22South Miami
wiamencaCitn
CITY OF SOUTH MIAMI 1
OFFICE OF THE CITY MANAGER
INTER- OFFICE MEMORANDUM 2007
To: The Honorable Mayor & Members of the C' Commission
From: Roger M. Carlton, Acting City Manager
Date: March 16, 2010 Agenda Item No..
Subject: An Ordinance of the Mayor and City Commission of the
City of South Miami, Florida Amending the South Miami
Pension Plan, providing for compliance with Chapter 2009 -97,
Laws of Florida; providing for a reduction in certain employee
contributions for one fiscal year; providing for severability;
providing for codification; and providing for an effective date.
Request: Approve the Ordinance on first reading subject to completion of an actuarial
impact study prior to second reading.
Reason/Need: Comply with State law and allow negotiated union contracts to be
implemented
City employees are represented by two Police Unions, the PBA Lieutenants and Captains and the PBA
Sergeants and Officers, and the American Federation of State, County and Municipal Employees
(AFSCME). The City Commission has approved agreements with union, the representing Lieutenant's
and Captains and AFSCME which represents a number of employees predominantly in the Public Works
and Park and Recreation Departments. In addition, the City Commission has approved the same
retirement payroll deduction adjustment for non bargaining unit employees as has been approved for the
two unions for which have new contracts and have been completed.
In order to implement the two (2) percentage point reduced payroll deduction for the two unions and the
non - bargaining unit employees an amendment to the City Pension Ordinance is required. That
amendment to the City Pension Ordinance is incorporated in Sec. 2 (a) 3 in the attached Ordinance.
Further, there are four (4) amendments which are necessary to implement changes in State law that are
required of all municipal pension plans. These changes can be found in Sec. 1 (f) 16, Sec. 3 (k), Sec. 4 b
and Section 5 of the attached ordinance.
The proposed amendments have been reviewed by Pension attorney James W. Linn (recently brought on
board with approval of the City Commission), Labor Counsel James Crossland, the City Pension Board
and the Ad Hoc Pension Advisory Committee. After much discussion, the Ad Hoc Pension Advisory
Committee approved amending the Pension Ordinance only in relation to the State mandates and the
language necessary to implement the pension salary reduction. There was a strong dissent from one of
their members. The Pension Board wanted an additional item which would have extended the members
term to four (4) years from the current two (2) years. The Administration has not included this change in
the proposed Ordinance because this change should be reviewed in the more global context of pension
reform. .
The Administration strongly recommends approval of these changes which have been reviewed and
discussed by the Ad Hoc Pension Advisory Committee, the Pension Board an d our legal counsels. It is
critical that we move forward on this first reading Ordinance so that we show good faith to the bargaining
units and the money be paid retroactively to October 1, 2009 to our employees who have concluded
bargaining as well as the non bargaining unit employees. It is required that the Pension Board Actuary
review the financial implication of the amendments and conduct an actuarial impact study which will be
provided before the second reading. That study is already in process. Based on the substantial review
that has been completed and that will continue through second reading, the adoption of this Ordinance is
strongly recommended.
Cost:
Funding Source:
Backup Documentation:
❑ Proposed Ordinance
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ORDINANCE NO.
An ordinance of the Mayor and City Commission of the City of
South Miami, Florida amending the South Miami Pension Plan,
providing for compliance with Chapter 2009 -97, Laws of Florida;
providing for a reduction in certain employee contributions for one
Fiscal Year; providing for severability; providing for codification,
ordinances in conflict; and providing for an effective date.
WHEREAS, the 2009 Florida Legislature enacted Chapter 2009 -97, Law of
Florida, which mandates certain amendments to the South Miami Pension Plan; and
WHEREAS, recent changes to State statutes require several amendments to the
Plan in order to maintain eligibility for receipt of state premium tax revenues; and
WHEREAS, the City Administration has entered agreements with certain
employee groups to provide a one year reduction in required employee contributions,
and
WHEREAS, an amendment to the City code is necessary to permit such new
obligations and conditions; and
WHEREAS, the trustees of the South Miami Pension Plan have requested and
approved the amendments provided herein as being in the best interests of the
participants and beneficiaries and improving the administration of the plan, and
WHEREAS, the City Mayor and City Commission has received and reviewed an
actuarial impact statement related to this change and attached as such; and
WHEREAS, the City Commission deems it to be in the public interest to provide
this change to the pension plan for its police officer employees;
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, THAT:
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Section 1. Section 16- 14(f)(1)(b) of the Code of Ordinances of the City of
2 South Miami, Florida, is hereby amended as follows:
3 (f) Optional forms of payment.
4
5 (1) A participant entitled to a normal or early service retirement
6 benefit shall have the right at any time prior to the date upon which the
7 first payment is received to elect to have the benefit payable under one of
8 the options provided in this section. The participant shall be permitted to
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revoke any such election and to elect a new option at any time prior to the
receipt of the first payment. Election of the retirement option shall be on a
form prescribed by the board of trustees.
a. Life annuity. A police officer Participant may elect to receive an
annuity payable for life. This shall be the normal form of retirement.
There shall be no guaranteed payment in excess of the
accumulated contributions of the Participant, which contributions
shall be paid to the Participant's estate or designated Beneficiary
should the Participant die prior to receiving payments equal to said
contributions.
b. Joint and last survivor option. A participant may elect to receive
a reduced benefit for life and to have the same benefit (or a
designated fraction of the benefit) continued after the participant's
death and during the lifetime of a designated joint pensioner. The
participant shall have the option of electing to receive the payment
of a benefit of seventy -five (75) percent, sixty -six and two- thirds (66
2/3) percent, or fifty (50) percent of the participant's monthly
retirement allowance to be paid at the participant's death to a joint
pensioner designated by the participant at the time of or prior to
retirement, such benefit to be payable during the lifetime of the joint
pensioner. The reduced retirement benefit shall be the actuarial
equivalent of the amount of the retirement compensation otherwise
payable to the participant. A designated joint pensioner may be any
natural person, but need not be the spouse of the participant. In the
event that the designated joint pensioner dies, before the
participant's benefit payments begin, this option shall be canceled
automatically and a retirement income shall be payable to the
member in the form of a life annuity as if the election had never
been made. A retired participant may change his or her joint
pensioner up to two times without the approval of the Board or the
current ioint pensioner. The retiree member need not provide proof
of the good health of the joint pensioner being removed, and the
designated survivor being removed need not be living. Any
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increase in liability to the Plan associated with the new designation,
as determined by the Fund's actuary, shall be borne by the retiree.
c. Other options. The pension board may, approve any other
optional form of substantially equal payments, which are the
actuarial equivalent of any other form provided for in this plan, or
which optional form of payment is cost neutral to the plan.
Section 2. Section 16 -19 of the Code of Ordinances of the City of South
Miami, Florida is hereby amended as follows:
Sec. 16 -19. Contributions.
(a) Each participant shall contribute in each calendar year towards the
cost of the participant's pension an amount equal to three (3) percent of
the participant's earnings. With the exception of police officer participants,
no participant shall make any contributions toward the cost of any past
service pension to which the participant is entitled under this plan. The
employer shall contribute the balance of the cost, actuarially determined,
of providing the benefits of the plan. The employer's contributions shall be
deposited into the pension plan on at least a quarterly basis. Effective
October 1, 1995, the pension contribution for all general employee
participants, including those general employees that are now members of
the retirement system, shall be increased from three (3) percent to five (5)
percent of earnings. Effective October 1, 2001, the pension contribution
for all general employee participants, including those general employees
that are now members of the plan, shall be increased from five (5) percent
to seven (7) percent of earnings. Police officer participant including
bargaining unit employees, that are now members of the plan and any
police officers who join the plan in the future shall, effective October 1,
1993, have their contribution increased from three (3) percent to five (5)
percent of earnings. Effective October 1, 2001, police officer participants
shall contribute 7.5 percent of earnings.
(1) General employee participants. Should the employer's annual
contribution be actuarially determined to exceed twelve (12)
percent, both the employer and the participants shall share equally
the amount in excess of twelve (12) percent for that fiscal year.
Effective October 1, 2005 should the total participant and
employer's annual contribution be actuarially determined to exceed
fourteen (14) percent, both the employer and the general employee
participants shall share equally the amount in excess of fourteen
(14) percent for that fiscal year.
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1 (2) Police officer participants. Effective October 1, 2004 if the
2 total police officer participants contributions and employer
3 contribution exceeds fifteen (15) percent of covered police payroll
4 for any fiscal year, the excess over fifteen (15) percent shall be
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shared equally by the employer and police officer participants.
Police officer participant contributions shall be deposited in the plan
immediately after each pay period. Effective October 1, 2001, an
amount actuarially determined, to provide for certain minimum
benefits required by Chapter 185, F.S. shall be paid from the South
Miami Police Officers Retirement Trust Fund to the Plan each year,
regardless of the growth or diminution in future Chapter 185, F.S.
funds.
(3) Effective October 1, 2009 and for one fiscal year thereafter
participant contributions for the following employee designations
shall be reduced from the above calculated percentages by two (2)
percentage points:
(a) Non bargaining unit employees
(b) Members of the AFSME bargaining unit
(c) Members of the Police Lieutenants and Captains
bargaining unit
Section 3. Section 16 -20 of the Code of Ordinances of the City of South
Miami, Florida is hereby amended as follows:
Sec. 16 -20. Board of trustees.
(a) The board of trustees shall be comprised of seven (7)
members consisting of the two (2) active employees of the city
elected by participants of the plan, two (2) citizen of the city, two (2)
individuals with financial backgrounds and the appointment of one
(1) active employee of the city designated by the city manager, all
to be appointed by the mayor with the advice and consent of the
city commission. No board of trustee member shall receive any
compensation or emolument for services on the pension board. The
board members shall each serve for a period of two (2) years, or
until their successors are appointed, which appointment shall be
evidenced by an acceptance in writing of such appointment. A
member of the pension board may resign by delivering a written
resignation to the city clerk, and such resignation shall become
effective upon its delivery or at a later date specified therein. If, at
any time there shall be a vacancy in the membership of the board,
provided there are not less than five (5) members, the board shall
continue to act until such vacancy is filled as provided above.
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(b) The board shall hold meetings upon such notice, at city hall,
and at such times as its members may from time to time determine.
A majority of the members of the board at the time in office shall
constitute a quorum for the transaction of business. All action taken
by the board at any meeting shall be by vote of the majority of its
members present at such meeting; provided, however, the board
may act without a meeting by unanimous action of its members
evidenced by a resolution signed by all such members.
(c) Subject to the terms of this plan, the pension board may from
time to time adopt bylaws, rules and regulations for the
administration of the plan and the conduct and transaction of its
business and affairs.
(d) The pension board shall have such powers as may be
necessary to discharge its duties hereunder; including but not
limited to, the power to interpret and construe the plan, to
determine all questions of eligibility for benefits, duration of
employment, computation of benefits, value of benefits and
similarly related matters for the purposes of the plan, and the
pension board's determination of all questions arising under this
plan shall be conclusive and binding upon all Employees, retired
Employees, Participants and all other persons.
(e) No member of the pension board shall be precluded from
becoming a Participant under this plan if otherwise eligible.
(f) The board shall keep accurate records and minutes of its
proceedings and actions. The pension board shall prepare annually
a report showing in reasonable detail an account of the operations
for the preceding year, and shall deliver a copy within sixty (60)
days thereof to the city commission. The pension board shall also
file with the appropriate governmental bodies all necessary forms
and documents that must be furnished in accordance with
applicable law.
(g) The board shall, from time to time, issue written instructions to
the insurance company with respect to the pensions and other
benefits to be provided pursuant to this plan.
(h) The board may authorize one (1) or more of its members to
sign on its behalf any document relating to the administration of this
plan.
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(i) Except for gross negligence or willful breach of the terms of this
plan, no member of the pension board shall incur any individual
liability for any action or failure to act pursuant to the terms of this
plan. No member of the pension board shall be liable for the acts of
any other member of the pension board. The members of the
pension board may engage agents to assist them in their duties
and may consult with counsel who may be of counsel to the
Employer. The members of the pension board shall be relieved of
all responsibility whatsoever for anything done or not done upon the
written advice of counsel.
Q) The members of the pension board may inspect the records of
the Employer whenever such inspection shall be reasonably
necessary in order to determine any fact pertinent to the
performance of their duties under this plan. The members of the
pension board, however, shall not be required to make such
inspection, but in good faith may rely on any statement of the
Employer or any of its officials or authorized Employees.
(k) The board shall identify and publicly report any direct or
indirect holdings it may have in any scrutinized company, as
defined in Florida Statutes Section 215.473, and proceed to sell,
redeem divest or withdraw all publicly traded securities it may
have in such company beginning January 1, 2010 and shall
thereafter be prohibited from purchasing or holding such securities.
The divestiture of any such security must be completed by
September 30 2010. In accordance with Ch. 2009 -97, Laws of
Florida no person may bring any civil, criminal, or administrative
action against the board or any employee, officer, director, or
advisor of such board based upon the divestiture of any security
pursuant to this paragraph.
Section 4. Section 16 -22 of the Code of Ordinances of the City of South
Miami, Florida, is hereby amended as follows:
Sec. 16 -22. Amendment and termination of the pension plan.
(a) The employer may amend the provisions of this pension plan at any
time and from time to time by enacting such amendments in a public
meeting provided that:
(1) No amendment shall increase the duties or liabilities of the
board of trustees.
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(2) No amendment shall provide for the use of funds or assets
held under this plan other than for the benefit of employees and no
contributions paid by the employer shall ever revert to or be used or
enjoyed by the employer, except as provided in subsection (b).
(b) The employer may terminate this pension plan at any time by
repealing the provisions of this article in a public meeting. In such event
the board of trustees shall take the necessary steps to have all the funds
held by the plan applied to the purchase of immediate or deferred
annuities, as the case may be, in the following. order of priority and in
accordance with the provisions of section 16 -23, if applicable:
(1) An immediate annuity on the normal forms of pension for each
employee participant who has retired or has attained normal
retirement date but who has not retired, in an amount equal to the
amount of basic benefit to which the participant is entitled or would
have been entitled if the participant had retired immediately prior to
such termination.
(2) A deferred annuity on a full cash refund form of pension
commencing at normal retirement date for each participant who has
not reached normal retirement date, for each disabled participant,
and for each former employee who is a terminated participant and
has not elected a cash payment as provided in Option 1 of section
16 -17; in an amount of the participant's contributions paid to and
received by the plan, with credited interest of three (3) percent per
annum from the end of the year in which contributions were
received to the date basic benefits commence.
(3) A temporary annuity ending on normal retirement date for each
disabled participant in an amount equal to the basic benefits being
received under section 16 -15.
(4) A deferred annuity on the life annuity form commencing at
normal retirement date for each terminated participant as defined in
section 16 -17 in an amount equal to the amount the participant is
entitled to under section 16 -17 and deferred annuity commencing at
normal retirement date for each disabled participant and each
participant in an amount equal to the amount the participant would
be entitled to under section 16 -17 if the date of termination of
employment less the amount of benefit applicable to him in
subsection (b) above.
(5) A deferred annuity on the life annuity form commencing at
normal retirement date for each participant who has not reached
normal retirement date in an amount equal to the amount of basic
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benefit the participant would be entitled to if the participant's normal
retirement date were the date of termination of this plan less the
amount of benefit applicable in subsections (2), (3) and (4) above.
Provided, however, that if there are insufficient funds to provide any
category of such annuities, the amount of annuity to be provided for each
participant in that category shall be reduced by a uniform percentage. If by
reason of actuarial error the purchase of such annuities as is provided for
in subsections (1), (2), (3), (4) and (5) above does not exhaust the funds,
any excess shall be paid to such employer.
For Police Officer participants all benefits shall be fully funded in
accordance with the provisions of Chapter 185, Florida Statutes upon
such termination of this plan. The Board shall determine the date of
distribution and the asset value required to fund all of the nonforfeitable
police officer benefits. The Board shall inform the City, if additional assets
are required in which event the City shall continue to financially support
the Retirement Plan until all nonforfeitable police officer benefits have
been fully funded.
Section 5. Section 16 -24(e) of the Code of Ordinances of the City of South
Miami, Florida is hereby amended as follows:
(e) Alienation of proceeds, levy, etc.; prohibited. No participant shall
have any right to assign, alienate, anticipate or commute any payments
hereunder; and, except as otherwise prescribed by law, no payment shall
be subject to the debts, contracts or engagements of any payee, nor to a
judicial process to levy upon or attach the same for the payment thereof;
except the recipient of any monthly benefit may authorize the board of
trustees to withhold from the monthly benefit those funds necessary to pay
for the benefits being received through the city, to pay the certified
bargaining agent of the city, and-to make any payments for child support
or alimony, and to pay for accident, health, and long -term care insurance
premiums for the recipient, the recipient's spouse and the recipient's
dependents. The Pension Fund shall not incur any liability for making or
failing to make such withholdings if its action is taken in good faith.
Section 6: Should any section or provision of this Ordinance or portion hereof,
any paragraph, any sentence, or word, be declared by a court of competent jurisdiction
to be invalid, such decision shall not affect the validity of the remainder of this
40 ordinance.
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Section 7: Authority is hereby granted to codify this Ordinance.
Section 8: This Ordinance shall become effective upon adoption.
PASSED AND ADOPTED this day of , 2010.
ATTEST:
Ir !__G/
1St Reading —
2nd Reading —
READ AND APPROVED AS TO FORM
AND SUFFICIENCY:
CITY ATTORNEY
_••:• _pj
MAYOR
COMMISSION VOTE:
Mayor Stoddard
Vice Mayor Newman
Commissioner Palmer
Commissioner Beasley
Commissioner Harris:
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