Loading...
HomeMy WebLinkAboutMinutes BOC 011106BUDGET OVERSIGHT COMMITTEE January 11, 2005 Minutes The Budget Oversight Committee met on January 11, 2006 in the Council Chambers of the Municipal Complex, located at 10500 North Military Trail, Palm Beach Gardens, Florida. The meeting was called to order at 8:35 A.M. I. ROLL CALL Members Present: John Chaplik Martin Cohen Harvey Goldberg Also Present: Allan Owens, Finance Administrator Mary Anderson, Deputy Finance Administrator Bonnie Johnson, Legal Council for the Police Pension Board Robert Odell — Police Officer and Representative of the Police Benevolent Association. II. APPROVAL OF MINUTES The board approved the minutes from the June 14, 2005 and June 21, 2005 meetings. III. REVIEW PROPOSED POLICE PENSION PLAN BENEFIT ENHANCEMENT Allan Owens presented the Board with the proposed Police Pension Plan changes. He stated that there would be an increase in the multiplier from 3% to 3.5% and the maximum payout would increase from 75% to 100 %. It would also provide annual adjustments to all pensioners. Bonnie Johnson added that the annual adjustment is a cost of living type benefit. Allan went on to explain that the supplemental benefit of $12.50 per year of service would be paid to all retirees. He explained how the old system worked and how that compared to the new system. Martin Cohen asked how many people are presently retired and receiving pensions. After checking her records, Bonnie stated there are 23 presently retired and receiving benefits. John Chaplik had several topics to discuss. He asked to talk about the 100% benefit plan. He stated that private employers are going the other way and wanted to know if any other cities are offering a 100% defined benefit plan. Bonnie responded that many other cities have 100% plans. She has put together a spreadsheet with this information, but did not have it with her. She thinks about 3/ of the cities in Palm Beach County have 100% plans. John asked if the City has trouble attracting applicants to the police and fire departments. Allan stated that he does not think this is a problem. John Chaplik went on to say that he reviewed the actuary's evaluation and went over the figures in the actuaries report. He stated that the bottom line is there is an unfunded liability of approximately 14 million dollars in this plan which is based on 8 '/z interest presumptions. Harvey Goldberg had questions about the proposed Ordinance 22, 2005 that would revise the retirement benefits for the police pension. He wanted clarification on the calculations of the plan. He didn't understand how numbers went from 70% to 100 %. Bonnie stated that they wouldn't automatically go to the 100 %. There is an analysis included in the cost value. She pointed out that she is not the actuary but she will explain to the best of her knowledge. She explained that there is an analysis as to how many people would retire at 20 years of service with 70% benefit and how many would retire more than 20 years and they would receive 100% benefit. She explained that not everyone will take advantage of the 100% benefit. Since there is no mandatory retirement a police officer who puts in more than 20 years of service would be entitled to a higher benefit. Harvey Goldberg also asked for clarification regarding the statement in the ordinance that says "in no event will the benefit paid be less than 2% per year of service." Bonnie explained that because they participate in the mandatory funding from the State, this language must be included in the pension program. He also asked for an explanation of the annual adjustments. He asked what happens if the adjustment is negative. Bonnie stated in that case the benefit would not be paid. There was discussion regarding the monthly supplemental benefit of $12.50 per year of service. Bonnie stated that the Pension Board had a concern with this because under the current language the benefit would fluctuate significantly, especially as the pool of participants grew. It could turn out that the people who are currently retired could receive a substantial amount of money and the new people retiring could receive much less. This was put in to equalize the benefit among all retirees. Martin Cohen stated he is neutral regarding the changes in the benefits. He feels this is a decision between City Council and the Police Officers. His concern is the funding of the already promised benefit. He sees problems down the road and feels the plan is very under funded. He is concerned that there will not be funds available and that in the future the City will have to make a much larger contribution, or the benefits will have to be decreased. He feels the actuary consumptions are not reasonable and will get worse in years to come. He feels the first thing to do is to get the funding in order before contemplating further increases. He would hate to see the benefits increased and then have to decrease them in the future. He again stated he is not opposed to the police getting an increase, he just very concerned about the financial condition of the plan. John Chaplik stated he is against the increase because of the level of funding. If the plan was fully funded he would have no problem with this, but he feels the plan is not properly funded and is also concerned with the future. Bob Odell who is a police officer stated he is at this meeting representing the Palm Beach County Police Benevolent Association. He stated that 3/ of the benefits are paid with 185 grant money that comes from the State of Florida. He said that in the last 2 years the Police Department has actually given 1.5 million dollars of its budget back to the general fund. He feels the $175,000 that they are asking for would have no affect on the Police 2 Department's budget. He also discussed the amount of growth that is happening in the City and that he feels the plan is almost self - funded with the 185 money from the State. There was discussion regarding the annual required contribution would have an increase of $416, 694.00. Martin Cohen added that he feels everyone is correct but going back to the core of the benefits, the plan is under funded. He is concerned that future retires will not be able to get their pensions. Bonnie stated that the fund is actuarially sound. John Chaplik does not agree. He stated that the fund is 15 million dollars unfunded on an 8% interest rate. If the interest goes down the fund will be even more under funded. He said you can use the terms actuarially sound but it is not even close to being fully funded because it is dependent on an increasing stream of contributions that there is not a commitment to pay. Bonnie stated that the State mandates that the Cities have to put in a certain amount of money. The committee is very concerned that if the plan looses money the City will have to make up the funds. There was discussion regarding the importance of a well funded plan and what the real cost to the City would be down the road. After much discussion Allan asked the committee what their recommendation to City Council will be. The Committee agreed they cannot support the increase based on the current funding and the future state of the City. They would like to see the plan more adequately funded in order to consider these benefits. There was ongoing conversation about the fund becoming adequately funded and how the committee feels about the funding situation. Bonnie Johnson will also bring the committee's recommendation back to the pension board. Harvey Goldberg made a motion to recommend to City Council that they defer an increase in the pension plan until the fund reaches a target of 75 % -80% increase in self funding. The Motion was seconded by Martin Cohen and passed 3 -0. Chaplik Yes Cohen Yes Goldberg Yes IV. REVIEW BUDGET TIMETABLE AND GOALS FOR COMING YEAR Discussion about Resolution that was proposed by Councilmember Valeche at City Council meeting. John Chaplik asked to discuss the Resolution that Councilmember Valeche brought up at last council meeting regarding budget. John read the Resolution and said he would like to have a "top line" number going into a budget and asked what Allan and Ron Ferris feel the "top line" number would be. He would also like to have a spread sheet that shows different operating expenses and salary increases. Allan stated that from a staff prospective, they are in the process of analyzing the costs that have contractual obligations to meet. They are calculating that number and then it will be up to council to decide if they want to keep the budget the same as last year and possibly cut back on other things. John reiterated that he would like a "buy in" number that would not be exact, but will be in the range in order to start the process. Harvey Goldberg was not sure 3 what he was referring to and asked John to please clarify this. John explained that he would like Allan to have a percentage of increase in mind before going into the budget process. Harvey did not agree because he did not know how that could be done. Allan stated that he feels he needs to look at the contractual obligations and then look at other operational costs that the City is committed to. He could then look at a percentage to give John Chaplik. John Chaplik again stated that he would like to have a number presented at the beginning of the process. There was discussion about department heads coming in so the committee can ask questions about each individual budget. Allan went through the duties of the committee as stated in Resolution 121, 2004. The four duties include: 1) To review the proposed operating and capital improvements budget as prepared by staff. 2) Request information from staff in order to analyze the proposed operating and capital improvements budget. 3) Review the recommended spending plan for compliance with current adopted financial policies, such as fund balance levels and debt service coverage. 4) Make recommendation to Council during the budget adoption process with regard to the recommended spending plan. Allan went over the meeting dates that are already scheduled and told the board that they can ask for additional meetings. The first internal tax revenue estimate could be ready by March and the first official notice comes from the Property Appraiser in early June. Martin Cohen would like to keep the procedure similar to the same process as last year. He would like to take an overview and not get into specific departments. John Chaplik also does not want to go line by line. Allan would like to bring in each department head so the Committee can see exactly what each department does and what there expenses are. Harvey Goldberg asked Allan to please email him a copy of the Committee's recommendations from last year. V. Adjournment With no further business to discuss the board adjourned at 10:37 A.M. b JohA Chaplik, dhairman Ma in Cohen, arvey oldberg, Attest: `�. C h an Bel , ublic Infoam H ec m Coordinator 11