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92-2810 OrdinanceORDINANCE NO. 92-2810 AN ORDINANCE OF THE CITY OF MIAmi BEACH, FLORIDA AMENDING ORDINANCE NO. 88-2603, WHICH CREATED A RETIRENENT SYSTEM FOR UNC~SSIF~ED E~P~YEE8 ~D ELECTED OFF~C~AL8~ BY PROViDiNG FOR A PER~OD DURING ~CH A ~T~NT INCENTIVE ~ILL BE OFFEND TO ~UALIFY~NG E~PLOYEE8~ PROVIDING FOR REPEALER~ SEVE~BILITY ~D ~ EFFECTIVE DATE. WHEREAS, the City of Miami Beach, Florida, created a retirement system known as the Retirement System for Unclassified and Elected Officials of the City of Miami Beach with the passage of Ordinance No. 88-2603 and as the same has been amended; and WHEREAS, the City desires to reduce the number of employees who qualify for membership in the retirement system; and WHEREAS, such a reduction in employees may be accomplished on a voluntary basis through the offer of an incentive to the current employees to retire as provided below. NOW, THEREFORE, BE IT DULY ORDAINED BY THE CITY CONMISSION OF THE CITY OF MIl%MI BEACH, FLORIDA: SECTION 1. That Ordinance No. 88-2603 be amended by adding Section 5.10 which will read as follows: 5.10 Retirement Incentive Commencinq on the effective date of this Ordinance and for sixty (60) days thereafter (the "Election Period"), an Employee who is a Member ("Employee Member") of this system who meets one of the criteria set forth below will have an irrevocable option to elect one of the following: (a) If an Employee Member, within the Election Period, has attained the normal retirement date and completed five (5) years of the creditable service (as defined in Section 5.01 of the Ordinance as amended), said Employee Member shall have the irrevocable option to retire during the Election Period, and receive, as an inducement, credit for two (2) years of additional creditable service (at a normal service retirement allowance of four percent (4%) per Tear), in addition to any creditable service the Employee Member may have previously earned; or (b) If an Employee Member, within the Election Period, shall have completed five (5) years of creditable service and is within two (2) years of the normal retirement date, said Employee Member shall have an irrevocable option to retire within the Election Period, and receive, as an inducement, credit for two (2) years of additional aqe in addition to the age previously attained by the Employee Member. SECTION 2. REPEALER Ail Ordinances or parts of Ordinances in conflict herewith be an the same are hereby repealed. SECTION SEVERABILITY If any section, subsection, clause or provision of this Ordinance is held invalid, the remainder shall not be effected by such invalidity. SECTION 4. EFFECTIVE DATE This Ordinance shall take effect on the 18th day of October , 1992. PASSED and ADOPTED this 8th 1992. ATTEST: CITY CLERK 1st reading 9/16/92 2nd reading 10/8/92 JCD/cnm m~sc4.a:unclemp[ .ord FORM APPROVED LEGAL DEPT. CITY OFMIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 OFFICE OF THE CITY MANAGER COMMISSION MEMORANDUM TELEPHONE: (305) 673-7010 TO: Mayor Seymour Gelber and DATE: September 16, 1992 Members of the City Commission FROM: City Manager (~ V"1,-l~V'~'--""--- SUBJECT: Amendments to the Salary Plan and the Pension System for Unclassified Employees Administrative Recommendation: The Administration recommends that the City Commission adopt two ordinances amending the Retirement System for Unclassified Employees and Elected Officials on first reading and schedule a Public Hearing and second reading for the two ordinances during the October 7, 1992, City Commission meeting. These two Ordinances are prepared in accordance with the anticipated savings to be achieved in the FY 92/93 Proposed Budget. The ordinance relating to pay levels, which is on this agenda for second reading, amends the Unclassified EmPloyees Salary Plan in order to establish a revised pay plan for new employees which will average fifteen percent (15%) lower at both the bottom and top of the pay scale. The two ordinances related to this memorandum amend the Retirement System for Unclassified Employees and Elected Officials on this first reading. The first retirement related ordinance implements the recommendations of the Pension Systems Review Committee, the "Green Report", and institutes a bifurcated pension system with a reduced benefit level for new members of the system. The second retirement related ordinance provides an ear.ty retirement window with an incentive to encourage eligible employees to retire. These three ordinances, which should be considered as a package, will accomplish two necessary goals. First, the retirement incentive should effectuate two and a half years AGENDA of anticipated employee turnover (22 employees) immediately. The resultant savings from replacing a limited number of the early retired employees (estimated at 17 employees) at the lower salary and benefit levels will provide the expense reductions anticipated within the FY 92/93 Proposed Budget. Second, the same two and a half years of turnover will allow the Administration to accomplish Affirmative Action Goals for Unclassified Employees within budget limitations and much sooner than would otherwise be possible without an early retirement program. Analysis: The financial effect of the amended salary structure for new hires in the Unclassified service will be an approximate forty percent (40%) reduction in salary cost for new employees. This is accomplished because the existing salary plan has a twenty-five percent (25%) range from minimum to maximum and the employees leaving are typically at the maximum salary for the position. With the reduction of fifteen percent (15%) in the salary plan, new hires at the entry level pay for the position will typically be at a salary forty percent (40%) lower than the employees that they are replacing. Additionally, the changes in the pension system affecting new members of the system will save approxi/nately ten percent (10%) of the employees salary.as a cont. ribution to the system. Members of the City Commission should also be aware that the retirement in~entive will pr. oduce a cost for the one-time payout am°',.nt of the'employee's acea~r.~.:e~ balances which will be more than offset by the savings produced from salary and benefit reductions. The payout amounts have been considered in the net savings projected in the FY 92/93_Proposed Budget to be achieved through the retirement incentive program. There are thirty-two (32) unclassified employees who would be eligible for the retirement incentive. The retirement incentive option would be available to the eligible employees for a sixty day period (the "Election Period") from the effective date of the ordinance and would provide credit for two years of creditable service for all employees over normal retirement age or credit for two years of age if the employee is within two years of the normal retirement age within the period. Twenty-four of these employees are over age fifty (50) and would be eligible for additional service credits and eight (8) employees will be within two years of retirement during the Election Period in the Ordinance and would be eligible for additional age credit. The thirty-two employees are listed below: Narn~ Diane Alexander Barbara Bargeman Department Name Department Eco. & Comm. Dev. Bill Harrison City Manager Mayor & Comm. Jane Hines City Manager Eloy Bauleth Phylis Berger Jim Beauchamp Fred Braeseker Pat Brown Prospero Cabrera Diane Camber 'Arlene Clapper Walter Coolidge Eddie Cox Charlene Craig Edward Davis Grecia Ferro Paul Gioia Computers Legal Risk Mangt. Computers Legal Planning & Zoning Bass Museum OMB Computers City Manager OMB Purchasing Building Building Bruce Lernle Computers Jamie Mitrani Building Gary Ortega Building Estrella Pena Purchasing Teresita Roche Police Domingo Rodriguez Public Works Mike Saclarides Sandra Schneider Octavio Serna Roberta Sloane Edward Stein Robert Taylor Randy Wilkinson Sylvia Wohl Code Enforcement Legal Computers City Manager Building Computers Parks & Rec. Finance These thirty-three employees have cOmbined salaries of $1,585,901 annually and the current leave balances for these employees total $465,373. It is anticipated that seventy percent (70%) (or 22) of those employees eligible for the incentive will accept ihe benefit and retire. The retiring employees would have salaries of approximately $1,110,000 and it is anticipated that approximately seventy-five percent (75%) of the positions (Or 17) will be refilled. With the new salary structure and,anticipating hiring at the entry level for the positions, the s~laries for the new hires ~!! in salary cost. The new level of benefits in the pension system will produce savings of $110,000 in reduced funding cost. The total of $720,000 in savings will be offset in the first year by ~he leave settlements of approximately $325,000 (70% of the leave balances) producing a net savings for-.the first year of $395,000 which is forty percent (40%) of the projected savings from changes in the pension plans projected in the FY 92/93 Proposed Budget. The second year, without leave settlements, the savings would be $750,000 based on expected performance salary reviews and the amount would continue to grow as additional employee turnover occurred. The effect of these three ordinances working together during the first year is to produce a savings to the City which is nine times greater than only implementing the bifurcated plan recommended by the Pension Systems Review Committee. Conclusion: The saving of $395,000 the first year and $750,000 the second year with ~'o additional benefit of the ability to more quickly achieve the affirmative action commitment of the City Commission and the Administration provides the justification for approval of these two ordinances on first reading and the amendments to the Unclassified Salary Plan on second reading.