Bill Mayhew's comments at mtg.COAB Citizens Input Meeting - Jan 7, 2012
I. Vision for City
-When I moved to Atlantic Beach 28 years ago, the city was friendly place with good
schools, nice parks, and a nice police department. It was a safe city and good place to raise
children. It was a great place to live with a minimum of interruptions from a city government
that was trusted. Animal Control was a one person position that actually tried to help stray
animals.
Something has happened over the years. Apparently the new vision has become to be a
"cutting edge" showplace in the world of city governments. We still have a great city with good
schools, nice parks, and a safe place to raise children, but we now also have a city bureaucracy
that is unresponsive to its citizens in certain major areas.
I don't know of any citizen that wants to guarantee, through their taxes, life -time defined
benefit retirement plans that would allow city employees to retire with 100% of average pay,
plus social security. Nor do I know any who want multi-million dollar unfunded liabilities
footnoted to the financial statement. Likewise I don't believe they want an oversized, multi-
million dollar police station or to have an Emergency Operation Center or an Emergency
Command Vehicle. Just who wants to live in a "cutting-edge" city that is the envy of other
small cities in Florida? Certainly not the tax payers. How about a referendum to see what the
citizens think?
If you really want to attract businesses, keep taxes low by eliminating the excesses of
becoming a "showplace". If you really want satisfied taxpayers eliminate the defined benefit
plans that are financial burdens and adopt reasonable defined contribution plans like most
workers have, if they have a retirement plan at all. We want our city employees to be well paid
and to have reasonable benefits compared to what other workers have in our local market
place. We don't want a special class of citizens who receive special treatment because they are
city employees. Conduct city business conservatively with a full disclosure of what is going on.
Give citizen's ample time to address their concerns.
II. -The new Actuarial Valuation Reports are out. Great formats. Easy to interpret. The
actuaries understand their professional responsibility to disclose the whole picture. See
selected information attached. Contributions continue to rise, solvency ratios continue to
decline, and the situation worsens. Unfunded liabilities are to go up another $846,590 to
$8,693,434 and would be higher if a lower yield assumption was used. Only one time in the past
ten years has the investment yield been over 8% on the Police Plan, and twice on the General
Employee Plan. The average yields have been around the 4.4%-4.9% range.
Certainly the "sky's not falling" but it is time for significant tax increases to underwrite
the excessive programs that the city has undertaken.
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III. -Police Building
-One of the primary campaign planks of the "Marks" was to stop this new police building. The
details have been discussed repeatedly. We the voters who voted you "Marks" in expect you to
keep your campaign promises.
IV. -Personal Leave Time
-To understand this program let's convert the city formula for hours of leave to comparable
weeks of time off in the private sector. In the private sector if one gets two weeks off that
means 10 working days. The City Plan:
Yrs of Ser. Leave Hours Leave Days (8 hour days) Weeks of Leave
0-3 151 18.825 3.77
4-7 176 22 4.4
8-11 216 27 5.4 Plus 11 Holidays
12-15 256 32 6.4
16+ 272 34 6.8
To get almost 4 weeks leave your first year of service is unheard of. Additionally the employee
gets 11 paid national holidays. Please note that this program has no sick leave separate from
the hours provided. This program is far out of line with what ordinary citizens receive. The city
should be able to reduce staff by 5-6 employees by going to a conventional plan and adding a
sick leave program.
V. -Other Comments
A. I have never said that any retiree has received 100% of pay, only that the pension plans
allow for this possibility, plus social security resulting in possibly getting over 100%.
B. I have never predicted what a yield would be. I have given you forecasts from nationally
recognized experts that give 5-8% estimates of long term yields. The plans own actuary
said his sources ranged from 5-8% and he recommended the use of 7.25 and 7.5% on the
plans.
C. I have tried to document every statement I have made. My purpose has been and is to
deal in facts and point out the down -sides of defined benefits plans and other overly rich
benefits which costs were budgeted to be a greatly excessive 54% of payroll this year.
William E. Mayhew, CPUC, CLU, ChFC
242 8629
COAB Pension Evaluations (Actuarial) for Plan Years Ending 9-30-13
The new pension studies for Atlantic Beach are out and following is a summary of some salient points.
1. City Contributions: (See pages A-1 and D-3)
2013 2012 2011 2010 2009
Police Plan $518,000 $540,000 $487,000 $425,000 $345,000
General Plan $1,044,000 $999,000 $723,000 $599,000 $528,000
$1,562,000 $1,539,000 $1,210,000 $1,024,000 $873,000
Note: Contribution increase leveled off because of change in salary increase assumption (3.8% versus 7.4%.
Average increase has been 6.5% over last 10 years(B-11)). Yield on investments were 2.2% and 2.1% respectively
for the plans versus an 8% assumption. The averages have been around 4.5%over the last 10 years. (A-2)
2. Contributions as a Percentage of Payroll (B-15, B-14)
2013 2012 2011 2010 2009 2008 2007
Police 36% 36 26 27 22 23 26%
General 26% 24 17 15 14 14 14%
3. Unfunded Actuarial Accrued Liability (B-9)
This Year Expected Last Year Change
Police $3,759,831 $3,284, 921 $474,910
General $4,933,603 $4,561,923 $371,680
$8,693,434 $7,846,844 $846,590
(Prior year totals were: 2010- $7,106,000; and 2011- $6,608,000)
The Unfunded Liability increased by $970,718 due to investment (mis)assumptions.
4. Short Term Solvency -Value of assets relative to liabilities. The trend is important. ( B-4, B-5)
Report says "should be fully covered by assets".
2011 2010 2009
Police 72% 76% 77%
General 78% 85% 87%
5. Long Term Solvency- The % of Actuarial Liability covered by assets. (B-7, B-6)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Police 63% 65 68 71 74 74 68 71 73 79 81%
General 69% 70 72 73 74 72 69 70 73 77 80%
6. Actuarial Investment Returns (B-11, B-10)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Police 2.2% 4.7 3.8 4.6 9.4 7.8 4.4 2.4 2.2 2.6 6.3%
General 2.1% 5.0 4.2 4.9 10.0 8.5 4.9 2.3 1.7 1.5 5.1%
Police 5 year average is 4.9% and 10 year average is 4.4%.
General average is 4.5%. (Note: Only one year over 8% for Police, and two years for General.)
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7. Funding Progress -Unfunded Actuarial Accrued Liability as a Percentage of Payroll (D-2)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Police 234% 200 163 159 134 148 158 137 143 92%
General 132% 119 95 92 88 91 95 89 78 63
8. Fund Assets (C-1))
2011 2010 Change
Police $6,056,405 $6,010,957 $45,448
General $10,417,807 $10,448,470 -$30,663
$16,474,212 $16,459,427 $14,785
Bill Mayhew
242 8629