HomeMy WebLinkAboutAgenda BOC 042811AGENDA
CITY OF PALM BEACH GARDENS
BUDGET OVERSIGHT COMMITTEE
Thursday April 2 8 , 201 1 , 8:3 0 AM
CITY COUNCIL CHAMBERS
I. CALL TO ORDER
II. PLEDGE OF ALLEGIANCE
III. ROLL CALL :
Regular Members
L. Marc Cohn Chair
Bernard Pettingill Regular Member
Phillip Woodall Regular Member
Marilyn Lew -Jacobs Regular Member
IV. ELECTION OF VICE CHAIR
V. ADDITIONS, DELETIONS, MODIFICATIONS:
VI. APPROVAL OF MINUTES
1. March 24 , 2011
VII. ITEMS BY COUNCIL LIAISON
VIII. ITEMS BY STAFF LIAISON
1. Presentation by Mr. Jose Fernandez, Principal and Consulting Actuary ,
Cavanaugh McDonald Consulting LLC , regarding actuarial analysis of
public safety pensions
2. Discussion of alternative revenue sources
3. Discussion of Committee schedule and agenda through August, 2011
4. Standard & Poor’s bond rating revi ew
IX. OLD BUS I NESS
X. NEW BUSINESS
XI. COMMENTS BY PUBLIC
XII. COMMENTS BY THE BOARD
XIII. ADJO U RNMENT
B UDGET O VERSIGHT C OMMITTEE M EETING PAGE
03 ·24 ·11
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CITY OF PALM BEACH GARDENS 1
BUDGET OVERSIGHT COMMITTEE 2
REGULAR MEETING 3
MARCH 24 , 20 1 1 4
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I. CALL TO ORDER 6
The regular meeting was called to order at 8 :3 0 a.m. by Chair L. Marc Cohn . 7
II. PLEDGE OF ALLEGIANCE 8
III. ROLL CALL 9
PRESENT: Chair L . Marc Cohn , Phillip A. Woodal l , Marilyn Lew -Jacobs . 10
ABSENT: Bernard Pettingill . 11
ALSO PRESENT: Vice Mayor, Council Liaison Robert Premuroso; Finance Administrator, 12
Staff Liaison Allan Owens; Deputy Finance Administrator, Alternate Sta ff Liaison Mary 13
Anderson -Pickle . 14
IV. ADDITIONS, DELETIO NS, MODIFICATIONS 15
None . 16
V. APPROVAL OF MINUTES 17
Phillip Woodall made a motion for approval of the February 24 , 2011 minutes . 18
Marilyn Lew -Jacobs seconded. 19
Motion passed 3 -0. 20
VI. ITEMS BY COUNCIL LIAISON 21
Vice Mayor Premuroso addressed a comment regarding action minu tes. 22
VII. ITEMS BY STAFF LIAISON 23
1. Update on status of F Y 2012 Budget preparation 24
Staff Presentation: Finance Administrator Allan Owens . 25
Discussion ensued. 26
VIII. OLD BUSINESS 27
1. Discussion of Blue Ribbon Panel Report on Canal System Restoration and Maintenance 28
Staff Pr esentation: Finance Administrator Allan Owens . 29
Discussion ensued. 30
Phillip Woodall left the meeting at 9:10 a.m. 31
IX. NEW BUSINESS 32
None. 33
X. COMMENTS BY THE PUBLIC 34
None. 35
XI. COMMENTS BY THE BOARD 36
None . 37
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B UDGET O VERSIGHT C OMMITTEE M EETING PAGE
03 ·24 ·11
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XII. ADJOURNMENT 1
Meeting was adjourned at 9:1 0 a.m. 2
The next regular meeting will be held April 28 , 201 1 . 3
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APPROVED : 7
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10 L. Marc Cohn , Chair 11
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14 Bernard Pettingill 15
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18 Phillip A. Woodall 19
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22 Marilyn Lew -Jacobs 23
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26 (Vacant) 27
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ATTEST : 32
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Donna M. C annon 36
Municipal Services Coordinator 37
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NOTE: These minutes are prepared in compliance with 286.011 F.S. and are not verbatim transcripts of 44
the meeting. A verbatim audio recording is available from the Office of the City Clerk. All referenced 45
attachmen ts on file in the Office of the City Clerk . 46
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City of Palm Beach Gardens
Public Safety Pension Study
Jose Fernandez, ASA, EA, FCA, MAAA
April 28, 2011
Purpose & Scope of Project
Review City’s public safety employees’ pension
plans (Firefighters, Police Officers)
Develop cost savings options
Estimate amount of cost savings for each option
Estimates based on 2009 valuation reports
prepared by plans’ actuary and our experience
analyzing benefit changes
Estimates should not be relied upon to make final
determination of cost savings
2
3
Benefit Financing
C + I = B + E
Contributions
Investment Income
Benefits Paid
Expenses (administration)
=
=
=
=
C
I
B
E
Basic Retirement Funding Equation
4
Current Plan Cost Projections
Asset Smoothing Recognition
Accrued Benefits Protected
Provide Baseline for Prospective Plan Changes
5
Firefighters’ Plan Baseline Projection
No Plan Changes
($’s thousands)
Fiscal Year Without Asset Loss Recognition With Asset Loss Recognition Estimated Impact of Asset
Loss Recognition
2010/2011 $3,745 $3,745 $0
2011/2012 $3,914 $4,004 $90
2012/2013 $4,090 $4,282 $192
2013/2014 $4,274 $4,507 $233
2014/2015 $4,467 $4,714 $247
2015/2016 $4,668 $4,930 $262
2016/2017 $4,878 $5,153 $275
2017/2018 $5,097 $5,385 $288
2018/2019 $5,326 $5,627 $301
2019/2020 $5,566 $5,881 $315
2020/2021 $5,817 $6,146 $329
6
Police Officers’ Plan Baseline Projection
No Plan Changes
($’s thousands)
Fiscal Year Without Asset Loss Recognition With Asset Loss Recognition Estimated Impact of Asset
Loss Recognition
2010/2011 $3,886 $3,886 $0
2011/2012 $4,101 $4,166 $65
2012/2013 $4,326 $4,450 $124
2013/2014 $4,563 $4,741 $178
2014/2015 $4,812 $5,040 $228
2015/2016 $5,073 $5,348 $275
2016/2017 $5,348 $5,667 $319
2017/2018 $5,635 $5,997 $362
2018/2019 $5,938 $6,340 $402
2019/2020 $6,255 $6,697 $442
2020/2021 $6,588 $7,069 $481
7
Retirement Design Strategy
Determine goals and objectives
Retirement philosophy
Attraction and retention of employees
Salary, retirement, health, life and fringe
Benchmark to other employers
8
Alternative Plan Designs
Defined Benefit (DB) Plan (Current City pension
plans)
Defined Contribution (DC) Plan (e.g., IRC Section
401 and 457 plans)
Hybrid Plan (Combination DB and DC Plans)
9
Alternatives Analyzed
Florida Retirement System (FRS) Pure DB
Plan
Hybrid DB/DC Plan
Two -tier Plan –Modification of Current Plans
10
Freezing Benefits/Florida Retirement
System (FRS)
Freeze Accrued Benefits
Continue to Administer Inactive and Frozen
Benefits
Future Accruals in FRS
Loss of City Control –Limited Influence
Legal Considerations
11
Freezing Benefits/Florida Retirement
System (FRS)
All new hires join FRS
Employees in current plans transfer to FRS
Limitation on buying past service
Fire and police 2% past service
–One -third lower than current 3% for fire
–Nearly 43% lower than current 3.5% for police
Significant additional cost to purchase prior service
12
Freezing Benefits/Florida Retirement
System (FRS)
Item Firefighters Police Officers FRS
Benefit Accrual
Rate
3%3.5%3%
Pensionable
Pay
All Pay All Pay Base Pay
Cost -of -Living
Adjustment
3%per year
age 55 on
None
guaranteed
3% per year
Member
Contribution
Rate
6%8.6%0%
13
Freezing Benefits/Florida Retirement
System (FRS)
City will have to continue paying for unfunded
liability of current plans
Change unfunded amortization from level percent
of pay to level dollar –increases required
contributions
No member contributions
City loses future State premium tax distributions to
offset pension contributions
28% current employer contribution to FRS -likely
to go up due to asset losses
14
Firefighters’ Plan Freeze/FRS
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
With Benefits Freeze
And FRS Costs
Change
2010/2011 $3,745 $3,745 $0
2011/2012 $4,004 $4,878 $874
2012/2013 $4,282 $5,172 $890
2013/2014 $4,507 $5,377 $870
2014/2015 $4,714 $5,549 $835
2015/2016 $4,930 $5,726 $796
2016/2017 $5,153 $5,908 $755
2017/2018 $5,385 $6,096 $711
2018/2019 $5,627 $6,292 $665
2019/2020 $5,881 $6,498 $617
2020/2021 $6,146 $6,712 $566
15
Police Officers’ Plan Freeze/FRS
15 Year Amortization
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
With Benefits Freeze
And FRS Costs
Change
2010/2011 $3,886 $3,886 $0
2011/2012 $4,166 $4,622 $456
2012/2013 $4,450 $4,852 $402
2013/2014 $4,741 $5,080 $339
2014/2015 $5,040 $5,307 $267
2015/2016 $5,348 $5,534 $186
2016/2017 $5,667 $5,764 $97
2017/2018 $5,997 $5,997 $0
2018/2019 $6,340 $6,236 ($104)
2019/2020 $6,697 $6,481 ($216)
2020/2021 $7,069 $6,732 ($337)
16
Police Officers’ Plan Freeze/FRS
30 Year Amortization
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
With Benefits Freeze
And FRS Costs
Change
2010/2011 $3,886 $3,886 $0
2011/2012 $4,166 $4,971 $805
2012/2013 $4,450 $5,201 $751
2013/2014 $4,741 $5,429 $688
2014/2015 $5,040 $5,656 $616
2015/2016 $5,348 $5,883 $535
2016/2017 $5,667 $6,113 $446
2017/2018 $5,997 $6,346 $349
2018/2019 $6,340 $6,585 $245
2019/2020 $6,697 $6,829 $132
2020/2021 $7,069 $7,081 $12
17
Hybrid Plan
Decrease defined benefit multiplier from 3% Fire
and 3.5% Police to 1.25% for all
4.0% of pay City contribution to Defined Contribution
plan
Keep member DB contribution rate the same as
current plans (6% Fire; 8.6% Police)
Age 65 with 10 years of service retirement eligibility
-current retirement eligibility age 52 with 10 years of
service, or 25 years of service (Fire) and 20 years of
service (Police)
18
Hybrid Plan
No Cost of Living Increases –currently 3% from age
55 on for Fire; no guaranteed COLA for Police
Single life annuity form of payment
10 year vesting requirement
Estimate of savings based on multiplier change/DC
feature
19
Firefighters’ Hybrid Plan
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
Hybrid Multiplier
With 4.0% DC City Contribution
Change
2010/2011 $3,745 $3,745 $0
2011/2012 $4,004 $2,372 ($1,632)
2012/2013 $4,282 $2,576 ($1,706)
2013/2014 $4,507 $2,724 ($1,783)
2014/2015 $4,714 $2,851 ($1,863)
2015/2016 $4,930 $2,983 ($1,947)
2016/2017 $5,153 $3,119 ($2,034)
2017/2018 $5,385 $3,259 ($2,126)
2018/2019 $5,627 $3,406 ($2,221)
2019/2020 $5,881 $3,560 ($2,321)
2020/2021 $6,146 $3,720 ($2,426)
20
Police Officers’ Hybrid Plan
15 Year Amortization
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
Hybrid Multiplier
With 4.0% DC City Contribution
Change
2010/2011 $3,886 $3,886 $0
2011/2012 $4,166 $2,318 ($1,848)
2012/2013 $4,450 $2,509 ($1,941)
2013/2014 $4,741 $2,695 ($2,046)
2014/2015 $5,040 $2,878 ($2,162)
2015/2016 $5,348 $3,060 ($2,288)
2016/2017 $5,667 $3,242 ($2,425)
2017/2018 $5,997 $3,426 ($2,571)
2018/2019 $6,340 $3,611 ($2,729 )
2019/2020 $6,697 $3,801 ($2,896)
2020/2021 $7,069 $3,994 ($3,075)
21
Police Officers’ Hybrid Plan
30 Year Amortization
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
Hybrid Multiplier
With 4.0% DC City Contribution
Change
2010/2011 $3,886 $3,886 $0
2011/2012 $4,166 $2,741 ($1,425)
2012/2013 $4,450 $2,953 ($1,497)
2013/2014 $4,741 $3,161 ($1,580)
2014/2015 $5,040 $3,368 ($1,672)
2015/2016 $5,348 $3,575 ($1,773)
2016/2017 $5,667 $3,783 ($1,884)
2017/2018 $5,997 $3,993 ($2,004)
2018/2019 $6,340 $4,207 ($2,133)
2019/2020 $6,697 $4,426 ($2,271)
2020/2021 $7,069 $4,651 ($2,418)
22
Two -Tier Plan
Reductions to current defined benefit plan
benefits
No defined contribution plan
Definition of pay reduced to base pay plus
up to 300 hours of overtime
Elimination of guaranteed and ad -Hoc
COLAs
23
Two -Tier Plan
Firefighters
No benefit multiplier reduction
City no longer able to use 2% of pay from
State distributions to offset pension
contributions
24
Two -Tier Plan
Police Officers
3.1% multiplier with 15 -year amortization
2.85% multiplier with 30 -year amortization
City still able to use up to $230,855 of
State distributions to offset pension
contributions
25
Firefighters’ Plan Savings –
Retain Current Multiplier
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
With Pay and COLA Changes
Only Change
2010/2011 $3,745 $3,745 $0
2011/2012 $4,004 $2,865 ($1,139)
2012/2013 $4,282 $3,091 ($1,191)
2013/2014 $4,507 $3,263 ($1,244)
2014/2015 $4,714 $3,414 ($1,300)
2015/2016 $4,930 $3,571 ($1,359)
2016/2017 $5,153 $3,733 ($1,420)
2017/2018 $5,385 $3,902 ($1,483)
2018/2019 $5,627 $4,077 ($1,550)
2019/2020 $5,881 $4,261 ($1,620)
2020/2021 $6,146 $4,453 ($1,693)
26
Police Officers’ Plan -3.1% Multiplier
15 Year Amortization
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
With Pay Changes and 3.1%
Multiplier Change
2010/2011 $3,886 $3,886 $0
2011/2012 $4,166 $3,169 ($997)
2012/2013 $4,450 $3,395 ($1,055)
2013/2014 $4,741 $3,624 ($1,117)
2014/2015 $5,040 $3,858 ($1,182)
2015/2016 $5,348 $4,098 ($1,250)
2016/2017 $5,667 $4,345 ($1,322)
2017/2018 $5,997 $4,600 ($1,397)
2018/2019 $6,340 $4,864 ($1,476)
2019/2020 $6,697 $5,138 ($1,559)
2020/2021 $7,069 $5,423 ($1,646)
27
Police Officers’ Plan –2.85% Multiplier
30 Year Amortization
($’s thousands)
Fiscal Year Baseline (With Asset Loss
Recognition)
With Pay Changes and 2.85%
Multiplier Change
2010/2011 $3,886 $3,886 $0
2011/2012 $4,166 $3,138 ($1,028)
2012/2013 $4,450 $3,362 ($1,088)
2013/2014 $4,741 $3,589 ($1,152)
2014/2015 $5,040 $3,821 ($1,219)
2015/2016 $5,348 $4,060 ($1,288)
2016/2017 $5,667 $4,305 ($1,362)
2017/2018 $5,997 $4,558 ($1,439)
2018/2019 $6,340 $4,820 ($1,520)
2019/2020 $6,697 $5,091 ($1,606)
2020/2021 $7,069 $5,374, ($1,695)
28
Other Proposed Changes
Too difficult to estimate impact without plan
data and programming
Proposed changes expected to reduce costs
Reduce maximum multiplier from 100% Police
Officers and 99% Firefighters
Eliminate service based normal retirement (20
years Police, 25 years Firefighters)
Raise retirement eligibility age
Changes to DROP
29
Other Considerations
Benefit changes subject to collective
bargaining
Seek legal counsel on plan changes
Prepare actuarial impact statements
Technical issues at discretion of pension
boards and Florida Division of Retirement
Police plan unfunded liability amortization period
Increasing payroll growth assumption for
amortization of unfunded liability under two -tier
plan