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Ordinance No. 58-24-48ORDINANCE NO. 58-24-48 AN ORDINANCE AMENDING CHAPTER 2, ADMINISTRATION, ARTICLE VI, EMPLOYEE BENEFITS, DIVISION 4, POLICE OFFICERS' RETIREMENT SYSTEM, SECTION 2-305, "BENEFIT AMOUNTS AND ELIGIBILITY", TO AMEND THE BENEFIT MULTIPLIER AND TO PROVIDE FOR A COST -OF -LIVING ADJUSTMENT; PROVIDING FOR CONFLICT; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City of Atlantic Beach and the Coastal Florida Police Benevolent Association are parties to a 2022-2025 collective bargaining agreement (The "Agreement"); and WHEREAS, provisions of the Agreement affect the City of Atlantic Beach Police Officers' Retirement System ("Retirement System"); and WHEREAS, the Board of Trustees also desires to provide a one-time Cost of Living Adjustment for current retirees; and WHEREAS, amendments to the Plan are necessary to conform the Retirement System to the requirements of the agreement and to provide for the Cost of Living Adjustment; and WHEREAS, the Board of Trustees of the City of Atlantic Beach Police Officers' Retirement System has recommended amendments to the Retirement System to comply with the agreement and to provide for the Cost of Living Adjustment; and WHEREAS, the Trustees of the City of Atlantic Beach Police Officers' Retirement System have requested and approved the amendments provided herein as being in the best interest of the participants and beneficiaries and improving the administration of the Fund; and WHEREAS, City Commission has received and reviewed an actuarial impact statement related to this change and attached as such; and WHEREAS, the City Commission deems it to be in the public interest to provide these changes to the Retirement System for its Police Officers; Ordinance No. 58-24-48 Page 1 of 3 NOW, THEREFORE, BE IT ENACTED BY THE CITY COMMISSION ON BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA that: SECTION 1. Revisions to Section 2-305(bl Section 2-305, `Benefit amounts and eligibility", subsection (b), Normal retirement benefit, of the Code of Ordinances is hereby amended as follows: Sec. 2-305 . - Benefit amounts and eligibility. (b) Normal retirement benefit. A member retiring hereunder on or after his normal retirement date shall receive a monthly benefit which shall commence on the first day of the month coincident with or next following his retirement and be continued thereafter during member's lifetime, ceasing upon death, but with one hundred twenty (120) monthly payments guaranteed in any event. For all members hired before Tann r<, 1,204-3, the monthly retirement benefit shall equal three (3) percent of average final compensation for each year of credited service. For- ,...o,.,. ber-n hired on „r aftjaffuar-y 1, 2013, the ,,,x nfl-1., retirement benefit shall equal twe Ml per-een4 of n e Fina atio for eh year r o f eredited serviee. SECTION 2. Additions to Section 2-305. Section 2-305, "Benefit amounts and eligibility" of the Code of Ordinances is hereby amended by adding a subsection (f) as follows: Sec. 2-305 . - Benefit amounts and eligibility. PITMITITA Effective October 1 2024 there shall be a one-time Cost of Living Adjustment for all current retirees and surviving, beneficiaries receiving benefits of 3.00% for ev five complete years that have ela sed since their original date of benefit commencement. SECTION 3. Conflict. All ordinances, resolutions, official determinations or parts thereof previously adopted or entered by the City or any of its officials and in conflict with this ordinance are repealed to the extent inconsistent herewith. Ordinance No. 58-24-48 Page 2 of 3 SECTION 4. Severability. If a Court of competent jurisdiction at any time finds any provision of this Ordinance to be unlawful, illegal, or unenforceable, the offending provision shall be deemed severable and removed from the remaining provisions of this Ordinance which shall remain in full force and intact. SECTION 5. Effective Date. This ordinance shall take effect upon final reading and adoption. PASSED by the City Commission on first reading on the 9th day of December, 2024. PASSED AND ADOPTED by the City Commission on second and final reading on the 13th day of January, 2025. ATTEST: is �. Donna L. Bartle City Clerk Approved as to form and correctness: r Jasoab iel City orn Curtis For Mayor Ordinance No. 58-24-48 Page 3 of 3 GRS November 12, 2024 Ms. Brittany Percell Plan Administrator Police Officers' Retirement System City of Atlantic Beach 800 Seminole Road Atlantic Beach, FL 32233 P: 954.527.1616 1^:954.525.0©83 . www.grsconsult;ng.com Re: City of Atlantic Beach Police Officers' Retirement System Actuarial Impact Statement Dear Brittany: As requested, we have prepared the enclosed Actuarial Impact Statement measuring the first-year financial impact of the proposed ordinance (copy attached) which would amend the plan as summarized below• • Effective October 1, 2024, implement a one-time Cost of Living Adjustment for all current retirees and surviving beneficiaries receiving benefits of 3.00% for every 5 complete years that have elapsed since their original date of benefit commencement. • For members hired on or after January 1, 2013, increase the benefit multiplier from 2% to 3% for all years of credited service. The enclosed exhibits show the impact of the above changes on the City's contribution requirement, the Unfunded Actuarial Accrued Liability (UAAL), the funded ratio in the first year and the ultimate cost to the City in today's dollars (for this report, the ultimate cost is the change in the Actuarial Present Value of all Projected Benefits). Please note that the increase in the UAAL was amortized over 15 years in this analysis, rather than the 30 - year period which has been used by the Board to amortize plan changes in the past. Since the proposed plan change significantly increases liabilities for current retirees and for benefits attributable to past years of service, the shorter amortization period accelerates funding and limits the transfer of costs to future taxpayers. The impact of the proposed plan changes is being shown on the actuarially determined contribution for the fiscal year ending September 30, 2025 for illustrative purposes only using the valuation results as of October 1, 2023, the most recent actuarial valuation. If the proposed ordinance is adopted, funding requirements would not be impacted until the year beginning October 1, 2025. The Statement must be filed with the Division of Retirement before the final public hearing on the ordinance. Please have a member of the Board of Trustees sign the Statement. Then send the Statement along with a copy of the proposed ordinance to Tallahassee. Ms. Brittany Percell November 12, 2024 Page 2 Summary of Findings The baseline results shown on the enclosed exhibits are from the October 1, 2023 Actuarial Valuation Report dated May 9, 2024. As compared to these baseline results, the proposed ordinance would have the following impacts: ■ The first year required City contribution would increase by $152,676, or 6.10% of covered payroll. ■ The Funded Ratio would decrease by 3.8%, from 86.8% to 83.0%. The ultimate cost of the proposed change for current plan participants is measured by the change in the Actuarial Present Value of Projected Benefits, or approximately $1,590,000. This represents the increase in future benefit payments expected to be funded by the City in today's dollars. This assumes all of the actuarial assumptions are met each year. Other Cost Considerations ■ The enclosed figures measure the increase in the City's contribution requirement for the first year only, and assume that all of the actuarial assumptions are met. Future costs and contribution requirements can be significantly higher or lower depending on the extent to which Plan experience differs from that anticipated by the assumptions, increases or decreases are expected as part of the methodology used to determine contribution requirements, and if there are any future changes in assumptions, plan provisions, or applicable law. ■ As of October 1, 2023, the Actuarial Value of Assets exceeds the Market Value of Assets by approximately $825,000. This difference will be gradually recognized over the next three years. In turn, the employer contribution will increase in the absence of offsetting gains. Risks Associated with Measuring the Accrued Liability and Actuarially Determined Contribution The determination of the accrued liability and the actuarially determined contribution requires the use of assumptions regarding future economic and demographic experience. The assumptions used to determine the contribution requirement and accrued liability are the same as those used for the October 1, 2023 Actuarial Valuation Report dated May 9, 2024. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions due to changing conditions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period, or additional cost or contribution requirements based on the Plan's funded status); and changes in plan provisions or applicable law. Please refer to the October 1, 2023 Actuarial Valuation Report dated May 9, 2024 for additional discussions regarding the risks associated with measuring the accrued liability and the actuarially determined contribution. &GRS Ms. Brittany Percell November 12, 2024 Page 3 The scope of this Actuarial Impact Statement does not include an analysis of the potential range of such future measurements or a quantitative measurement of the future risks of not achieving the assumptions. In certain circumstances, detailed or quantitative assessments of one or more of these risks as well as various plan maturity measures and historical actuarial measurements may be requested from the actuary. Additional risk assessments are generally outside the scope of an Actuarial Impact Statement. Additional assessments may include stress tests, scenario tests, sensitivity tests, stochastic modeling, and a comparison of the present value of accrued benefits at low-risk discount rates with the actuarial accrued liability. Additional Disclosures This report was prepared at the request of the Board and is intended for use by the Plan and those designated or approved by the Board. This report may be provided to parties other than the Plan only in its entirety and only with the permission of the Board. This report is intended to describe the financial effect on the Plan of the changes in the proposed ordinance. Potential effects on other benefit plans were not considered. No statement in this report is intended to be interpreted as a recommendation in favor of the changes, or in opposition to them. Determinations of financial results associated with the benefits described in this report, for purposes other than those identified herein may be significantly different. The calculations in this report are based upon information furnished by the Plan Administrator for the October 1, 2023 Actuarial Valuation concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We reviewed this information for internal and year-to-year consistency, but did not audit the data. We are not responsible for the accuracy or completeness of the information provided by the Plan Administrator. The date of the valuation was October 1, 2023. This means that the results of the supplemental valuation indicate what the October 1, 2023 valuation would have shown if the proposed benefit changes had been in effect on that date. Supplemental valuations do not predict the result of future actuarial valuations. Rather, supplemental valuations give an indication of the cost of the benefit change only without comment on the complete end result of future valuations. The calculations are based upon assumptions regarding future events, which may or may not materialize. They are also based on the assumptions, methods, and plan provisions outlined in the October 1, 2023 Actuarial Valuation Report and this report. If you have reason to believe that the assumptions that were used are unreasonable, that the plan provisions are incorrectly described, that important plan provisions relevant to this Report are not described, or that conditions have changed since the calculations were made, you should contact the author of the report prior to relying on information in the report. This report was prepared using our proprietary valuation model and related software which in our professional judgment has the capability to provide results that are consistent with the purposes of the valuation and has no material limitations or known weaknesses. We performed tests to ensure that the model reasonably represents that which is intended to be modeled. Ms. Brittany Percell November 12, 2024 Page 4 This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, and with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. Nicolas Lahaye and Dina Lerner are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The undersigned actuaries are independent of the plan sponsor. We will be pleased to answer any questions pertaining to this report. Sincerely, Gabriel, Roeder, Smith & Company Q ud-4- � Nicolas Lahaye, FSA, EA, MAAA, FCA Consultant & Actuary Enclosures Dina Lerner, FSA, EA, MAAA, FCA Consultant & Actuary This communication shall not be construed to provide tax advice, legal advice or investment advice. LIM CITY OF ATLANTIC BEACH POLICE OFFICERS' RETIREMENT SYSTEM Actuarial Impact Statement — November 12, 2024 Description of Amendments The proposed ordinance would amend the plan as follows: • Effective October 1, 2024, implement a one-time Cost of Living Adjustment for all current retirees and surviving beneficiaries receiving benefits of 3.00% for every 5 complete years that have elapsed since their original date of benefit commencement. • For members hired on or after January 1, 2013, increase the benefit multiplier from 2% to 3% for all years of credited service. Funding Implications of Amendment An actuarial cost estimate is attached. Certification of Administrator I believe the amendment to be in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the Constitution of the State of Florida. For the Board of Trustees as Plan Administrator CG IRS City of Atlantic Beach Police Officers' Retirement System Plan SUPPLEMENTAL ACTUARIAL VALUATION REPORT City of Atlantic Beach Police Officers' Retirement System Valuation Date October 1, 2023 Date of Report November 12, 2024 Report Requested by Board of Trustees Prepared by Nicolas Lahaye and Dina Lerner Group Valued All active and inactive participants of the Plan as of October 1, 2023. Benefit Provisions Being Considered for Change The proposed ordinance would amend the plan as follows: • Effective October 1, 2024, implement a one-time Cost of Living Adjustment for all current retirees and surviving beneficiaries receiving benefits of 3.00% for every 5 complete years that have elapsed since their original date of benefit commencement. • For members hired on or after January 1, 2013, increase the benefit multiplier from 2% to 3% for all years of credited service. Participants Affected Active and inactive participants of the Plan (as described above). Actuarial Assumptions and Methods Same as the October 1, 2023 Actuarial Valuation Report dated May 9, 2024. Some of the key assumptions/methods are: Investment Return 6.25% per year compounded annually, net of investment expenses Mortality Table Assumptions used by the Florida Retirement System (FRS) for Special Risk members in the FRS actuarial valuation as of July 1, 2022. Salary increase Age based ranging from 4.5% to 18.5% (including 2.5% price inflation) Cost Method Entry Age Normal Amortization Period for Any Change in Actuarial Accrued Liability The impact of the proposed plan change on the actuarial accrued liability was amortized as a level percentage of payroll over a 15 -year period. The payroll growth rate used to amortize the unfunded actuarial accrued liabilities was 3.50%. Summary of Data Used in Report See attached page entitled "Participant Data"; based on the data used for the October 1, 2023 Actuarial Valuation Report dated May 9, 2024. City of Atlantic Beach Police Officers' Retirement System 6 Actuarial Impact of Proposed Changes See attached page(s). Special Risks Involved That the Plan Has Not Been Exposed to Previously None; please refer to page 2 of this report for a discussion of risks associated with measuring the accrued liability and actuarially determined contribution. Other Cost Considerations The enclosed figures measure the increase in the City's contribution requirement for the first year only, and assume that all of the actuarial assumptions are met. Future costs and contribution requirements can be significantly higher or lower depending on the extent to which Plan experience differs from that anticipated by the assumptions, increases or decreases are expected as part of the methodology used to determine contribution requirements, and if there are any future changes in assumptions, plan provisions, or applicable law. As of October 1, 2023, the Actuarial Value of Assets exceeds the Market Value of Assets by approximately $825,000. This difference will be gradually recognized over the next three years. In turn, the employer contribution will increase in the absence of offsetting gains. City of Atlantic Beach Police Officers' Retirement System ACTUARIALLY DETERMINED EMPLOYER CONTRIBUTION (ADEC) A. Valuation Date October 1, 2023 October 1, 2023 Increase/ Baseline Plan Changes (Decrease) B. ADEC to Be Paid During Fiscal Year Ending 9/30/2025 9/30/2025 C. Assumed Date(s) of Employer Contribution Monthly Monthly D. Annual Payment to Amortize Unfunded Actuarial Liability (UAL) if Paid on the Valuation Date $ 187,048 $ 257,380 $ 70,332 E. Employer Normal Cost (including Administrative Expenses) if Paid on the Valuation Date 355,628 424,285 68.657 F. ADEC if Paid on the Valuation Date: D + E 542,676 681,665 138,989 G. ADEC Adjusted for Frequency of Payments and Interest to Required Time of Contribution 596,113 748,789 152,676 H. Covered Payroll for Contribution Year $ 2,504,363 $ 2,504,363 $ 0 I. ADEC as % of Covered Payroll in Contribution Year: G - H 23.80 % 29.90 % 6.10 % J. Estimated Credit for State Revenue in Contribution Year* 165,133 165,133 0 K. Required Employer Contribution (REQ in Contribution Year: G -J 430,980 583,656 152,676 L REC as % of Covered Payroll in ContributionYear: K=H 17.21 % 23.31 % 6.10 % *Chapter 185 Florida Statutes. The City contribution amount may need to be increased if the amount received under the provisions of Chapter 185, Florida Statutes, is not sufficient to meet the total employer contribution requirement. City of Atlantic Beach Police Officers' Retirement System ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October 1, 2023 October 1, 2023 Baseline Plan Changes Increase/ (Decrease) B. Actuarial PresentValueof All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 13,598,760 $ 14,459,865 $ 861,105 b. Vesting Benefits 515,881 630,596 114,715 c. Disability Benefits 198,360 220,688 22,328 d. Preretirement Death Benefits 72,763 84,035 11,272 e. Return of Member Contributions 95,304 95,304 0 14,481,068 1,009,420 f. Total 15,490,488 2. Inactive Members a. Service Retirees & Beneficiaries 6,000,990 6,511,787 510,797 b. Disa bi I ity Red rees 661,907 731,861 69,954 c. Terminated Vested Members 1,339,853 1,339,853 - 580,751 d. Total 8,002,750 8,583,501 3. DROP Balances 91,274 91,274 0 4. Total for All Members 22,575,092 24,165,263 1,590,171 C. Actuarial Accrued (Past Service) Liability under Entry Age Normal* 19,593,367 20,477,079 883,712 D. Plan Assets* 1. Market Va I ue 16,176,869 16,176,869 0 2. Actuarial Value 17,001,835 17,001,835 0 E. Unfunded Actuarial Accrued Liability (URAL) 2,591,532 3,475,244 883,712 F. Actuarial PresentValueof Projected Covered Payroll 14,323,976 14,323,976 0 7 G. Actuarial PresentValueof Projected Member Contributions 1,145,918 1,145,918 0 H. Funded Ratio (AVA basis): E2/D 86.8 % 83.0 % (3.8) % * Includes DROP balances. Cw City of Atlantic Beach Police Officers' Retirement System CALCULATION OF EMPLOYER NORMAL COST A. Valuation Date October 1, 2023 October 1, 2023 Increase/ Baseline Plan Changes (Decrease) B. Normal Cost for 1. Service Retirement Benefits $ 385,139 $ 445,232 $ 60,093 2. Vesting Benefits 68,093 74,658 6,565 3. Disability Benefits 23,487 24,739 1,252 4. Preretirement Death Benefits 4,486 5,233 747 5. Return of Member Contributions 24,935 24,935 - 6. Total for Future Benefits 506,140 574,797 68,657 7. Assumed Amountfor Admin. Expenses 26,723 26,723 - 8. Total Normal Cost 532,863 601,520 68,657 C. Expected Member Contribution $ 177,235 $ 177,235 $ - D. Net Employer Normal Cost: B8 - C $ 355,628 $ 424,285 $ 68,657 �R City of Atlantic Beach Police Officers' Retirement System 10 PARTICIPANT DATA October 1, 2023 October 1, 2023 Baseline Plan Changes ACTIVE MEMBERS Number 25 25 Covered Annual Payroll $ 2,378,410 $ 2,378,410 Average Annual Payroll $ 95,136 $ 95,136 Average Age 42.8 42.8 Average Past Service 11.8 11.8 Average Age at Hire 31.0 31.0 i RETIREES, BENEFICIARIES & DROP Number 18 18 Current Annual Benefits $ 595,460 $ 650,200 Average Annual Benefit $ 33,081 $ 36,122 Average Age 69.7 69.7 DISABILITY RETIREES Number 3 3 Current Annual Benefits $ 59,673 $ 66,506 Average Annual Benefit $ 19,891 $ 22,169 Average Age 65.6 65.6 TERMINATED VESTED MEMBERS Number 5 5 Annual Benefits $ 131,973 $ 131,973 Average Annual Benefit $ 26,395 $ 26,395 Average Age 51.0 51.0 4w City of Atlantic Beach Police Officers' Retirement System 11 ORDINANCE NO. AN ORDINANCE OF THE CITY OF ATLANTIC BEACH, FLORIDA AMENDING CHAPTER 2, ADMINISTRATION, ARTICLE VI, EMPLOYEE BENEFITS, DIVISION 4, POLICE OFFICERS' RETIREMENT SYSTEM, SECTION 2-305 "BENEFIT AMOUNTS AND ELIGIBILITY", TO AMEND THE BENEFIT MULTIPLIER AND TO PROVIDE FOR A COST -OF -LIVING ADJUSTMENT; PROVIDING FOR CONFLICT; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City of Atlantic Beach and the Coastal Florida Police Benevolent Association are parties to a 2022-2025 collective bargaining agreement (the "Agreement"); and WHEREAS, provisions of the Agreement affect the City of Atlantic Beach Police Officers' Retirement System ("Retirement System"); and WHEREAS, the Board of Trustees also desires to provide a one-time Cost of Living Adjustment for current retirees; and WHEREAS, amendments to the Plan are necessary to conform the Retirement System to the requirements of the agreement and to provide for the Cost of Living Adjustment; and WHEREAS, the Board of Trustees of the City of Atlantic Beach Police Officers' Retirement System has recommended amendments to the Retirement System to comply with the agreement and to provide for the Cost of Living Adjustment; and WHEREAS, the trustees of the City of Atlantic Beach Police Officers' Retirement System have requested and approved the amendments provided herein as being in the best interests of the participants and beneficiaries and improving the administration of the Fund; and WHEREAS, the City Commission has received and reviewed an actuarial impact statement related to these changes and attached as such; and WHEREAS, the City Commission deems it to be in the public interest to provide these changes to the Retirement System for its Police Officers; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION ON BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA: SECTION 1. Revisions to Section 2-305(b). Section 2-305, "Benefit amounts and eligibility", subsection (b), Normal retirement benefit, of the Code of Ordinances is hereby amended as follows: Sec. 2-305 . — Benefit amounts and eligibility. (b) Normal retirement benefit. A member retiring hereunder on or after his normal retirement date shall receive a monthly benefit which shall commence on the first day of the month coincident with or next following his retirement and be continued thereafter during member's lifetime, ceasing upon death, but with one hundred twenty (120) monthly payments guaranteed in any event. For all members #+red befeFe I^nuaFy 1, 2013, the monthly retirement benefit shall equal three (3) percent of average final compensation for each year of credited service. ^r membere• hir^rl ^n e+r after January 'I 2013,44e rvme+nth" retirement benefit shall equal two M\ nere+ent of average find n^mnen n}i^n fnr en^h year Of GFedited �eneine SECTION 2. Additions to Section 2-305. Section 2-305, "Benefit amounts and eligibility" of the Code of Ordinances is hereby amended by adding a subsection (f) as follows: Sec. 2-305 . — Benefit amounts and eligibility. (f) Effective October 1, 2024, there shall be a one-time Cost of Living Adiustment for all current retirees and survivinc; beneficiaries receiving benefits of 3.00% for every 5 complete years that have elapsed since their original date of the benefit commencement. 2 SECTION 3. Conflict. All ordinances, resolutions, official determinations or parts thereof previously adopted or entered by the City or any of its officials and in conflict with this ordinance are repealed to the extent inconsistent herewith. SECTION 4. Severability. If a Court of competent jurisdiction at any time finds any provision of this Ordinance to be unlawful, illegal, or unenforceable, the offending provision shall be deemed severable and removed from the remaining provisions of this Ordinance which shall remain in full force and intact. SECTION 5. Effective Date. This ordinance shall take effect upon final reading and approval. PASSED by the City Commission on first reading this day of , 2024. PASSED by the City Commission on second and final reading this day of 2024. CITY OF ATLANTIC BEACH Curtis Ford, Mayor Attest: Donna L. Bartle, City Clerk Approved as to form and correctness: Jason Gabriel, City Attorney 3