Ord 28-12AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF
DELRAY BEACH, FLORIDA, AMENDING CHAPTER 35,
"EMPLOYEES POLICIES AND BENEFITS ", SUBHEADING
"RETIREMENT PLAN ", OF THE CODE OF ORDINANCES OF THE
CITY OF DELRAY BEACH, FLORIDA, BY AMENDING SECTION
35.089, "DEFINITIONS ", TO AMEND THE DEFINITION OF
"EMPLOYEE" TO INCLUDE CERTAIN PREVIOUSLY EXCLUDED
POSITIONS; PROVIDING A GENERAL REPEALER CLAUSE; A
SAVINGS CLAUSE; AND AN EFFECTIVE DATE.
WHEREAS, the City Commission of the City of Delray Beach desires to amend the General
Employees' Retirement Plan to allow certain employees who were previously excluded from the Plan to
participate in the Plan and purchase credited service under the plan for the period of their employment with
the City;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF
DELRAY BEACH AS FOLLOWS:
Section 1. That Chapter 35, "Employee Policies and Benefits ", subheading, "Retirement Plan ", of
the Code of Ordinances of the City of Delray Beach is hereby amended by amending section 35.089,
"Definitions ", by amending the definition of "Employee" to read as follows:
Sec. 35.089. DEFINITIONS.
Employee. Any regular full-time employee of the City, except as otherwise provided herein.
(1) The term "employee" shall not include: City Commissioners; the City Manager (and
assistants); the City Attorney (and assistants); department heads upon their written election not to
participate in the plan; former department heads who have elected not to participate in the plan; any
person not classified by the City as a regular, full-time employee; any participant who retires and
receives early or normal retirement benefits under the plan, is subsequently re- employed by the City,
and elects to continue receiving retirement income during the period of employment pursuant to
Sec. 35.090(E) of this subchapter; and firefighters and police officers employed by the City who
participate in another retirement plan.
(2) Effective Tanuary 7.2003 , the term
"employee" shall include the City Manager (and assistants) upon their written election to participate
in the plan; the City Attorney (and assistants) upon their written election to participate in the plan;
and department heads: and the Sustainability Officer /Public Information Officer who previously
elected not to participate in the plan, upon their written election to participate in the plan. Aft
to the Retirement G–.—. —thin ninety (90) days foRff&ing adeption of Otdinanee No. 57 02
Such written election shall be irrevocable.
eleetion to the plan purstiftat to this pffagrftph shall, not pftrti'etpftte in the plaft for
Section 2. That all ordinances or parts of ordinances in conflict herewith be, and the same are
hereby repealed.
Section 3. That if any section, subsection, paragraph, sentence or word or other provision of
this ordinance, or any portion thereof, or its application to any person or circumstance, be declared by a
court of competent jurisdiction to be invalid or unconstitutional, such decision shall not affect the validity of
any other section, subsection, paragraph, sentence or word or provision or its application to other persons
or circumstances and 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.
final reading.
That this ordinance shall become effective immediately upon passage on second and
P SSED AND ADOPTED in regular session on cond and final rea g on this
2012.
:A'fT T: MAY
r1 City Clerk
First Reading �
Second Reading ;e •� , c�(L
ORD. NO. 28 -12
�f�
the day of
Coversheet
MEMORANDUM
TO: Mayor and City Commissioners
FROM: David T. Harden, City Manager
DATE: September 6, 2012
Page 1 of 1
SUBJECT: AGENDA ITEM 10.D. - REGULAR COMMISSION MEETING OF SEPTEMBER 20, 2012
ORDINANCE NO. 28-12
ITEM BEFORE COMMISSION
This ordinance is before Commission for second reading to consider an ordinance amending Chapter
35, "Employees Policies and Benefits ", Subheading "Retirement Plan", of the Code of Ordinances by
amending Section 35.089, "Definitions ", to amend the definition of "Employee" to include certain
previously excluded positions.
BACKGROUND
At the first reading on September 4, 2012, the Commission passed Ordinance No. 28 -12.
The attached actuarial impact statement shows that if all the eligible employees decided to opt into the
General Employee's pension plan, the City's required contribution would increase by $49,909 for fiscal
2013. However, as was explained in the agenda memo for the September 4th meeting, if the eligible
employees join the pension plan they will no longer receive the 9.5% City contribution to their deferred
compensation account. So, the City's net cost increase would be $7,516.
The attached actuarial impact statement now includes all eligible employees. The costs shown above
have been updated based on the revised actuarial statement.
RECOMMENDATION
Recommend approval of Ordinance No. 28 -12 on second and final reading.
http:// itwebapp/ Agendalntranet /Bluesheet.aspx ?ItemID= 5985 &MeetinglD =389 9/28/2012
ORDINANCE NO. 28 -12
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF
DELRAY BEACH, FLORIDA, AMENDING CHAPTER 35,
"EMPLOYEES POLICIES AND BENEFITS ", SUBHEADING
"RETIREMENT PLAN ", OF THE CODE OF ORDINANCES OF THE
CITY OF DELRAY BEACH, FLORIDA, BY AMENDING SECTION
35.089, "DEFINITIONS ", TO AMEND THE DEFINITION OF
"EMPLOYEE" TO INCLUDE CERTAIN PREVIOUSLY EXCLUDED
POSITIONS; PROVIDING A GENERAL REPEALER CLAUSE; A
SAVINGS CLAUSE; AND AN EFFECTIVE DATE.
WHEREAS, the City Commission of the City of Delray Beach desires to amend the General
Employees' Retirement Plan to allow certain employees who were previously excluded from the Plan to
participate in the Plan and purchase credited service under the plan for the period of their employment with
the City;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF
DELRAY BEACH AS FOLLOWS:
Section 1. That Chapter 35, "Employee Policies and Benefits ", subheading, "Retirement Plan ", of
the Code of Ordinances of the City of Delray Beach is hereby amended by amending section 35.089,
"Definitions ", by amending the definition of "Employee" to read as follows:
Sec. 35.089. DEFINITIONS.
Employee. Any regular full -time employee of the City, except as otherwise provided herein.
(1) The term "employee" shall not include: City Commissioners; the City Manager (and
assistants); the City Attorney (and assistants); department heads upon their written election not to
participate in the plan; former department heads who have elected not to participate in the plan; any
person not classified by the City as a regular, full-time employee; any participant who retires and
receives early or normal retirement benefits under the plan, is subsequently re- employed by the City,
and elects to continue receiving retirement income during the period of employment pursuant to
Sec. 35.090(E) of this subchapter; and firefighters and police officers employed by the City who
participate in another retirement plan.
(2) Effective Tanuary 7.2003 . - , _ , the term
"employee" shall include the City Manager (and assistants) upon their written election to participate
in the plan; the City Attorney (and assistants) upon their written election to participate in the plan;
*ad department heads. and the Sustain-ability Officer /Public Information Officer who previously
elected not to participate in the plan, upon their written election to participate in the plan.
later. ffftft. 7, 2003] or date of employment identified in this p2trftgt!aph, whieheyel! is
Such written election shall be irrevocable.:.
lang fts he or she is employed by the Gity' identified in this PftI!ftg"Ph.
Section 2. That all ordinances or parts of ordinances in conflict herewith be, and the same are
hereby repealed.
Section 3. That if any section, subsection, paragraph, sentence or word or other provision of
this ordinance, or any portion thereof, or its application to any person or circumstance, be declared by a
court of competent jurisdiction to be invalid or unconstitutional, such decision shall not affect the validity of
any other section, subsection, paragraph, sentence or word or provision or its application to other persons
or circumstances and 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 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
, 2012.
ATTEST:
City Clerk
First Reading
Second Reading
U* •.1
ORD. NO. 28-12
Coversheet
MEMORANDUM
TO: Mayor and City Commissioners
FROM: R. Brian Shutt, City Attorney
DATE: August 28, 2012
SUBJECT: AGENDA ITEM 12.A. - REGULAR COMMISSION MEETING OF SEPTEMBER 4.2012
ORDINANCE NO. 28-12
Page 1 of 1
ITEM BEFORE COMMISSION
Adoption of Ordinance 28 -12 regarding a proposed change to allow department head level employees to
join the general employees' pension plan and buy back previously accrued service.
BACKGROUND
In 2003 department head level employees were given a 90 day window in which to join the general
employees' pension plan and buy back previously accrued service, where they had been excluded from
membership. This amendment will allow current and future department head level employees, which
include the City Manager and assistants, the City Attorney and assistants, and department heads, who
previously elected not to participate in the plan, the ability to join the general employees' pension plan
at any time in the future and buy back accrued service.
As has been previously discussed with the Commission, the City Manager believes this change will be
helpful in attracting and retaining employees at this level. All of the employees included in this change
are at will employees. For that reason, they often elect to not participate in the Pension Plan when they
are first hired, since they have no assurance they will be employed by the City long enough to become
fully vested in the City's pension plan. They elect to participate in the deferred compensation plan (457)
since contributions to it are fully portable. Once they have been employed by the City for a number of
years they may feel secure enough to buy into the City's pension plan.
There are currently four employees who would be affected by this change.
FUNDING SOURCE
The employee would be required to pay the full actuarial cost to purchase prior service credit. Going
forward the City would have to contribute a percentage of the employee's salary to the pension fund.
However, the City would no longer contribute 9.5% of the employee's salary to the deferred
compensation plan. Currently the City's cost would increase from 9.5% of salary to 11.95 %. In many
prior years, however, the City's pension contribution for General Employees has been less than 9.5 %, so
the City would have realized a savings.
RECOMMENDATION
Commission discretion.
http: // itwebapp/ Agendalntranet /Bluesheet.aspx ?ItemID= 5947 &MeetinglD =387 9/6/2012
Gabriel Roeder Smith & Company One East Broward Blvd. 95=4.527.1616 phone
Consultants & Actuaries Suite 505 95=4.525.0083 fax
GRS
Ft. Lauderdale, FL 33301 -1804 www.gabrielroeder.com
September 18, 2012
Mr. David A. Boyd, CPA
Finance Director
City of Delray Beach
100 Northwest 1 st Avenue
Delray Beach, Florida 33444
Re: City of Delray Beach General Employees' Retirement Plan
Dear David:
As requested, we have prepared the enclosed Actuarial Impact Statement for proposed Ordinance No. 28 -12
which would amend the Plan by eliminating the requirement for individuals employed as City Manager (and
assistants), City Attorney (and assistants), and department heads to elect to participate in the Plan within 90
days of the later of January 7, 2003 or date of employment.
The Statement must be filed with the Division of Retirement before the final public hearing on the ordinance.
Please have a member of the Board of Trustees sign the Statement. Then send the Statement along with a copy
of the proposed ordinance to Tallahassee.
Summary of Findings
The required employer contribution in the first year would increase by $49,909, from $2,128,666 to
$2,178,575.
The present value of the pension benefits expected to be earned by the four employees who would be
eligible to join the Retirement Plan is $426,013. This assumes all of our actuarial assumptions are
met each year. A portion of the $426,013 would be funded by member contributions from the four
employees, and the remainder would be funded by the City each year.
The Plan's funded ratio (assets divided by actuarial accrued liability) would remain the same.
Other Cost Considerations
■ As of October 1, 2011 the Actuarial Value of Assets exceeds the Market Value of Assets by
approximately $10,246,000. This difference will be gradually recognized over the next several years.
In turn, the computed employer contribution rate will increase by approximately 5% of covered payroll
in the absence of offsetting gains.
Additional Disclosures
This report was prepared at the request of the Board and is intended for use by the Retirement System and
those designated or approved by the Board. This report may be provided to parties other than the Board only
in its entirety and only with the permission of the Board.
The purpose of this report is to describe the financial effect of the proposed plan changes. This report should
not be relied on for any purpose other than the purpose described above.
Mr. David A. Boyd, CPA
September 18, 2012
Page 2
The calculations in this report are based upon the data provided by the City for the four current employees
who would become eligible to participate in the Plan under the proposed ordinance and upon information
furnished by the Plan Administrator for the October 1, 2011 Actuarial Valuation concerning Plan benefits,
financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries.
We reviewed this information for internal and year -to -year consistency, but did not otherwise audit the data.
We are not responsible for the accuracy or completeness of the information provided by the City or Plan
Administrator.
The calculations are based upon assumptions regarding future events, which may or may not materialize.
They are also based on the assumptions, methods, and plan provisions outlined in this report. Future
actuarial measurements may differ significantly from the current measurements presented in this report due
to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; changes in economic or demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements (such as the end of
an amortization period or additional cost or contribution requirements based on the plan's funded status); and
changes in plan provisions or applicable law. If you have reason to believe that the assumptions that were
used are unreasonable, that the plan provisions are incorrectly described, that important plan provisions
relevant to this proposal are not described, or that conditions have changed since the calculations were made,
you should contact the author of the report prior to relying on information in the report.
The undersigned actuaries are members of the American Academy of Actuaries and meet the Qualification
Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The
undersigned actuaries are independent of the plan sponsor.
This report has been prepared by actuaries who have substantial experience valuing public employee
retirement systems. To the best of our knowledge the information contained in this report is accurate and
fairly presents the actuarial position of the Plan as of the valuation date. All calculations have been made in
conformity with generally accepted actuarial principles and practices, and with the Actuarial Standards of
Practice issued by the Actuarial Standards Board and with applicable statutes.
Respectfully submitted,
Stephen Pahnquist, AS AAA, FCA
Enrolled Actuary No. 11 -1 60
Enclosures
effr Amrose, MAAA
Enrolled Actuary No. 11 -6599
Gabriel Roeder Smith & Company
CITY OF DELRAY BEACH GENERAL EMPLOYEES' RETIREMENT PLAN
Impact Statement — September 18, 2012
Description of Amendments
The proposed ordinance would amend the Plan by eliminating the requirement for individuals employed as City
Manager (and assistants), City Attorney (and assistants), and department heads to elect to participate in the Plan
within 90 days of the later of January 7, 2003 or date of employment.
Funding Implications of Amendment
An actuarial cost estimate is attached.
Certification of Administrator
I believe the amendment to be in compliance with Part VII, Chapter 112, Florida Statutes and Section 14,
Article X of the Constitution of the State of Florida.
For the Board of Trustees
as Plan Administrator
Plan
SUPPLEMENTAL ACTUARIAL VALUATION REPORT
City of Delray Beach General Employees' Retirement Plan
Valuation Date
October 1, 2011
Date of Report
September 18, 2012
Report Requested by
Board of Trustees
Prepared by
J. Stephen Palmquist
Group Valued
All active and inactive members of the Plan.
Benefit Provisions Being Considered for Change
Present Provision Before Change
Individuals employed as City Manager (and assistants), City Attorney (and assistants), and department
heads must elect to participate in the Plan within 90 days of the later of January 7, 2003 or date of
employment.
Proposed Change
The proposed ordnance would eliminate the requirement for the above - mentioned employees to elect
to participate in the Plan within 90 days of the later of January 7, 2003 or date of employment.
Participants Affected
Individuals currently employed in the above - mentioned positions who did not previously elect to
participate in the Plan and individuals who become employed in these positions after the effective date
of the ordinance. We reflected the addition of the four employees from your September 5, 2012 letter
and Brian Shutt's e-mail dated September 14, 2012.
Actuarial Assumptions and Methods
Same as October 1, 2011 Actuarial Valuation Report with no exceptions.
Some of the key assumptions /methods are:
Investment Return 7.25%
Salary Increase 4.4% to 7.2% per year, based on service (salary increases are lowered to 2%
for each of the next three years)
Cost Method Entry Age Normal
Amortization Period for Any Change in Actuarial Accrued Liability
N/A
Summary of Data Used in Report
See attached page. The calculations are based on the data used for the October 1, 2011 Actuarial
Valuation Report and on the data provided by the City for the four current employees who would
become eligible to participate in the Plan under the proposed ordinance.
Actuarial Impact of Proposal(s)
See attached page(s)
Special Risks Involved with the Proposal That the Plan Has Not Been Exposed to Previously
None
Other Cost Considerations
As of October 1, 2011 the Actuarial Value of Assets exceeds the Market Value of Assets by
approximately $10,246,000. This difference will be gradually recognized over the next several years.
In turn, the computed employer contribution rate will increase by approximately 5% of covered payroll
in the absence of offsetting gains.
ANNUAL REQUIRED CONTRIBUTION (ARC)
A. Valuation Date
October 1, 2011
October 1, 2011
Change
Valuation
Proposed
from Baseline
Ordinance
B. ARC to Be Paid During
Fiscal Year Ending
9/30/2013
9/30/2013
C. Assumed Date of Employer Contrib.
12/31/2012
12131/2012
D. Annual Payment to Amortize
Unfunded Actuarial Liability
$ 81,283
$ 81,283
0
E. Employer Normal Cost
1,869,059
1,914,787
4-.7?8
F. ARC if Paid on the Valuation
Date: D +E
1,950,342
1,996,070
45,728
G. ARC if Paid on the First Day of
the Next Fiscal Year
2,091,742
2,140,785
49,043
H. ARC if Paid on December 31
2,128,666
2,178,575
49,909
1. ARC as % of Covered Payroll*
11.95 %
11.93 %
(0.02) %
J. Assumed Rate of Increase in Covered
Payroll to Contribution Year
0.00 %
0.00 %
0.00 %
K. Covered Payroll for Contribution Year
17,817,131
18,263,384
446,253
L. ARC for Contribution Year: I x K*
2,128,666
2,178,575
49,909
M. REC as % of Covered
Payroll in Contribution Year: L - K*
11.95 %
11.93 %
(0.02}
* Assuming the contribution is paid on the date in Item C.
ACTUARIAL VALUE OF BENEFITS AND ASSETS
A. Valuation Date
October 1, 2011
October 1, 2011
Change
Valuation
Proposed
from Baseline
Ordinance
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits
$ 58,022,430
$ 58,338,642
$ 316,212
b. Vesting Benefits
2,456,503
2,468,708
12,205
c. Disability Benefits
2,004,841
2,016,641
11,800
d. Preretirement Death Benefits
1,816,088
1,894,059
77,971
e. Return of Member Contributions
50,032
57,857
7,825
64,349,894
f. Total
64,775,907
426,013
2. Inactive Members
a. Service Retirees & Beneficiaries
42,737,386
42,737,386
-
b. Disability Retirees
551,109
551,109
-
c. Terminated Vested Members
3,154,662
3,154,662
-
46,443,157
-
d. Total
46,443,157
3. Total for All Members
110,793,051
111,219,064
426,013
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25
93,546,778
93,546,778
-
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35
N/A
N/A
N/A
E. Plan Assets
1. Market Value
80,267,519
80,267,519
-
2. Actuarial Value
90,513,860
90,513,860
-
F. Unfunded Actuarial Accrued Liability: C -E2
3,032,918
3,032,918
-
G. Actuarial Present Value of Projected
Covered Payroll
133,561,393
136,753,806
3,192,413
H. Actuarial Present Value of Projected
Member Contributions
4,971,068
5,068,436
97,368
I. Funded Ratio: E2 /C
96.8%
96.8%
0.0%
CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date
October 1, 2011
October 1, 2011
Change
Valuation
Proposed
from Baseline
Ordinance
B. Normal Cost for
1. Service Retirement Benefits
$ 1,890,959
$ 1,933,914
$ 42,955
2. Vesting Benefits
234,182
235,541
1,359
3. Disability Benefits
128,969
130,407
1,438
4. Preretirement Death Benefits
104,842
117,296
12,454
5. Return of Member Contributions
48,342
49,475
1,133
6. Total for Future Benefits
2,407,294
2,466,633
59,339
7. Assumed Amount for Administrative
Expenses
135,818
135,818
-
8. Total Normal Cost
2,543,112
2,602,451
59,339
As % of Covered Payroll
14.27 %
14.25 %
(0.02) %
C. Expected Member Contribution
674,053
687,664
13,611
As % of Covered Payroll
3.78 %
3.77 %
(0.01)
D. Net Employer Normal Cost: B8-C
1,869,059
1,914,787
45,728
As % of Covered Payroll
10.49 %
10.48 %
(0.01) %
PARTICIPANT DATA
October 1, 2011
October 1, 2011
Change
Valuation
Proposed
from Baseline
Ordinance
ACTIVE MEMBERS
Number
389
393
4
Covered Annual Payroll
$
17,817,131
$
18,263,384
$
446,253
Average Annual Payroll
$
45,802
$
46,472
$
670
Average Age
47.2
47.2
0.0
Average Past Service
11.2
11.1
(0.1)
Average Age at Hire
36.0
36.1
0.1
RETIREES, BENEFICIARIES & DROP
Number
243
243
0
Annual Benefits
$
4,129,570
$
4,129,570
S
0
Average Annual Benefit
$
16,994
$
16,994
S
0
Average Age
68.3
68.3
0.0
DISABILITY RETIREES
Number
3
3
0
Annual Benefits
$
46,412
$
46,412
$
0
Average Annual Benefit
$
15,471
$
15,471
$
0
Average Age
53.4
53.4
0.0
TERMINATED VESTED MEMBERS
Number
46
46
0
Annual Benefits
$
491,817
$
491,817
$
0
Average Annual Benefit
$
10,692
$
10,692
$
0
Average Age
47.8
47.8
0.0
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