Exh 6B~~
Cl[TY OF ATLANTIC BEACH
y,~„,. CITE.' COMMISSION
STAFF REPORT
AGENDA ITEM: Resolution 99-26
DATE: September 8, 1999
SUI3MITTED BY: David E. Thompson, City Manager
BACKGROUND: At the last City Commission meeting, this section of resolution '99-
24 `Nas omitted by the City Commission. The City Commission
indicated that it would reconsider this matter at the September 13,
1999.
On.e question that was raised at the previous meeting was whether
or not the City Commission had a legal obligation to fund the
shortfall in the retirement funds. We have a legal requirement to
fund the pension plan according to the actuarial valuation. Ii: has
been a past practice for the City Commission to do so, and staff
,strongly urges the Commission to fund it as presented. F~ .S. S.
1 12.63 addresses this issue.
If tl~e City Commission does not pass this resolution, then the
actuaries will update the numbers in the next fiscal. year to cover
the difference in the funding.
RECOMMENDATION: Approve resolution 99-26 as presented.
ATTACHMENT: September 7, 1999 Memo from Nelson Van Liere
Resolution 99-26
Pa€;e A-3 regarding Chapter 185 provision
F.S.S. 112.63 relating to Pension Plans
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REVIEWED BY CITY MANA.GER:_ _ =.---_- ___.
AGENDA ITEM NUMBER:
CITY OF
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Date:
To:
From:
Subject:
September 7, 1999
MEMORANDUM
David Thompson, City Manager
Neason Van Liere, Finance Director~~'~~--•-
800 SEbtINOLE ROAD
ATLANTIC BEACH, F;~ORIDA 32233-5445
TELEPE[ONE (904) 247-:1800
FAJ~ (904) 247-5805
SU:VCOM 852-5800
Resolution No. 99~-26 amending the operating budget.
It has been the City's past practice to fund annually the retirement plan at the level as recommended by
the plan's actuary. The actuary determines what level of funding is needed and also estimates how much
funds will be received under the provisions of Chapter 185, Florida Statutes. If the actual receipts from
the state are higher than expected, the City would need to contribute less. For this fiscal year, the
estimate was high and actual. receipts were lower than anticipated. In keeping with the City's past
practice of funding the actuary's recommendation, the City must then contribute more: to make up the
difference.
,rte The current budget is:
En)plo}per Contribution $94,599
Chapter, 185 -State 72,500
Total re;commend(;d funding $167,099
The adjusted bud;;et will be:
Employer Contribution $100,754
Chapter 185 - State 68,048
Total recbmmend~ed funding $168,802
Please find attached Resolution 95~-26 amending the Fiscal Year 1998/99 Operating Budget:. Also
attached is a copy of page A-3 of The Report of the Annual Actuarial Valuation September 30,1997 of
the City of Atlantic; Beach Employees Retirement Plan. Please refer to the note at the bottom of page
A-3 regarding the Chapter 185 provision.
You will also note that the current: budget as shown above is not what the actuary recommended since the
budget was originally adopted without the benefit of this report due to its late release. Therefore, the
budget needs to be amended to reflect the difference in funding from the original budget to the actuary
report and from thf; actuary report to what was actually received. The actuary had estimated we would
receive $74,203 from the Chapter 185 provision.
Recommendation:
That the City Commission adopt Resolution 99-26 amending the Police Pension Fund budget to adjust
;cwr the City's contribution in an amount sufficient to fund the total recommendation of the pension plan's
actuary for the current year.
]EiESOLUTION NO. 99 - 26
A RESOLti"TION AMENDING THE OPERATING BUDGET FOR THE CITY OF
ATLANTIC BEACH, I''LORIDA, FOR THE FISCAL YEAR BEGINN:[1vG
OCTOBER. 1, 1998 AND :ENDING SEPTEMBER 30,1999,
WHEREAS, the; City Charter of the City of Atlantic Beach requires that the City Commission
approve all budgetary increases and. transfers at the fund level, and
WHEREAS, the; nature of budgetary systems and those day to day decisions affecting such
budgetary systems require adjustments from time to time.
NOW, THI,R.EFORE, BE; IT RESOLVED by the City Commission of the City of Atlantic
Beach, that the followint; Budget N[odification be approved for the 1998-1999 Operating Budget.
GENERAL FUND
Expenses:
Police I)ep;rrtment:
Administration -Pension 00120015212203 $1,046
Patrol -Pension 00120025212203 $4,555
Detective -Pension 00120035212203 $554
POLICE PENSION FUND
Revenues:
'w~ Employer contributions 60100003681000 $6,155
Casualty Insurance Premium 'Tax 185 60100003125200 -$4,452
Description:
'To increase the City's contribution to the employees retirement plan to meet the total
contribution requirement as calculated by the pension actuary for this fiscal ye;ar and reduce. the
amount budgeted fear Casualty Insurance Premium Tax to the amount actually received by the
City.
Adopted by the City Commission this 23`d day of August, 1999.
Suzanne Shaughnessy
Mayor /Presiding Officer
Approved as to form. and correctness:
ATTEST:
Alan C. Jensen, :Esquire
City Attorney
Maureen King, CMC
City Clerk
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`` ll _ De~erminifig Dollar Contributions
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For any period of time, the percent-of-payroll contribution rate needs to be converted to dollar
amounts. We recommend one of t:he following procedures.
Procedure (1) Contribute dollar amounts at the end of each payroll period which are equal to the
percent-of-payroll contribution requirement multiplied by the covered active mef.nber payroll for the
period. Adjustments should be made as necessary to exclude items of pay that are; not covered
compensation for R.etire;ment System benefits and to include non-payroll amounts that are covered
compensation.
-~ Procedure (2} Contribute:; the a.:mounts indicated in the following schedule. Included i:n these
amounts is the projected effect of base salary increases for 1-1/2 years, which produces a projection
factor of 1.08362:4, i.e., ((1.OS5)1~']
General Police* Fire*
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City Contribution ~ 5257,97 594,99 50
Chapter 185/17 N/A 74,203 4:?,139
Totals 5257,597 5168,802 54:?,139
The above dollars a;raounts are assumed to be contributed, on average, halfway through the fiscal
year. If contributions are made on a later schedule, interest should be added at the rate of .70%
(.0070) f`or each month of delay.
FS 112.64 requires City contributions to be deposited not less frequently than quarterly. Member
contributions, whicr. are in addition to the City contributions, must be deposited not less frequently
than monthly.
* Chapter 175185 Florida Statutes. The base City contribution amount may need to be increased if the
amount received under the provisions of Chapter 175/185, Florida Statutes, is not sufficient to meet the total
contribution requirement.
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GAE3F',lEl_, f:0EI7FR, SMITH << C(~MP,ANY ~ A - •3
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112.63 Actuarial re~ort<~ and statements of actuarial impact; review„
(1) Each retirement system or plan subject to the provisions of this act shall have
regularly scheduled. act~~arial reports prepared and certified by an enrolled actuary. The actuarial
report shall consist of, but shall not be limited to, the following:
(a) Adequacy of employer and employee contribution rates in meeting lf;vels oaf
employee benefits provided in thf: system and chances, if any, needed in such rates to achieve or
preserve a level of :Funding-.deemE:d adequate to enable payment through the indefinite future of
the benefit amounts prescribed b}~ the system, which shall include a valuation of'prese:nt assets,
based on statement value, and prospective assets and liabilities of the system anti the extent of
unfunded accrued liabilities, if any.
(b) A plan to amortize an.y unfunded liability pursuant to s. 112.64 and a description. of
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actions taken to reduce: the unfunded liability.
(c) A description and explanation of actuarial assumptions.
(d) A schedule. illustrating the amortization of unfunded liabilities, if airy.
(e) A comparative review illustrating the actual salary increases Granted and the rate of
investment return realized over t:he 3-ye~rr period preceding the actuarial report with the
assumptions used :in both the preceding and current actuarial reports.
(f) A statement by the enrolled actuary that the report is complete and accurate a.nd that
in his or her opinion the techniques and assumptions used are reasonable and meet the
requirements and intent of this act.
The actuarial cost methods utilized for establishing the amount of the annual actuarial no:-mal
cost to support the: promised benefits shall only be those methods approved in the Employee
Retirement Income Security Act of 1974 and as permitted under regulations prescribed by the
Secretary of the Treasury.
(2) The fr~que;ncy of actuarial reports must be at least every 3 years commencing from
the last actuarial report of the p'.~an or system or October 1, 1980, if no actuarial report has been
issued within the 3-year period prior to October 1, 1979. The results of each actuarial report shall
be filed with the plan administrator within 60 days of certification. Thereafter, the rf;sults of each
actuarial report shall be made available for inspection upon request. Additionally, each
retirement system or plain covered by this act which is not administered directly by laze
Department of M,3nagement Services shall furnish a copy of each actuarial report to the
Department of Manao;ement Services within 60 days after receipt from the actuary. The
requirements of this section are: supplemental to actuarial valuations necessary to comply with
i„~. th.e requirements of ss. 11.4,6 and'218. ~2.
~(3) No ur.~it oi: locaI go~~~ernment shall agree to a proposed change in retirement benefits
unless the administrator of the system, :prior to adoption of the change by the governing body,
and prior to th.e last public healing thereon, has issued a statement of the actuarial impact of the
proposed chariQe upon the local. retirement system, consistent with the actuarial review„ and has
furnished a copy of such statement to the division. Such statement shall also indicate whether the
proposed changes are: in compliance with s. 14, Art. X of the State Constitution and with s.
112.64.
(4) Upon receipt, pursuant to subsection (2), of an actuarial report, or upon :receipt,
pursuant to subsection (3), of a statement of actuarial impact, the Department of Management
Services shall acknowledge such receipt, but shall only review and comment on each retirement
system's or plan's actuarial valuations at least on a triennial basis. If the department: finds that the
actuarial valuation is not complete, accurate, or based on reasonable assumptions, or if the
department does not receive tree actuarial report or statement of actuarial impact, tr-e department
shall notify the local government and request appropriate adjustment. If, after a re~~sonable period
of time, a satisfactory adjustment is nat made, the affected local government or the: department
may petition for a hearing under the provisions of ss. 120.569 and 120.57. If the administrative
law judge recommends in favor of the department, the department shall perform an actuarial
review or prepare the statement of actuarial impact. The cost to the department of :performing
such actuarial review or preparing such statement shall be charged to the governmental entity of
which the employees are covered by the retirement system or plan. If payment of sucl^i costs is
~'~"' not received b he de artmerrt within 60 da s after recei t b the governmental e:r~tit of~the
y~ p Y P Y b Y
request for payment;, the department shall certify to the Comptroller the amount due, and the
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_ Comptroller shall. pa:y such amount to the department from any funds payable to the
_..,~„~„ governmental entity of which the employees are covered by the retirement system or plan. If the
administrative law judge recommends in favor of the local retirement system ane( the department
performs an actuaria:( review, the cost to the: department of performing the actuarial review shall
be paid by the department.
. (~) Payments made to the fund as required by this chapter shall be based on the norm~.al
and past sen•ice costs contained in the most recent actuarial valuation, subject to being;
state-accepted.
(6} Begiruur..g July 1, 1980, each retirement system or plan of a unit of local gave:rnment
shall maintain, in. aa:urai:e and accessible form, the following information:
(a) For each active and inactive member of the system, a number or other means of
identification; date of birth; sex; dote of employment; period of credited service; split, if required,
between prior service and current service; and occupational classification.
(b) For each active member, current pay rate, cumulative contributions together Frith
accumulated interest, if credited, a~~e at entry into system, and current rate of corrtribution.
(c) For each inactive mem'~:>er, average final compensation or equivalent and age at which
deferred benefit i.s to begin.
(d) For each retired member and other beneficiary, a number or other means of
identification, date of birth, sex, beginning date of benefit, type of retirement and amount of
monthly benefit, and type of survivor benefit.
History.-~s. I, ch. Ili-170; s. 15, ch. 79-183; s. 3, ch. 83 ~7; s. 48, ch. 92-279; s. 5~, ch. 9.!-326; s.. 23;, ch.
94-249; s. 1418, ch. 95-147; s. 2, ch. 96-324; s. 16, ch. 96-410; s. 21, ch. 99-255; s. 1, ch. 99-392.
~~~! zNote.-Actuarial valuation are required pursuant to generally accepted accounting principles. The requirement
that financial statements be prepared in compliance with the principles was deleted from s. 218.32(1'){a) by s. 1S, ch.
96-324, and similar requirements were incomeorated into newly created s. 218.321 by s. 19, ch. 9b-3.?4.
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