LTC 257-2005 Citywide Pension Analysis
CITY OF MIAMI BEACH
Office of the City Manager
Letter to Commission No. 257-2005
lQ
From:
Mayor David Dermer and
Members of the City Commission
Jorge M. Gonzalez ~ ~-
City Manager ---- 0
CITYWIDE PENSIO ANALYSIS
Date: OC\o.?er b 2005
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The purpose of this LTC is to provide you with an update regarding the Comm~icatk>ns
Workers of America (CWA) pension proposals that will be discussed at the October 6,
2005 Finance Committee meeting at 12:00 p.m.
Subject:
As discussed at the Finance Committee meeting on September 14, 2005, the
Administration has made a thorough City-wide review of our numerous pension plans that
affect our civilian bargaining units, including the Communications Workers of America
(CWA), the American Federation of State, County and Municipal Employees (AFSCME),
the Government Supervisors Association (GSA), the non-unionized Classified employees
and the Unclassified employees.
This review was done with the ooals of (1) beino fair to all affected City employees, (2)
makino the pension plans as similar as possible for all affected employees. (3) maintainino
fiscal responsibility and (4) benefitino as many employees as possible. (75% of our civilian
employees are currently in either Tier B of the pension system or the 401A plans, a
minority of our employees, 25%, are in the Tier A pension system.) Further, of the 225
current members of the Classified Tier A pension, 149 employees (or 66%) are today, or
will have reached retirement age within five (5) years.
Since one of the goals is an attempt to equalize the City's five (5) civilian pension plans, it
is important to note that it is more expensive to equalize those plans that currently have
lower benefits than those pension plans that currently contain richer benefits.
Part of the City proposal includes the merging of the Unclassified and Classified pension
systems which will result in administrative and other cost savings to the City.
Attached is the pension information shared with the CW A in preparation for the October 6,
2005 Finance Committee. The pension proposal (attached) is part of a package proposal
which includes wages, pension, health insurance and several other contractual items which
will be summarized and expanded upon at the Finance Committee meeting. The City
pension proposal net cost is approximately $3.7 million dollars.
The CWA proposal, presented at the September 14, 2005 Finance and Citywide
Committee Meeting, equals approximately $6.5 million dollars; however, this estimate was
calculated without accumulating the benefits. The City has requested that the actuary
recalculate the CWA proposal using accumulated benefits so that we will have a direct
comparison to the City proposal cost, it is expected that this recalculation will result in a
greater, but truer, cost of the CW A proposal.
The City has made every attempt to not only consider the CWA's recommendations for
their particular bargaining unit, but to include the interests of all affected City employees in
this very important benefit recommendation.
Thank you.
JMG\LG\mr
cc: Timothy Hemstreet, Assistant City Manager
Hilda Fernandez, Assistant City Manager
Robert Middaugh, Assistant City Manager
Trish Walker, Chief Financial Officer
Kathie Brooks, Budget & Performance Improvement Director
Ramiro Inguanzo, Chief of Staff
Linda Gonzalez, Labor Relations Director
Jose Cruz, Budget Officer
Richard McKinnon, CWA President
F:lLABOlLABORRELILabor RelalionslCWAlnegotiations 200311 0-4-05 LTC 10 Finance Committee.doc
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of 2)
401
(page 1
Miami Beach Pension Plans
Comparison of Current
(A)
Unclassified
Bifurcation Date
10/18/92
Classified
Bifurcation Dates
AFSCME 4/30/93 CWA 2/21/94
OTHERS 8/1/93 GSA 8/1/93
Police & Fire
55
50
60
-
Tier A
Tier B
50
60
-
Tier A
Tier B
Rule of 70 or age 50
with DROP plan
Retirement
Age
mmediate
5 years
Tier A
Tier B
any yrs
(
- 5 years
62)
Tier A
At age
10 years
Vesti ng
1 0 years cliff
1 0 yrs to vest
-
vesting
step
- 10 years
10 %/yr
Tier B
vesting
Contributions and
Investment returns
(no guarantee)
Tier A = 80%
Tier B - 80%
Tier A = 90%
Tier B - 80%
90%
Maximum
pension
Amount
N/A
0%
100%
0%
-
Tier A
Tier B
Overtime not to
exceed 70% of max
pay for next highest
classification
Pensionable
Overtime
N/A
Tier A - 1.5%
compounded
Tier B-1. 5% simple
2.5% compounded
2.5% compounded
Retirement
COLA
662/3% of salary to a
maximum monthly
benefit of $5000 (max
covered salary of
$90,000(per 1992
ordinance as it applies
to the 401 )
Tier A - 50% of FAME or
accrued benefit if
higher
Tier B - 60% of FAME or
accrued benefit if
higher
Tier A - 75% of FAME or
accrued benefit if higher
Tier B - 60% of FAME or
accrued benefit if higher
85% of current
extended salary or
accrued benefit if
higher
Service
Connected
Disability
(page 2 of 2)
Miami Beach Pension Plans
Comparison of Current
(A)
401
Unclassified
Bifurcation Date
10/18/92
Classified
Bifurcation Dates
AFSCME 4/30/93 CWA 2/21/94
OTHERS 8/1/93 GSA 8/1/93
Police & Fire
N/A
N/A
N/A
Age 50 or Rule of 70
(add'l multiplier at 3%,
maximum 6%).
Employee pays back
10%/yr up to 2 yrs
Buy back
N/A
Tier A - Last years salary
Tier B - Average of three
highest years
Tier A - Average of two
highest years + no cap on OT
Tier B - Average of three
highest years
Average of two highest
paid years + OT not to
exceed 70% of max pay
for next highest
classification
FAME
CW A & Others -
immediate vesting
GSA & AFSCME - 10 yr
vesting and City pays
50% (reti rees &
dependents)
10%
Vested and City pays 50%
(retirees & dependents)
Vested and City pays 50%
(retirees & dependents)
Vested and not to
exceed the ave of the
straight line % increase
in premiums for the
City's plans
Retiree Health
10%
10%
10%
Employee
Contribution
N/A
N/A
N/A
N/A
Partial lump sum
distribution
N/A
N/A
Not allowed
N/A
No pension
impact upon
promotions
Not allowed
N/A
N/A
N/A
Allow 401A
employees to
migrate into
pension plans
(page 1 of 2)
Unclassified
Bifurcation Date
10/18/92
Proposed City Pension Plans
Classified
Bifurcation Dates
AFSCME 4/30/93 CWA 2/21/94
OTHERS 8/1/93 GSA 8/1/93
Post 2005
Post 2005
)5
Tier A
50
55
Tier A
50
Retirement Age
5
5 years
years
r>
J
at
(any yrs
5 years.
age 62)
Vesting
80%
80%
80%
90%
Maximum pension
Amount
N/A
N/A
0%
10% cap
Pensionable
Overtime
pounded
rr
co
2
nded
u
compo
2
2.5% compounded
2.5% compounded
Retirement COLA
60% of FAME or accrued
,benefit if higher
r
of FAME or
Denefit if highe
60% of FAME or
accrued benefit if
higher
75% of FAME or
accrued benefit if
higher
Service
Connected
Disability
35%
,
.)
35%
35%
Non Service
Connected
Disabi lity
No
No
No
out
ly
r
ea
2 year
Early Out
(page 2 of 2)
Unclassified
Bifurcation Date
10/18/92
Proposed City Pension Plans
Classified
Bifurcation Dates
AFSCME 4/30/93 CWA 2/21/94
OTHERS 8/1/93 GSA 8/1/93
Post 2005
Post 2005
buy back
2
back
Tier A
highest
two
2 year buy
l1mi ted
Average of two highest
years
back
two
Tier A
2
Average of two highest
years
Buy back
FAME
( reti rees &
City pays 50%
dependents)
( reti rees &
City pays 50%
dependents)
( reti rees &
City pays 50%
dependents)
(reti rees &
City pays 50%
dependents)
Retiree Health
(Pre 2005)
Fixed stipend
N/A
Fixed stipend
10%
N/A
(Post 2005)
j\Vil
r
F\
able
10%
Employee
Contribution
Partial lump sum
distribution
N/A
1
able
No pension
impact upon
promotions
N/A
Allow 401 A
employees to
migrate into
pension plans
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CWA PENSION PROPOSAL
COM P ARISON (AS APPLIED CITY-WIDE)
8/1/05 CWA PROPOSAL · 9/14/05 CWA PROPOSAL
(presented to Commission - "Olive (presented to Finance Committee)
Branch")
.
CWA ONLY:
$2,258,000*
CITY WIDE COST
$6,515,963*
Not accumulated benefits
Note: *
.
.
· CWA ONLY:
$1 ,602,000
· CITY WIDE COST:
$4,777,000
CITY PENSION PROPOSAL COMPARISON
(AS APPLIED CITY-WIDE)
CITY PROPOSAL COST
.
to 80/0)
CWA ONLY:
$1,178,000
CITY WIDE COST
$4,511 ,289
($400,000) (projected savings due to plan combining)
($264,230) (GERS wages - employee contribution reduction 100/0
($98,593) (UC wages - employee contribution reduction 100/0 to 8010)
$3,748,465/year
.
.
.
CITY PROPOSAL COST - GERS
(.lAnA'''' F rnplr R
General Employees Tier A Arne
Amount % of payroll Payroll $12,540.655
Population 365
Payroll $12,390,344 FAME - 2 years 102.209 0.82%
Population 225 Multiplier - 3% all years; 0
FAME - 2 years 0 cap of 80%
Age 55 w/5 yrs of service 564,012 4.50%
Multiplier - 3% 1 st 15 yrs, 0 Service Connected Disability 0
then 4%; cap of 90% 60% of FAME
100% Vesting - 5 years 24,223 0.19%
Age 50 w/5 yrs of service 0 COLA - 2.5% cornpounded 0
Non-Service Disability
Service Connected Disability 0 35% of FAME minimum 0
75% of FAME Not Applicable 0
100% Vesting - 5 years 0 Subtotal 690,445 5.51%
2 year buyback (govtlmilitary) 156,613 1.25%
COLA - 2.5% compounded 0
Non-Service Disability
35% of FAME minimum 0 Decrease Employee contribution
from 10% to 8% 264,230 2.11%
Not Applicable 0 for new employees, City will
refund employee contribution
Subtotal 0 & match it (max 5 yrs). After 5
years, employee is in DB
and has no option to get refund H 0.06%
Total 1,119,110 8.92%
2 year buyback (govtlmilitary) 198,703 1.60%
401-A Pension Changes
10% Cap on OT (504,282) -4.36% Uses Grand Total as baseline
Payroll now = 11,553,997 Sr.~m~rin1' 1 00% migr~tinn
Payroll 19,555,678
2 year early out(1-time window). 524.080 4.54% Population 561
Move 401-A into DB under Tier B
new members receive credit for 2,303,411
all past service, entire account (799,560)
balance transferred to DB 1,503,851 7.69%
annual reduction to eliminate
401A (701,502) -3.59%
Net cost of benefit 802,349 4.10%
Total 218,501 Total from above 1,119,110
1.89% Total Cost to City 1,921,459 9.83%
"