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AGENDA ITEM:
DATE:
SUBMITTED BY:
9-a7- 99
CITY OF ATLANTIC BEACH
CITY COMMISSION
STAFF REPORT
Budget Resolution
September 23, 1999
David E. Thompson, City Manager
BACKGROUND: At the August 23, 1999 City Commission meeting, a section of
resolution 99-24 was omitted by the City Commission. The City
Commission indicated that it would reconsider this matter at the
September 13, 1999 meeting.
One 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. After some research into this matter, it
appears that the City has a legal requirement to fund the pension
plan according to the actuarial valuation. It 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. 112.63 addresses this
issue.
However, the amount is so small, that it is doubtful that failing to
fund this change would result in any penalty. If the 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.
Other issues in the Resolution are addressed in the attached
memorandum from Nelson Van Liere.
RECOMMENDATION: Approve resolution 99-26 as presented.
ATTACHMENT: September 21, 1999 Memo from Nelson Van Liere
Resolution 99-26
Page A-3 regarding Chapter 185 provision
F.S.S. 112.63 relating to Pension Plans
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REVIEWED BY CITY MANAGER: ,.~ _,.~
AGENDA ITEM NUMBER:
CITY OF
~~c ~eac~ - ~~vr~da
800 SEMINOLE ROAD
ATLANTIC BEACH, FLORIDA 32233-5445
TELEPHONE (904) 247-5800
FAX (904) 247-5805
SUNCOM 852-5800
MEMORANDUM
Date:
To:
From:
Subject:
September 21,1999
David Thompson, City Manager
Nelson Van Liere, Finance Director----
Resolution No. 99-26 amending the Operating Budget.
Resolution No. 99-26 amending the Operating Budget for 1998/99 addresses a number of issues
concerning the pension funds.
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.
The current budget is:
Employer Contribution $94,599
Chapter 18S -State 72,500
Total recommended funding $167,099
The adjusted budget will be:
Employer Contribution $100,754
Chapter 18S -State 68,048
Total recommended funding $168,802
Also adjusted are some of the administrative expenses of the pension plan. Expenses such as actuary,
attorney and medical fees are by code to be paid for by the City. The only administrative costs paid for
with pension funds are the investment management fees. The actuary and attorney costs are more than
expected due to the special requests concerning the contract with Jacksonville and the revisions
requested in conjunction with changes in state laws. Also, the actuary was late with last year's report,
causing the City to have to pay for two reports in the current year.
Please find attached Resolution 99-26 amending the Fiscal Year 1998/99 Operating Budget. Alsa
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. 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 the actuary report, to the amount that was actually received. The actuary had estimated
we would receive $74,203 from the Chapter 185 provision.
Also included in this resolution is a request to reduce the Convention Development Tax fund budget for
funds to be spent next year on Bull Park and the request to fund additional costs of the Storm Water
Improvement project as recommended with the bid 9899-25 staff report. If the city commission does not
award the bid, the resolution maybe amended to strike that line item.
Recommendation:
That the City Commission adopt Resolution 99-26 amending the Operating Budget for the following:
• Adjust the City's contribution in an amount sufficient to fund the total recommendation of the
pension plan's actuary for the current year for pension benefits,
• Adjust the budget to cover additional pension plan administrative costs,
• Adjust the budget for additional funds needed for the Storm Water Improvement project,
• Adjust the Convention Development Tax Fund budget to move funds to next year for Bull Park.
RESOLUTION NO. 99 - 26
A RESOLUTION AMENDING THE OPERATING BUDGET FOR THE CITY OF
ATLANTIC BEACH, FLORIDA, FOR THE FISCAL YEAR BEGINNING
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, THEREFORE, BE IT RESOLVED by the City Commission of the City of Atlantic
Beach, that the following Budget Modification be approved for the 1998-1999 Operating Budget.
GENERAL FUND
Expenses:
Police Department
Administration -Pension
Patrol -Pension
Detective -Pension
General Government
Transfer to Fire Pension Fund
00120015212203 $1,046
00120025212203 $4,555
00120035212203 $554
00110095819105 $12,000
Description:
Funding from the General Fund is increased by charging the divisions in which the employees
payroll is charged for their benefits. This increase is a result of the less than expected funds
received from the state. The transfer to the Fire Pension Fund from the General Fund -General
Government division is to cover additional administrative expenses including actuary costs and
attorney fees that by City Code, the City is required to pay.
GENERAL EMPLOYEE PENSION FUND
Expenses:
General Employee retiree payments 60380305183605 $16,500
Professional Services -Management Fees 60380305183100 $10,600
Description:
To increase the budget to true up the budget for pension retiree monthly payments and
unexpected legal fees. Actual payments exceeded originally budgeted amounts due to fire
retirees being paid longer than expected and the monthly retirement payroll being higher than
expected.
POLICE PENSION FUND
Revenues:
Employer contributions 60100003681000 $6;155
Casualty Insurance Premium Tax 185 60100003125200 -$4,452
Expenses:
Professional Services -Management Fees 60180105183100 $7,900
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 year and reduce the
amount budgeted for Casualty Insurance Premium Tax to the amount actually received by the
City. Also to increase the Investment Management fees which are higher than expected due to
the increased value of the investment portfolio.
FIRE PENSION FUND
Revenues:
Transfer from General Fund
60200003811000
$12,000
Expenses:
Professional Services 60280205183100 $15,600
Fire Department retiree payments 60280205183603 $20,100
Description:
To increase the budget for higher than anticipated pension payroll and professional expenses
related to the fire contract with Jacksonville. The transfer from the General Fund is for
administration expenses required to be paid for by the City. The administrative expenses to be
paid for by the City are professional services for the actuary and the attorney. Investment
management fees are paid for by the Pension Fund.
CONVENTION DEVELOPMENT TAX FUND
Expenses:
Buildings -original budget Russell Park Bldg 12000005196200
-$99,946
Description:
The 1998/1999 budget had appropriated these funds for a building at Russell Park. The funding
was re-designated for Bull Park Improvements in the 1999/2000 Budget. This modification
releases the funds in the current year to make them available for next year.
GENERAL FUND
Expenses:
Public Works -Streets Division 00150025426300 $72,600
Description:
The purpose of this request is to make funding available for the award of bid number 9899-25,
Storm Water System Improvements. The total amount needed is $422,560. The original budget
for this project was. $279,000 and available funds being re-appropriated within the existing
budget are $71,000. The remaining funds would be from General Fund reserves of $72,600. The
award of Bid number 9899-25 is also on this agenda for approval. If the bid is not awarded, this
portion of the resolution maybe stricken.
Adopted by the City Commission this 27"' day of September, 1999.
Suzanne Shaughnessy
Mayor /Presiding Officer
Approved as to form and correctness:
Alan C. Jensen, Esquire
City Attorney
ATTEST:
Maureen King, CMC
City Clerk
Determining Dollar Contributiotas
For any period of time, the percent-of-payroll contribution rate needs to be converted to dollar
amounts. We recommend one of the 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~:ber payroll for the
period. Adjustments should be made as necessary to exclude items of pay that are not covered
compensation for Retirement System benefits and to include non-payroll amounts that are covered
compensation.
Procedure (2) Contribute the amounts indicated in the following schedule. Included in these
amourrts is the projected effect of base salary increases for 1-1/2 years, which produces a projection
factor of 1.083b24, i.e., [(1.055)t']
General Police* Fire*
City Contribution $257,97 $94,99 $0
Chapter 185/17 N1A 7203 42,139
Totals $257,.597 $108,802 S42,139
The above dollars amounts are assumed to be contributed, on average, halfway through the fiscal
" vear. If contributions are made on a later schedule, interest should be added at the rate of .70%
--~ (.00 70} for each month of delay.
FS 112.b4 requires City contributions to be deposited not less frequently than quarterly. Member
contrbutions, which 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 tke provisions of Chapter 175/185, Florida Statutes, is zzot sufficient to meet the total
contribution requirement.
GABRIEL, ROEDER, SMITH & COMPANY A - 3
13.2.63 Actuarial reports and statements of actuarial impact; review.-
(1) Each retirement system or plan subject to the provisions of this act shall have
regularly scheduled actuarial 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 levels of
employee benefits provided in the system and chances, if any, needed in such rates to achieve or
preserve a level of fundinc~.deemed adequate to enable payment through the indefinite future of
the benefit amounts prescribed by the system, which shall include a valuation of present assets,
based on statement value, and prospective assets and liabilities of the system and the extent of
unfunded accrued liabilities, if any.
(b) A plan to amortize any 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 any.
(e} A comparative review illustrating the actual salary increases granted and the rate of
investment return realized over the 3-year 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 and 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 normal
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 frequency of actuarial reports must be at least every 3 years commencing from
the last actuarial report of the plan 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 results of each
actuarial report shall be made available for inspection upon request. Additionally, each
retirement system or plan covered by this act which is not administered directly by the
Department of Management Services shall furnish a copy of each actuarial report to the
Department of Management Services within 60 days after receipt from the actuary. The
requirements of this section are supplemental to actuarial valuations necessary to comply with
the requirements of ss. 11.4 and'218.32.
~(3) No unit of local government 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 the last public hearing thereon, has issued a statement of the actuarial impact of the
proposed change upon the Iocal 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, 'out 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 the actuarial report or statement of actuarial impact, the department
shall notify the local government and request appropriate adjustment. If, after a reasonable period
of time, a satisfactory adjustment is not 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 such costs is
not received by the department within. 60 days after receipt by the governmental entity of the
request for payment, the department shall certify to the Comptroller the amount due, and the
Comptroller shall pay 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 and the department
performs an actuarial 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 normal
and past service costs contained in the most recent actuarial valuation, subject to being
state-accepted.
(6) Beginning July 1,1980, each retirement system or plan of a unit of local government
shall maintain, in accurate 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; date 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 with
accumulated interest, if credited, age at entry into system, and current rate of contribution.
(c) For each inactive member, average final compensation or equivalent and age at which
deferred benefit is 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. 1, ch. 78-170; s. 15, ch. 79-183; s. 3, ch. 83 ~7; s. 48, ch. 92-279; s. 5~, ch. 93-326; 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.
Note.-Actuarial valuations 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. 18, ch.
96-324, and similar requirements were incorporated into newly created s. 218.321 by s. 19, ch. 96-334.
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