Exh 7CAGENDA ITEM #7C
MARCH 28, 2005
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT.
AGENDA ITEM: Ordinance S8-OS-30: To increase the contribution to the Pension
Fund from 2% to 3% for all general employees and to reduce the
benefit multiplier from 2.85% to 2.50% for all new general
employees.
SUBMITTED BY: Nelson Van Liere
Finance Director
DATE: March 21, 2005
' BACKGROUND: Approval of the attached ordinance is necessary in order to affect
the desired cost reductions discussed earlier with the City
Commission during budget workshops and union negotiations.
' ' The proposed ordinance will increase the percentage of member
. , contributions for current and future general employees from 2% of
salary to 3% of salary. This change is expected to save the City
' ' approximately $24,762.
The proposed ordinance also will lower the multiplier for general
employees from 2.85% of final average salary to 2.5%. This
change is expected to save the city $27,238.
The City has successfully negotiated both of these items with the
union and the changes have been included in the ratified contract.
BUDGET: The Combined savings to the City is estimated at $51,999,
according to the City's Actuary, Gabriel, Roeder, Smith &
Company. The savings will not affect the current year, but will be
apart of the total determination of funding for future years. The
six percent raise provided in exchange for this benefit change was
budgeted for and has been in effect since October I, 2004. The
calculation is provided in the attached actuarial impact analysis.
RECOMMENDATION: Approve Ordinance 58-OS-30
ATTACHMENTS: Gabriel, Roeder, Smith & Company Actuarial Impact Statement.
REVIEWED BY CITY MAN
AGENDA ITEM #7C
MARCH 28, 2005
Ordinance 58-05-30
AN ORDINANCE AMENDING CHAPTER 2
ADMIl~IISTRATION, ARTICLE VI, EMPLOYEE
BENEFITS, DIVISION III GENERAL EMPLOYEE
RETIREMENT SYSTEM, SECTION 2-281 AMOUNT
OF LEVEL STRAIGHT LIFE PENSION; TO
REDUCE THE BENEFIT MULTIPLIER FOR NEW
HIRES; AMENDING SECTION 2-298 BENEFIT
GROUP GENERAL, RAISING THE EMPLOYEE
CONTRIBUTION PERCENTAGE; TO PROVIDE
FOR SEVERABILITY; TO PROVIDE FOR AN
EFFECTIVE DATE.
WHEREAS, the city is in the process of repackaging the mix of salary and benefits
provided by having approved a salary rate adjustment to partially be off-set by an
increase in the deduction for pension contributions, and
WHEREAS, it is the city's intent to achieve competitiveness in the local azea with
respect to salary and benefits offered to its employees.
NOW, THEREFORE, BE IT ENACTED BY THE CITY COMMISSION ON
BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA,
that;
SECTION 1. Chapter 2 Administration, Article VI Employee Benefits, Division III
General Employee Retirement System be amended as follows:
Sec. 2-281. Amount of level straight life pension.
(a) Benef t group general or employees hired before(see note):
Subject to section 2-285, the amount of level straight life pension shall be
equal to the retiring member's benefit group general credited service
multiplied by the sum of two and eighty-five hundredths (2.85) percent of
the retiring member's final average compensation.
Ib) Benefit group general for employees hired afrer (see note):
Subiect to section 2-285, the amount of level strai ht life pension shall be
equal to the retiring member's benefit group general credited service
multiplied by the sum of two and fifty hundredths (2.50) percent of the
retiring member's final avers e~ compensation.
Sec. 2-298. Member contributions.
AGENDA ITEM #7C
MARCH 28, 2005
1 (a) Member contributions for benefit group general shall be twe-(-?}
three 3 ercent of salary and said contribution shall be deducted from the
~ member's pay and paid over into the retirement system at least monthly.
SECTION 2. Severability
If any section, sentence, clause, or phrase of this ordinance is held to be
invalid or unconstitutional by any court of competent jurisdiction, then
said holding shall in no way affect the validity of the remaining portions
of this ordinance,
SECTION 3. Effective Date
Note: The above modifications to the pension ordinance include a blank
for the date of the change. The staff will insert the date that corresponds
with the first full pay period after adoption that it is feasible to implement.
This Ordinance shall take effect upon its final passage and adoption as
described in the note above.
Passed by the City Commission on first reading this _ __ Day of March,
2005.
Passed by the City Commission on final reading this Day of April,
2005.
John S. Meserve
Mayor /Presiding Officer
Approved as to farm and correctness:
Alan C. Jensen, Esquire
City Attorney
ATTEST:
Donna Bussey
City Clerk
AGENDA ITEM #7C
MARCH 28, 2005
GABRIEL, ROEDER, SMITH & COMPANY
Consultants & Actuaries
Orie.Towne Square • Suite 800 • Southfield, Michigan 48076 •248-799-9000 •800-521-0498 • fax 248-799-9020
March 7, 2005
Mr. Nelson Van Liere, Director of Finance
City of Atlantic Beach General Employee
Retirement System
800 Seminole Road .
Atlantic Beach, FL 32233-5445
Re: General Employee Retirement System
Dear Nelson:
Enclosed are S copies of the Impact Statement and Actuarial Cost Estimate for the proposed
change to the Ordinance.
The proposed. changes are to increase member contributions for current and future members from
2% of salary to 3% of salary and to decrease the multiplier from 2.85% to 2.50% for members
hired after March 31, 2005.
The Impact Statement should be transferred to Atlantic Beach letterhead and signed. A copy of
the Impact Statement and Actuarial Cost Estimate should be sent prior to the second reading
together with a copy of the proposed ordinance to:
Division of Retirement
Department of Management Services
Bureau of Program Services
2639-C North Monroe Avenue
Tallahassee, Florida 32399-1560
Respectfully submitted,
~~~~ ~
Brad Lee Armstrong, ASA, EA
BLA:dks
Enclosures
AGENDA ITEh1 #7C
MARCH 28, 2005
CITY OF ATLANTIC BEACH GENERAL EMPLOYEE RETIREIYIENT SYSTEM
ACTUARIAL IMPACT STATEMENT, MARCH 7, 2005 ; : ;;., ~., .,,.,
Description of Amendrrtents
• Increase member contributions from 2% of salary to 3% of salary for current and future members.
• Decrease the multiplier from 2.85% to 2.50% for members hired after Nfarch 31, 2005.
Funding Implications of the Amertdrnents
An actuarial cost estimate for the amendment is attached.
Certification ofAdministrator
The actuary has been furnished with a description of the amendment.
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.
, Administrator
City of Atlantic Beach
General Employee Retirement System
AGENDA ITEM #7C
MARCH 28, 2005
CITY OF ATLANTIC BEACH GENERAL EIVIPLOYEE RETIREiYIENT SYSTElYI
ACTUARIAL COST ESTIMATE, MARCH 7, 2005
Data atad Actuarial Assicmptions ` ,'" "'.
The data and actuarial assumptions used for the cost estimate were the same as used for the September
30, 2003 actuarial valuation.
Description of Proposed Amendments
• Increase member contributions from 2% of salary to 3% of salary for current and future members.
+ Decrease the multiplier from 2.85% to 2.50% for members hired after March 31, 2005.
Contribution Implications of the Amendments
' ' ... Percents of Payroll FY 04/05 Dollars
' ~ ~ ~ General ~ General
Before Amendments
Normal Cast 11,93%
Unfd Act. Accr. Liab. 4.23
FS 112.64(5} Compliance 0.36
Administrative Exp. O.SO.
Total 17.02%
After Amendments
Normal Cost 10.90%
UnPd Act. Accr. Liab. 4.54
FS 112.64(5) Compliance 0.40
Administrative Exp. O.SO
Total 16.34%
Change from Amendments
Normal Cost (1.03)%
Unfd Act. Accr. Liab. 0.31
FS 112.64(5) Compliance 0.04
Administrative Exp. 0.00
Total (0.68)%
$526,796
$505,749
$(21,047)
AGENDA ITEM #7C
lY1ARCH 28, 2005
CITY OF ATLANTIC BEACH GENERAL EMPLOYEE RETIREMENT SYSTEM
ACTUARIAL COST ESTIMATE, MARCI3 7, 2405
Allocations of Contribution Increase , .'' ~:~'•~:?.,~ a=:;~~~:
Percents of Payroll
To Member
To City
1.00%
(1.68)
FY 04J05 Dollars
$ 30,952
(51,999)
Actrcarial Present Valtces (thousands of dollars)
..... ~.j~ „.. .._...r., , .. .. ~. ~...
Present Value of Prospective Benefits
Retired Members & Beneficiaries
Vested Terminated Members
Active Members
Service pensions
Vested term pensions
Disability pensions
Survivor pensions/pre-retirement
Termination refunds
Total-Active Members
Total APV of Prospective Benefits
Actuarial accrued liability
Unfd actuarial accrued liability
Active member future salaries
Active member future contributions
Before Amendments After. Amendments .
General General
$2,354 . ,. $2;354
' 404 ~ ~ 404
6,877 ~ 6,877
' ~ 288 ~ ~~ 289
~
~
252 ~ ~ 253
~
314 ~ 314
~
59 . 73
7,790 7,806
$10,548 $10,564
$8,186 $8,396
$2,236 $2,446
$20,584 ~ $20,584
$412 $618
COMMENT: The increase in unfunded actuarial accrued liability was financed as a Level percent of
payroll over 30 years.
;~~ ~ . ~~ ~l~~Q s~
Brea. d Lee Armstrong, ASA, , EA [02-5614]