigned actuaries are independent of the plan sponsor. This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, and with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. Respectfully submitted, )·r~A.~.._ K. til~..._ /Jc;.__ Melissa R. Algayer, MAAA, FCA Enrolled Actuary No. 11 ~6467 Copy: Rick Rivera Enclosures Gabrid Roeder Smith & CnmpJny 466 -------------------------~~ -~~ SUPPLEMENTAL ACTUARIAL VALUATION REPORT Plan City of Miami Beach Employees' Retirement Plan Valuation Date October l, 2012 Date of Report July 15,2013 Report Requested by City of Miami Beach Prepared by Melissa R. Algayer Group Valued All active and inactive members. Plan Provisions Being Considered for Change Present Plan Provisions Before Change • Members hired before October 1, 2010 (i.e., Tier A and Tier B members) who become eligible for normal retirement may participate in the Deferred Retirement Option Program (DROP) for up to three years. The annual cost-of-living adjustment (COLA) of2.5% is not payable while members are in the DROP. • Members who have five or more years of service may elect to purchase up to two years of additional credited service at any time prior to retirement. Members who elect to purchase such service pay 1 0% of the annual rate of compensation multiplied by the number of years purchased. Proposed Plan Changes • Members hired before October 1, 2010 (i.e., Tier A and Tier B members) who become eligible for normal retirement may participate in the Deferred Retirement Option Program (DROP) for up to five years. Members currently participating in the three-year DROP may also continue participation for an additional two years (five years total). The annual COLA of2.5% is not payable while members are in the DROP. • The optional service purchase provision would be eliminated. 467 2 Participants Affected The extension of the DROP participation period would apply to members hired prior to October l, 20 l 0 (i.e., Tier A and Tier B members) who become eligible for normal retirement and current members participating in the DROP as the effective date of the amending ordinance. Elimination of the optional service purchase provision would apply to all active members after the effective date of the amending ordinance. Actuarial Assumptions and Methods To measure the impact of extending the DROP, the assumed COLA delay was increased from 2.75 years to 4 years for active Tier A and Tier B members. Additionally, the COLA delay was increased from 3 years to 5 years for members currently participating in the DROP. All other assumptions and methods are the same as shown in the October l, 2012 Actuarial Valuation Report. Some ofthe key assumptions/methods are: Investment return -8.0% per year Salary increase -4.5% to 7.0% depending on service Cost Method -Entry Age Normal Cost Method Amortization Period for Any Change in Actuarial Accrued Liability 30 years. Summary of Data Used in Report Same as data used in October 1, 2012 Actuarial Valuation Report. Actuarial Impact of Proposal(s) See attached page(s). Extending the DROP from three to five years will decrease the first year annual required contribution by $778,439 or 1.19% ofNon-DROP payroll. Since the employer portion of the cost for members to purchase service is not prefunded, eliminating the optional service purchase provision would not have an immediate financial effect on the Plan. Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to Previously None Other Cost Considerations As ofOctober 1, 2012 the Market Value of Assets exceeds the Actuarial Value by $2.07 million. This difference will be recognized over the next several years. Once all the gains and losses through September 30, 2012 are fully recognized in the Actuarial Value of Assets, the contribution rate will decrease by roughly 0.3% of non-DROP payroll unless there are further gains or losses. 468 3 CITY OF MIAMI BEACH EMPLOYEES' RETIREMENT PLAN fmpact Statement-July 15, 2013 Description of Amendment The proposed ordinance incorporates the following plan changes: I. The maximum period for participation in the Deferred Retirement Option Program (DROP) would be extended from three to five years for members hired before October I, 20 I 0 (i.e., Tier A and Tier B members). This extension would apply to all active members in Tiers A and B who elect to participate in the DROP in the future as well as current DROP members. The 2.5% COLA is not payable while members are in the DROP. 2. The option for members to purchase up to 2-years of credited service would be eliminated. Funding Implications of Amendment Se attachments. Certification of Administrator I believe the amendment to be in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the Constitution of the State of Florida. For the Board of Trustees as Plan Administrator 469 4 ANNUAL REQUIRED CONTRIBUTION (ARC) A. Valuation Date October 1, 2012 October I, 2012 Increase/ Valuation Extend DROP from (Decrease) Three to Five Years B. ARC to Be Paid During Fiscal Year Ending 9/30/2014 9/30/2014 C. Assumed Date of Employer Contrib. I 0/112013 10/112013 D. Annual Payment to Amortize Unfunded Actuarial Liability $ 17,184,796 $ 16,685,042 $ (499,754) E. Employer Normal Cost 7,085,589 6,864,566 (221 ,023) F. ARC if Paid on the Valuation Date: D+E 24,270,385 23,549,608 (720,777) G. ARC Adjusted for Frequency of Payments 26,212,016 25,433,577 (778,439) H. ARC as % of Covered Payroll -Non-DROP Payroll 40.29 % 39.10 % (1.19)% -Total Payroll 37.56 % 36.45 % (1.11)% I. Covered Payroll for Contribution Year -Non-DROP Payroll 65,053,945 65,053,945 - -Total Payroll 69,782,689 69,782,689 - 470 5 ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October I, 2012 October 1, 2012 Increase/ Valuation Extend DROP from (Decrease) Three to Five Years B. Actuarial Present Value of All Projected Benefits for I. Active Members a. Service Retirement Benefits $ 264,825,342 $ 258,655,513 $ (6, 169,829) b. Vesting Benefits 31,967,178 31,967,178 - c. Disability Benefits 7,271,899 7,271,899 - d. Preretirement Death Benefits 3,953,764 3,953,764 - e. Return of Member Contributions 631,843 631,843 - f. Total 308,650,026 302,480,197 (6, 169,829) 2. Inactive Members a. Service Retirees & Beneficiaries 409,347,392 407,731 '946 (1,615,446) b. Disability Retirees 12,377,127 12,377,127 - c. Terminated Vested Members 11,480,115 11,480,115 - d. Total 433,204,634 431,589,188 (1,615,446) 3. Total for All Members 741,854,660 734,069,385 (7, 785,275) c. Actuarial Accrued (Past Service) Liability per GASB No. 25 637,363,774 631,287,564 (6,076,210) D. Plan Assets I. Market Value 423,447,642 423,447,642 - 2. Actuarial Value 421 ,3 76,041 421,376,041 - E. Unfunded Actuarial Accrued Liability (C-02) 215,987,733 209,911,523 (6,076,21 0) F. Funded Ratio (02 -o-C) 66.1 % 66.7 % 0.6 % G. Actuarial Present Value of Projected Covered Payroll 543,825,043 543,825,043 - H. Actuarial Present Value of Projected Member Contributions 51,791,078 51,791,078 - 471 6 CALCULATION OF EMPLOYER NORMAL COST A Valuation Date October 1, 2012 October 1, 2012 Increase/ Valuation Extend DROP from (Decrease) Three to Five Years B. Normal Cost for l. Service Retirement Benefits $ 9,825,032 $ 9,604,009 $ (221 ,023) 2. Vesting Benefits 2,047,065 2,047,065 - " Disability Benefits 529,872 529,872 -.). 4. Preretirement Death Benefits 268,222 268,222 - 5. Return of Member Contributions 225,573 225,573 - 6. Total for Future Benefits 12,895,764 12,674,741 (221,023) 7. Assumed Amount for Administrative Expenses 694,180 694,180 - 8. Total Normal Cost 13,589,944 13,368,921 (221,023) % of Covered Payroll -Non-DROP Payroll 20.89% 20.55% (0.34)% -Total Payroll 19.47 % 19.16% (0.31)% c. Expected Member Contribution 6,504,355 6,504,355 - % of Covered Payroll -Non-DROP Payroll 10.00% 10.00% 0.00 % -Total Payroll 9.32% 9.32% 0.00 % D. Employer Normal Cost: 88-C 7,085,589 6,864,566 (221,023) % of Covered Payroll -Excluding DROP Payroll 10.89% 10.55% (0.34) % -Including DROP Payroll 10.15% 9.84% (0.31) % 472 7 PARTICIPANT DATA October 1, 2012 October 1, 2012 Valuation Extend DROP from Three to Five Years ACTIVE MEMBERS Number (Non-DROP) 1,049 1,049 Covered Annual Non-DROP Payroll $ 65,053,945 $ 65,053,945 Average Annual Non-DROP Pay $ 62,015 $ 62,015 Total Covered Annual Payroll $ 69,782,689 69,782,689 Average Annual Pay $ 63,209 63,209 Average Age 45.1 45.1 Average Past Service 9.8 9.8 Average Age at Hire 35.3 35.3 DROP PARTICIPANTS Number 55 55 Annual Benefits $ 2,994,703 2,994,703 Average Annual Benefit $ 54,449 54,449 Average Age 59.3 59.3 RETIREES & BENEFICIARIES Number 1,002 1,002 Annual Benefits $ 33,085,394 $ 33,085,394 Average Annual Benefit $ 33,019 $ 33,019 Average Age 71.1 71.1 DISABILITY RETIREES Number 43 43 Annual Benefits $ 1,117,160 $ 1,117,160 Average Annual Benefit $ 25,980 $ 25,980 Average Age 65.6 65.6 TERMINATED VESTED MEMBERS Number 63 63 Annual Benefits $ 1,343,444 $ 1,343,444 Average Annual Benefit $ 21,325 $ 21,325 Average Age 45.9 45.9 473 ORDINANCE NO. ___ _ AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH~ FLORIDA, IMPLEMENTING PROVISIONS OF THE 2012w2015 COLLECTIVE BARGAINING AGREEMENT BETWEEN THE CITY AND THE COMMUNICATIONS WORKERS OF AMERICA! (CWA) LOCAL 3178; IMPLEMENTING SIMILAR RETIREMENT PLAN AMENDMENTS FOR MEMBERS WHO ARE NOT INCLUDED IN ANY BARGAINING UNIT; AMENDING THE MIAMI BEACH EMPLOYEES' RETIREMENT PLAN CREATED BY ORDINANCE 2006-3504; AMENDING SECTION 2.26 OF THE PLAN BY EXTENDING THE DEFERRED RETIREMENT OPTION PLAN (PLAN) PROGRAM FROM THREE (3) TO FIVE (5) YEARS FOR ELIGIBLE MEMBERS; AMENDING SECTION 5.13 TO REFLECT AMENDED ELIGIBILITY AND PARTICIPATION REQUIREMENTS AND AMENDED DROP PLAN FEATURES; AMENDING SECTION 4.03 BY ELIMINATING THE PURCHASE OF ADDITIONAL CREDITABLE SERVICE FOR CERTAIN MEMBERS; PROVIDING FOR SEVERABILITY; REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA: Section 1. Section 2.26 of the Miami Beach Employees' Retirement Plan created by Ordinance 2006-3504, as subsequently amended, is hereby further amended as follows: 2.26 Deferred Retirement Option Plan (DROP) -A program under which a Member who has reached the normal retirement date may elect to retire for purposes of the Plan but continue employment with the City for up to thirty-six (36) months, and have his/her monthly retirement benefit paid into a DROP account during the DROP period, in accordance with Section 5.13. Notwithstanding the preceding sentence, effective July 17. 2013. Members within classifications in the CWA bargaining unit who were hired prior to October 27, 2010, and Members not included in any bargaining unit who were hired prior to September 10. 2010, may elect to retire for purposes of the Plan but continue employment with the City for up to sixty (60) months, and have their monthly retirement benefit paid into a DROP account during the DROP period, in accordance with Section 5.13. 474 Section 2. Section 5.13 of the Miami Beach Employees' Retirement Plan created by Ordinance 2006-3504, as subsequently amended, is hereby further amended as follows: 5.13 A deferred retirement option plan ("DROP") is hereby established for eligible Members, as follows: (a) Eligibility and participation: 1. A Member who attains the normal retirement date shall be eligible to participate in the DROP. 2. A Member's election to participate in the DROP shall be irrevocable. A Member may participate in the DROP only once. 3. An eligible Mem~er may participate in the DROP for a maximum of thirty-six (36) months. Effective July 17, 2013, Members within classifications in the CWA bargaining unit, who were hired prior to October 27, 2010, and Members not included in any collective bargaining unit. who were hired prior to September 10. 2010, may participate in the DROP for a maximum of sixty (60) months. 4. An eligible Member who elects to participate in the DROP must provide at least thirty (30) days' advance written notice to the City of his or her election to participate in the DROP. A Member who elects to participate in the DROP may elect to terminate DROP participation and City employment sooner than the maximum DROP period, with thirty (30) days' advance written notice to the City. 5. Effective July 17. 2013, any Member within classifications in the CWA bargaining unit, and any Member not included in any collective bargaining unit, who previously executed an election form entitling him/her to participate in the DROP for a period of less than sixty (60) months and whose DROP period ceases between July 1. 2013 and July 16, 2016, shalf have a one-time opportunity to submit an irrevocable amended election from provided by the Board, within thirty {30) calendar days following the effective date of this ordinance. extending his or her DROP period to a maximum of sixty (60) months in total. 2 475 (b) DROP plan features: 1. An eligible Member who elects to participate in the DROP will be considered to have retired for purposes of the Plan upon entry into the DROP, except that such Member shall be eligible to vote for and serve as an Employee member of the Board of Trustees during the DROP participation period. The Member's monthly retirement benefit, determined in accordance with the Plan based on years of creditable service and final average monthly earnings at the time the Member enters the DROP, will be paid into the Member's DROP account every month during the DROP period. 2. No Member contributions shall be required after a Member enters the DROP, and the Member will not accrue any additional creditable service or any additional benefits under the Plan after entering the DROP. No City normal cost contributions shall be required after a Member enters the DROP, and DROP participants shall be excluded from the covered payroll for the Plan. 3. A Member who elects to participate in the DROP shall not be eligible for disability or preretirement death benefits under the Plan; nor shall a Member be eligible for any post retirement adjustment provided in Section 5.10 during the DROP participation period. 4. A Member who elects to participate in the DROP shall retain the earned balance of annual and sick leave as of the date of entry into the DROP, and shall continue to earn annual and sick leave during the DROP period, in accordance with applicable City ordinances. Alternatively, at the time of entry into the DROP, a Member may request full or partial payment of the earned balance of annual and sick leave as of the date of entry into the DROP, up to the maximum allowed by applicable City ordinances for employees who terminate City employment, but reduced by the amount of annual and sick leave used for the purchase of additional credited service under section 4.03, if any, at the Member's rate of compensation upon entering the DROP; provided that the Member must retain at least 120 hours of accrued sick leave after any such payment. Upon termination of City employment, a Member who has participated in the 3 476 DROP shall be eligible to receive payment for the earned balance of annual and sick leave as of the date of termination, up to the maximum allowed by applicable City ordinances for employees who terminate City employment, but reduced by the amount of annual and sick leave for which payment was received upon entry into the DROP, if any; and further reduced by the amount of annual and sick leave used for the purchase of additional credited service under section 4.03, if any. In no event shall payments for accrued annual or sick leave be included in a member's Earnings for purposes of the Plan. 5. As a condition of participating in the DROP, the Member must agree to terminate City employment at the conclusion of the DROP period, and to submit an irrevocable letter of resignation stating this prior to entering the DROP. A Member who elects to participate in the DROP must also submit an irrevocable written DROP election prior to entering the DROP on a form provided by the Board. Notwithstanding the preceding sentence. eligible Members who are participants in the DROP on July 1. 2013, shall be given a one-time opportunity to submit an irrevocable amended election form. as provided in Section 5.13 (a) 5., extending the DROP period to a maximum of sixty (60) months in total. 6. At the conclusion of the DROP period and upon termination of City employment, the Member's monthly retirement benefit shall be paid to the Member in accordance with the Plan. In the event of the Member's death during or at the conclusion of the DROP period, a benefit may be payable in accordance with Section 5.07 8. Participation in the DROP is not a guarantee of City employment, and DROP participants will be subject to the same terms and conditions of employment that are applicable to employees who are not DROP participants. 9. During participation in the DROP, the Member's monthly retirement benefit will be paid into the DROP account, and shall be credited/debited with earnings/losses as provided herein. The Member may direct that their DROP account be invested in any of the investment options approved by the Board, on forms provided by the 4 477 Board. Any gains on the Member's DROP account investments shall be credited to the Member's DROP account; and any losses incurred by the Member shall be deducted from the Member's DROP account balance, and shall not be made up by the City or the Retirement Plan. A Member's DROP account shall only be credited or debited with earnings/losses while the Member is a participant in the DROP. 10. A DROP participant may designate a beneficiary or beneficiaries for his/her DROP account on a form provided by the Board. 11. Within thirty (30) days following a DROP participant's termination of City employment or death, whichever occurs first, the Member, or in the event of the Member's death the Member's designated beneficiary, may submit a written election on a form approved by the Board, to receive the Member's entire DROP account balance, which shall be distributed to the Member (or in the event of the Member's death, to the Member's designated beneficiary or estate in accordance with paragraph (b)9., below) in a cash lump sum, unless the Member elects to have all or any portion of an eligible rollover distribution paid directly to an IRA or eligible retirement plan specified by the Member in a direct rollover. Any such direct rollover shall be processed in accordance with Article 12 of the Plan. In the event a Member or designated beneficiary does not submit a written election to receive a distribution of the Member's DROP account balance within thirty (30) days following the Member's termination of City employment or death, the Member's DROP account shall ·be maintained by the Plan but shall not be credited with earnings/losses after thirty (30) days following the Member's termination of City employment or death. 12. If a DROP participant dies before his or her DROP account is distributed, the participant's designated beneficiary shall have the same rights as the participant with respect to the distribution of the DROP account. If the participant has not designated a beneficiary, the DROP account balance shall be paid to the Member's estate. 13.The Board of Trustees shall make such administrative rules as are necessary for the efficient operation of DROP, but shall not adopt any 5 478 rule that is inconsistent with this Ordinance or the Plan. 14.The DROP shall be administered so that the Plan remains qualified under the Internal Revenue Service Code and in compliance with applicable laws and regulations. Section 3. Section 4.03 of the Miami Beach Employees' Retirement Plan created by Ordinance 2006-3504, as subsequently amended, is hereby further amended as follows: 4.03 (a) A Member with five (5) or more years of creditable service may, at any time prior to retirement, elect to purchase up to a maximum of two (2) years of additional creditable service as provided in this section 4.03. Notwithstanding any provision of this Section 4.03. effective September 30, 2013, Members whose classification is included in the CWA bargaining unit and Members who are not included in any collective bargaining unit shall not be eligible to purchase additional creditable service under this section 4.03. The benefit multiplier that the Member is earning at the time of the election to purchase additional creditable service pursuant to this section 4.03 shall be applied to the additional credited service purchased. To be eligible to purchase additional creditable service under this section 4.03, a Member who previously elected to participate in the Defined Contribution Retirement System (401 (a) Plan) must first purchase all available creditable service in accordance with section 4.04. An eligible Member may elect to purchase additional creditable service under this section 4.03 for any of the following types of employment prior to the employee's date of hire by the City, provided that the Member may not purchase such service if the Member has received or will receive a pension benefit for the same period of employment under another retirement plan: 1. Active duty military service in the Armed Forces of the United States or the Coast Guard. 2. Full-time employment with another governmental entity. 3. Full-time employment in the private sector performing the same or very similar duties the employee is performing for the City at the time of his/her election to purchase additional service. (b) In order to receive the additional creditable service, the Member shall pay ten percent (1 0%) of his/her annual rate of pensionable Earnings, multiplied by the number of years and fractions of a year purchased, up to a total of two years. For the purpose of this section, the annual rate of pensionable earnings shall be the rate in effect on the date of payment and 6 479 shall include the annual amount of overtime pay for those Members whose overtime pay is included in Earnings. Payment shall be made in a single lump sum to the Plan within six (6) months following the date of the member's election to purchase the additional service. (c) For purposes of this section 4.03, Members may use the value of accrued sick and/or annual leave for the purchase of additional creditable service, as follows. Accrued sick leave may be used at the rate of 2 hours of accrued sick leave for the value of each hour used toward the purchase, provided that the Member must retain at least 120 hours of accrued sick leave after the purchase. Annual leave may be used at the rate of 1 hour of accrued annual leave for the value of each hour used toward the purchase. The total amount of sick and annual leave used for the purchase of additional creditable service under this section 4.03 shall be deducted from the maximum amount of leave allowed for payout to the Member upon termination of employment. (d) Members may pay for some or all of the cost of additional creditable service purchased pursuant to this section 4.03 by direct transfer or rollover of funds from a 401 (a) or 457 plan, provided the 401 (a) plan or 457 plan permits such direct transfers. (e) Notwithstanding the forgoing, Employees in classifications within the AFSCME bargaining unit and the GSA bargaining unit shall not be eligible to purchase additional creditable service under this section 4.03 unless and until a collective bargaining agreement is ratified that provides for such purchase. (f) Amounts paid or transferred to this Plan for the purchase of creditable service under this section 4.03 shall be considered accumulated employee contributions as that term is defined herein, and Members shall be 100% vested in such amounts. (g) Notwithstanding any other provision of this section 4.03, in no event may the maximum benefit percentage applicable to the member be exceeded as the result of any purchase of creditable service. Purchase of Creditable Service by Members Who Previously Participated in the Defined Contribution Retirement System. (a) Any Employee who previously elected to participate in the Defined Contribution Retirement System (401 (a) Plan) prior to the effective date of this Ordinance, and who becomes a Member of this Plan on or after the effective date of this Ordinance, may purchase Creditable Service under this Plan for all or a portion of the period of their 7 480 participation in the Defined Contribution Retirement System, by paying into the Plan an amount equal to the sum of the required employer and employee contributions to the Classified Plan or Unclassified Plan (whichever plan in which the Member was eligible to participate) for each fiscal year of service, or portion thereof, purchased, as reflected in the actuarial valuation report for that year; plus interest at the rate of 8.5 percent for Classified Employees and 9.0% for Unclassified Employees, calculated from the end of each applicable fiscal year through the date of payment. Notwithstanding the preceding sentence, for any Creditable Service purchased pursuant to this subsection (a) that relates to employment during the 2005-2006 fiscal year, if full payment for such service is made on or before May 1, 2006, the payment amount for such service shall be twenty percent (20%) of the Employee's earnings for the period purchased, with no interest on the amount paid for such service. In any event, full payment all service purchased pursuant to this subsection (a) must be made within six (6) months after the effective date of this Ordinance and cost estimates have been provided to the Employee, but in no event later than the last day of employment. In the case of an employee who elects to transfer or roll over assets from the Defined Contribution Retirement System to purchase creditable service pursuant to this subsection (a), the requirements of the preceding sentence as to such assets shall be satisfied by the employee's irrevocable authorization to transfer or roll over such assets, executed on or before the last day of employment. Each employee electing this option may purchase creditable service under this Plan for the period from the date the employee entered the Defined Contribution Retirement System through the effective date of membership in this Plan, or any portion thereof. If a Member elects to purchase less than the full period of participation in the Defined Contribution Retirement System, the first period of purchase shall be for the same fiscal year in which the Employee was first authorized to purchase service pursuant to this subsection (a), the second period of purchase shall be for the immediately preceding fiscal year and so on, until the Member purchases the amount of creditable service desired. A Member shall not be permitted to select those years that result in the lowest purchase amount. Notwithstanding any other provision of this section 4.04, in no event may the maximum benefit percentage applicable to the member be exceeded as the result of any purchase of Creditable Service. (b) Any Employee who previously elected to participate in a defined contribution retirement plan established for employees of the Miami Beach Visitor and 8 481 Convention Authority, the Classified Plan, the Unclassified Plan or the City Pension Fund for Firemen and Policemen, prior to the effective date of this Ordinance, and who becomes a Member of this Plan on or after the effective date of this Ordinance, may purchase Creditable Service under this Plan for all or a portion of the period of their participation in such defined contribution retirement plan on or after October 18, 1992, during which such Member was employed on a regular basis for thirty (30) or more hours per week, by paying into the Plan an amount equal to the sum of the required employer and employee contributions to the Classified Plan for each fiscal year of service, or portion thereof, purchased, as reflected in the actuarial valuation report for that year; plus interest at the rate of 8.5 percent calculated from the end of each applicable fiscal year through the date of payment. Notwithstanding the preceding sentence, for any Creditable Service purchased pursuant to this subsection (b) that relates to employment during the 2005-2006 fiscal year, if full payment for such service is made on or before May 1, 2006, the payment amount for such service shall be twenty percent (20%) of the Employee's earnings for the period purchased, with no interest on the amount paid for such service. In any event, full payment all service purchased pursuant to this subsection (b) must be made within six (6) months after the effective date of this Ordinance and cost estimates have been provided to the Employee, but in no event later than the last day of employment. In the case of a Member who elects to transfer or roll over assets from a defined· contribution retirement plan established for employees of the Miami Beach Visitor and Convention Authority, the Classified Plan, the Unclassified Plan or the City Pension Fund for Firemen and Policemen to purchase creditable service pursuant to this subsection (b), the requirements of the preceding sentence as to such assets shall be satisfied by the Member's irrevocable authorization to transfer or roll over such assets, executed on or before the last day of employment. If a Member elects to purchase less than the full period of participation in the defined contribution retirement plan, the first period of purchase shall be for the same fiscal year in which the Employee was first authorized to purchase service pursuant to this subsection (b),the second period of purchase shall be for the immediately preceding fiscal year and so on, until the Member purchases the amount of creditable service desired. A Member shall not be permitted to select those years that result in the lowest purchase amount. Notwithstanding any other provision of this section 4.04, in no event may the maximum benefit percentage applicable to the Member be exceeded as the result of any purchase of creditable service. (c) A Member who elects to purchase creditable service under this section 4.04 may pay for such service in one or a combination of the following manners: 9 482 (1) Direct transfer or rollover from the Defined Contribution Retirement System, 457 plan or other eligible plan in accordance with Section 11.03, provided the other retirement system or plan permits such direct transfers or rollovers for the purchase of creditable service under this Plan. The full value of assets, including any outstanding loans, transferred from a Member's account in the Defined Contribution Retirement System, or from a defined contribution retirement plan established for employees of the Miami Beach Visitor and Convention Authority, the Classified Plan, the Unclassified Plan or the City Pension Fund for Firemen and Policemen that permits such direct transfers or rollovers for the purchase of creditable service under this Plan, will be credited toward the purchase of creditable service under this section 4.04. A Member must payoff any loan balance existing at the time of transfer from the Defined Contribution Retirement System, or from a defined contribution retirement plan established for employees of the Miami Beach Visitor and Convention Authority, the Classified Plan, the Unclassified Plan or the City Pension Fund for Firemen and Policemen, by making payments to this Plan in the same manner and at the same rate of interest as the payments that were made to the Defined Contribution Retirement System or defined contribution retirement plan prior to the transfer. In the event full payment of all outstanding loan balances is not made prior to termination of employment, the Member's creditable service shall be adjusted to reflect the payments actually made. (2) Cash Payment. (3) A Member who is employed by the City at the time creditable service is purchased pursuant to this section 4.04 may use the value of accrued sick and/or annual leave as follows. Accrued sick leave may be used at the rate of 2 hours of accrued sick leave for the value of each hour used toward the purchase, provided that the Member must retain at least 120 hours of accrued sick leave after the purchase. Annual leave may be used at the rate of 1 hour of accrued annual leave for the value of each hour used toward the purchase. The total amount of sick and annual leave used for the purchase of additional creditable service under this section 4.04 shall be deducted from the maximum amount of leave allowed for payout to the Member upon termination of employment. (c) Amounts paid or transferred to this Plan for the purchase of creditable service under this section 4.04, excluding any outstanding loan balances, shall be considered accumulated employee contributions as that term is defined herein, and Members shall be 100% vested in such amounts. 10 483 (d) Notwithstanding any other provision of this section 4.04, the provisions of this section 4.04 shall not apply to Employees within classifications in the AFSCME and GSA bargaining units until a collective bargaining agreement containing such provisions is ratified. If a collective bargaining agreement applying the provisions of this section 4.04 to Employees within classifications in the AFSCME or GSA bargaining units is ratified on or before April 1, 2006, for any Employee who purchases Creditable Service purchased pursuant to subsection (a), above, that relates to employment during the 2005-2006 fiscal year, and makes full payment for such service within sixty (60) days following ratification of the collective bargaining agreement, the payment amount for such service shall be twenty percent (20%) of the Employee's earnings for the period purchased, with no interest on the amount paid for such service. Purchase of Creditable Service by Members Who Previously had Creditable Service Under the Classified Plan. Any Member who previously had creditable service under the Classified Plan but who separated from employment as a Classified Employee prior to becoming fully vested in the Classified Plan, may purchase Creditable Service under this Plan for all or a portion of the period of their creditable service under the Classified Plan, by paying into the Plan an amount equal to the sum of the required employer and employee contributions to the Classified Plan for each fiscal year of service, or portion thereof, purchased, plus interest at the rate of eight and one-half percent (8.5%) from the end of each applicable fiscal year through the date of payment. Full payment must be made within six (6) months after the effective date of this Ordinance. Notwithstanding any provision of this section 4.05, this section 4.05 shall have no application to persons employed by the Miami Beach Visitor and Convention Authority, the Classified Plan, the Unclassified Plan or the City Pension Fund for Firemen and Policemen on the effective date of this Ordinance, Section 4: Conflicts and Severability. (a) All Ordinances, and parts of ordinances, in conflict herewith shall be and the same, are hereby repealed. (b) In the event any article, section, paragraph, sentence, clause, or phrase of this Ordinance shall be adjudicated invalid or unconstitutional, such adjudication shall in no manner affect the other articles, sections, paragraphs, sentences, clauses or phrases of this Ordinance, which shall be and remain in full force and effect as fully as if the item so adjudged invalid or unconstitutional was not originally a part hereof. 11 484 Section 5. Effective Date. This Ordinance shall take effect the_ day of , 2013. PASSED and ADOPTED by the City Commission of the City of Miami Beach this __ day of , 2013. Attest: RAFAEL GRANADO, CITY CLERK APPROVED AS TO fQilM & LANGUAGE & FOR EXECUftON \L~~~ qf1.~n • City Aflo--meyr Oa1e 12 485 MATTI HERRERA BOWER MAYOR ------------------------------------------- I MIAMI BEACH I i j l I "%1 ! CITY OF MIAMJ BEACH NOTICE OF PUBUC HEARINGS NDllCE IS HEftEBY gi'nln 1!1at publ!<) hEarlnQ" wll be lw!ld by 1lle lvloyor ond City Corm1lssioo ol tl1e City r:JI Miami Boach, Flot1da, In lhE Commisoian Chambers.. lr<l Floor, City Hall, 1700 Con'Nrtlon Center O.We, Miami Beach. ne<~da, oo Wednl>$d"lf, September n, 21l13 to oonoid<lr the ro~ owi"Gl IO;l!Se.m. /on OtdnMG<l .,plem<nl!l'l{l f'r<wlolon• Of Th• 2012·2015 Ccllot:IM> Bargaining ~~ Elotween Tho City Md TheCarnmunlcatlro•WOO<arnOfArnerloo, tCWAlloeai317B; lmplemM~ngSimllarRe~emsnt ~looAmendmanto Fo-Memb""' I Who Ate ~ct Included In Arrf !largall'lns Unit: Amendlllg The Mloml !loach tmptoyO<Oo' Retlrem<!nt Pion Creat«l By OrdrlMoe i 21:00 35C4; Amending Soctloo :<.26 Of The Pion By E:<twdlng Tho D<lm'od Rotlmroont Oplloo I'IM tl'lanl Pr"!Jram From 1'llmtl {!3l I To Fiv" (5j Yerus Fer Bigbie Members, Armndng Socticn 5-13 To Re!lootArnet'lded Eligibility Ard Pmljcipalloo Requl.,.,erl!!! And Pmendad DAOP Plan features; Amondln9 Section 4.03 By IJimlna!lng Tho l'urehase 01 Addl~ooal CI'E<Itable SeM«> f« C..rtaln Members; Providing For S~; RepealingAII<ltljj""""""lnCotrl!lctThEfllWi!ll; And F'rt:MdtngAnO!octveOOIIil. ! tQ-.30am. AA On:linllllCe ~ Ordinance No. 700. The Claos~ ErnplayeM Sola.y Ordinance Of The City Of Miami Beach, fk><lda, k. Rlllows: Providing Fo-The cm,.,;5callons In Group N, Repmoontod By The Gommunlcolloos Woll<ors 01 Arnel1oa (CWAJ Local .31711, In ~Will\ The ~gotlale<:l Collecll';e 8argcl<llng Agreement Effoellve Oc1ober 1. 2012, Th<ire $1>101 Be Ar!locreaoe 01 El<>ffl(o P~ (1 1 !10) To The Maximwn Wag<> For 'The Clasoi1icatlont> Of Uraguard It And Lile;uard Lieutenant Etfec11W: The Flrnl Pay Pt:rk:ld Ending In Oc!ober0t2014, n.,re Shloll 8e Ar1 ~ n., Board Coot-0!-LMng Adju•lmeni(GOLAJ O!Throo !>ereont \:3%), Arid The Mlolmum And Mal<Jmum 01 Ead1 Pay Flcnll'O Wll AlB<:> Be I~ Sy Throo Percent (3%): ~log All Drdinonc .. In Coollict; Provi<llr1g For S.W<W<lbioty, An Eft...,....., 0-And C<ldifi<:ation. i0:4So.m. Mlnln>Jm Unll Stzu For Hlolorle H010ia And RM-2 T<>War Salbacl<e Ordirlflnoe Amending Tha land D~ Flegulalloo• Of The Code Of Tho City Of """"' Bcaoh, By Ameru:llng ChOp!er 142, 'Zoning Dlolri<:I>Md lleg..,...!lono,' By ~lng Mcfe II, •Oiolrlct Aegulati011o: By Am'>'l<lll>!l DIYiolon $, "Reoid<mfal Mul~mmlty Olsllicts, • By Amending S<ctk>n "142·155"TD ModiJYThe Ro(JilO""""nts ForMinlmi.Kll Hotel Room Size ForHI•IOI1o Hotolo Within The RM-1 Dlmrict; By Amending Sectlm "142-217" To Modify The Requirements For Mlnl!'n.1!11 Hot•l Room Sl2o For HIS!orlc H<ltllls Within The RM-2 Dlmlet. By Amending SOC!Ion "142·211f' To MolifyTha Towel' Setback Requirements Wltl11n The RM-2 Olstrlct; By Amending Sec1ion "142 ·246" TD MD<IIIy Tho Roqul"""""ts Far Mlnlmum Hatol Room Slz.> for HISlll~c Hotel• Wltlm Tho RM-3 Dl>lrlct: ln<l'Jiriffi may be dirf!Cied to 111<> Planning O..partm<rnt at (3!J5} 573-7551:. 1HX1e.m. Ordinoooe Amending Cll!ll>ler SO Of Tho Miami Beoch Cily Code, Eni!Ued 'Solid -·' By Amending Article II, l:nllllecl 'Ctt;wldo R<>cycllng Pro,;"'"' For Muttlfllmlly Re~And C"""""""" Eotllbllshmenb.' 8y Amending 5ectlom 00-34:t Enllllcti "Publlo Edu&811on Program; Roquirenrents JC<>r Ret>yollrig Corrtlactom; warni"IJ I'<W>d; En!OrG-Dote,' By Eio1anding Tha Warning Period From Jrne'lll, 2013 To Oe(lembEf31,2C13 ,lind El<tflnQlngThe Begl1111ing O!The Enloroement Period From July l, 2!l13 TOJ31U1fl11, 2!l14: By /ornet1dlnQ Sed~ on 9C·346, ~ "En1oo:M'!tmt." By £><1\mdfng The Begrmlng Of The tnfotooment Parkld From July l, 21l13To JruiUaly •, 21l14 H:15a.m. Qrdlnanoo Amondlng Clloptet 90 01 The Miami Boach Clly Code, Enllll•d 'SOlid W-: By ~ng Sedlon 90-39 Entitlad •fine Scl1edule For \llolatl""o ls!)Ued And Ajlplled To Owne.,., Agenb, Tenan!5, 0ooup!lr1~, Oj>era!orn Or .Mmagern, Or Persons Ro""""'"blo For Tho \11clal!cn." By Am..,<lng TM Fins Schedtll~• fDr \lloi.Uons Of S.c1lon 90-36 And 91M5 And Providing For Coosm1£ol Terminology R~g Flrnt And Subsequant O!!el'lllllS; By AmendinG S<!ci1M 9040. Utth!Ed "Fne Schedule For \11olatl<r1<! 01 Sections 90~; 9EH07: 90·19" Et Seq.; 00-221 El Seq.: And 90·228 By P-e Wool!: C-." By Ammdlng Arid f'rovldlng For flM Seh«Mes /ond ViolMIOnS Coot.lmnl 'Mt!l Tho PKMslon• In The Ref..,.,ed Sccllom And In &!<:tlon$ !l0-36, 91l·99, And SC-1!JIJ, Ard Providing Fa< Gormls!ml Terminology Regllffllrlg Fltst And Subooquent Offenses; By Ammdlng Sedon 90-222. EnDtioo "U•I Of Aocoonto," By !'rovld!og Reporting REqul"""'"'t. r.,. Dlsconllnuo<l Acoounto Cooolslenl WHh Sec1ioo 91l-~ll. H:allo.m. OrddnMu Amending Chapter 82 01 The City Code, Entitled "''ublk: Pmpertt." B~ Amending Miele \11, E'nlllled •:>~amlnf; 01 Milo I Focllftlas And E!!tabli>Wrtenl Of Wmum<ll'll!l Or 'Aemorlals," By Arn<lndlng Secloo !!2-503, Enlltied "Naming Of PubHc F'odf111e<>," 6y Eliminating Tim Flequlremenl Of A Refu<endum In Such C"""" When The Facillly To 8e "!wood Or~ I!> Clly Owned, And NO! Alroady Nomad For An lodMdual Or lndi';ldualo Ptll'liW>Ot To Sedon !W·503(a)(4), And: Tho Proposod N...,a 11\<;f"<ks n.. Nam" 01 The Physiooll.ooatlon Of ThE Facllity Or The Focllily To Be 'larned Or Renamed, 'M\k:h Mfr.{ lrdudo The Name 01 The POO< ArdiOr s-Wh<:re Tho roelllty "'Loootod lnquhi6S mey bo dl""""" kl tl1e CityAl'tomoy's Ollioo (3001573-7470 INTERESTrD PARnES -lrwlled ~appear at 111\s moollng, <>r be repre!lellled by s~ .ht, or 10 el<prt!ill th<!lr lllews in wntfng addr-lll the Clfy Convnl..ron, 0/a til« Cit( Clerk, 1700 Coowenllon C<mler Oriv•. 1ot Floor, Cit,< Hfjl, Mlaml Bead1, Flc<ida 33139. Copios of 111-~..,. orea>~oil!lble for public in..,..:ll<>n during ncrmol b!JaiM§ ho4Jrs In tM Clty Cler!<'o. Olli.,, 17CG Coo...-.!lon Cmler D~v<>, ~ .r Flocr, Clfy Hall, Miami Bmch, Florida 33~ 3!1. Thl!l rooe!lng or any Of th<lll<im• Mmlrl may b<l etlnlirnJI>d, and undor !!Ooh clroonml""""" addl;toooi k!g<>l mtiee wm not be ptovlderl. Ratacl £. Granado, C1!y Clerk Clly of ~101'11! Beooh ?rJrnuardto Set:tlon 286.010!i, Ra Stat., lhe Clly hereby r.dVIM~ t11e public lhot R a person dedd<:fi to appear &fi'J cklcleiOO m.lde 1 1 %:~,;;=:::;;,:~~~ ;.":;'..:'ro~~=!~e=n~ !'dh.:J:~~~ ~~=~•~b; based. Thlsm!lce does not conslftule ooosentbythe City for Dlelntnxluolloo or admissloo of o!har'MoeiMdmleslbloorllfel,_t ellida>co, nor OO...It aulha<lz<l cha!long<s or~ nol othorv.1oo allowed by law. I To raqueSilllls rnnlmialln ac""""lble fooml, sign loogmge lnlerpruiJJrn, loformallon oo oocoss lrr pernons with dlsat>11tios om:V I or any sccommcx!atlon to Miow any doeumonl "'p!1111Qpate in anv Cily-3Pl>nsor9d pnxeedlng, ~-ocntacil .,. fiw day9 In a<N"""" at (3tl5J 67:J..l411(lffiiee) or TTY llSerB.""'Y oirocalllho Florida Rolay S..,.,ce at 11,, 1 11<1-;~------------------------------------~ 486