Ord 15-11ORDINANCE NO. 15-1 1
AN ORDINANCE OF THE CITY COMMISSION OF THE
CITY OF DELRAY BEACH, FLORIDA, AMENDING
CHAPTER 33, "POLICE AND FIRE-RESCUE
DEPARTMENTS" OF THE CODE OF ORDINANCES OF
THE CITY OF DELRAY BEACH; SECTION 33.62, "BENEFIT
AMOUNTS AND ELIGIBILITY", SUBSECTION (E),
"DISABILITY RETIREMENT PROVISIONS", SUB-
SUBSECTION (5), "DISABILITY RETIREMENT BENEFITS",
TO INCREASE THE MINIMUM SERVICE INCURRED
DISABILITY BENEFIT FOR FIREFIGHTERS AND
AMENDING SECTION 33.64, "CONTRIBUTIONS",
SUBSECTION (A), "MEMBER CONTRIBUTIONS", TO
INCREASE MEMBER CONTRIBUTIONS FOR
FIREFIGHTERS; PROVIDING A SAVING CLAUSE, A
GENERAL REPEALER CLAUSE, AND AN EFFECTIVE
DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF DELRAY
BEACH, FLORIDA, AS FOLLOWS:
Section 1. That Chapter 33, "Police and Fire-Rescue Departments", Section 33.62,
"Benefit Amounts and Eligibility", Subsection (E), "Disability Retirement Provisions", Sub-
subsection (S), "Disability Retirement Benefits" of the Code of Ordinances of the City of Delray
Beach is hereby amended to read as follows:
Sec. 33.62. BENEFIT AMOUNTS AND EI.ICIBILITY.
(E) Disahihty Retiren~tent Provisio~~s.
(5) Disability Retirement Benefits.
(a) Eligibility. Each member shall be eligible for service incurred disability benefits, regardless
of length of continuous service. Each member who completes ten (10) years of continuous
service prior to becoming disabled shall be eligible for non service incurred disability benefits.
(b) Initial Amount of Service Incurred Disability Bej~efit. The greater of sixty (60) percent of
the member's average monthly earnings in effect on the date of disability or the member's
accrued pension benefit. Effective for disability applications filed on or after Mav 3, 2011, the
initial amount of service incurred disability benefit for firefighters shall be the ~rcater of sixty-
one (611 vercent of the member's averaee monthly earnings in effect on the date of disability or
the member's accrued pension benefit.
(c) rlmoi~~it of Nonservice Incurred Disabilit~~ Benefit. Two (2) percent of average monthly
earnings in effect on the date of disability for each year of continuous service; provided,
however, the minimum shall not be less than twenty-five (25) percent of average monthly
earnings.
(d) Terms of Payments. Disability benefits shall commence on or as of the first day of the
month coincident with or next following the date of disability, as established by the Board of
Trustees, and shall continue to be paid on the first day of each subsequent month until the death
or recovery of the disability retiree. The same survivorship percentages which apply to normal
retirement benefits shall also apply to disability retirement benefits.
(e) Eligibility for Other Benefits. In the event that a member applying for disability benefits is
also eligible for either early or nornial retirement, the Board may, upon the request of the
member, pay the early or nornlal retirement benefit instead of a disability retirement benefit.
Section 2. That Chapter 33, "Police and Fire-Rescue Departments", Section 33.64,
"Contributions", Subsection (A), "Member Contributions", of the Code of Ordinances of the
City of Delray Beach is hereby amended to read as follows:
Sec. 33.64. CONTRIBUTIONS.
(A) Member Contributions.
(1) Effective the first pay period after September 1, 1999, members of the retirement system
shall make regular contributions to the Trust Fund at a rate equal to three (3) percent of their
respective annual earnings. Eligible employees, as a condition of membership, shall agree in
writing upon becoming a member to make the contribution specified herein. These contributions
shall be deducted from the earnings before the same are paid, until the member has completed
twenty-five (25) years of continuous service at which time member contributions are no longer
required.
(2) Effective the first pay period starting after May 3 2011 members of the retirement system
employed as firefighters shall make regular contributions to the Trust Fund at a rate equal to six
(6) percent of their respective annual earnings. Eligible employees, as a condition of
membership shall agree in writing upon becoming a member to make the contribution specified
herein. These contributions shall be deducted from the earnings before the same are paid, until
the member has completed twenty-five (25) years of continuous service at which time member
contributions are no loner required.
~~} B€ ~Eti~te-9Eteb°~, ;-,-'rn~T The City shall pick up the member contribution required by
subsection (A)(1) and A 2 above. The contributions so picked up shall be treated as employer
contributions in detern~ining tax treatment under the United States Internal Revenue Code. The
City shall pick up the member contributions from fiords established and available in the salaries
account, which funds would have otherwise been designated as member contributions and paid
2
Ord No. 15-1 l
to the pension fund. Member contributions picked up by the City pursuant to this subdivision
shall be treated for purposes of making a refund of member contributions, and for all other
purposes of this and other laws, in the same manner and to the same extent as member
contributions made prior to the effective date of this subdivision. The intent of this subdivision is
to comply with Section 414(h)(2) of the Internal Revenue Code.
Section 3. That should any section or provision of this ordinance or any portion
thereof, any paragraph, sentence, or word be declared by a court of competent jurisdiction to be
invalid, such decision shall not affect the validity of the remainder hereof as a whole or part
thereof other than the part declared to be_invalid.
Section 4. That all ordinances or parts of ordinances in conflict herewith be, and the
same are hereby repealed.
Section 5. That this ordinance shall become effective immediately upon passage on
second and final reading.
PASSED AND ADOPTED in regular session on second and final reading on this the 3"~
day of May, 2011.
G
~ G MAYOR
ATTEST:
City Clerk
First Reading l~t,~ 5, ~.D11
Second Reading l l l ~-~ ~
3
Ord No. 15-11
Coversheet
MEMORANDUM
TO: Mayor and City Commissioners
FROM: R. Brian Shutt, City Attorney
DATE: April 29, 2011
SUBJECT: AGENDA ITEM 10 B -REGULAR COMMISSION MEETING OF MAY 3.2011
ORDINANCE NO. 15-11
ITEM BEFORE COMMISSION
Page 1 of 1
This ordinance is before Commission for second reading to consider amending Chapter 33, "Police and
Fire-Rescue Departments"; amending Section 33.62, "Benefit Amounts and Eligibility", Subsection (E),
"Disability Retirement Provisions", Sub-Subsection (5), "Disability Retirement Benefits", to increase
the minimum service incurred disability benefit for firefighters; and amending Section 33.64,
"Contributions", Subsection (A), "Member Contributions", to increase member contributions for
firefighters.
BACKGROUND
At the first reading on April 5, 2011, the Commission passed Ordinance No. 15-11. On April 19, 2011,
the Commission tabled the second reading of this ordinance as the actuarial impact statement had
not been received. The actuarial impact statement has been received and is being delivered to the state
at this time and the ordinance is now ready to be adopted on second reading.
RECOMMENDATION
Recommend approval of Ordinance No. 15-11 on second and final reading.
http://itwebapp/AgendaIntranet/Bluesheet.aspx?ItemID=4467&MeetingID=316 5/16/2011
ORDINANCE NO. 15-1 I
AN ORDINANCE OF THE CITY COMMISSION OF THE
CITY OF DELRAY BEACH, FLORIDA, AMENDING
CHAPTER 33, "POLICE AND FIRE-RESCUE
DEPARTMENTS" OF THE CODE OF ORDINANCES OF
THE C[TY OF DELRAY BEACH; SECTION 33.62, "BENEFIT
AMOUNTS AND ELIGIBILITY", SUBSECTION (E),
"DISABILITY RETIREMENT PROVISIONS", SUB-
SUBSECTION (5), "DISABILITY RETIREMENT BENEFITS",
TO INCREASE THE MINIMUM SERVICE INCURRED
DISABILITY BENEFIT FOR FIREFIGHTERS AND
AMENDING SECTION 33.64, "CONTRIBUTIONS",
SUBSECTION (A), "MEMBER CONTRIBUTIONS", TO
INCREASE MEMBER CONTRIBUTIONS FOR
FIREFIGHTERS; PROVIDING A SAVING CLAUSE, A
GENERAL REPEALER CLAUSE, AND AN EFFECTIVE
DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF DELRAY
BEACH, FLORIDA, AS FOLLOWS:
Section 1. That Chapter 33, "Police and Fire-Rescue Departments", Section 33.62,
"Benefit Amounts and Eligibility", Subsection (E), "Disability Retirement Provisions", Sub-
subsection (5), "Disability Retirement Benefits" of the Code of Ordinances of the City of Delray
Beach is hereby amended to read as follows:
Sec. 33.62. BENEFIT AMOUNTS AND ELIGIBILITY.
(E) Disability Retirement Provisions.
(5) Disability Retirement Benefits.
(a) Eligibility. Each member shall be eligible for service incurred disability benefits, regardless
of length of continuous service. Each member who completes ten (10) years of continuous
service prior to becoming disabled shall be eligible for non service incurred disability benefits.
(b) Initial Amount of Service Incurred Disability Benefit. The greater of sixty (60) percent of
the member's average monthly earnings in effect on the date of disability or the member's
accrued pension benefit. Effective for disabilit~pplications filed on or after May 3, 2011, the
initial amount of service incurred disability benefit for firefighters shall be the greater of sixth
one (6lZpercent of the member's avera~le monthly earnings in effect on the date of disability or
the member's accrued pension benefit.
(c) Amount of Nonservice Incurred Disability Benefit. Two (2) percent of average monthly
earnings in effect on the date of disability for each year of continuous service; provided,
however, the minimum shall not be less than twenty-five (25) percent of average monthly
earnings.
(d) Terms of Payments. Disability benefits shall commence on or as of the first day of the
month coincident with or next following the date of disability, as established by the Board of
Trustees, and shall continue to be paid on the first day of each subsequent month until the death
or recovery of the disability retiree. The same survivorship percentages which apply to normal
retirement benefits shall also apply to disability retirement benefits.
(e) Eligibility for Other Benefits. In the event that a member applying for disability benefits is
also eligible for either early or normal retirement, the Board may, upon the request of the
-nember, pay the early or normal retirement benefit instead of a disability retirement benefit.
Section 2. That Chapter 33, "Police and Fire-Rescue Departments", Section 33.64,
'`Contributions", Subsection (A), "Member Contributions", of the Code of Ordinances of the
City of Delray Beach is hereby amended to read as follows:
Sec. 33.64. CONTRIBUTIONS.
(A) Member Contributions.
(1) Effective the first pay period after September 1, 1999, members of the retirement system
shall make regular contributions to the Trust Fund at a rate equal to three (3) percent of their
respective annual earnings. Eligible employees, as a condition of membership, shall agree in
writing upon becoming a member to make the contribution specified herein. These contributions
shall be deducted from the earnings before the same are paid, until the member has completed
twenty-five (25) years of continuous service at which time member contributions are no longer
required.
(2) Effective the first pay period starting after May 3, 2011, members of the retirement system
employed as firefighters shall make regular contributions to the Trust Fund at a rate equal to six
(6) percent of their respective annual earnin~gible employees, as a condition of
membership, shall agree in writing upon becoming a member to make the contribution specified
herein. These contributions shall be deducted from the earnings before the same are paid, until
the member has completed twenty-five (25) years of continuous service at which time member
contributions are no Ion eg r required.
~~ ,The City shall pick up the member contribution required by
subsection (A)(I) and A 2 above. The contributions so picked up shall be treated as employer
contributions in determining tax treatment under the United States Internal Revenue Code. The
City shall pick up the member contributions from funds established and available in the salaries
account, which funds would have otherwise been designated as member contributions and paid
to the pension fund. Member contributions picked up by the City pursuant to this subdivision
shall be treated for purposes of making a refund of member contributions, and for all other
purposes of this and other laws, in the same manner and to the same extent as member
contributions made prior to the effective date of this subdivision. The intent of this subdivision is
to comply with Section 414(h)(2) of the Internal Revenue Code.
Section 3. That should any section or provision of this ordinance or any portion
thereof, any paragraph, sentence, or word be declared by a court of competent jurisdiction to be
2
Ord No. 18-11
invalid, such decision shall not affect the validity of the remainder hereof as a whole or part
thereof other than the part declared to be_invalid.
Section 4. That all ordinances or parts of ordinances in conflict herewith be, and the
same are hereby repealed.
Section 5. That this ordinance shall become effective immediately upon passage on
second and final reading.
PASSED AND ADOPTED in regular session on second and final reading on this the
day of , 2011.
MAYOR
ATTEST:
City Clerk
First Reading
Second Reading
-,
Ord No. 18-11
CITY OF DELRAY BEACH
POLICE OFFICERS' AND FIREFIGHTERS' RETIREMENT PLAN
ACTUARIAL IMPACT STATEMENT
April 21, 2011
(Page 1)
Attached hereto is a comparison of the impact on the Total Required Contribution (per
Chapter 112, Florida Statutes), and the Required City Contributions, resulting from the
implementation of the following changes:
1.) For Firefighters, effective April 21, 2011, the initial amount of service incurred
disability benefit shall be the greater of sixty-one percent of the Member's
Average Monthly Earnings in effect on the date of disability or the Members'
accrued pension benefit.
2.) Effective the first pay period after April 21, 2011, Firefighters will contribute
6.0% of their respective annual earnings. (The Firefighters contributing to the
Enhanced Multiplier will have their Member Contributions increased from
6.0% to 9.0%.)
The cost impact, determined as of October 1, 2009, as applicable to the plan year
ending September 30, 2009 and the City's fiscal year ending September 30, 2011, is as
follows:
Current Proposed
Total Required Contribution
of Total Annual Payroll 53.5% 53.5%
Less Expected Member Cont.
of Total Annual Payroll 6.0% 6.7%*
Equals Required City & State
of Total Annual Payroll 47.5% 46.8%
Applicable State Contribution * 504,922 504,922
of Total Annual Payroll 2.8% 2.8%
Balance From City
of Total Annual Payroll 44.7% 44.0%
*Please note that since the increase in Member Contributions is effective more
than midway through the fiscal year, the impact of this amendment is
understated. At the payroll as of 10/1/09 for a full year, Member Contributions
would be estimated at 7.5%, reducing the Required City/State Contribution to
46.0% instead of the 46.8% shown above.
CITY OF DELRAY BEACH
POLICE OFFICERS' AND FIREFIGHTERS' RETIREMENT PLAN
ACTUARIAL IMPACT STATEMENT
April 21, 2011
(Page 2)
The changes presented herein are in compliance with Part VII, Chapter 112,
Florida Statutes and Section 14, Article X of the State Constitution.
Bradley . H inrichs, FSA, EA, MAAA
Enrolled Actuary #11-6901
STATEMENT OF PLAN ADMINISTRATOR
The prepared information presented herein reflects the estimated cost of the
proposed improvement.
Chairman, Board of Trustees
Comparative Summary of Principal Valuation Results
A. Participant Data
Number Included
Actives
Service Retirees
DROP Retirees
Beneficiaries
Terminated Vested
Disability Retirees
Total
Total Annual Payroll
Payroll Under Assumed Ret. Age
Annual Rate of Payments to:
Service Retirees"
DROP Retirees
Beneficiaries
Terminated Vested
Disability Retirees
New Benefit Old Benefit
10/1 /2009 10/1 /2009
246 246
111 111
36 36
10 10
5 5
25 25
433 ~~
$17,901,995 $17,901,995
17,901,995 17,901,995
4,816,716 4,816,716
2,509,141 2,509,141
105,633 105,633
50,898 50,898
740,757 740,757
B. Assets
Actuarial Value
Market Value
117,804,617 117,804,617
98,170, 514 98,170, 514
C. Liabilities
Present Value of Benefits
Active Members
Retirement Benefits
Disability Benefits
Death Benefits
Vested Benefits
Refund of Contributions
Service Retirees
DROP Retirees
Beneficiaries
Terminated Vested
Disability Retirees
Excess State Monies Reserve
COLA Account Balance
111,214,926 111,214,926
2,555,445 2,544,418
1,032,162 1,032,162
982,256 982,256
518,685 485,262
56,833,221 56,833,221
31,074,072 31,074,072
972,507 972,507
599,404 599,404
8,307,342 8,307,342
1, 504, 541 1, 504, 541
4,327,436 4,327,436
Total
219,921,997 219,877,547
'' Liabilities shown represent present value of future payments. Assets in item B.,
above, do not include accumulated DROP account balances.
New Benefit Old Benefit
10/1 /2009 10/1 /2009
C. Liabilities - (Continued}
Present Value of Future Salaries 149,128,254 149,128,254
Present Value of Future Member Cont. 8,947,695 8,947,695
Normal Cost (Entry Age Normal)
Retirement Benefits 4,076,953 4,076,953
Disability Benefits 184,500 183,365
Death Benefits 80,760 80,760
Vested Benefits 72,072 72,072
Refund of Contributions 88,653 85,054
Total Normal Cost 4,498
Present Value of Future Normal Costs 37,382,707 37,354,454
Actuarial Accrued Liability (Entry Age Norm al)
Retirement Benefits' 76,920,795 76,920,795
Disability Benefits 994,192 991,341
Death Benefits 353,357 353,357
Vested Benefits 518,001 518,001
Refund of Contributions 134,422 121,076
Inactives plus State Reserve 103,618,523 103,618 523
523
18
Total Actuarial Accrued Liability ,
,
Unfunded Actuarial Accrued Liab (UAAL) 64,734,673 64,718,477
D. Actuarial Present Value of Accrued Benefits
Vested Accrued Benefits
Inactives 97,786,546 97,786,546
Actives 29, 063, 324 29, 063, 324
Member Contributions 7 438,993 7 438 993
Total , .. `~ 1 ,
Non-vested Accrued Benefits 5,396,662 5,396,662
Total Present Value Accrued Benefits 139,685,525 139,685,525
Increase (Decrease) in Present Value of
Accrued Benefits Attributable to:
Plan Amendments 0 0
Assumption Changes 0 0
New Accrued Benefits 0 6,869,347
Benefits Paid 0 (6,264,626)
Interest 0 10,302,936
Other 0 0
Total: 0 10,907,657
New Benefit Old Benefit
Valuation Date 10/1/2009 10!1/2009
Applicable to Fiscal Year Ending 9/30/2011 9/30/2011
E. Pension Cost
Normal Cost (with interest)
of Total Annual Payroll 27.8 27.7
Administrative Expense (with interest}
of Total Annual Payroll* 1.3 1.3
Payment Required to Amortize
Unfunded Actuarial Accrued
Liability over 30 years
(as of 10/1 /09)
of Total Annual Payroll* 24.4 24.4
Total Required Contribution
of Total Annual Payroll'' 53.5 53.5
Expected Member Contributions
of Total Annual Payroll* 6.7 6.0
Expected City & State Contrib.
of Total Annual Payroll' 46.8 47.5
* Contributions developed as of 10/1/09 are expressed as a percentage of projected
annual payroll at 10/1/10 of $17,901,995.
*" Frozen per Chapters 175 and 185, Florida Statutes, as amended.
ACTUARIAL ASSUMPTIONS AND FUNDING METHODS
Assumptions
Mortality Rate
Interest Rate
Retirement Age
Disability Rate
Termination Rate
Salary Increases
Early Retirement
Cost-of-Living Adjustment
Administrative Expenses
RP 2000 Combined Healthy Mortality with
no projection.
8.2% per year compounded annually,
net of investment related expenses (8.3%
used in 2008).
25% retire on normal retirement date; 10%
retire each of the next two years; 25% retire
in each of the third and fourth years follow-
ing normal retirement date; and 100% retire
the fifth year following normal retirement
date..
See table below. Table updated since 2006
based on experience study.
See table below. Tables updated since
2006 based on experience study.
6.25% per year until the assumed
Retirement Age. See table below.
No Early Retirement is assumed.
1 % per year for those that retire after
10/1/1993.
Expenses paid out of the fund other than
investment-related expenses are assumed
to be equal to the average of actual ex-
penses over the two previous years.
Payroll Growth Up to 4.0% per year.
ACTUARIAL ASSUMPTIONS AND FUNDING METHODS
Assumptions
Firefighters - Police Officers -
Terminating % Terminating % Becoming Disabled
Age During the Year During the Year During the Year
20 8.0% 12.0% 0.07%
30 6.0 10.0 0.09
40 0.0 2.0 0.15
50 0.0 0.0 0.50
Current Salary
as a % of Salary
Abe at Age 53
20 13.5%
30 24.8%
40 45.5%
50 83.4%
Funding Method
Entry Age Normal Actuarial Cost Method.
SUMMARY OF CURRENT PLAN
(Through Ordinance No. 21-09)
Original Effective Date
Latest Amendment Date
April 22, 1974
May 5, 2009
Credited Service Years and fractional parts of years of service as
a sworn Police Officer or a regular or volunteer
Firefighter employed by the City.
Salary Basic compensation, excluding commissions,
overtime and bonuses. Lump sum payment of
unused leave is also excluded.
Average Final Compensation (AFC)
One twelfth of the average of the 3 highest
years of Salary.
Normal Retirement
Date The earlier of: 1) age 55 and 10 years of
Credited Service, or 2) 20 years of Credited
Service, regardless of age.
Benefit If less than 20 years of service, 2.5% of AFC
times years of service. With 20 or more years of
service, 3.5% of AFC times years of service,
with a maximum benefit of 87.5%.
Form of Benefit For married retirees, an annuity payable for the
life of the Member; upon the death of the mem-
ber, 100% of the Member's benefit payable to
the spouse for one year and 60% payable the-
reafteruntil death or remarriage. For unmarried
retirees, the normal form is a 10 Year Certain
and Life Annuity.
Earlx Retirement
Date Age 50 and 10 years of Credited Service.
Benefit Accrued benefit, reduced 3.0% for each year
prior to Normal Retirement Date.
Cost-of-Livinq Adjustment
Contributions
Employee
Premium Tax
An annual increase equal to 1 % applies for
those who retire after October 1, 1993 com-
mencing on the 25th anniversary of the retiree's
hire date. Additional increases are available
when the revenue under Chapters 175 and 185
exceeds $504,922.
3.0% of Salary, 6.0% of Salary for those
electing the Enhanced Multiplier.
Premium tax refunds.
City Remaining amount necessary for payment of
Normal (current year's) Cost and amortization
of the accrued past service liability over 30
years.
Disability Benefit
Eligibility Total and permanent as determined by
the Board of Trustees. Ten years of service
required for non-service connected disability.
Benefit Amount Accrued benefit, but not less than 60% of AFC
for service connected disabilities. For non-
service connected disabilities, a benefit of 2% of
AFC times years of service with a minimum of
25% of AFC.
Pre-Retirement Death Benefit
Service Incurred 50% of AFC to the spouse, plus 5% to each
unmarried child under age 18 (age 22 if full-time
student), subject to an overall maximum of 60%
of AFC.
Non-Service Incurred A $2,500 lump sum if less than one year of ser-
vice. A $5,000 lump sum if more than one year
of service but less than five.
If five or more years of service, a $5,000 lump
sum, >I''us a monthly benefit to the spouse of
65% of the accrued pension as of the date of
death subject to a minimum of 20% of AFC,
determined in the same manner as the child-
ren's service incurred death benefit. The total
monthly benefit is subject to a maximum of 50%
of AFC and 35% after death or remarriage of
the spouse.
Vesting (Termination)
Less than 10 years
Refund of Member Contributions.
10 or more years Either the accrued benefit payable at Normal
Retirement Date, provided contributions are not
withdrawn, or a refund of member contributions.
Board of Trustees The Board consists of the Mayor, the Fire Chief, the
Police Chief, two City residents appointed by the City
Commission, two Members of the Fire Department
elected by the Membership and two Members of the
Police Department elected by the Membership.
Deferred Retirement Option Plan
Eligibility Satisfaction of Normal Retirement requirements.
Participation Not to exceed 60 months.
Rate of Return Net rate of return on retirement fund assets dur-
ing the period the employee participates in the
DROP.
Form of Distribution Cash lump sum (options available) at termination
of employment.
PalmBeachPost.com (561 j 820-4343 ~ Monday, April i 1, 2011
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