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Ordinance No. 58-24-47ORDINANCE NO. 58-24-47 AN ORDINANCE AMENDING CHAPTER 2, ADMINISTRATION, ARTICLE VI, EMPLOYEE BENEFITS, DIVISION 3, GENERAL EMPLOYEES' RETIREMENT SYSTEM, SECTION 2-266, "BENEFIT AMOUNTS AND ELIGIBILITY", TO PROVIDE FOR A COST -OF - LIVING ADJUSTMENT; PROVIDING FOR CONFLICT; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the Board of Trustees of the City of Atlantic Beach General Employees' Retirement System ("Retirement System") desires to provide a one-time Cost of Living Adjustment for current retirees (DROP participants, beneficiaries/surviving spouses, and disability benefit recipients); and WHEREAS, amendments to the Plan are necessary to conform the Retirement System to such Cost -of -Living Adjustments; and WHEREAS, the Board of Trustees has recommended an amendment to the Retirement System to provide as such; and WHEREAS, the Trustees of the City of Atlantic Beach General Employees' Retirement System have requested and approved the amendment provided herein as being in the best interest 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 this change and attached as such; and WHEREAS, the City Commission deems it to be in the public interest to provide this change to the Retirement System for its General Employees. NOW, THEREFORE, BE IT ENACTED BY THE CITY COMMISSION ON BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA that: Ordinance No. 58-24-47 Page 1 of 3 SECTION 1. Additions to Section 2-266. Section 2-266, "Benefit amounts and eligibility" of the Code of Ordinances is hereby amended by adding a subsection (f) as follows: Sec.2-266 . - Benefit amounts and eligibility. (f) 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 every five complete years that have elapsed since their original date of benefit commencement. SECTION 2. 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parts thereof previously adopted or entered by the City or any of its officials and in conflict with this ordinance are repealed to the extent inconsistent herewith.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 3. 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 4. 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: Alk"k Donna L. Bartle City Clerk rAl� � Curtis Ford Mayor Ordinance No. 58-24-47 Page 2 of 3 Approved as to form and correctness: Jason Gabri City Attorne 0 Ordinance No. 58-24-47 Page 3 of 3 RS November 12, 2024 Ms. Brittany Percell Plan Administrator General Employees' Retirement System City of Atlantic Beach 800 Seminole Road Atlantic Beach, FL 32233 P: 954.527.1616 . P: 954.525.0083 : www,gmonsulting.com Re: City of Atlantic Beach General Employees' 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 follows: • 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 every 5 complete years that have elapsed since their original date of benefit commencement. 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 impact of the proposed plan change 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. Summary of Findings The baseline results shown on the enclosed exhibits are from the October 1, 2023 Actuarial Valuation Report dated August 6, 2024. As compared to these baseline results, the proposed ordinance would have the following impacts: ■ The first year required City contribution would increase by $108,389, or 8.85% of covered payroll. ■ The Funded Ratio would decrease by 2.5%, from 91.2% to 88.7%. ■ The ultimate cost of the proposed changes is measured by the change in the Actuarial Present Value of Projected Benefits, or approximately $763,000. 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. Ms. Brittany Percell November 12, 2024 Page 2 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 $954,000. 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 August 6, 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 August 6, 2024 for additional discussions regarding the risks associated with measuring the accrued liability and the actuarially determined contribution. 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. (GRS Ms. Brittany Percell November 12, 2024 Page 3 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. 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. Ms. Brittany Percell November 12, 2024 Page 4 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 Nicolas Lahaye, FSA, EA, MAAA, FCA Consultant & Actuary Enclosures oc.c-c�U•2 Dina Lerner, FSA, EA, MAAA, FCA Consultant & Actuary This communication shall not be construed to provide tax advice, legal advice or investment advice. CITY OF ATLANTIC BEACH GENERAL EMPLOYEES' RETIREMENT SYSTEM Actuarial Impact Statement — November 12, 2024 Description of Amendments The proposed ordinance would amend the plan as follows: ■ 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 every 5 complete years that have elapsed since their original date of benefit commencement. 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 0f% City of Atlantic Beach General Employees' Retirement System -r Plan SUPPLEMENTAL ACTUARIAL VALUATION REPORT City of Atlantic Beach General Employees' 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 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 every 5 complete years that have elapsed since their original date of benefit commencement. Participants Affected All current inactive Participants of the Plan (as described above). Actuarial Assumptions and Methods Same as the October 1, 2023 Actuarial Valuation Report dated August 6, 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 Regular (other than K-12 School Instructional Personnel) members in the FRS actuarial valuation as of July 1, 2022. Salary increase Age based ranging from 4.8% to 9.5% (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 changes on the actuarial accrued liability was amortized as a level dollar amount over a 10 -year period. 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 August 6, 2024. tv City of Atlantic Beach General Employees' Retirement System 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 pan` 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 $954,000. This difference will be gradually recognized over the next three years. In turn, the employer contribution will increase in the absence of offsetting gains. VCity of Atlantic Beach General Employees' Retirement System ACTUARIALLY DETERMINED EMPLOYER CONTRIBUTION (ADEC) A. Valuation Date October 1, 2023 October 1, 2023 Baseline Plan Change Increase/ (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 $ 323,202 $ 421,874 $ 98,672 E. Employer Normal Cost (including Administrative Expenses) if Paid on the Valuation Date 184,348 184,348 0 F. ADEC if Paid on the Valuation Date: D + E 507,550 606,222 98,672 G. ADEC Adjusted for Frequency of Payments and Interestto Required Time of Contri buti on 557,528 665,917 108,389 H. Covered Payroll for Contribution Year $ 1,224,587 $ 1,224,587 $ 0 I. ADEC as % of Covered Payroll 45.53 % 54.38 % 8.85 % G RS City of Atlantic Beach General Employees' Retirement System ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October 1, 2023 October 1, 2023 Baseline Plan Change Increase/ (Decrease) B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 8,730,338 $ 8,730,338 $ - b. Vesti ng Ben efi is 156,005 156,005 - c. Disability Benefits 79,702 79,702 - d. Prereti rement Death Benefits 158,756 158,756 - e. Return of Member Contributions 4,703 4,703 - f. Total 9,129,504 9,129,504 - 2. Inactive Members a. Service Retirees & Benefi cia ri es 18,353,517 19,078,406 724,889 b. Disability Retirees 415,734 453,412 37,678 c. Terminated Vested Members 431,447 431,447 - 19,963,265 762,567 d. Total 19,200,698 3. DROP Balances 291,124 291,124 - 4. Total for All Members 28,621,326 29,383,893 762,567 C. Actuarial Accrued (Past Service) Liability under Entry Age Normal* 27,239,828 28,002,395 762,567 D. Plan Assets* 1. Market Value 23,878,808 23,878,808 0 2. Actuarial Value 24,832,777 24,832,777 0 E. Unfunded Actuarial Accrued Liability (UAAL) 2,407,051 3,169,618 762,567 F. Actuarial PresentValueof Projected Covered Payroll 7,967,159 7,967,159 0 G. Actuarial PresentValueof Projected Member Contributions 478,030 478,030 0 H. Funded Ratio (AVA basis): E2/D 91.2 % 88.7 % (2.5) * Includes DROP balances. CP City of Atlantic Beach General Employees' Retirement System CALCULATION OF EMPLOYER NORMAL COST A. Valuation Date October 1, 2023 October 1, 2023 Increase / Baseline Plan Change (Decrease) B. Normal Cost for 1. Service Retirement Benefits $ 177,773 $ 177,773 $ - 2. Vesting Benefits 29,350 29,350 - 3. Disability Benefits 10,516 10,516 - 4. Prereti rement Death Benefits 4,764 4,764 - 5. Return of Member Contributions 6,931 6,931 - 229,334 6. Total for Future Benefits 229,334 - 7. Assumed Amountfor Admin. Expenses 32,188 32,188 - 8. Total Normal Cost 261,522 261,522 - C. Expected Member Contribution $ 77,174 $ 77,174 $ - D. Net Employer Normal Cost: B8 - C $ 184,348 $ 184,348 $ - V City of Atlantic Beach General Employees' Retirement System 10 PARTICIPANT DATA October 1, 2023 October 1, 2023 Baseline Plan Change ACTIVE MEMBERS Number 15 15 Covered Annual Payroll $ 1,224,587 $ 1,224,587 Average Annual Payroll $ 81,639 $ 81,639 Average Age 55.8 55.8 Average Past Service 23.5 23.5 Average Age at Hire 32.3 32.3 RETIREES, BENEFICIARIES & DROP Number 81 81 Current Annual Benefits $ 1,714,018 $ 1,788,858 Average Annual Benefit $ 21,161 $ 22,085 Average Age 71.9 71.9 DISABILITY RETIREES Number 3 3 Current Annual Benefits $ 46,861 $ 51,144 Average Annual Benefit $ 15,620 $ 17,048 Average Age 70.7 70.7 TERMINATED VESTED MEMBERS Number 6 6 Annual Benefits $ 58,265 $ 58,265 Average Annual Benefit $ 9,711 $ 9,711 Average Age 53.2 53.2 City of Atlantic Beach General Employees' Retirement System 11 ORDINANCE NO. AN ORDINANCE OF THE CITY OF ATLANTIC BEACH, FLORIDA AMENDING CHAPTER 2, ADMINISTRATION, ARTICLE VI, EMPLOYEE BENEFITS, DIVISION 3, GENERAL EMPLOYEES' RETIREMENT SYSTEM, SECTION 2-266, "BENEFIT AMOUNTS AND ELIGIBILITY", TO PROVIDE FOR A COST -OF -LIVING ADJUSTMENT; PROVIDING FOR CONFLICT; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the Board of Trustees of the City of Atlantic Beach General Employees' Retirement System ("Retirement System") desires to provide a one-time Cost of Living Adjustment for current retirees (DROP participants, beneficiaries/surviving spouses, and disability benefit recipients); and WHEREAS, amendments to the Plan are necessary to conform the Retirement System to such Cost of Living Adjustments; and WHEREAS, the Board of Trustees has recommended an amendment to the Retirement System to provide as such; and WHEREAS, the trustees of the City of Atlantic Beach General Employees' Retirement System have requested and approved the amendment provided herein as being in the best interest 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 this change and attached as such; and WHEREAS, the City Commission deems it to be in the public interest to provide this change to the Retirement System for its General Employees; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION ON BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA: SECTION 1. Additions to Section 2-266. Section 2-266, "Benefit amounts and eligibility" of the Code of Ordinances is hereby amended by adding a subsection (f) as follows: Sec. 2-266 . — Benefit amounts and eligibility. (f) Effective October 1. 2024, there shall be a one-time Cost of Living Adiustment for all current retirees and surviving beneficiaries receiving benefits of 3.00% for every five complete years that have elapsed since their original date of benefit commencement. SECTION 2. 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 3. 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 4. Effective Date. This ordinance shall take effect upon final reading and approval. qW0 PASSED by the City Commission on first reading this _ day of PASSED by the City Commission on second and final reading this day of 2024 CITY OF ATLANTIC BEACH Curtis Ford, Mayor 2 Attest: Donna L. Bartle, City Clerk Approved as to form and correctness: Jason Gabriel, City Attorney