Item 7A
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CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
'""" STAFF REPORT
AGENDA ITEM #7A
MARCH 8, 2004
AGENDA ITEM: Final Reading and Public hearing on Ordinance 58-04-29
amending the City's Code of Ordinances, Article VI, Division 3,
General Employee Retirement System and Division 4, Police
Officer Retirement System.
SUBMITTED BY: George Foster, Human Resource Manager
DATE: March 8, 2004
BACKGROUND: On February 9, 2004, the City Commission conducted a first
reading of proposed Ordinance 58-04-29. On February 23, the City
Commission conducted a Public Hearing and, based upon
comments on the %z% monthly reduction for the "early" DROP,
continued the Public Hearing and deferred action until March 8,
2004.
The DROP was established as a "no cost" optional benefit for
j employees. To establish a lesser reduction than '/2% per month for
General Employees' "early" DROP would cost the City the
following amounts:
To establish a'/4% per month "early" DROP reduction would
increase the City's contribution rate by + 0.75% for an annual
cost to the City of $22,496.
To establish a 0% per month "early" DROP reduction would
increase the City's contribution rate by + 1.71 % for an annual
cost to the City of $51,289.
The cost for the above DROP reductions for Police Officers would
be de minimis based upon their current retirement options as
mandated by FS 185.
Another consideration, other than cost, is one of priorities. That is,
if the City decides to allocate more funding, where would that
funding be most effectively utilized? There are two major areas
that additional funding could be utilized - 1) salaries and/or
~"' 2) benefits. If additional funding were allocated to benefits, a
decision would need to be made as to what benefit, or benefits,
should be funded. There are at least two other benefits that maybe
of a higher priority than the DROP. These are providing
employees with disability insurance and providing additional life
insurance to our employees.
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AGENDA ITEM #7A
A'IARCA 8, 2004
COST IMPACT STATEMENT REQUIREMENT:
The actuarial cost impact statement as required by the State of
Florida for these changes is as follows:
1. Transferring the administrative costs from the City to the
Pension Plan would cost $597 annually for the General Plan and
$597 for the Police Plan.
2. Implementation of all mandated Florida FS 189 mandated
benefit enhancements as listed within the ordinance would cost an
additional $12,529 annually which will be funded by the additional
FS 185 funds being received by the City.
3. Cost to implement a DROP plan would be:
a. The proposed %a% per month reduction DROP is cost
neutral and would not cost the City additional funds.
b. To establish a '/a% per month reduction DROP would
1 increase the City's contribution rate for General Employees
by + 0.75% for an annual cost to the City of $22,496.
c. To establish a 0% per month reduction DROP would
increase the City's contribution rate for General Employees
by+ 1.71% for an annual cost to the City of $51,289.
RECOMMENDATION: Approve Ordinance 58-04-29 which includes a "cost neutral"
DROP.
CITY MANAGER: