R5I-AFSCME MBERP Ordinance -Weithorn-Condensed Title:COMMISSION ITEM SUMMARY
An Ordinance Of The Mayor And City Commission Of The City Of Miami Beach, Florida, lmplementing Provisions Of The 2013-2016 Collective
Bargaining Agreement Between The City And The American Federalion Of State, County And Municipal Employees, (AFSCME) Local 1554;
Amending The Miami Beach Employees' Retirement Plan Crealed By Ordinance 2006-3504; Amending Section 2.26 Of The Plan By Extending
The Deferred Retirement Option Plan (DROP) 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 Effective April 23, 2015; Amending Section 6.02 Of The Plan By Reinstating An Additional Two Percent
Member Contribution For Members Of The AFSCME Bargaining Unit Hired Prior To September 30, 2010; And Eliminating The Additional Two
Percent Member Contribution When The Plan Actuary Conlirms That The City's Annual Required Contribution To The Retirement Plan ls 23.5% Ot
Payroll Or Less; Providinq For Severabilityt Repealinq All Ordinances ln Conflicl Therewith; And Providinq An Effective Date.
lntended
Ensure expenditure trends are sustainable over the longterm.
Supporting Data (Surveys, Environmental Scan, etc.) N/A
Currently, there is a three year DROP for Tier A and Tier B AFSCME MBERP members, and a five year DROP for Tier C (post 2010
employment date) members. ln the collective bargaining agreement between the City and AFSCME covering the period May 1, 2013,
through April 30, 2016, the parties agreed to extend the DROP period for Tier A and Tier B AFSCME MBERP members from three to five
years, effective upon ratification of the agreement, April 23, 2014. The extension of the DROP yields savings by reducing the City's annual
required contribution (ARC) to MBERP, since DROP participants do not receive the annual retiree cost-of-living increase during their DROP
years. ln addition, DROP participants do not earn additional pension benefits.
Effective April 23, 20'15, AFSCME bargaining unit members will no longer have the option to purchase up to two years of prior creditable
service. On average, 157 employees elect to purchase additional creditable servi@ in the MBERP each year. A member pays ten percent
of his or her pensionable eamings for each year of prior services purchased. The true actuarial impact is significantly higher. 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 ten percent of pay for each year purchased. For example, the full actuarial cost to purchase the maximum of two years of service
to a 45 year old member with ten years of service and an annual salary of $60,000 is approximately $38,000; yel 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 effect on the ARC due to this membef s service purchase is an increase of about $2,300 per year for 30 years.
Based on trends, the average annual impact of $2,300 per member represents $361,000 to the City each year based on an average of 157
buybacks per year, of which approximately $292,410 is estimated to be attributed to GSAF, CWA, Unclassified and "Others" combined; and
$68,590 is attributable to AFSCME members alone.
Effective April 23, 2014, the additional two percent pension contribution was reinstated for all AFSCME bargaining unit members, and will
not sunset- When lhe City's ARC reaches 23.5% of pensionable payroll or less, the City will rescind the additional two percent pension
contribution levied on employees covered by the AFSCME collective bargaining unit who participate in MBERP and were hired prior to
September 30, 2010. The estimated impact of the additional two percent pension contribution by AFSCME bargaining unit members is
approximately ($541,500) for the term of the agreement, and will conlinue to rise as employee pensionable earnings increase over time.
The pension changes recently negotiated with AFSCME are expected lo generate a savings toward the City's ARC, as well as savings off
the unfunded actuarial accrued liability (UAAL). The terms of the agreement are parallel to those reached with the Communication Workers
of America (CWA) and Govemmenl Supervisors Association of Florida (GSAF), as well as those also applied to non-represented
employees in the "others" and "unclassified" salary groups.
The collective bargaining agreement was ratified by AFSCME bargaining unit members on April 21, 2014: the City Commission ratified the
agreement on April 23, 2014.
Based on the foregoing, the Administration recommends approval of the ordinance, as implementing the changes described herein will
orovide oension savinos in the short and lono-lerm.
Financial lmpact Summary: The DROP extension will not affect the budgel during FY 2013114, however, it will result in recurring savingsrrrri,svr verrrrr!s
off the ARC estimated in the amount of$125,000, during FY2014115,FY 2015116, FY 2016117 and FY 2017118 for a tolal five year impact
of ($500,000). The salary cost attributable to lhe extension of the DROP for AFSCME MBERP members is as follows: $3,077 in FY
2O13114; $37,487 inFY 2014115; $96,021 in FY 2015/16; $87,109 in FY 2016/17 and $116,786 inFY 2O17h8, assuming all eligible
employees opt 10 extend their participation in DROP. The total five year salary increase impact for the extension of the DROP is $340,480.
ln FY 2O13114 and FY 2O14115 there will be no savings from the elimination of the ability to purchase prior service; however, there will be
an anticipated savings of ($28,579) in FY 2015i16; ($97,169) inFY 2016117; and ($165,759) inFY 20171'18. Therefore, the total five year
impact of eliminating the prior service buyback is a savings of ($291,507).
The projected savings from the reinstatement of the additional two percent pension contribution is as follows: ($108,000) in FY 2O13114;
($272,000) inFY 2014115; ($277,000) in FY 2015/16; ($282,000) inFY 2O16117i and ($288,000) inFY 2017118. The total five year impact
is a savings of ($1,227,000).
of lhese items is a savinos of ($1
Tabak. Human Resources Director
Clerk's Office
Agenda ttem RS-.I
Date *Zl^lVqD nAtAnntBEACH 357
4 MIAMIBEACH
FROM: Jimmy L. Morales, City Manager
DATE: May 21 ,2014
SUBJECT: AN ORDINANCE OF THE MAYOR CITY GOMMISSION OF THE GITY OF MIAMI
BEAGH, FLOR!DA, IMPLEMENTINE PROVISIONS OF THE 2013.2015 COLLECTIVE
BARGAINING AGREEMENT N THE CITY AND THE AMERICAN FEDERATION
oF STATE, GOUNTY AND MUNICIPAL EMPLOYEES, (AFSCME) LOCAL 1554;
AMENDING THE MIAMI BEACH EMPLOYEES' RETIREMENT PLAN CREATED BY
ORDINANCE 2006-3504; AMENDING SECTION 2.26 OF THE PLAN BY EXTENDING
THE DEFERRED RETTREMENT OPTTON PLAN (DROP) 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 EFFECTIVE APRIL 23,
2015; AMENDING SECTION 6.02 OF THE PLAN BY REINSTATING AN ADDITIONAL
TWO PERCENT MEMBER CONTRIBUTTON FOR MEMBERS OF THE AFSCME
BARGAINING UNIT HIRED PRIOR TO SEPTEMBER 30, 2010; AND ELIMINATING THE
ADDITIONAL TWO PERCENT MEMBER CONTRIBUTION WHEN THE PLAN ACTUARY
CONFIRMS THAT THE CITY'S ANNUAL REQUIRED CONTRIBUTION TO THE
RETIREMENT PLAN lS 23.5% OF PAYROLL OR LESS; PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN GONFLICT THEREWITH; AND
PROVIDING AN EFFEGTIVE DATE.
ADMINISTRATION RECOMMENDATION
The Administration recommends approval of the ordinance.
BACKGROUND
ln 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), OPEIU,
Local 100. ln 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 to the employee's pension
contribution of two percent. This increase was implemented for the general 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
City of iiiomi Beoch, '1700 Convenlion Center Drive, Miomi Beoch, Florido 33I39, www.miomibeochfl.gov
COMMISSION MEMORANDUM
TO:Mayor Philip Levine and Members the City
ND READING AND PUBLIC HEARING
358
Commission Memorandum
May 21,2014
MBERP Pension Ordinance AFSCME 2nd Reading
Page 2 of 7
incumbents in all salary groups except employees covered by the AFSCME collective bargaining
agreement, which expired April 30, 2013, as the provision sunset.
The final average monthly earnings (FAME) increased from two to five years for cunent (Tier A and
Tier B members) and future employees (Tier C members), phasing in those members who were
between two and four years from the 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 would yield an annual savings ranging from $1.49 million
to $2.275 million per year (approximalely 2.12 percent of payroll) each year over the next ten years.
The standard benefit is a lifetime annuity. Additional pension reform was negotiated for all
employees hired after September 30, 2010 (October 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. As compared to Tier A members who can
retire at age 50 and Tier B members who can retire at age 55.
. 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 benefit multiplier will be two and one half percent multiplied by the member's years
creditable service, subject to a maximum of 80% of the member's FAME. As compared
three or four percent for Tier A members and three percent for Tier B members.
o 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) as compared to two and one half percenl for Tiers A and B members.
. Employee contribution: 12 percent for Tier A members and ten percent for Tiers B and C
members.
o 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.
. Members 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 annual savings attributed to the changes for future employees beginning in FY 201 1112 was
approximately $900,000 (1.92 percent of payroll) to the City's ARC. GRS estimated that the City
would realize an additional annual reduction of seven{enths percent per year of payroll applied as a
reduction toward the City's ARC in perpetuity. These savings on the City's ARC were estimated to
vary from a low of $910,000 in FY 2011112to as much as $5.995 million in FY 2020121.
The negotiating teams for the City and AFSCME began meeting in April 2013, to negotiate a
successor agreement to the 2010-2013 collective bargaining agreement which expired April 30,
2013. After ten negotiation sessions, on March 19,2014, the City and AFSCME reached a tentative
of
to
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Commission Memorandum
May 21 ,2014
MBERP Pension Ordinance AFSCME 2nd Reading
Page 3 of 7
three year agreement covering the time period May 1,2013, through April 30, 2016. Bargaining unit
employees ratified the contract on April 21 ,2014, the City Commission ratified the agreement on
April23,2014.
ANALYSIS
The pension changes recently negotiated with AFSCME are expected to generate a savings toward
the City's ARC, as well as savings off the unfunded actuarial accrued liability (UAAL).
The agreement with AFSCME includes the reinstatement of the additional two percent pension
contribution effective upon ratification of the three year labor agreement (April 23, 2014). The
estimated impact of the two percent contribution attributable to AFSCME/MBERP members is
approximately $108,000 in FY 2013/14. This amount will increase each year as employee
pensionable earnings rise.
The City and AFSCME have agreed to the following pension related items:
Extension of the Deferred Retirement Option Plan (DROP)
The DROP is an arrangement used by many public organizations under which employees who
would otheruise retire and collect benefits pursuant to the employer's defined benefit (pension)
retirement plan continue working for a fixed number of years. lnstead 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' pension but as long as they remain in the
DROP, they continue earning their full salaries and all other applicable incentive pays, if any. lf
these employees are not exempt from the provisions of the Fair Labor Standards Act (FLSA), they
earn overtime if they actually work more than 40 hours per week and they are also eligible for merit
increases and/or salary COLAs other employees may receive. When the employees leave at the
end of the DROP period, their contributions to the interest bearing account are disbursed to them by
the plan. At that point, they start collecting the monthly benefits they earned based on earlier years
of service. During the DROP period, employees are not eligible for the retiree COLA.
There are two reasons why the DROP yields saving to the City's ARC. The first, is that participants
are not eligible for the annual retiree COLA. The second is that the employee is not earning
additional pension benefits while in the DROP.
The City has already implemented a five year drop for all members of MBERP excluding members
covered by the AFSCME bargaining unit. Currently, there is a three year DROP for Tier A and Tier B
members covered by AFSCME and a five year DROP for Tier C (post-2010 employment) members
covered by AFSCME. AFSCME has agreed to extend the DROP period for Tier A and Tier B (pre-
2010 employment) members from three to five years, effective upon ratification of the 2013-2016
collective bargaining agreement.
Any employee who previously executed a form entitling him or her to enter the DROP for a period of
less than sixty (60) months in total shall be given a one{ime irrevocable election, within thirty (30)
calendar days from the effective date of the conforming City ordinance amending the DROP period
as set forth herein, to execute a new form extending his or her DROP period for up to sixty (60)
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Commission Memorandum
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MBERP Pension Ordinance AFSCME 2nd Reading
Page 4 ol 7
months in total.
Based on the actuarial impact statement provided by GRS (Attachment), the total estimated impact
from extending the DROP period for all AFSCME pre-2010 employment members represents a
reduction in the present value of future benefits of approximately $1 .2 million. This means the plan
would be expected to pay out $1 .2 million less, in today's dollars. The City's ARC payable on
October 1,2014, will be reduced by approximately $125,000. This savings is comprised of a
reduction in the amortization payments on the UAAL of approximately $916,000 and a reduction to
the normal cost.
The analysis provided by the pension actuary does not take into account the financial impact of
salary earnings. By extending the DROP to five years, retirement-eligible employees who earn
higher salaries will remain employed, requiring the City to pay their higher salaries for a longer
period. That expenditure is offset somewhat by the fact that hiring new employees is postponed,
eliminating the City's contribution toward their pension. 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 or separate earlier.
As of our latest analysis, there are 16 AFSCME bargaining unit members in the MBERP DROP. The
cost effect on salaries caused by the extension of the DROP from three to five years for AFSCME
bargaining unit members is as follows: $3,077 in FY 2013/14; $37,487 inFY 2014115; $96,021 in FY
2015/16; $87,109 in FY 2016/17; and $116,786 inFY 2017118. To reach these conclusions, 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
Municipal Service Worker lll (MSW lll) retires, his/her position becomes available to an incumbent in
a feeder classification and the domino effect would lead to the City ultimately hiring a new entry level
Municipal Service Worker I (MSW l). ln such example, the impact is the difference between the
MSW lll's salary and the entry level salary of an MSW l. For this illustrative purpose, the assumption
was that all DROP participants take advantage of the opportunity and remain employed with the
City.
Elimination of Prior Creditable Service Purchase Ootion
Effective one yearfrom date of ratification of the 2013-2016 collective bargaining agreement, the
option to purchase up to two years of prior creditable service will be eliminated.
Currently, any AFSCME/MBERP 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 purchase is
contingent upon the member not receiving a pension benefit for the same period under another
retirement plan ($112.65, Florida Statutes). Eligible priorservice includes: (1) military service in the
United States Armed Forces or Coast Guard; (2) full{ime 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, 157 employees elect to purchase additional creditable service in the MBERP each
year. A member pays ten percent of his or her pensionable earnings for each year of prior services
purchased. The true actuarial impact is significantly higher. The ultimate cost of the prior creditable
service purchase provision is measured by the difference between the full actuarial cost of the time
361
Commission Memorandum
May 21,2014
MBERP Pension Ordinance AFSCME 2nd Reading
Page 5 of 7
purchased and the ten percent of pay for each year purchased. For example, the full actuarial cost
to purchase the maximum of two years of service to a 45 year old member with ten years of 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 effect on the ARC due to this member's service purchase is an increase of about $2,300 per
year for 30 years. Based on trends, the average annual impact of $2,300 per member represents
$361,000 to the City each year based on an average of 157 buybacks per year, of which
approximately $292,410 is estimated to be attributed to GSAF, CWA, Unclassified and "Others"
combined; and $68,590 is attributable to AFSCME members alone (effective in FY 2015/16). As
shown on the table below, this impact is compounded each year buybacks are allowed.
FY 2014t15 FY 2015/16 FY 2016t17 FY 2017t18 FY 2018/19
FUTURE
YEARS
Elimination of
FY 2014rt5
loss
amortization
$0 $28,579 $28,579 $28,579 $28,579
THE IMPACT
OF THE
BUYBACK
WILL
CONTINUE TO
COMPOUND
EACH YEAR
Eliminalion of
FY 2015/16
loss
amortizalion
$68,s90 $68,590 $68,590
Elimination of
FY 2016t17
loss
amortizalion
$68,s90 $68,590
Elimination of
FY 2017t18
loss
amortization
$68,590
TOTAL $28,579 $97,1 69 $165,759 $234,349
Additional Two Percent Employee Pension Contribution
The Budget Advisory Committee's (BAC) Recommendation on Pension Reform Report of August
2012, included policies and guidelines for the City to adopt to establish thresholds which, if not met,
would require the City to take prompt and appropriate measures to meet the criteria. At the July 17,
2013 City Commission meeting, the Mayor and City Commission adopted the policies and guidelines
proposed by the BAC. These policies and guidelines included the following related to the
management of risk and risk sharing:
"lf the City's contribution to a defined benefit plan exceeds 25 percent of payroll for
general employees and 60 percent of payroll for high-risk employees, the employee
contribution should be reviewed."
ln 2010, the City negotiated a two percent increase in pension contributions from all employees
hired before that year. This represented an increase for Tier A members (AFSCME bargaining unit
employees hired prior to April 30, 1993), from ten to 12 percent of pensionable earnings and an
increase from eight to 10 percent of pensionable earnings for Tier B employees (AFSCME
362
Commission Memorandum
May 21,2014
MBERP Pension Ordinance AFSCME 2nd Reading
Page 6 of 7
bargaining unit employees hired on or after April 30, 1993). The additional employee pension
contribution implemented in 2010 helped address the increased costs that resulted from the
downturn in the stock market that occurred in 2008 and 2009.
The actuarial valuation report approved bythe MBERP Board in March 2013 indicatesthatthe cost
of the plan represents 40.3 percent of payroll. Although the Plan is still recognizing the impact from
the 2008-2009 economic downturns, the recently negotiated pension changes will yield long-term
savings.
Effective upon the April 23, 2014, ratification of the 2013-2016 collective bargaining agreement, the
additional two percent pension contribution was reinstated for all AFSCME bargaining unit members,
and will not sunset. When the City's ARC reaches 23.5o/o of pensionable payroll or less, the City will
rescind the additional two percent pension contribution levied on employees covered by the
AFSCME collective bargaining unit who participate in MBERP and.were hired prior to September 30,
2010.
Re-instating this provision in the collective bargaining agreement results in the City avoiding a cost
rather than experiencing an actual savings since the plan has not taken into account the fact that the
provision expired April 30, 2013, and the contribution will be re-instated prior to the actuarial
valuation report for October 1, 2014.
CONCLUSION
The estimated five year impact of these proposed pension changes is a combination of savings and
cost avoidance of ($1 ,678,027), as shown below.
FY 2013t14 FY 2014t15 FY 201 5/16 FY 2016t17 FY 2017n4 TOTAL
Estimated lmpact
on ARC From
Extension of DROP
$o ($125,000)($12s,ooo)($125,000)($125,000)($5oo,ooo)
Salary lmpact From
Extension of DROP $3,077 $37,487 $96,021 $87,109 $116,786 $340,480
Estimated lmpacl
on ARC From
Elimination of Two-
Year Buvback
$0 $0 ($28,579)($97,169)($165,759)($291,507)
SUBTOTAL
cosT(SAVTNGS)$3,077 ($87,513)($57,558)($57,558)($173,e73)($451,027)
Estimated Cost
Avoidance lmpacl
from Reinstatement
of Addilional Two
Percent Pension
Contribution
($108,000)($272,000)($277,000)($282,000)($288,000)($1,227,000)
TOTAL
coST(SAVTNGS)($104,923)($35s,s13)($334,s58)($417,060)($461,973)($1,678,027)
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MBERP Pension Ordinance AFSCME 2nd Reading
Page 7 ot 7
The Administration recommends amending Ordinance No. 2006-3504, the Miami Beach Employees'
Retirement Plan, by extending the DROP for pre-2010 AFSCME MBERP members from three to five
years; and eliminating the two year past service purchase option for members covered by the
AFSCME collective bargaining agreement. lmplementing the described changes will provide
additional pension savings.
Based on the foregoing, the Administration recommends the City Commission approve the
ordinance.Iil,ll
JLM/K6B/SC-T
T:\AGENDA\2014Way\AFSCME\AFSCME 201 3-2016 MBERP Pension DROP and Buybac* Memo 2nd Reading.docx
364
ATTACHMENT
GRS Gabriel Roeder Smfuh & Company
Consulronts & Actuaries
One Esst Broward BIvd.
Suitc 505
Ft. lrudcrdalc, FL 33301- 1804
954.527.l616 phonc
954.525.00E3 fax
www. gabrielrocdcr. com
April9,2014
Mr, Jose Del Risco
L,abor Rcldions Spccidist
Depanmont of Human Rcsourpcs
CityofMiani Beach
17fi) Convcntion C€ntcr Drivc
Miarni Bcach Florida 33 139
Ro: Ariurdd Lupct Strbnut for Prcporod Ctrryu to ttc Mirnl Be*i Enploya' Rcdrcmoil Plu
Dear losc:
As mquese4 we have prparcd ttr cncloccd Actrsill Imp*t Strbment showing the fuuncbl cffect of tho
following proposcd clnngcs to thc Mlami Bcach Ccneral Employees' Rctiruncmt Syrnan for members
participating in tre AFSCME bugaining unit
l. The maximum period fc participation in fte [hfcrrcd Rairuncnt Option Pmgram (DROP) would be
orendcd from thrce to fito ycars for mourbcrs hired bcfue O*obor 1,2010 (i.c. Trer A and Tisr B
membcrs). This sccnsion would qply b all astive manbert in Ticrs A rnd B urro clrct to participab
in the DROP in the firnnc as npll rs cunsrt DROP monrbars. Thc 2.5% COI-A is not peyable whilc
mcmbcrs are in rfic DROP.
2. Thc option for mcmbcrs to purclusc np b 2-ycats of crcdibd savice would bs elimin&d cffootive ono
ycar from Ore ratiftstioo dstc.
PlG.$ DotG tLrt thc rbflc clrli8tr hrvc bcoo rdopad for rf, umben crccfr for uombcn wtro rrl
plrddpldlg h ttcA,FSCI|iE bcryrhtry udt,ed ttcclhcoffrerbore clrnga b ilorn ll orr
October 7, 2013 Acturrial IDErcT Strtcotot (rLo rrfGrrrd b u ttc (Buclrc' h Olr nporg. TLc
cncloctd filurcr tlfiec't tlc rddltbrd oftcf of rpplyiry tlc ebove clrngcl no neubcrr prdclpefng ln
trcAfgCME blryeidrgunlt
Thc Stmrncnt must be filGd with tltc Division of Retinnrent bcfore tlrc firul prrblfu hcaring or thc ordiruncc.
Plcasc havc a mcmber ofthe Board ofTrustes sign ftG SotsmflL Thm scnd thc StiEmcnt dmg with a copy
of the proposed ordinancc to Talhhnee.
Wift r€gard b item 2 abovq the employcr portion of tho cost for mGilbcrs to purchasc scdics is nd pr€fimdod.
Thcrsfort, climinaing drc scrvicc purclrase prcvision will not hrve an immcdiac furancial cffcct on ftc Plan,
Whcn wc gcparc orr rnnul valudion, uy incrcascs to the liability dnc to scrvkE prrchescd during dre
ptwiout year arc rcfloaed in trc nA grin/loss for tto year, whbh is anrortizcd orrer 30 years.
Thc uhimsc cost of tfie cuncnt scnrice purclnse povisirn is measrrcd by thc difrcrencc bctrveen rhc firll
actuuial cost of ftG scrvice prchasod and thc anrount $at mcmbcrs cilmntty pcy to purclrasc scwie (i.c.,
l07e of pay for each year prcltated). As rn cxamplc, iltc fitll scfiriliat coot b purclrrc ttc maximum of 2
ycan of service for a member who is orrcilly age 45 wi0r l0 ycus of crcdiEd s.wicc urd rn annud selary of
$60,000 is appmximdcly $38,000. Under iltc cttrrcilt provisisrx thc monber prys $I4OOO. Thc difrcrcnce of
$26,000 is funded by edditional City conuibt[isrs oncr timc. In this aonrplg the oftc m thc annnl rcquired
confibtrtion due to fte service purchas is an inquc of $out $2J00 for tho fir* par. This rssumcs fiur dt of
862
365
Mr. Josc Dcl Risco
Aptil9,2014
Pagc 2
our actuarial assumptions as desntcd in the &tobcr l, 2012 AcfiEdal Valuation Rspoft arc mct ch par.
Thc impact on thc total pinfloss veries eadr ytar depending on fie denregraphics ad the specific bcnefit
prwisions that apply to rrcmbcrs wfio purchascd servicc.
Eliminding the savice purchasc provision will nrcan drrt any loss€s due to servicc purchxcs will not occur ir
firture yean. Pleasc notc, hovcvcr, drEt ftcre will likcly bc losses duc to scrvice purhascs for AFSCME
mcmbers in fiscal yoars cnding Scpteinbcr 30, 2013 alrd Scptcmbcr 30, 2014 $rt will bc rtflGGGd in ilrc
Octobcr l, 2013 and October l, 2014 Actrarial Valu*ionso sincc climindion of the scrvhe puchasc provisioo
for AFSCME members will not be cffestivc onc year afrcr thc r*ific*im date.
Sumnrtyof Findingr
Thc following summarires the additional efroct of reflecting 0re abovc Plrn changss for AFSCME mcmbers (as
comparcd to tte October 7, 20 I 3 Aotrurial lmpact Strlcmcnt tlr* includss the €ffcst of tlrcse ssrrc clungcs for
all mcmbcn ofdre Ptan):
. TIG prrs€nt value of futurc hnefits decrtascs $r approximately $ I .2 million.- Thc Phn would be expected to pay out $1.2 million lcss, in todry's dolhrs, to currcnt mcmbcrs
of thc Plan. This can bc vicrvcd as fltc totll coct impact due to thc artcnsion of the DROP for
AFSCME mernbcrs ifthe actuarial assumptions arc mA e*h prr.r Thcrs is a decreasc in rhe first ycar Annud Rcquired Contribution for trc City th* is compriscd of e
rtduction in thc amotization pymcnts on tho Unftndcd Accnrcd Lirbitity and a rcduction in thc oormal
cost.
- The Unfundcd Accrued Liability docrcarod by appoximatcly $915,000. This rcdrrction will
dccrcaso tlrc annrul rcquircd mnribfiion by approximrrcly $E1,0fi) caoh of tbc ncxt 30 pars
- The first par normal cost will dccreasc by rppoxinretcly $t1,000 wtrich is 0.06% of tst l
covcrcd payroll (0.0796 of Tier A and B mcnrbcrcovcrcd payroll). firc rcdustion of 0.0770 of
Tier A and Ticr B membcr covercd pafroll will exist until dl fier A and Tier B mcmbers hcve
ietircd.
- The first ycar rcquircd omploycr oontibutiqr would dccrease by rpproximatcly $125,fl)0 or
0. I 9olo of Non-DROP payroll.
- The fuided ratio will remain an66.Wo.
OtherCat Conrldcntior
r As of OctobGr 1,2012 drc Mulrct Vdue of Assc6 exocds 0E Actuadd Vduc by $2.07 million. This
diffqcnce will be rwognired ovcr thc nud serrml pars. Once all ttre grins and lo6s6 0rmugh Scptember
30,2012 are fully rccognircd in the Actruial Value ofAsscq tre mntibution rrle will dccrcosc by
rouglrly 03% of non-DROP palmll unlcss tlrcrc ue furthcr gains or losscs,
Addtdonrl Ilitclocurrr
This rcport was prepered at ftc request ofthc Crty with the Board's pcnnission and is intcndcd for use by trc
City and thc RetitEmcnt Plaru and hosc dmigndGd or apprwed by them. This ltport mey bc prorridcd to
partics otrer than tlrc Crty and Rstirement Plur only in its cntircty and only with tlreir pcnnission.
This report is intcnded to detcribe dte financial cffect of thc proposed plan chartges. No ffinrcnt in Oris
rcpott is intendcd to be interpracd as a rccomrrqdation in favor ofthc changcs, or in opgosition to them-
This rcport should not be rcliod on for any purpose oftcr fian the purpose describcd above.
Gabriel Roeder Smirh & Company
86s
366
Mr. Josc Dcl Risco
April 9,2014
Page 3
The calculations in this rcport are based upon information firmishod by thc Plan Administ&r for the
Octobcr l, 2012 Achrarial Vduaion conccrning Plur bcncfits, firuncial hansactionq plan provisions and
octivc membcrs, t€fininatGd members, r*irocs rnd bencficiarics. Thc celculatioos arc also bascd on
bargaining unit information providcd by the City rclatcd to this study. Wc rcviarrcd this informrtion for
intcrnal rnd year-to-yeor c.onsistcncn but did not odrcrwisc audit the data, We are not rcspursiblc for the
ffcuracy or completeness of thc informdim povided by the Plan Adminishuor or 6e Ctty.
Thc calculations are brscd upon rssumlions rtgading futurc cvortg which ma1/ or m8y not matcrirlire.
Thcy are drc bascd on thc esrumsions, methods, urd phn provisions outlfurod in this rcpot. FuUuc
actnarial mcasurcfirents may differ significrntly fiom thc surrcnt m€asur€mcnts prcscrEd in this rcport due
o such frctors as tbc following: phn cxpeticncc diffcring {hom that urticipatod by thc cconomic or
danographic assumptions; changcc in economic or danographic Essumption$ inqrrses c dcorcasct
cxpected as part of thc natunl opcration of tlre metlrcdolory usod for lhcsc mcasurcmcnf (uch as the eod of
sn urortization pcriod or additio,nrl cost or confibution requircenerE brsod on the phn's fiurdod statui); and
changee in plan pnovisions or applicable law. Ifyor bave rcrson to bclicve drat thc rseumptions that wcre
used are rmreasonrble, that tte phn provisions are incorrectly describe4 th* impo'rtant plan prwisions
rclevant to this proposal are not describcd, or tlm conditions heve changed sima the catculations wrre made,
you should contact the artlror of ttc rtport pdor to rclying on informdion in drc rtport
The undcrsigned actuaries rrc mcmbcrs of tlrc Amcrican Acadcury of Actrarics urd mcct 6e Qualiffcsion
Standards of thc Amcrican Acadcsry of Actnricc to render the &htrid opinions containcd lrcrein. The
undersigncd actrries arc indcpandent ofthc plan sponsor.
This report has bcen preporcd by rtuarics wto haw $bstmtial cxperienoc valuing publio cnrptopc
rctircrncnt systems. To thc bcst of or knowhdgc thc infonnation contdncd in this rcport is accurdc rnd
faidy presonts thc acaurid position of thc Plan rs ofths valustion date. All cdculations hrvc bocn made in
conformity with generatly ac,ccptcd actuarid principlcs and pmcticcq and wifr thc Actrurial Standrr& of
Practicc issucd by the Actuerid SEndrrds Boord and with applicablc setutcs.
Respectfully submiue4
MAAA!
Enrolled Actuy No. I t {5457
Copy: Rick Rivcr:a
Encloourss
Gabricl Roeder Smith & Company
864
lvIAltit
Ac{uary No. l t45599
367
SI'PPLEMENTAL ACTTIAHAL VALUATION REPORT
Plu
City of Miami Bcach Bnployccs'RctircmEut Phr
Vrlrrtiron llrtc
fuob€r 1,2012
Ilrre ofRcport
April9,201a
Rcport Rcqucrtd by
City of Miami Bcach
PEprrcdW
Mclisss R Algaycr
GrcrpVducd
All active and inactivc mcmbcrs.
Pha Provhlone Bclry Conddard hr Clrngc
Presart Plan hovisions bcforc Chmgc
All Mombcs,cxccDt AFSCME [Icrobcrs:
r Membcrs hircd beforc Ocobor l, 2010 (i.c. Ticr A md Ticr B mcmbcrs) who bccomc oligiblc
for normal rctircrncflt truy psriid@ tn thc Deftmd Raimnmt ffion Progrlm @ROP) for up
to firrc years. Mcmbers currcntty prticipting in tbe thleyoar DROP may also continuc
p{rticipation for u additisnl turo }errt (fiv€ frs tml). The uurrul @LA of 2.5% is not
pqnblcwhilo mcmbcrs u! inttr DROP.
r Thcrc is no optionel scrvicc purctusc provisior.
AFIICMEMembm
r Mcmbcrs hircd befut Octoba l, 2010 (i.c., Tirr A urd Ticr B rucrnbcrr) wlro boomc digiblc
fornormal rttircnreuttnryputhipamin &cDcfcmd Rainorcm0pdon Pnogran @ROP) for up
to drce pra Tlrc rnnral coet+f-living adjusErnt (COIA) of 25% is not payablc wtrile
membqsarc for thc DROP.
r Msmbcrs who havc frw or morp pur of sorvicc may cloct to grclrasa up b two pars of
additional crcdited s€rvicc d dy tirnc piorto rtirwcm. Msubcrs wlro clcct to Aurlraso srrch
service pry l07o ofthc anrual raE of compcnsdion muhipliod @ the numbor ofyorrs purchslcd.
865
368
2
Pmooscd Plrn Chrnqcs
Tbc following otrugos yvould rpply to AFSCME rntrnbers:
. [{Gmbcrc hircd bcfoic Octobcr l, 2010 (ir., Ticr A rnd Ticr B rmnbcrs) udro bcconc cligible
fornonrd Etirlmcntmsyprrticip& inth Dcftrsd nsdrctncntofiion PloSrur(DROP) for up
to fi\rG ycars. Mcmbcnornrntly partbipcing in thctlueyorr DROP mry do mntinuc
participuion for m rdditiooal two prn (fivc ycrrs tml). Thc mnual COI"A of2.5% is not
pa5ablc whilo members arc in lhe DROP.
. Thc optional scrvicc prclrrc pnovision woild be elirninacd cffcctiw onc ,rcar aft:r tho
ratificdion dctc.
Particilgnts Afftctd
The extension of the DROP participaion period woild apply to all r.tivc AFSCME mcmbcrs hircd
prior to Octobcr l, 2010 (i,c., Ticr A ud Ticr B mcmbcrs) urho bccomc cligibtc for normal retilumcnt
The extension ofthe DROP would atso appty to cuficot AFSCME mcmbcrs participating in thc DROP
as tho efhctivc do oftrc anandi,ng otdinsnca
Eliminatim offie o6ional savftr pudusc provision woild aply to all active AFSCME mcmbom me
paraftcr the eftctivr dat! offlro Irrcoding ordinrnce.
Acturrid Alrnnptionr rnd lf,otlodr
To mcasurr the impact of erEnding tho DROP, thc assumcd COLA dolay was incrrascd ftom 2.75
)rcars to 4 yearc for ac'tive Tier A and Tier B membcrt. Additioully, thc COLA dolay wes incrcas.d
from 3 ycars to 5 yean for mcmberc cunrntly perticipating in the DROP.
All otlrcr assumptions and mcftodg are thc samc as shown in thc Octobcr 1.2012 Acoariel Vduation
Ropon
Somc of the key assumptiondmoftods ue:
Inwsfincnt rtturn - t 0% per )roar
Seluy incrcasc - 4-S%orpT,Wodependinguraervicc
CostMcthod - EntryfuoNormalCostMcdtod
Anor{zedon Pertod br Ary Chugc ln Actrerld Aenmd lLbl[ty
30 ycers.
Sunnrry of Drte U*d la Rcporl
Same as data uscd in Octobcr l,2012 Acturrid Vdufioo Rcpott.
ActErrid Iupact of Prcpocr{r)
SGG atrehGd pag{s), Emcnding thc DROP fronr thrcc to five pars for AFSCME rnoobers wilt
dscrcasc fte firstycrrannual rcquircd contibution by S125,412 or0.t9cz6 ofNm-DROP peyotl.
Sinco thc cmployer pofiion of thc cost for manbcrs to purshsc servicc is nd prefirndo{ climinsting
ilte optionat senice purclusc provision woild not havc an immcdidc finartcid cftct on thc Ptan.
866
369
Spocid Rbkr Inolvod Wtth tht Pnopord fhra ttc PlrD Eu Noi DGG! Dtrporcd to Prrvtoorly
Nonc
Otlr Cci Conddcrrliorr
As of Oc-tobcr l, 2012 dte l\,ftd(ct Valuc o,f Asects cxccds thc Actuarial Vdno by $2.07 millioo. This
diffrrcncc will bo rucognized ovcrthe rc:rt ssrrcnl years. Oncc all tlrc grins end losscs duongh
Scpffitbcr 30, 2012 arc ftlly rtcogniad in the Actrrial Vduc of Ascu, thc coruihtion nic will
dccrcuc by ronghly 03% of norrDROP payroll rmlcss fiorc ur fiutfier gains or losser.
867
370
CITY OF MIA}II BD,ACE EMPIOYEES' R.ETIRDMEITT PI.AI\[
lmpect Sttcrrar - Agil 9, 2011
Dcecdpdor of An:ndrat
Thc popooed ordinancc incorporrbs thc following plan changcc urd would apply to all active members
participrting in tlre AFSCME bargaining rmit urd AFSCME rncrnbcrs psrticipating in tho Dsfqrcd
Rctircment Option Program (DROP):
l. The maximum pedod for puticiprlior in frc Defcned Rctfurst Optim hogram (DROP)
wouldbcodadcdtrroarfuecto frcprs formcmberr hird befuEOcbbcr l,2010(ic., TiarA
and Ticr B nrmbcrs). This crdcnsi:n *ould +ply to all *tive mernbcrs in Tiors A md B who
clect to putici@ ir drc DROP in the fuule as well as cuncnt DROP menbcrs. 11rc2-5o/o
@LA is not pqablc wtile rrrnbcre ur in thc DROP.
2. Tho @ion for membes to pnchsse q to 2-yers of creditcd scrvicc would bc climined
cffoctive ons 5rcar afu thc rdiftaion ddc.
Thc abo/c ctrsnglc wc *adyrdoptcd fordl memben occpt membcrs prdctrring in 60 AFSCTv{E
barglining unit, urd thc cftct of drcsc clugcs is showu in our Ociobcr 7, 2013 Astuial Impact
Statcrncmt (also rcftncd to rs fio 'Basdirc" iD fris Eport). Thc arcloced figurcc rcflcct thc additioml
ctrc*of applying ftc above changeto manbas porthipaing in thc AFSOvIE boryliningunit.
Fudhg Inplcrtbu of Aqcodocrt
ScG aE*hmcnts,
Cerdtrcetol of Adrhhtntor
I bclisve thc amerrdmcnt to bG iD conrplirnoc wih Psrt VII, Cbaptcr I12, FhidE Stmrbs and Scgtion
14, Articlc X of thc Constfutim ofthc Starc of Florida"
Forthc BodofTnuiles
lr PIen Adminirldor
868
371
AII{NUAL REQUIREII CONTRIBUTION (ARC)
VrfustimDrc
B. ARC to Bc Pait During
FircalYear Endhg
Assumd Dete of Empbyer Colrtrs.
Annual Paymcnt io Arnoilizc
Unffmdod Actuarhl Lhbility
EmpbycrNormal Coet
ARC if Pait on tha Valrrtbn Da!a:
D}E
ARC A{iustcd for Frcqucncy of
Peymcnts
ARC as % of Covcrcd Prlrol
- Non-DROP Payroll
- Total Pryroll
I. Covcrcd Payro[ fo ContrSutkrn Ycar
- Non-DROP Palmoll
- Total Payrol
c.
D.
E.
F.
G,
lt.
Ociobc-r l,20l2
Bal,eliacr
9BODOI4
toilDot3
16,760,395
6,905,335
23,66,5,730
25,5tt.94'
39.29 Vc
36,61 %
65,053,945
69,7t2,6&)
Octobsr l,20l2
EnendDROPfum
Tluec a Flve Ye*t
9ROaO,4
tutnolS
t6'6t5,042
6t64,566
23,549,608
25'433,577
39.10
36.ifs
55,053,915
@,782,6t9
%
Yo
It*-rcue/
(Wqd
(75,353)
(40,769)
(u6r22)
(r2s,412)
(0.19) o/o
(0.rr) %
r Fmm Osbbcr 7,2013 Actuarid Irnprct Sfficert Inckrds churgx for ell mcnnbcrs cx@ttrosc wtro arc
pcrticipaing in the AFSC\{E bargrining rrnir
869
372
ACIUARIAL VALUE OF BEf,{E'ITS AITID ASSEI]8
c.
D.
E.
F.
H
Valuatbn Darc
Actuerhl Prcsent Valuc of All Projcctcd
Bencfitg for
l. Activc Mombcn
a. Scrvir R.tir€ment Bcmellts
b. Vcoting Bcncfits
c. Dbability Bcncfits
d. Prcrerircmcnt Dcdtr BcrEfts
o. Rcturn of lrlcrnbcr Coorihrtiolrs
f. Total
2. Inactive Members
a Scrvice Rctir*s & Bcncficigh3
b. Ditdf,ity Rrililecs
c. Termintcd Vcstcd Msrnbcrs
d. Total
3. Total fur All Mcmbcrrs
Actuubl Accnrcd (P!ct Scrvfuc)
Litbilry pcr GASB No. 25
Plan Assct!
l. Martct Vatrc
Z. Actuarhl Vahp
Unflmdcd Actusrhl AEcrucd Lhbihy (C-D)
FurddRarb(D2 -C)
Aotusrtil Prcscnt Vahr of Projccbd
Covqed Payroll
ActuarirEt Prcecnt Valuc of Projcccd
Mcnrbcr ConErtutionc
Octobcr l,20l2
Buclinc'
2s9,785A3O
31,96%l7t
7,271,t99
3,953,7&
63r.843
303,610,114
40?,t35,275
t2,,3?7,t27
11,480.1 t5
4r1,6u2,517
735J0L63r
6t2.203,7t9
123,U7,ilz
42t,376,M1
2l,o,tfiI,6gt
66.7 t/o
543,825,043
51,79t,O7t
Ocober l,2Ol2
E tcnd DROPfrorrt
Tbec to Five Yets
25t,55s,513
31,967,t78
7,271,t99
3.953,7@
63t-'/,t
30a480,1y,
Nl,73l,W
12,3T1,127
I r.480.r 15
43t,5t9,Itt
134,M9,3t5
63t,2E7.564
1?.3,&7,42
421,376,041
209,911,523
66.7 lo
543.825,043
51,791,07t
Yo
Irctcose,/
(Detrease)
(l,l2g,gl7)
(1,t29,,9t7)
(103,32e)
(r03,329)
(1,233,2$)
(915,175)
(e16, r75)
0.0
* Frut October 7 , 2fi13 Actuaftl Imprct StaHnent Inclrdcs clangcs for alt menrbers orccs tlroce wto arr
partiolpating in thc AFSCME bargainhg unit.
870
373
CAIfUL/\TION OT EMPII)YER I{ORMAL C(XTT
t.
2.
3.
1.
5.
6.
7.
Vrhntixr Daic
Nornal C.ogt fo
Elpcnscs
E. TotalNonnd co€c
% ofCovcrcd Payroll
-Non-DROP Payroll
- Tohl Payroll
E pcced Mcmbcr Contibutirn
% of Covcrcd Payroll
- Non-DROP Paymll
- Totd Peyroll
Empbycr Normal Cost B8-C
?6 of Covcrcd Payroll
-ErcbdingDROP Prymll
- Inchrding DROP Pryro[
Scrvhc Rctircrffiit Bcncftr
Vcsthg Bcncfrts
Dbabflny BGrEft3
Pllilatfu€mcnt Dcsth Bcncfts
Rcarn of Mcmbcr Contsibrdou
Total for Futru Bcncftr
/{s$md Amormt for Adrninfotrtivc
Ocbbff 1,2012
Baselbrar
9,61437t
2,U?,65
529,n2
?ftt,xn
aE.s73
t2,7t5,510
59,1.tt0
13,,009,690
20.51 9c
19.22 Yo
6,J04,355
10.00 %
9.32%
6,90s,335
10.61 %
9.90 %
Oclob.r l,20t2
et nd DR?.Plttatt
lhr.. to Flvc Yctt
9.604,000
ao{7,055
529,t72
zgE,Ulz
225.573
t2,67+711
69,+.lm
13,36t 921
20.55 %
t9.15 %
6,5(X,355
10.00 %
9.12 Yo
6,t64,556
10.15 %
9.&r 96
Inotascl
(hcrcsc)
(40,71)
J
(l(),769)
(10,769)
(0.06) %
(0.06)
'6
0.00 %
0.00 %
(40,769)
(0.06) %
(0.06) %
' Ftost O6ber 7, 2013 Acuryial Impac Smrcm. Includcs chmgcs for ell mcmbcrc €so€tr droea who arr
pailicipcing in tho AFSCME bergaining unir
871
374
PARTICIPANTIDATA
ffiobcr l,2Ol2
hwllnc'
Octobcr l,2Ol2
&undD@Plron
Thran Ftve tws
ACTNYEMEDTBER,S
Number (Non-DROP)
Covcrcd Annuat No*'DROP Payroll
Avcrage Annual Non-DROP Pay
Total Covcrcd Amual Paymll
AvcraSE AnnualPay
Average Age
Avcrage Past Servit:c
Avcrago Age .t Hirc
1,049
$ 65,053,9,05
$ 52,015
s 69,7&1,6E9
$ 63,209
45.t
9.8
35.3
I,(N9
I 65,053,945
3 62,015
69,782,689
63,209
.t5.1
9.t
35.3
DROP PARTICIPAIiTTS
Numbcr
fuinual Bencfic
Avcnge Annual Bonefit
Avcrage Age
3I
55
2,994,703
51,49
59.3
55
2,994,703
51,U9
59.3
RETIREEI C BENETICIABIDS
Numbor
Annual Booofts
Avcrage Annual Bcrrfit
Avcragc Agc
I,(NEi 33,0t5,394$ 33,019
7l.l
l,(x)23 33,085,394
$ 33,019
7l.l
DISABIL]TY NETINEDS
Numbor
Annual Benefts
Avcrqgc Amual BGflGfit
Averrge Ago
3i
43
I,l17,160
2r,ggo
5s.6
$
$
43
l,l17,160
25,990
6s.6
TERMINATED VESTED MEMBERII
Numbcr
Annual Bcnefrts
Avcrago Annual Bcncft
Avcragc Age
$t
63
1,143,144.
21,325
45.9
t
$
63
1,343,444
21..325
ls.9
rFrunOctobcr'l,z0l3acararialLnprctStd!ilrffit lncludosdrargcsforcllmcmbGrscr(c€ptilroscu,ho
ar plrticipating in ftG AFSCME bugdning unir
872
375
ORDINANCE NO.
AN ORDINANGE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, IMPLEMENTING PROVISIONS
OF THE 2013-2016 COLLECTIVE BARGAINING AGREEMENT
BETWEEN THE CIry AND THE AMERICAN FEDERATION OF
STATE, COUNTY AND MUNtCtpAL EMPLOYEES, (AFSCME)
LOCAL 1554; AMENDING THE MIAM! BEACH EMPLOYEES'
RETIREMENT PLAN CREATED BY ORDINANCE 2006.3504;
AMENDING SECTION 2.26 OF THE PLAN BY EXTENDING THE
DEFERRED RETIREMENT OPTION PLAN (DROP) PROGRAM
FROM THREE (3) TO F|VE (5) YEARS FOR ELIGIBLE MEMBERS;
AMENDING SECTION 5.13 TO REFLECT AMENDED ELIGIBILITY
AND PARTICIPATION REQUIREMENTS AND AMENDED DROP
PLAN FEATURES; AMENDING SEGTION 4.03 BY ELIMINATING
THE PURCHASE OF ADDITIONAL CREDITABLE SERVICE
EFFECTIVE APRIL 23, 2015; AMENDING SECTION 6.02 OF THE
PLAN BY REINSTATING AN ADDITIONAL TWO PERCENT
MEMBER CONTRIBUTION FOR MEMBERS OF THE AFSCME
BARGAINING UNIT HIRED PRIOR TO SEPTEMBER 30, 2010; AND
ELIMINATING THE ADDITIONAL TWO PERCENT MEMBER
CONTRIBUTION WHEN THE PLAN ACTUARY CONFIRMS THAT
THE CITY'S ANNUAL REQUIRED CONTRIBUTION TO THE
RETIREMENT PLAN IS 23.5% OF PAYROLL OR LESS; PROVIDING
FOR SEVERABILITY; REPEALING ALL ORDINANGES lN
CONFLICT THEREWITH; AND PROVIDING AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COII'MISSION 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.'l 3. Notwithstanding the preceding sentence.
(e) 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
376
monthly retirement benefit paid into a DROP account during the DROP period, in
accordance with Section 5.13.
IU Effective October 16, 2013, Members
within classifications in the GSAF bargaining unit who were hired prior to July 14,2010,
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.
(c) Effective April 23. 2014. Members within classifications in the AFSCME baroainino
unit who were hired prior to September 30. 2010. mav elect to retire for purposes of the
Plan but continue emplovment with the Citv for up to sixtv (60) months. and have their
monthly retirement benefit paid into a DROP account durinq the DROP oeriod. in
accordance with Section 5.1 3.
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 C'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 Member 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. Effective
October 16, 2013, Members within classifications in the GSAF
bargaining unit, who were hired priorto July 14, 2010, may participate
in the DROP for a maximum of sixty (60) months. Effective Aoril 23.
2014. Members within classifications in the AFSCME baroainino unit.
who were hired prior to September 30. 2010, mav participate in the
2377
4.
DROP for a maximum of sixtv (60) months.
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.
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, shall 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. Effective Octobert6, 2013, any Member within classifications
in the GSAF 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
October 16,2013 and October 15,2016, shall 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. Effective April 23. 2014. anv
Member within classifications in the AFSCME baroaininq unit, who
previouslv executed an election form entitlinq him/her to participate in
the DROP for a period of less than sixtv (60) months and whose
DROP period ceases between April23. 2014 and April 22, 2015. shall
have a one-time opportunity to submit an irrevocable amended
election from provided bv the Board. within thirtv (30) calendar davs
followinq the effective date of this ordinance, extendinq his or her
DROP oeriod to a maximum of sixtv (60) months in total.
5.
378
(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
4379
5.
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. ln no event shall payments for accrued annual or sick
leave be included in a member's Earnings for purposes of the Plan.
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. Notwithstanding the preceding sentence, eligible
Members who are participants in the DROP on October 16,2013,
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.
Notwithstandinq the precedino sentence. eliqible Members whose
classifications are covered bv the AFSCME baroaininq unit who are
participants in the DROP on April 23, 2014, shall be qiven a one-time
oooortunitv to submit an irrevocable amended election form. as
provided in Section 5.13 (a) 5. extendinq the DROP period to a
maximum of sixtv (60) months in total.
At the conclusion of the DROP period and upon termination of City
employment, the Member's monthly retirement beneflt shall be paid to
the Member in accordance with the Plan. ln the event of the
Member's death during or at the conclusion of the DROP period, a
6.
380
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 Membeis 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
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 Membe/s death the Membe/s designated
beneficiary, may submit a written election on a form approved by the
Board, to receive the Membe/s entire DROP account balance, which
shall be distributed to the Member (or in the event of the Membe/s
death, to the Membeis 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. ln the event a
Member or designated beneficiary does not submit a written election
to receive a distribution of the Membe/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
381
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.
12.1f 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. lf 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
rule that is inconsistent with this Ordinance or the Plan.
14.The DROP shall be administered so that the Plan remains qualified
under the lnternal 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.
Notwithstanding any provision of this Section 4.03, effective September 30, 2013, Members
whose classification is included in the GSAF bargaining unit shall not be eligible to purchase
additional creditable service under this section 4.03. Notwithstandino anv orovision of this
Section 4.03. effective Aoril 23. 2015. Members whose classification is included in the
AFSCME baroainino unit shall not be eliqible to purchase additional creditable service under
this section 4.03. The benefit multiplier that the Member is eaming 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 (a01 (a) Plan) must first purchase all available
382
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.
Section 4. Section 6.02 of the Miami Beach Employees' Retirement Plan created by
Ordinance 2006-3504, as subsequently amended, is hereby further amended as follows:
6.02 Contributions by Members
(a) Each Member shall contribute to the Plan eight percent (8%) of earnings, except as
othenarise provided in this Section 6.02. Notwithstanding the preceding sentence, effective
July 14, 2010, each Member in a classification within the AFSCME and GSA bargaining
units, and each Unclassified and "Othef' Member, shall contribute to the Plan ten percent
(10%) of earnings, except as otherwise provided in this Section 6.02. Notwithstanding the
first sentence of this subsection (a), effective November 27, 2010, each Member in a
classification within the CWA (MBEBA) bargaining unit shall contribute to the Plan ten
percent (10%) of eamings, except as otherwise provided in this Section 6.02., and contingent
on State approval of an actuarial impact statement conflrming a reduction in the City's annual
required pension contribution for FY 2010-2011 associated with the pension changes
contained in the 2009-2012 collective CWA collective bargaining agreement of at least
$1 ,000,050. The contributions made by each Member to the Plan shall be deducted from the
Membe/s Earnings and designated as Employer contributions pursuant to section 414(h) of
the lnternal Revenue Code. Such designation is contingent upon the contributions being
excluded from the Members' gross income for Federal lncome Tax purposes. For all other
purposes of the Plan, such contributions shall be considered to be Member contributions.
(b) Notwithstanding subsection (a) above, all persons entering service with the City prior
to April 1, 1993 who are in the classifications within the AFSCME bargaining unit; all
persons entering service with the City prior to February 21 , 1994 who are in classifications
383
within the CWA (MBEBA) bargaining unit, and all persons entering service with the City prior
to August 1, 1993 who are in classifications within the GSA bargaining unit or classified as
"Othe/', who were members of the Classifled Plan continuously from the date they entered
service with the City until March 18,2006, shall contribute to the Plan ten percent (10%) of
their earnings throughout their service as a Member of this Plan. Notwithstanding the
preceding sentence, effective July 14, 2010, each Member described in the preceding
sentence who is in a classification within the AFSCME or GSA bargaining units shall
contribute to the Plan twelve percent (12o/o) of earnings; and effective January 18, 2010,
each Member described in the preceding sentence classified as "Other" shall contribute to
the Plan twelve percenl (12o/o) of earnings. Notwithstanding the first sentence of this
subsection (b), effective November 27,2010, each Member described in the first sentence of
this subsection (b) who is in a classification within the CWA (MBEBA) bargaining unit shall
contribute to the Plan twelve percenl (12%) of earnings, contingent on State approval of an
actuarial impact statement confirming a reduction in the City's annual required pension
contribution for FY 2010-201 1 associated with the pension changes contained in the 2009-
2012 collective CWA bargaining agreement of at least $1,000,050.
(e) Notwithstandinq subsections (a) and (b) above. for members who are in classifications
within the AFCSME barqainino unit:
1. For Members hired priorto April 30. 1993. the emplovee contribution shall be
twelve oercent (12%) of earninqs effective Julv 14, 2010 throuqh Aoril 30. 2013: ten oercent
(10%) of earnings effective May 1. 2013 through Aoril 23, 2014: and twelve oercent (12%) of
earninqs effective Aoril 23, 2014.
2. For Members hired on or after April 30. 1993 and before September 30, 2010. the
emplovee contribution shall be ten percent (10%) of earninqs effective July 14, 201 0 throuoh
April 30. 2013: eiqht percent (8%) of earninos effective May 1. 2013 throuoh April 23. 2014:
and ten oercent (10%) of earninqs effective April 23. 2014.
3. For members hired on or after September 30. 2010. the emoloyee contribution
shall be ten oercent (10olo) of earnings.
4. The emolovee contribution provided in oaraoraohs 1. and 2. above shall decrease
bv two oercent (2%) of earninos when the Plan actuarv confirms that the Citv's annual
required contribution to the Plan is twentv-three and one-half oercent (23.5%) of pensionable
384
pavroll or less. The two oercent decrease in the emolovee contribution shall take effect on
the same date as the Citv's annual reouired contribution of twentv-three and one-half percent
(23.5%) of pensionable oavroll or less.
Section 5: Conflicts and Severability.
(a) All Ordinances, and parts of ordinances, in conflict herewith shall be and
the same, are hereby repealed.
(b) ln 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.
Section 6. Effective Date.
This Ordinance shall take effect the day of 2014,
except as otherwise provided herein.
PASSED and ADOPTED by the Gity Commission of the City of Miami Beach this
day of 2014.
PHIL]P LEVINE
MAYOR
ATTEST:
APPROVEB A5 TO
FOR|{ & l.,6.t.lGUAGE
& FCRDGCUflON
RAFAEL E. GMNADO
CITY CLERK
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