Item 8A v
AGENDA ITEM # 8A
SEPTEMBER 25, 2006
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: The General Employee and Police Employee Pension Boards have
~, requested that the City Commission grant a one time three (3)
percent cost of living adjustment or COLA, for city retirees and
beneficiaries.
SUBMITTED BY: General Employee Pension Board, and
Police Employee Pension Board
DATE: September 7, 2006
BACKGROUND: Previous to this request, retirees and their beneficiaries have
received three previous cost of living adjustments. These were in
the amount of 12.5% in 1987, 3% in 1997 and 5% in 2001. In
1993, as a separate adjustment, retiree and beneficiary benefits
were increased by raising the multiplier related to each respective
plan.
During the August 10, 2006 pension board meetings, both boards
reviewed the need for a cost of living adjustment and voted to have
"' the plan administrator propose a one time cost of living adjustment
of three'(3) percent to the City Commission for approval. The
board was asked if they wanted to consider other options such as
~`" restricting the eligibility for the COLA in order to reduce cost.
Options such as requiring the retiree or beneficiary to have been
receiving a benefit for at least five years, as an example, was
'"" discussed. Both boards did not want to "discriminate" with the
eligibility criteria.
Attached is the cost estimates prepared by the plan's actuary,
Gabriel Roeder Smith and Company.
BUDGET: If a COLA is approved, the action will affect the budget for the
City and for the City's pension funds. The City will have to
budget and transfer additional funds as calculated by the actuary to
amortize the cost of the increased benefit over fifteen years. The
pension fund will have to budget and pay the additional costs of
the increased benefits being paid out.
City Budget:
The actuary report attached estimates that the increased
contributions to the General Employee Plan would be $2,414 per
year for a one (1) percent adjustment. A three (3) percent COLA
would therefore cost $7,242 per year for fifteen years. This will
require an additional 0.21 % increase in contributions as a percent
of payroll.
AGENDA ITEM # 8A
SEPTEMBER 25, 2006
a..
The actuary report attached estimates that the increased
contributions to the Police Employee Plan would be $3,039 per
~„ year for a one (1) percent adjustment. A three (3) percent COLA
would therefore cost $9,117 per year for fifteen years. This will
require an additional 0.60% increase in contributions as a percent
of payroll.
Pension Budget:
Both of the above increases in the City's budget for transfers to the
pension fund will be revenues in the pension fund. This will off-
set the increased expenses of the additional benefit to be paid. For
•• the General Employee Plan this is estimated at $9,625.83 per year
and for the Police Employee Plan the increased cost would be
$10,261.23 per year.
RECOMMENDATION: The City Commission consider the request of the General
and Police Employee Pension Boards to provide a three (3) percent
*~ Cost of Living Adjustment to all retirees and beneficiaries as of
September 30, 2005.
REVIEWED BY CITY M
~.
ATTACHMENTS:
~""" • Supplemental Actuarial Valuation to determine the costs associated
with providing a cost of living adjustment for the General Employee
Pension Plan
• Supplemental Actuarial Valuation to determine the costs associated
~. with providing a cost of living adjustment for the Police Employee
Pension Plan
~,.
'" CITY OF ATLANTIC BEACH GENERAL EMPLOYEE
RETIREMENT SYSTEM
PROPOSALS UNDER CONSIDERATION
AGENDA ITEM # 8A
SEPTEMBER 25, 2006
SUBMITTED TO: The Board of Trustees
DATE: July 21, 2006
SUBMITTED BY: Brad Lee Armstrong, ASA, EA
~„ Gabriel Roeder Smith & Company
~.
BACKGROUND
This report contains the results of a supplemental actuarial valuation requested to determine the costs
~• associated with changes under consideration for General retirees and beneficiaries. The proposed
changes were valued to be funded by additional city contributions.
Except as otherwise noted, valuation data, methods, and assumptions were the same as those used for
the annual actuarial valuation as of September 30, 2005. The member data as of September 30, 2005
can be summarized as follows:
Total Average
Annual Monthly
Pensions Pension
Number of retirees and beneficiaries 32 $320,861 $ 836
~"' Number of retirees retired more than 5 years 24 $195,446 $ 679
Number of retirees retired more than 10 years 14 $ 95,154 $ 566
Annual active member Payroll $3,182,450 N/A N/A
,,
Gabriel Roeder Smith & Company -1-
..
AGENDA ITEM # SA
SEPTEMBER 25.2006
RESULTS OF SUPPLEMENTAL ACTUARIAL VALUATIONS:
Proposal 1
A one time pension increase of 1 % to each retired member and beneficiary as of September 30, 2005.
(e.g. $1,000 a month would become $1,010 a month):
Adoption of this proposal would require an additional city contribution of:
Number of Cost of Increase Over 15 Years
Individuals Percent of Payroll FY 06/07 Dollars
32
Proposal 2
A one time pension increase of 1 % to each retired member and beneficiary as of September 30, 2005
where the original benefit commenced before October 1, 2000. (e.g. $1,000 a month would become
"" $1,010 a month for members retired at least 5 years):
Adoption of this proposal would require an additional city contribution of:
Number of Cost of Increase Over 15 Years
Individuals Percent of Payroll FY 06/07 Dollars
24
Proposal 3
0.07%
0.04%
A one time pension increase of 1 % to each retired member and beneficiary as of September 30, 2005
where the original benefit commenced before October 1, 1995. (e.g. $1,000 z month would become
$1,010 a month for members retired at least 10 years):
Adoption of this proposal would require an additional city contribution of:
Number of Cost of Increase Over 15 Years
Individuals Percent of Payroll FY 06/07 Dollars
14
~.
0.02%
$2,414
$1,379
$690
The preceding calculations were based on the same member data, methods, and assumptions used in
the September 30, 2005 annual actuarial valuation.
Note: An actuarial impact statement and cost estimate, in the format required pursuant to Chapter 112,
Florida Statutes, must be submitted to the Division of Retirement, Bureau of Local Retirement
Systems, prior to final action adopting a change to the Ordinance.
Gabriel Roeder Smith & Company
-2-
~.
CITY OF ATLANTIC BEACH POLICE OFFICERS'
RETIREMENT SYSTEM
PROPOSALS UNDER CONSIDERATION
AGENDA ITEM # 8A
SEPTEMBER 25, 2006
~. SUBMITTED TO: The Board of Trustees
,,,~ DATE: July 21, 2006
SUBMITTED BY: Brad Lee Armstrong, ASA, EA
Gabriel Roeder Smith & Company
~.
BACKGROUND
This report contains the results of a supplemental actuarial valuation requested to determine the costs
~. associated with changes under consideration for General retirees and beneficiaries. The proposed
changes were valued to be funded by additional city contributions.
Except as otherwise noted, valuation data, methods, and assumptions were the same as those used for
~„ the annual actuarial valuation as of September 30, 2005. The member data as of September 30, 2005
can be summarized as follows:
Total Average
Annual Monthly
Pensions Pension
Number of retirees and beneficiaries 13 $342,041 $2,193
Number of retirees retired more than 5 years 8 $166,183 $1,731
Number of retirees retired more than 10 years 3 $ 55,697 $1,547
Annual active member Payroll $1,402,444 N/A N/A
Gabriel Roeder Smith 6'c Company -1-
~•
~.
AGENDA ITEM # SA
SEPTEMBER 25, 2006
RESULTS OF SUPPLEMENTAL ACTUARIAL VALUATIONS:
Proposal 1
A one time pension increase of 1% to each retired member and beneficiary as of September 30, 2005.
(e.g. $1,000 a month would become $1,010 a month):
Adoption of this proposal would require an additional city contribution of:
Number of Cost of Increase Over 15 Years
Individuals Percent of Payroll FY 06/07 Dollars
13
0.20%
$3,039
Proposal 2
A one time pension increase of 1% to each retired member and beneficiary as of September 30, 2005
where the original benefit commenced before October 1, 2000. (e.g. $1,000 a month would become
$1,010 a month for members retired at least 5 years):
Adoption of this proposal would require an additional city contribution of:
Number of Cost of Increase Over 15 Years
Individuals Percent of Payroll FY 06/07 Dollars
8
0.09%
$1,368
Proposal 3
A one time pension increase of 1% to each retired member and beneficiary as of September 30, 2005
where the original benefit commenced before October 1, 1995. (e.g. $1,OOG a month would become
$1,010 a month for members retired at least 10 years):
~„ Adoption of this proposal would require an additional city contribution of:
Number of Cost of Increase Over 15 Years
Individuals Percent of Payroll FY 06/07 Dollars
3
0.02%
$304
The preceding calculations were based on the same member data, methods, and assumptions used in
the September 30, 2005 annual actuarial valuation.
Note: An actuarial impact statement and cost estimate, in the format required pursuant to Chapter 112,
Florida Statutes, must be submitted to the Division of Retirement, Bureau of Local Retirement
Systems, prior to final action adopting a change to the Ordinance.
~.
Gabriel Roeder Smith & Company
-2-