HomeMy WebLinkAbout2006-26224 Reso Inc.
RESOLUTION NO. 2006-26224
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER
PERTAINING TO THE RANKING OF PROPOSALS PURSUANT TO REQUEST FOR
PROPOSALS (RFP) NO. 33-04/05, FOR SERVICES TO ADMINISTER AND IMPLEMENT A
POST RETIREMENT HEALTH INVESTMENT PROGRAM; AUTHORIZING THE
ADMINISTRATION TO ENTER INTO NEGOTIATIONS WITH ICMA RETIREMENT
CORPORATION (ICMA-RC) AND NATIONWIDE RETIREMENT SOLUTIONS
(NATIONWIDE); AND FURTHER AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE A CONTRACT(S) UPON COMPLETION OF SUCCESSFUL NEGOTIATIONS.
WHEREAS, on July 6, 2005, the Mayor and City Commission authorized the issuance of
Request for Proposals (RFP) No. 33-04/05 to obtain proposals from professionaVqualified firms that
will provide complete administration and implementation of a Post Retirement Health Plan that permits
employees to contribute a portion of their leave settlement, at time of separation, to pay for future
health related expenses using pre-tax dollars; and
WHEREAS, RFP No. 33-04/05 was issued on July 13, 2005 with an opening date of August
24,2005;and
WHEREAS, a pre-proposal submission meeting to provide information to firms submitting a
proposal was held on August 3, 2005; and
WHEREAS, Bid Net issued bid notices to forty-six (46) prospective proposers, resulting in six
(6) proposers requesting the RFP document; and
WHEREAS, proposals were received from ICMA Retirement Corporation (ICMA-RC) and
Nationwide Retirement Solutions (Nationwide); and
WHEREAS, the City Manager via Letter to Commission (LTC) No. 211-2005, appointed an
Evaluation Committee ("the Committee") consisting of the following individuals:
. Javier Nunez, Property Owner, Partner with RSM McGladrey, Inc. (Chair)
. Marsha Behr, Miami Dade County Risk Manager
. Vivian Guzman, Neighborhood Services Director, City of Miami Beach
. Sue Radig, Human Resources Administrator, City of Miami Beach
· Orlando Alvarez, Mercy Hospital Vice President of Marketing and Development, and
Personnel Board Chairperson; and
WHEREAS, the Committee convened on October 17, 2005; and
WHEREAS, both firms provided a presentation relative to their proposal submittal, with a
question and answer session following each presentation; and
WHEREAS, at the conclusion of the presentations and question and answer session, the
Committee expressed its concerns as to the differences between the two proposals presented; and
WHEREAS, the Committee reconvened on May 30, 2006; and
WHEREAS, the City's Human Resource and Risk Management Director briefed the
Committee on the actions taken by the Administration since the last meeting, whereby the City met
with Arthur J. Gallagher, Co., (Gallagher) the City's broker for Group Employee Benefits, and
requested Gallagher draft on behalf of the City, an IRS Letter of Determination based on the City's
desired plan; and
WHEREAS, once IRS provides the Letter of Determination, the recommended firm(s) would
then administer the approved plan; and
WHEREAS, the Committee unanimously recommended to the City Manager that the
Administration enter into negotiations with both ICMA-RC and Nationwide; and
WHEREAS, the City Manager concurs with the Committee's recommendation.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby accept the
recommendation of the City Manger pertaining to the ranking of proposals, pursuant to Request for
Proposals (RPF) No. 33-04/05, for Services to Administer and Implement a Post Retirement Health
Investment Program; authorizing the Administration to enter into negotiations with ICMA Retirement
Corporation (ICMA-RC) and Nationwide Retirement Solutions (Nationwide); and further authorizing
the Mayor and City Clerk to execute a contract(s) upon completion of successful negotiations.
PASSED AND ADOPTED THIS 7th
2006.
ATTEST:
_~rPM~
CITY CLERK
Robert Parcher
T:\AGENDA\2006~un0706\consent\PostRetirementHealthlnvestmentProgram-Resolution.doc
i APPROVED AS TO
'~"~- FORM & LANGUAGE
~n:~
COMMISSION ITEM SUMMARY
Condensed Title:
Accept the City Manager's Recommendation Pertaining to the Ranking of Proposals, Pursuant to Request
for Proposals No. 33-04/05, For Services to Administer and Implement a Post Retirement Health
Investment Proaram.
Ke Intended Outcome Su orted:
Attract and maintain a qualit workforce.
Issue:
Shall the City Commission approve the City Manager's recommendation to accept the ranking of
proposals, authorize negotiations, and authorize the execution of a contract(s) upon successful
neaotiations?
Item Summary/Recommendation:
On July 6, 2005, the Mayor and City Commission authorized the issuance of Request for Proposals (RFP)
No. 33-04/05, to obtain proposals from professional/qualified firms that will provide complete administration
and implementation of a Post Retirement Health Plan that permits employees to contribute a portion of
their leave settlement, at time of separation, to pay for future health related expenses using pre-tax dollars.
The City Manager via Letter to Commission (LTC) No. 211-2005, appointed an Evaluation Committee ("the
Committee") that convened on October 17, 2005 to listen to presentations from ICMA-RC and Nationwide,
with a Question and Answer session following each presentation. At the conclusion of the presentations
and Question and Answer sessions, the Committee expressed their concerns as to the differences of the
two (2) proposals presented, and whether they meet IRS guidelines/law.
On May 30, 2006, the Committee reconvened. The City's Human Resource and Risk Management
Director briefed the Committee on the actions taken by the Administration since the last meeting, whereby
the City met with Gallagher and requested they draft on behalf of the City, an IRS Letter of Determination
based on the City's desired plan design. Once IRS provides the Letter of Determination, the recommended
firm(s) would then administer the approved plan. The IRS Letter of Determination will take approximately
eight (8) months before the City receives their "ruling".
Based on these actions taken by the Administration, the pending status of the IRS Letter of Determination,
and the fact that the City has an excellent long term business relationship with both ICMA-RC and
Nationwide, the Evaluation Committee unanimously recommends that the City authorize the Administration
to enter into negotiations with both ICMA-RC and Nationwide.
ADOPT THE RESOLUTION.
Advisory Board Recommendation:
I N/A
Financial Information:
Source of Amount Account Approved
Funds: 1
D 2
3
4
OSPI Total
Financial Impact Summary:
islative Trackin
ity Manager
City Manager
JMG
T:\AGEN . n0706lconsenlIPoslRelirementHeallhlnvestmentProgram - Summary.doc
m
,.,
MIAMI BEACH
AGENDA ITEM
DATE
ell
r; -7-0"
lD MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach. Florida 33139, www.miamibeachR.gov
COMMISSION MEMORANDUM
FROM:
Mayor David Dermer and Members of the City Commission
Jorge M. Gonzalez, City Manager \..,./~
June 7, 2006 U
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
CITY MANAGER PERTAINING TO THE RANKING OF PROPOSALS RECEIVED
PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 33-04/05, FOR
SERVICES TO ADMINISTER AND IMPLEMENT A POST RETIREMENT HEALTH
INVESTMENT PROGRAM; AUTHORIZING THE ADMINISTRATION TO ENTER
INTO NEGOTIATIONS WITH ICMA RETIREMENT CORPORATION (ICMA-RC)
AND NATIONWIDE RETIREMENT SOLUTIONS (NATIONWIDE); AND
FURTHER AUTHORIZE THE MAYOR AND CITY CLERK TO EXECUTE
CONTRACTS UPON COMPLETION OF SUCCESSFUL NEGOTIATIONS.
TO:
DATE:
SUBJECT:
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
The City of Miami Beach recognizes that the costs associated with health insurance after
retirement can be a significant financial burden. Recent changes in the federal tax laws now
permit the implementation of certain plans that may assist the retired employee in handling
some of these costs.
These plans would offer retiring employees an investment plan that helps them build assets
that are then used to pay for healthcare premiums, co-payments, deductibles, prescriptions,
etc. The investment plan is funded with pre-tax dollars, the investment of the funds is
directed solely by the employee (in funds approved by the selected Firm(s)), and funds are
still tax free when used for IRS approved health related expenses; and may be transferred to
a beneficiary at time of death.
The investment plan would be funded by the employee using accrued annual and sick leave,
to the maximum amount allowed that is available for payout at separation from the City.
Commission Memorandum
RFP No. 33-04/05 - For Services to Administer and Implement a Post Retirement Health
Investment Program.
Page 2
ANALYSIS (Cont.)
SCOPE OF SERVICES
The City of Miami Beach requested proposals to offer full administrative and investment
services, including implementation of a Post Retirement Health Plan (the "Plan") that permits
employees in specified groups to invest portions of their annual and sick leave at time of
termination into such a plan on a pre-tax basis.
1. The proposed plan will have a Post Retirement Health Plan Document with a
favorable determination letter from the Internal Revenue Service (IRS) that may be
adopted by the City.
2. Eligibility will be determined by the City, initially it will be offered to full time eligible
employees not covered by a bargaining unit. Subject to collective bargaining, other
groups may become eligible for participation.
3. The Firm(s) will provide services that include, but are not limited to: employee
communications, full service recordkeeping, education, enrollment, and investment
services.
4. Services provided will closely resemble the administrative and investment services
currently being provided on behalf of the City's other 401 (a) and 457 (b) retirement
plans.
5. Provide all related education information, including brochures, enrollment materials
and an 800 number for employees to call with questions.
6. Review and/or assist writing Agreements/policies purchased by the City to assure
their accuracy and appropriateness.
7. Provide an annual report summarizing use of the Plan, including contribution
amounts by employees.
8. Provide utilization reports on an annual basis or as requested by the City.
9. Interpret and explain related regulations, respond to inquires from City benefit staff.
10. The selected Firm(s) will allow the participants in the Plan the ability to direct the
investment of their current and future contributions; changes to both amounts must
be allowed at least daily.
11. It is anticipated that the City will execute an Agreement with a Firm(s) for a five (5)
year period with options to renew the term on a year-to-year basis at the City's
discretion, for an unlimited term.
12. The selected Firm(s) will accept fiduciary responsibility for the Plan assets which
come into its custody.
13. Any other services that may be needed relative to the Plan.
Commission Memorandum
RFP No. 33-04/05 - For Services to Administer and Implement a Post Retirement Health
Investment Program.
Page 3
ANALYSIS (Cont.)
MINIMUM REQUIREMENTS I QUALIFICATIONS:
1) The selected Firm(s) will offer full administrative and investments services for the
City of Miami Beach's Post Retirement Health Plan.
2) The Firm must be properly licensed to offer this type of service. The selected
Firm(s) shall not have filed for bankruptcy within the last seven (7) years of the due
date of the RFP.
3) The selected Firm(s) shall have a minimum "A" rating from Standard & Poor or
Moody's as of the due date of this RFP, if the company has a rating by either of
these agencies. If the selected Firm(s) has no such rating because it is a not-for-
profit entity or it is a non-stock organization and it has no long-term debt, then the
selected Firm(s) shall submit audited financials showing a strong financial position,
including strong asset to liability ratio, to be determined by the City.
4) The selected Firm(s) has at least ten (10) years of continuous 401(a) plan
administration and investment experience prior to the due date of this RFP.
5) The selected Firm( s) has at least two (2) years of continuous Post Retirement Health
Plan administration and investment experience prior to the due date of this RFP.
6) The selected Firm(s) shall submit a template Post-Retirement Health Retirement
Account Plan document that may be adopted by the City which confirms with the IRS
guidelines set forth in the following documents:
a) IRS Notice 2002-45
b) IRS Revenue Ruling 2002-41
c) IRS Revenue Ruling 2005-24
7) Minimum Insurance Coverage-the Firm(s) must agree to maintain in force, at all
times during which services are to be performed for The City of Miami Beach,
Professional Liability insurance with limits of coverage no less than $1,000,000;
General Liability Coverage with limits of coverage no less than $1,000,000; and
Workers Compensation if required by Statute.
8) The selected Firm(s) will allow the participants in the Plan the ability to direct the
investment of their current and future contributions; changes to both amounts must
be allowed at least daily.
On July 6, 2005, the Mayor and City Commission authorized the issuance of Request for
Proposals (RFP) No. 33-04/05, to obtain proposals from professional/qualified firms that will
provide complete administration and implementation of a Post Retirement Health Plan that
permits employees to contribute a portion of their leave settlement, at time of separation, to
pay for future health related expenses using pre-tax dollars.
Commission Memorandum
RFP No. 33-04/05 - For Services to Administer and Implement a Post Retirement Health
Investment Program.
Page 4
ANALYSIS (Cont.)
RFQ No. 33-04/05 was issued on July 13, 2005 with an opening date of August 24, 2005. A
pre-proposal submission meeting to provide information to prospective firms was held on
August 3, 2005. BidNet issued bid notices to 46 prospective proposers, resulting in 6
proposers requesting the RFP document, which resulted in the receipt of the following two
(2) proposals from:
. ICMA-Retirement Corporation (RC)
. Nationwide Retirement Solutions
The City Manager via Letter to Commission (LTC) No. 211-2005, appointed an Evaluation
Committee ("the Committee") consisting of the following individuals:
- Javier Nunez, Property Owner, Partner with RSM McGladrey, Inc. (Chair);
- Marsha Behr, Miami Dade County Risk Manager;
- Vivian Guzman, Neighborhood Services Director, City of Miami Beach;
- Sue Radig, Human Resources Administrator, City of Miami Beach;
- Orlando Alvarez, Mercy Hospital Vice President of Marketing and Development, and
Personnel Board Chairperson.
Prior to the October 17, 2005 initial Committee meeting, committee member Vivian Guzman
was replaced by Jorge Gomez, Planning Director City of Miami Beach. The Committee was
provided information on the scope of services by Mayra Diaz Buttacavoli, Human Resources
and Risk Management Director, City of Miami Beach, and staff from the Procurement
Division.
Both firms that submitted proposals provided a presentation relative to their proposal
submittal, with a Question and Answer session following each presentation.
Additionally, the Committee discussed the following Evaluation Criteria, which was used to
evaluate and rank the Firms proposals:
A. Specific Expertise regarding the Scope of the Project (25 points);
B. Experience and qualifications of the Proposer in Administering a Post
Retirement Health Plan (20 points);
C. References (25 points);
D. Cost to employees for Administration Fees and Investment Fees (30 points)
At the conclusion of the presentations and Question and Answer sessions, the Committee
expressed their concerns as to the differences of the two (2) proposals presented. Because
the plan submitted/presented by ICMA-RC is a better plan for both the employer and retiree
than Nationwide's plan, the Committee raised concerns as to whether ICMA-RC's plan
meets IRS guidelines/law.
Commission Memorandum
RFP No. 33-04/05 - For Services to Administer and Implement a Post Retirement Health
Investment Program.
Page 5
ANALYSIS (Cont.)
ICMA-RC presented their VantageCare Retirement Health Savings (HRS) Program that is
very flexible in that it allows for reimbursement of all participant costs related health care for
the retiree and their dependents, whereby Nationwide Retirement Solutions presented their
Post Employment Health Plan (PEHP) that was very restrictive in that it allowed either for
reimbursement of plan premiums when employer dollars were contributed or limited health
care costs when employee dollars were contributed, which was contrary to the ICMA-RC
Plan.
Another difference in the two (2) plans has to do with Survivor/Beneficiary Benefits. The
ICMA-RC plan allows after the retiree's death, the remaining assets may be used by the
surviving spouse and dependents for medical expenses, tax-free. If there is no surviving
spouse or dependents, a designated beneficiary may use the assets for medical expenses,
which are taxable. The Nationwide plan limits the retiree to designate qualified dependents,
those who are claimed as dependents for federal income tax purposes in the year the
qualifying expense is incurred, and upon retiree's death, the remaining assets of a
participant with no spouse or other qualified dependents are reallocated to the accounts of
current participants within the same group plan.
Based on the conflicting information provided by the two (2) Firms, the Committee
recommended that the Administration receive a legal opinion prior to reconvening, so that
they could utilize the legal opinion as a basis to accurately evaluate the two (2) proposals.
The decision was made to have the City utilize the Agreement executed with Arthur J.
Gallagher, Co., ("Gallagher") the City's broker for Group Employee Benefits to draft on
behalf of the City, an IRS Letter of Determination based on the City's desired plan design.
On May 30, 2006, the Committee reconvened. Committee member Orlando Alvarez was
replaced by Vivian Guzman, Neighborhood Services Director, City of Miami Beach, who then
during the meeting, recused herself from the Committee based on the fact she was not
present when the two (2) Firms gave their presentations to the Committee on October 17,
2005.
The City's Human Resource and Risk Management Director briefed the Committee on the
actions taken by the Administration since the last meeting, whereby the City met with
Gallagher and requested they draft on behalf of the City, an IRS Letter of Determination
based on the City's desired plan design. Once IRS provides the Letter of Determination, the
recommended firm(s) would then administer the approved plan. The IRS Letter of
Determination may take approximately up to eight (8) months before the City receives their
"ruling".
Based on these actions taken by the Administration, the pending status of the IRS Letter of
Determination, and the fact that the City has an excellent long term business relationship
with both ICMA-RC and Nationwide, relative to the administration and investment
management services of the City's 401(a) and 457 (b) plans, the Evaluation Committee
unanimously recommends that the City authorize the Administration to enter into
negotiations with both ICMA-RC and Nationwide.
Commission Memorandum
RFP No. 33-04/05 - For Services to Administer and Implement a Post Retirement Health
Investment Program.
Page 6
ANALYSIS (Cont.)
Should negotiations become successful with both firms, this would give the
retiree/participant the option to choose between the two firms, just as the participants have
this same option for either their 401 (a) and/or 457(b) plans.
ICMA-RC:
ICMA-RC has been providing administration and investment management services of
retirement savings plans since 1972. They have also administered and managed the City's
401 (a) and 457 (b) plans for over ten (10) years. As of July 30,2005, ICMA-RC administers
492 RHS plans with over 20,000 participants and over $100 million in assets.
ICMA-RC began administering the Retirement Health Savings (RHS) plan in 2000.
They currently provide the RHS plan to the following State of Florida employers:
. City of North Miami Beach
. Pinellas County
. City of Delray Beach
. Town of Palm Beach
. City of Coral Gables FOP
. City of Boca Raton
. City of Palm Bay
. City of Port St. Lucie
. Village of Pinecrest
. City of Gainesville
FEES:
ICMA-RC has proposed a quarterly account fee of $7.50 which will be charged to each
participants account, plus an annual asset-based fee of 30 basis points (.30%) of the
participants account balances, which will also be assessed to the participants account on a
quarterly basis. These fees are subject to negotiations.
Nationwide Retirement Solutions:
Nationwide Retirement Solutions (Nationwide) provides plan administration, investment and
education/communication services to more than 8,000 public sector clients with more than
1.5 million participants and over $38.8 billion in assets under management. Nationwide has
provided these same services to the City of Miami Beach for over 15 years. They currently
maintain 14 state relationships, including three of the largest plans in the nation: the States
of California, New York and the State of Ohio.
Nationwide administers nearly 500 RHS plans for nearly 50,000 participants and over $1 00
million in assets since 1997.
They currently provide the RHS plan to the following employers:
. City of Coral Gables
. City of Miami FOP
. Lake County Florida, Clerk of Courts
. City of Boise, Idaho
. Salt Lake City, Utah
. City of Des Moines, Idaho
. Tulsa County, Oklahoma
. City of Lincoln, Nebraska
Commission Memorandum
RFP No. 33-04/05 - For Services to Administer and Implement a Post Retirement Health
Investment Program.
Page 7
FEES:
Nationwide has proposed an annual administration fee of $30.00 which will be charged to
each participants account, plus an annual asset management fee of 50 basis points (.50%)
of the participants account balances, which will also be assessed to the participants account
on an annual basis. These fees are subject to negotiations.
CONCLUSION
A Resolution of the Mayor and City Commission of the City of Miami Beach, Florida
accepting the recommendation of the City Manager pertaining the ranking of proposals
received pursuant to Request for Proposals (RFP) No. 33-04/05, for Services to Administer
and Implement a Post Retirement Health Investment Program; Authorizing the
Administration to enter into negotiations with ICMA Retirement Corporation (ICMA-RC) and
Nationwide Retirement Solutions, (Nationwide); and further authorize the Mayor and City
Clerk to execute a contract(s) upon completion of successful negotiations.
T:\AGENDA\2006~un0706\consent\PostRetirementHealthlnvestmentProgramMemo.doc