15CITY OF SOUTH MIAMI
THE CITY OF PLEASANT LIVING
OFFICE OF THE CHIEF FINANCIAL OFFICER
INTER-OFFICE MEMORANDUM
To:
From:
Date:
Subject:
The Honorable Mayor & Members of the City Commission
/5 Steven Alexander, City Manager
December 20, 2016
An Ordinance amending the South Miami Pension Plan to implement the
Collective Bargaining Agreement between the City of South Miami and Dade
County Police Benevolent Association Lieutenants and Captains by amending
Chapter 16, Article II, Section 16-12, "Definitions" of Annual Compensation and
final average compensation, as it applies to the Police Lieutenants and Police
Captains and by Adding A Definition by amending Sec. 16-19, "Contributions"
to place a limit on the total contributions made in any fiscal year by Police
Lieutenants and Police Captains; and amending Chapter 16, Article II Section
16-23 (a)(2) to clarify how certain payments are to be treated under Section
415(b) of the Internal Revenue Code and amending Chapter 16, Article II, by
creating Section 16-27, lip reservation of Benefits Plan".
Please find attached a proposed Ordinance for the City's Mayor and Commission's review and
adoption. The intended purpose is to codify the pension revisions which were agreed upon and
ratified in the most recently adopted Collective Bargaining Agreement between Miami-Dade
County Police Benevolent Association Upper-Collective Bargaining Union (Lieutenant &
Captains) and the City of South Miami.
Furthermore, the City has included within the proposed Ordinance a Preservation of Benefits
Plan section which has the intent of not providing for or reducing any benefit; the section
serves to protect the benefits promised to pension participates as part of the City's retirement
pension program.
The City's Pension Attorney helped prepare the revisions for which are being presented under
stril<ethroughs and underlines within the proposed Ordinance and the PBA's attorney have
reviewed and approved all changes and confirmed they are consistent with what was agreed
upon as part of the new executed union agreement between Miami-Dade County Police
Benevolent Association Upper-Collective Bargaining Union (Lieutenant & Captains) and the City
of South Miami.
1 ORDINANCE NO. _____ _
2
3 An Ordinance amending the South Miami Pension Plan to implement the
4 Collective Bargaining Agreement between the City of South Miami and Dade
5 County Police Benevolent Association Lieutenants and Captains by
6 amending Chapter 16, Article II, Section 16-12, "Definitions" by amending
7 the definitions of Annual Compensation and final average compensation, as
8 it applies to the Police Lieutenants and Police Captains and by Adding A
9 Definition for Police Officer; by amending Sec. 16-19, "Contributions" to
10 place a limit on the total contributions made in any fiscal year by Police
11 Lieutenants and Police Captains; and amending Chapter 16, Article II
12 Section 16-23 (a)(2) to clarify how certain payments are to be treated under
13 Section 41S(b) of the Internal Revenue Code and amending Chapter 16,
14 Article II, by creating Section 16-27, "Preservation of Benefits Plan".
15
16 WHEREAS, the City of South Miami and the Dade County Police Benevolent
17 Association Lieutenants and Captains have entered into a new Collective Bargaining
18 Agreement ("Agreement"), effective October 1,2015 to September 30,2018; and
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20 WHEREAS, it is the purpose and intention of the Agreement to provide for salaries,
21 fringe benefits and other terms and conditions of employment except as otherwise provided
22 by Constitution, Statute, Charter, Ordinance, Administrative Order or Personnel Rules and
23 Regulations; and
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25 WHEREAS, Florida law requires that if any provIsion of a collective bargaining
26 agreement is in conflict with any ordinance over which the chief executive officer has no
27 amendatory power, the chief executive officer shall submit to the appropriate governmental
28 body having amendatory power a proposed amendment to such ordinance; and
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30 WHEREAS, the City Commission wishes to change the terms of the South Miami
31 Pension Plan to effectuate the changes called for in the Agreement; and
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33 WHEREAS, the City is desirous of creating a preservation of benefits plan to provide
34 for the payment of benefits that may be in excess of the limitations imposed by section 415(b)
35 of the Internal Revenue Code; and
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37 WHEREAS the City is desirous of clarifying how COLA and other payments are to be
38 treated for purposes of determining the limitations imposed by section 415(b) of the Internal
39 Revenue Code; and
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41 WHEREAS, the City Commission has received and reviewed an actuarial impact
42 statement related to such amendments; and
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45 WHEREAS, the City Commission deems it to be in the public interest to provide these
46 changes to the pension plan;
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48 NOW, THEREFORE, BE IT HEREBY ORDAINED BY THE MAYOR AND CITY
49 COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, THAT:
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51 Section 1: That Chapter 16 Article II, Section 16-12, "Definitions" of the City of
52 South Miami Code of Ordinances is hereby amended by amending the definition of
53 annual compensation as follows:
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55 Annual compensation shall mean base wages and salaries, including
56 hazardous pay, overtime pay, vacation, sick leave, holiday pay, clothing allowance,
57 educational incentive and extra duty pay. However, for compensation earned by police
58 officers or sergeants on or after October 1, 2011, or for compensation earned by
59 lieutenants and captains on or after October 1! 2016. the maximum amount of
60 overtime hours that may be used to determine annual compensation for calculating
61 retirement benefits for anyone (1) fiscal year shall not exceed three hundred (300)
62 hours. Additionally, for police officers and sergeants, payments for accrued unused
63 sick leave or accrued unused annual leave earned on or after October 1, 2011, and
64 payments for extra duty or special detail work for a second party employer, performed
65 on or after October 1, 2011, shall not be considered a part of their annual
66 compensation for purposes of calculating their retirement benefits. Additionally. for
67 lieutenants and captains. payments for accrued unused sick leave or accrued unused
68 annual leave earned on or after October 1! 2016. shall not be considered a part of their
69 annual compensation for purposes of calculating their retirement benefits. In addition,
70 shift differential pay, assignment pay and bonuses for police officers and sergeants
71 shall not be considered a part of their annual compensation for purposes of calculating
72 their retirement benefits. Any additional or other forms of pay not specifically
73 mentioned hereinabove, for any and all employees, shall be excluded from the
74 definition of annual compensation. Additionally, for compensation earned by general
75 employees, on or after October 1, 2011, annual compensation excludescor:nmissions,
76 overtime pay, bonuses and any other forms of additional compensation earned outside
77 of base wages.
78
79 _Section 2: That Chapter 16 Article II, Section 16-12, "Definitions" of the City of South
80 Miami Code of Ordinances is hereby amended by amending the definition of average final
81 compensation as follows:
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83 Final average compensation shall mean the participant's annual compensation, as
84 determined by the employer, acting in a uniform and nondiscriminatory manner. For general
85 employees, except for Second Tier Members, and AMSC Members effective October 1,
86 2011, final average compensation shall be averaged over the last five-year period, provided
87 however final average compensation over the last five-year period shall not be less than the
88 final average compensation as of September 30, 2011, under the definition of final average
89 compensation which existed as of September 30, 2011. For Second Tier Members, final
90 average compensation will be the average of the highest eight (8) years of credited service.
91 For ~MSC Members, final average compensation will be the average of the highest eight (8)
92 years of credited service. In the event an AMSC Member has less than eight (8) years, of
93 credited service, final average compensation will be the average of all the participant's annual
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compensation over the period for which the Member received credited service. For Police
Officers members covered under the police officers and sergeants collective bargaining
agreement, final average compensation shall be the best five-year period of the Police
Officer's or sergeant's career with the City of South Miami, provided however that for police
officers and Sergeants, final average compensation over the best five-year period shall not
be less than the final average compensation as of September 30, 2011, under the definition
of final average compensation which existed as of September 30, 2011. Provided further that
for Police Lieutenants and Police Captains, final average compensation over the best five-
year period shall not be less than the final average compensation as of September 30, 2016,
under the definition of final average compensation which existed as of September 30,
2016.The best five (5) years is defined as the highest five (5), twenty-six (26) consecutive pay
periods within a police officers career and such consecutive year periods shall not overlap
one another. For all other members, final average compensation shall be averaged over the
last three year period but not less than the average of the participant's five (5) best years of
annual compensation during the last ten (10) years of service. For all members final average
compensation will end on the participant's retirement date, date of disability, date of
termination of employment or the date of termination of the plan, whichever is applicable.
Section 3: That Chapter 16 Article II, Section 16-12, "Definitions" of the City of South
Miami Code of Ordinances is hereby amended by adding the definition of police officer as
follows;
Police Officer generally means all sworn police personnel, of whatever rank, provided
however, where different rights and benefits are afforded to Police Captains and Police
Lieutenants, the Plan may specifically apply those rights and benefits to Police Lieutenants or
Captains.
* * *
Section 4. That Chapter 16 Article II, Section 16-19, Contributions, is amended to
read as follows:
a) Each participant, except as otherwise provided herein, 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. Except as otherwise provided herein, 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.
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141 (1) General employee participants. Should the employer's annual contribution be
142 actuarially determined to exceed twelve (12) percent, both the employer and the participants
143 shall share equally the amount in excess of twelve (12) percent for that fiscal year Effective
144 October 1, 2005, should the total participant and employer's annual contribution be actuarially
145 determined to exceed fourteen (14) percent, both the employer and the general employee
146 participants shall share equally the amount in excess of fourteen (14) percent for that fiscal
147 year. Notwithstanding the above, the maximum general employee contribution rate will be
148 10% of earnings for fiscal years beginning on or after October 1, 2016.
149
150 (2) Police officer participants. Effective October 1, 2004, if the total Ppolice Oafficer
151 participants contributions and employer'§ contribution exceeds fifteen (15) percent of covered
152 police payroll for any fiscal year, the excess over fifteen (15) percent shall be shared equally
153 by the employer and Police Officer participants, provided however, that effective October 1,
154 2016, Police Lieutenants and Police Captains shall have their contributions capped at 12% of
155 earnings. Police Officer participant contributions shall be deposited in the plan immediately
156 after each pay period. Effective October 1, 2001 an amount actuarially determined, to provide
157 for certain minimum benefits required by Chapter 185, F.S. shall be paid from the South
158 Miami Police Officers Retirement Trust Fund to the plan each year, regardless of the growth
159 or diminution in future Chapter 185, F.S. funds.
160
161 (3) Second Tier Member participants. Second Tier Members shall contribute three (3)
162 percent of earnings.
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164 (4) AMSC Member participants in the South Miami Pension Plan. AMSC Members shall
165 contribute seven (7) percent of earnings.
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167 (5) General employees and AMSC Member participants in the defined contribution plan of
168 the City of South Miami referenced in Section 16-13 above. General employees and AMSC
169 Member participants in the defined contribution plan of the City of South Miami referenced in
170 Section 16-13 above shall contribute a minimum of three (3) percent of earnings. The City of
171 South Miami shall contribute seven (7) percent of earnings.
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173 @ [Other participants.] Effective October 1, 2009, and for one (1) fiscal year thereafter
174 participant contributions for the following employee designations shall be reduced from the
175 above calculated percentages by two (2) percentage points:
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177 (a) Nonbargaining unit employees.
178 (b) Members of the AFSME bargaining unit.
179 (c) Members of the police lieutenants and captains bargaining unit.
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181 ill 415(c) Limitations. To the extent applicable, all employee contributions shall be in
182 accordance with Subsection 415(c) of the Internal Revenue Code and all regulations
183 thereunder, which subsections and regulations are incorporated herein by reference.
184
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185 (b) All amounts paid by the employer to the insurance company in accordance with this plan
186 shall represent irrecoverable contributions, except as may be otherwise provided in
187 subsection 16-22(b).
188
189 (c) The employer shall pay the reasonable expenses of the pension board, including any
190 expenses for legal and actuarial services. .
191
192 Section 5. That Chapter 16 Article II, Section 16-23 (a)(2), "Compliance with
193 Internal Revenue Code" shall be amended to provide as follows:
194 (2) "Annual pension" means the sum of all annual benefits, payable in the form of a
195 straight life annuity. Benefits payable in any other form shall be adjusted to the larger of:
196 a. For limitation years beginning on or after July 1, 2007
197 (I) The straight life annuity (if any) payable to the member under the plan
198 commencing at the same annuity starting date as the member's form of benefit, or
199 (II) The actuarially equivalent straight life annuity commencing at the same
200 annuity starting date, computed using a 5.00 percent interest rate and the mortality
201 basis prescribed in Code Section 415(b)(2)(E)(v).
202 b. For limitation years beginning before July 1 , 2007.
203 (I) The actuarially equivalent straight life annuity commencing at the same
204 annuity starting date, computed using the interest rate and mortality basis specified by
205 the board of trustees for determining actuarial equivalence under the plan for the
206 particular form of payment, or
207 (II) The actuarially equivalent straight life annuity commencing at the same
208 annuity starting date, computed using a 5.00 percent interest rate and the mortality
209 basis prescribed in Code Section 415(b)(2)(E)(v).
210 No actuarial adjustment to the benefit shall be made for benefits that are not directly
211 related to retirement benefits (such as a qualified disability benefit, preretirement incidental
212 death benefits, and postretirement medical benefits); or the inclusion in the form of benefit of
213 an automatic benefit increase feature, provided the form of benefit is not subject to Section
214 417(e)(3) of the Internal Revenue Code and would otherwise satisfy the limitations of this
215 Subsection (a), and the amount payable under the form of benefit in any Limitation Year shall
216 not exceed the limits of this subsection (a) applicable at the annuity starting date, as
217 increased in subsequent years pursuant to Section 415(d) of the Code.
218 For this purpose, the dollar limit of section 415(b) of the Code shall be automatically adjusted
219 beginning with the first limitation year following a Member's severance of employment. in
220 accordance with Section 415(d) of the Code. For this purpose, an automatic benefit increase
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221 feature is included in a form of benefit if the form of benefit provides for automatic, periodic
222 increases to the benefits paid in that form.
223
224 Section 6. That Chapter 16 Article II, Section 16-27, "Preservation of Benefit Plan"
225 of the City of South Miami Code of Ordinances is hereby created by adding as follows:
226 "Preservation of Benefits Plan"
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(1) There is hereby created a preservation of benefits plan
(2) Definitions.
Maximum benefit means the retirement benefit a member is entitled to
receive from the retirement system in any month after giving effect to any
provision of a qualified plan designed to conform to section 415 of the Internal
Revenue Code of 1986. as amended.
Excess benefit participant means any member whose retirement benefit
is determined on the basis of the retirement system without regard to limitations
set forth in this division that exceed the maximum benefit under section 415 of
the Internal Revenue Code of 1986. as amended.
Preservation of benefits plan means the unfunded plan created by the
City of South Miami to provide benefits to members that would be provided
under the retirement system. but for the limitations imposed by section 415 of
the Internal Revenue Code of 1986. as amended.
Unrestricted benefit means the monthly retirement benefit. including. but
not limited to. periodic increases provided in Sec. 16-14(b)(4) that a member.
spouse. child or other beneficiary. would receive under the terms of the South
Miami Pension Plan. except for the restrictions contained in this division.
(2) Excess Retirement Benefits.
246 The excess retirement benefits above the limits permitted by the Internal
247 Revenue Code shall be as follows:
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(a)
(b)
Funded from the general fund of the City of South Miami; and
Paid annually concurrently with the City of South Miami's annual
contribution to normal pension costs. which shall cause the City of
South Miami to realize a reduction in normal pension costs in the
same amount; and
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(c) Be deposited into a separate account established to receive the
City of South Miami's excess retirement benefit contributions,
which accounts shall be separate and apart from the accounts
established to receive the City of South Miami's normal pension
contribution for the South Miami Pension Plan.
(3) Administration of the Preservation of Benefits Plan.
(a) The Board of Trustees of the South Miami Pension Plan is
appointed as the committee to administer the Preservation of
Benefits Plan for the retirees.
(b) The actuaries for the South Miami Pension Plan shall calculate
the amounts necessary to fund the defined benefit plan giving
effect to the reductions caused by implementation of Section 415
of the Internal Revenue Code.
(4) Payment of Excess Benefit.
(a)
(b)
The unrestricted excess benefits shall be paid to each eligible
excess benefit participant on a monthly basis in an amount equal
to the difference between the allowable pension to be paid under
the Internal Revenue Code and the amount of the defined benefit
that would otherwise be paid if not for the benefit limitations.
Should additional retirements occur during the year where the
eligible member's retirement benefit exceeds the Section 415
limits, the Board of Trustees of the South Miami Pension Plan
shall calculate the additional excess benefit amount required for
the remainder of the fiscal year and should such amount exceed
the amount available from the funds provided for the fiscal year,
the Board of Trustees shall notify the City of South Miami of the
additional funds required. Upon the City of South Miami's receipt
of notice of the additional funds required, the City of South Miami
shall forward the additional funds required. The requirement for
additional funds paid by the City of South Miami shall be reflected
as a reduction in the City of South Miami's contribution of normal
pension costs for the following year.
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294 (5) Intent.
295 IRC Section 415(m). This Preservation of Benefits Plan is
296 intended to be a "qualified governmental excess benefit
297 arrangement" described in Section 414(m) of the Internal
298 Revenue Code and shall be administered in a manner consistent
299 with those requirements.
300
301 Section 6. Rules of Construction. This ordinance will be construed in accordance
302 with Florida statutory law and Florida case law.
303 Section 7. Codification. The provisions of this ordinance shall become and be
304 made part of the Code of Ordinances of the City of South Miami as amended; that the
305 sections of this ordinance may be renumbered or re-Iettered to accomplish such intention;
306 and that the word "ordinance" may be changed to "section" or other appropriate word.
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308 Section 8. Severability. If any section, clause, sentence, or phrase of this ordinance
309 is for any reason held invalid or unconstitutional by a court of competent jurisdiction, this
310 holding shall not affect the validity of the remaining portions of this ordinance.
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312 Section 9. Ordinances in Conflict. All ordinances or parts of ordinances and all
313 section and parts of sections of ordinances in direct conflict herewith are hereby repealed.
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315 Section 10. Effective Date. This ordinance shall become effective upon enactment.
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PASSED AND ENACTED this __ day of _____ , 2016.
ATTEST:
CITY CLERK
1st Reading
2nd Reading
READ AND APPROVED AS TO FORM:
LANGUAGE, LEGALITY AND
EXECUTION THEREOF
CITY ATTORNEY
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APPROVED:
MAYOR
COMMISSION VOTE:
Mayor Stoddard:
Vice Mayor Welsh
Commissioner Edmond:
Commissioner Harris:
Commissioner Liebman: