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HomeMy WebLinkAbout_2006 09 27 City Commission Workshop Minutes EXEMPTION CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION REGULAR MEETING SEPTEMBER 27,2006 CALL TO ORDER The Workshop of Wednesday, September 27,2006 of the City Commission was called to Order by Mayor John F. Bush at 6:31 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Mayor John F. Bush, present Deputy Mayor Michael S. Blake, arrived at 6:35 p.m. Commissioner Robert S. Miller, present Commissioner Donald A. Gilmore, present Commissioner Sally McGinnis, present Commissioner Joanne M. Krebs, present City Manager Ronald W. McLemore, arrived at 6:32 p.m. City Attorney Anthony A. Garganese, arrived at 6:38 p.m. A moment of silence was followed by the Pledge of Allegiance. City Manager Ronald W McLemore arrived at 6:32 p.m. Commissioner Joanne M. Krebs said, "I just wanted to send a message to the Chief of the Fire Department and Station 26 for saving my friend, Smokey [Allen] who had a twenty- five percent (25%) chance of living after a serious, serious problem that happened on September 13th, [2006] and because of your quick response, and what was done for him, you have saved his life - and thank you." INFORMATIONAL AGENDA INFORMATIONAL 500. Office Of The City Manager Discussion On Pension Related Issues. Mr. Jim Linn, Esquire, Lewis, Longman & Walker, P.A., 125 South Gadsden Street, Suite 300, Tallahassee, Florida: mentioned he knew Mr. Scott Christiansen, and began his presentation. CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 2 OF 15 Continuing, Mr. Linn explained, "We're going to start out tonight just with an overview of your Fiduciary duties with respect to the City's Pension Fund. The idea that you all, as Elected Officials, act in a Fiduciary capacity, I know, is not new to you. You do that all the time. And when you're acting as the City Commission, and clearly you function in a Fiduciary role in your capacity as City Commissioners with respect to the taxpayer's money, and looking out for the interest of the taxpayers. And, of course, that's the foundation of what it means to be a Fiduciary - is basically you're entrusted with something valuable that really belongs to somebody else. And, it's your charge to take care of the assets and basically to exercise your best judgment to make sure that those assets aren't used in some improper manner or that they get frittered away. And so, often times in your role as City Commissioners you're called upon to exercise that kind of judgment and to try to determine what would really be in the best interest of the taxpayers." Deputy Mayor Michael S. Blake arrived at 6:35 p.m. Mr. Linn continued, "Your role, with respect to the City Pension Fund is a little bit different. And just like you change hats, for example when you sit as the Development Review Committee, when you sit as the Pension Board of Trustees, you change hats and you become Fiduciaries with respect to the Pension Fund." City Attorney Anthony A. Garganese arrived at 6:38 p.m. Mr. Linn continued, "Section 112.656 states that a Pension Fiduciary shall discharge his duties with respect to a Pension Plan solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the Plan; and really, that in a nutshell, is the basic Fiduciary duty - the Pension Board acts solely in the interest of the participants and beneficiaries of the Plan." Mr. Linn then said, "The Law also requires that a Fiduciary act with the care, skill, prudence, and diligence under the circumstances that a prudent person acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aim." Commissioner Krebs commented, "We have a Board of Trustees, but yet you referred to us as the Board of Trustees and when you said, when we sit and act as the Board of Trustees - so I was a little confused what you meant. Are the Board of Trustees also Fiduciaries?" CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 3 OF 15 Mr. Linn replied, "Well, what you have is a Retirement Committee, and it's my understanding, that the ultimate responsibility for the Pension Fund resides with this Commission." Mr. Linn added, "But that the bottom line decisions, the ultimate decisions, reside with you, in terms of who the Consultants are; who the Investment Managers are. Those fundamental decisions that you take, recommendations from the Committee, but the Commission functions in the role of Trustee." Commissioner Krebs remarked, "The reason I ask is because when I read the Plan, that is not how I read the Plan." Mr. Linn said, "That's not how I read the Plan either." Mr. Linn continued, "And one of the problems, one of the challenges, that we have right now, is that you have a Plan document, and I think the Manager will get into this, that is, was originally designed as a private sector Plan. And it has a lot of inconsistencies and it has a lot of provisions that really don't apply to governmental Plans." Commissioner Krebs asked, "But you did a draft Summary on that in January." Mr. Linn said, "Yes, I di d. " Commissioner Krebs continued, "And it kind of coincided with what the Plan said, didn't it?" Mr. Linn replied, "The Summary does coincide with what the Plan said. And we had a discussion with the Committee in February, March - I was down here and we had this exact same discussion. Which is that the Plan document does not reflect the fact that the City Commission is ultimately in control, in charge of the Plan. And one of the things that I was tasked to do, as the Plan Attorney, was to prepare a Restatement of the Plan that would make that clearer. And that Restatement and initial draft has been prepared. It's been reviewed by staff, we're getting into the second round of revision of that, but the Restatement will remove those inconsistencies; and make it clear that the Retirement Committee is functioning as an Advisory Committee and not as the Board of Trustees. Because you're absolutely correct, the Plan document says the Retirement Committee is the Board of Trustees." Commissioner Krebs noted, "And that made perfect sense to me - and my question, my biggest question on Fiduciary responsibility is how can I be a Fiduciary for the Plan, at the same time represent the people. Because, just as you stated, in order for me to be a Fiduciary of the Plan, all my attention has to be only with the beneficiaries, those people involved in the Plan. And I, that is where all my attention would go as Fiduciary and yet, how do I take my City hat off? So, it really did make sense to me, to have with the Board of Trustees, but now, I am hearing conflicting stuff." Mr. Linn said, "Well, and not only that, if you look back in the duties of the Trustees and the duties of the Committee, the Plan documents says things like, 'The Trustee will prepare Reports and submit it to the Committee'. Well, obviously, that language doesn't make any sense if the Committee is the Trustee. So, there are inconsistencies in the Plan. Not only with respect to the governance, but in other areas. And it really needs to be cleaned up and that's what we're working on right now." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27,2006 PAGE 4 OF 15 Furthermore, Mr. Linn remarked, "It is a total rewrite of the Plan because frankly, I mean, you've got about, you've got a IOO-plus page document and there's just a lot of verbiage. And I - I'm sure Mr. Christensen probably has had a chance to look at it too. And I would venture to guess, might agree with my assessment that there's a lot of stuff in there that really doesn't need to be in a governmental Plan. So, we're working on it." Furthermore, Mr. Linn added, "So, what does a Fiduciary have to do, just very briefly - has to administer the Plan in accordance with the documents, and make sure that the documents are consistent with Law. That's why you engage Consultants and Attorneys to advise you on what the applicable provisions of Law are. Fiduciaries should be familiar with the provisions of the Plan and with the provisions of the Law that govern Pension Plans. There are a host of other functions of Fiduciaries and some of these certainly are functions that can be delegated. Now, I think, you have delegated. Like determination of issues involving eligibility for benefits, approval of benefits, maintenance of records, distribution of a Summary Plan Description, which is what you refer to that we did earlier this year. Verification of collection and deposit of monies into the Plan, making arrangements for the preparation of Actuarial studies and overseeing the investment of Fund Assets. I talked about hiring Consultants to assist and advise in the performance of Fiduciary duties and also filing the necessary reports with the State Division of Retirement, which oversees governmental Plans. And so, all of these duties are involved in what the Fiduciary, with respect to a governmental Plan, with respect to any Pension Plan, has to carry out." Mayor Bush asked, "The Commission, basically, they do their day-to-day duty and as Commissioners, they are looking out for the benefits of the citizens of the City. But as Fiduciary, their job is to look out for the best interest of the people who are recipients of the Plan. Is that correct?" Mr. Linn replied, "Yes." Commissioner Donald A. Gilmore remarked, "When you opened up, you said that we had the responsibility for the participants and the beneficiaries." Mr. Linn commented, "Right." Mr. Linn said, "When you're acting as Pension Trustees, Pension Fiduciaries, you're only wearing one (1) hat; and in that capacity, the Law requires that you act in the best interest of the participants and beneficiaries. The beneficiaries are the beneficiaries of the participants. So basically, it's anybody who is a member of the Plan and anybody who might be entitled to a benefit because they're related or in someway designated by a member of the Plan to receive a benefit, in the event the member dies. So those are the beneficiaries and it's all one (I) sentence. And - your role as Fiduciary is to look out for those folks' interest when you're making decisions about the Pension Plan." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27,2006 PAGE 5 OF 15 Mr. Linn said, "The way the Law is set up is that you make your decisions about funding the Plan in advance. The Law requires that the Plan be funded on an actuarially sound basis; and those decisions need to be made ahead of time. Because basically what 'Actuarially sound' means is that you're not going to put some benefit in place or make some decision with respect to the Plan, where the bill gets passed off to a future generation of tax payers - I hate to use the Social Security example, but that is an example of not Actuarial funding. And - what the Law requires in Florida is that you make decisions about what the City can afford, and this is in your role as Commissioners, not in your role as Pension Trustees - but you've already made that decision - you should make that decision in conjunction with your Budget, in conjunction with your long term financial planning; what level of benefits do you want to provide to employees. And then, when you put the hat on as a Pension Trustee, you're looking solely at, 'Okay, these are the Assets available from the City; these are the funds that have been made available; and what is the most prudent way of using those Assets, you know, to fulfill the promises that are made in the Pension Plan'. That's, you know - where the separation is." Discussion. Mr. Bryon Glitz, 1001 Troon Trace, Winter Springs, Florida: as a member of the Board of Trustees, Mr. Giltz stated, "What would be the Boards role and what would be their duties and responsibilities? I mean, I can't see having two (2) sets of Trustees." Mr. Linn replied, "I think that the Committee's role would be Advisory and would be whatever the Commission would determine in terms of what final responsibility is. For example, the Commission might well want to delegate benefit determinations, you know, sitting and reviewing eligibility for benefits, whether somebody is qualified for a disability for example. They might want to delegate other authority as well, but that's your decision." Mayor Bush inquired, "Does our Pension Board have any Fiduciary responsibilities?" Mr. Linn responded, "Well, to the extent that they are making final decisions, yes. Now, I would have to - find out more about exactly what your Committee is doing right now. If they're acting in an Advisory capacity and the City Commission is actually ratifying the decisions, then probably not." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27,2006 PAGE 6 OF 15 Deputy Mayor Blake said, "I just wanted to respond to that because - you could have a Plan document that lays out the rules for how a Plan will operate and then you have the fact of how a Plan operates. And they may not be the same. And I would not want any individual who sits on a Commission or who sits on the Board of Trustees, to think that they do not have any Fiduciary responsibility or liability because I think of course, I have found in the past that it really is very dependent upon the actions that are taken, the ultimate actions and not necessarily just what is written on a document. And so, that is sort of how we got down this road from the beginning was somebody up here - stood up here and said - 'We really need to take a look at the Fiduciary obligations and liabilities that each of us have as we go down this road of managing this Pension Plan'." Manager McLemore gave a PowerPoint presentation on the City's Pension Plan. Tape I/Side B Ms. Valarie Mendelson, Detective, Police Department: commented on the Pension Plan and said to Mr. Linn, "You said you are an Attorney for several different cities, and I am sure you have their Plans. Is there a way we can get copies of their different Plans to see which way we should go?" Mr. Linn responded, "You can get copies of any cities Plans, they are all public records." Regarding the kind of Plan we have, Deputy Mayor Blake explained, "This is not a 40 I k. What you have is the benefit. It doesn't matter how much money is in the Account; it could zero (0), it could be way over funded. Either way, it doesn't matter because all you really have is a contract from the City that says, 'If you fulfill certain obligations to be part of the Plan, you work here long enough, you get to be old enough, and retire, then there is a contractual obligation from the City to pay you a stream of dollars in the future'. Where that stream of dollars comes from is our problem, not the employees' problem. That's the difference between a Defined Benefit and a Defined Contribution Plan that the Manager really didn't cover. If it's a Defined Contribution Plan, you are responsible for how much money is in there; and you are responsible for whether or not you will have enough money to retire on. On a Defined Benefit program and this is the biggest benefit of this type of a program for the participants, the beneficiaries, you the employees, is that it doesn't matter if there's a nickel in there. It just doesn't matter. Because what you have is the full faith and credit in taxing authority, of this City, to raise the money when it is due to make sure that you get your check when you retire. So, you have no risk there, I mean, to the extent - risk exists everywhere." Deputy Mayor Blake added, "You don't own the money; it is not your money. It is the City's money and it is a trust that we have set aside in order to fund that future obligation." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27,2006 PAGE 7 OF 15 Mr. Linn noted, "Every employee receives a Summary Plan Description and the most recent one was in February, and that lays out all the benefits of the Plan." Ms. Mendolson then said to Mr. Linn, "I have never seen that document." Deputy Mayor Blake asked Manager McLemore, "How do we distribute the Summary Plan document on an annual basis?" Manager McLemore replied, "My understanding was that all employees got copies of it. I'll sure check and make sure." Manager McLemore continued, "But I need to also say, every quarter, you receive a financial statement that is right out here in front of the public. It is public record. If you ever want to know, just come there. And I am not sure, but if it's not on the Web, we can certainly put it there where you'll have access to it at any time." Ms. Sandra Turner, President, Retirement Plan Specialists, Inc., 2 Lawn Street, Oviedo, Florida: remarked, "Have you been in my Employee meetings that I have every single year, six (6) of them, morning, noon and evening for an entire week; where I sit in here and go over every single persons' individual statement and the 'Q' and 'A' on the Plan?" Ms. Turner continued, "Well, the 'Q' and 'A' that I give you is a summary of that because they are supposed to have that on the Website." Ms. Turner added, "I then also give you an individual statement that tells you what you can expect at retirement and what you have earned to-date." Discussion. Mr. Edward Martinez, Jr., 205 Little Creek Lane, Winter Springs, Florida: agreed with what Deputy Mayor Blake had said earlier regarding the Commission's authority. Mr. Scott R. Christiansen, Esquire, Christiansen and Dehner, P.A., 63 Sarasota Center Boulevard, Suite 603, Sarasota, Florida: stated, "I concluded that the Board of Trustees/Retirement Committee and those in the document are the same people - the Retirement Committee and the Board of Trustees. I concluded after reviewing the responsibilities of the Board of Trustees/Retirement Committee that they had the authority to hire the Actuary and to hire people to handle the administration of the Plan to include management people, Attorneys - they were making decisions on granting benefits from the Plan and basically doing the normal administration of the Pension." Continuing, Mr. Christiansen explained, "We don't have any Plans currently where the City Commission or Council acts as the Pension Plan or the Board of Trustees. That's not to say it is illegal, we just don't have any that do that. We did have some initially who did that and when the Board became aware of their Fiduciary liability and some of the potential problems with Conflicts of Interest that were kind of discussed here earlier, whether you perceived that to be a Conflict of Interest or not, the overwhelming additional responsibility of Fiduciary responsibility, virtually every Commission and Council that - was a Board of Trustees, made a decision to create a separate Board of Trustees to do nothing but administer the Pension Plan." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27,2006 PAGE 8 OF 15 Discussion. Mr. Christianson then mentioned that he represents approximately 170 Plans, and stated, "Had I known that, in fact you all were the Board of Trustees and that the Retirement Committee/Board of Trustees really doesn't have the authority to hire an Attorney, I might have even thought twice about coming in tonight. But, Mr. McLemore's outline of the history of your Plan was something that I wasn't privy to before and frankly I still have the question about what your Plan says and who has the authority to do what." Further discussion. Next, Mr. Christiansen pointed out some of information in a document he provided to the City Commission and stated, "Essentially Chapter 175 and 185, when I talk about this, Chapter 175 deals with Firefighters' Pension Plans and Chapter 185 deals with Police Officer Pension Plans, and essentially what it does, it's designed, as you can see in the introduction in the outline that I gave you, it's designed to essentially set up a minimum level of benefits for Police Officers and Firefighters within the State. And, again, the two (2) Chapters provide minimum benefits. They're essentially the same for Police Officers and Firefighters and there's a list of those benefits in the handout that I gave you. But what it is designed to do is kind of make a minimum level of benefits that we're going provide for Police Officers and Firefighters around the State. Now, in order to qualify, to get the funding that we talked about, that has been received, you're required to adopt a Pension Plan that has the minimum benefits that are provided for in Chapter 175, and 185. " Furthermore, Mr. Christiansen remarked, "Your current Plan has a number of provisions that would already meet or exceed the requirements of Chapter 175/185; and you have several benefits that don't meet the minimum requirements of 175 and 185. Your Plan would have to be, if we were to convert your Plan from its current unified - Pension Plan, you would actually have to create at least one (1) other Pension Plan. The Police Officers and Firefighters, if you're in Chapter 175/185, they have to have a Plan that's separate from the General Employees. So, you'd have to at least set up - keep the General Employees perhaps in the current Plan and set up a separate Plan for the Police Officers and Firefighters together or two (2) separate Plans, one (1) for Police and one (1) for Fire. Now because of the benefits that you currently have in your Plan, we certainly wouldn't want to set up a Police Officer Plan or a Firefighter Plan and end up taking some benefits away from the current Police Officers and Firefighters. I think I can speak for them and saying that they would not be in favor of doing that. CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 9 OF 15 Essentially, we would create a new Plan that would have the benefits that we currently have that are greater than Chapters 175 and 185 and then the ones that don't meet 175 and 185, we would increase those or make changes to the Plan to provide for those minimum benefits. By doing that, we then would qualify to receive the State funding that is received every year. What I was asked to do is explain the difference between a Chapter Plan and a Local Law Plan; you'll see that referred to in here. A Chapter Plan is a Plan that essentially just adopts - the minimum benefit levels in Chapter 175 and 185; and that's typically how somebody who doesn't have a Pension Plan at all, and wants to create a Plan under 175 and 185, they'll typically start off with a Chapter Plan. And then simply say, we hereby adopt Chapter 175 as our Pension Plan for our Firefighters and then you will have the two percent (2%) multiplier and the normal retirement at fifty-five (55) and ten (10) or fifty-two (52) and twenty-five (25) and the various benefits that you see outlined in the documentation that I provided to you. That is a Chapter Plan. If you want to do something that's considerably different than was in the Chapter, which you're allowed to do. In other words you can make your plan better than what's in Chapter 175 and 185. It just can't be worse. Okay? But, if you do things like - where you've got a three (3) year average final compensation, okay, that's the average salary that used to calculate the benefit. The Chapter plan is a five (5) year average final compensation. Since yours is better, you would have to have a local law plan in order to be able to use a three (3) year average final compensation. And you have several other provisions that are greater than what's provided for in 175 and 185. A good example of something that really doesn't cost anything is - buybacks. You have a provision that allows somebody that worked as a Policeman or a Fireman some place else, that they could come here and they could buy that service that they had elsewhere, they could buy it in your Plan by putting in an actuarially equivalent amount to get that benefit. Okay? You can't do that in a Chapter Plan. So essentially, we would have to create Local Law Plans for your Police Officers and Firefighters if we were going to set up a compliant Plan under 175 and 185, we would have to do it by Local Law." Mr. Christianson continued, "Okay, now that having been said, how are these, we talk about this funding that you can get - how is the funding developed? Essentially now, all of your residents, all of the residents of your City, are currently paying a tax on their casualty insurance and their fire insurance. And that tax is being collected by the Insurance companies, and it's being collected in Tallahassee, and that money is all staying in Tallahassee. CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 10 OF 15 If you pass, or adopt a Pension Plan that meets the minimum requirements of 175 and 185, that we just talked about, all of the dollars that are collected by, within your City, on fire insurance and, generally speaking, on fire insurance, and the tax on the casualty insurance, those funds would then be collected in Tallahassee and they would be rebated back to the City. And the fire insurance premium taxes would have to go into the Firefighters Plan, to fund benefits for the Firefighters. And the casualty insurance premiums, premium taxes would come back to the Police Officers Plan and it would go into that Plan to fund benefits for the Police Officers. Okay? How much is that? We can't tell you out of the blocks because obviously what it depends on is the value of property within your City. Obviously, the premiums are based on the value of properties. You are probably in a better position to be able to go through the list that I provided to you. I think we have the City of Apopka in there. We do Oviedo. You decide what City you think is most similar to your City as far as the tax base is concerned. Because that's going to be an approximation of the amount of money that you would likely be able to get back as a result of participating in Chapter 175 and 185. So, that's what the funding IS. Now that - the State money does have to be used, it has to be earmarked for benefits for Police Officers and Firefighters. I know one of the concerns here is with your unified Plan, is that there's a real concern that in fact, if we did this, Police Officers and Firefighters would end up with benefits that are better than what the General Employees get. And frankly, that often happens. But, if we can use the State money that we would qualify for to make benefit improvements for Police - to help to fund the benefits that we currently have for the Police Officers and Firefighters, particularly those that are above the minimums, to the extent we could use State money, the funding that we just talked about, to pay for some or all of the costs of those benefits, what that is going to do is maybe give you the opportunity to use some of the funds that we're saving in the Police and Fire Plans, to improve the benefits for the General Employees." Discussion ensued on a Chapter Plan, to which Mr. Christianson said, "If you create a Chapter Plan - meaning the minimum benefits in the Chapter, okay, the initial setup - the City would be required to fund that, fund those initial Plan benefits." Tape 2/Side A Deputy Mayor Blake said, "It doesn't matter what we're currently doing. I am only asking about what we are required to do. Are we required to provide two percent (2%) per year with twenty-five (25) and fifty-two (52) and fifty-five (55) and ten (10) out benefits; are we required to fund those numbers through General Fund contributions alone without using a single dollar of premium tax money to fund that? That's my question." Mr. Christianson said, "Starting up the Plan, yes." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27,2006 PAGE II OF 15 Manager McLemore said, "You could have a combined Police and Fire Chapter Plan, couldn't you?" Mr. Christianson said, "Yes, sir." Manager McLemore said, "I'm curious about the money that's available, the State monies. Don't you actually have to commit to adopting the State Plan before they will tell you how much money is generated in your City?" Mr. Christianson said, "Yes." Continuing, Manager McLemore said, "So, you're legally bound to that discussion before you ever know how much you have, isn't that correct?" Mr. Christianson said, "Yes." With further comments, Mr. Christianson noted, "You are already spending - over eleven percent (11 %) of payroll to fund the current Pension Plan so..." Mr. Christianson continued, "... You would know before you created the Plan what the cost of the minimum benefits would be. Okay. The Actuary would do a calculation and he would come in and say, 'It is going to cost you eight percent (8%) of payroll - in order to fund the minimum benefits in the Pension Plan', okay, well that's three percent (3%) less than what you are currently funding - we can do the Chapter Plan with the minimum benefits, it is going to cost us, eight percent (8%) of payroll and then when we get the State money, essentially, that's where I was going with the Local Law Plan, with the State money, you can use that additional State money to fund the difference between the Chapter Plan minimum benefits and the current level of benefits that you've got in your - unified plan." Deputy Mayor Blake asked, "Are you suggesting that you cannot fund above that two percent (2%) per year level with the Chapter Plan?" Mr. Christianson responded, "You can increase the multiplier. That's the only change that you can really make to a Chapter Plan without becoming a Local Law Plan. So, we could do the three percent (3%) multiplier and still be a Chapter Plan." Discussion ensued on the definition of "Extra benefit". Manager McLemore commented, "All this feasibility stuff is a second phase function, really not intended to happen tonight, and if you choose to go forward, then - economic feasibility on all these questions will be laid out to you at the next Meeting." Mr. Linn noted that regarding "The definition of 'Extra benefits' - and I'm reading from the Florida Statutes 175.351 that states that the term - this is 2004 - the term 'Extra benefits' means benefits in addition to or greater than those provided to General Employees of the Municipality and in addition to those in existence for Firefighters on March 12, 1999. I don't think that's been changed since 2004, Scott (Christianson). I think there still is a comparison to General Employees." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 12 OF 15 Mr. Joseph Bogdahn, Principal, Bogdahn Consulting, LLC, 340 West Central Avenue, Suite 300, Winter Haven, Florida: said, "But there was actually a lawsuit that the Florida League of Cities filed to contest that..." Mr. Linn remarked, "... I was the Attorney on the Lawsuit.. ." Mr. Bogdahn continued, "... And as you may recall, the lawsuit kind of went away when the legislature - and the Division of Retirements interpretation though, is that now all it says is that you have to use it to provide 'Extra benefits' above the minimum and you don't have to regard what the General Employees have. And that's the opinion that the Division of Retirement has taken and that's been what they've been using for the past two (2) years." Mr. Linn explained, "The reason that this is important is that what has been presented - well, you could start a Chapter Plan, get the State money, then use the State money to increase the multiplier back up to three percent (3%) from the two percent (2%) minimum, up to three percent (3%). But if the Statute is correct, and I think it is, you can't use the premium tax money for benefits that are not greater than what General Employees get. So if you keep your General Employees at a three percent (3%) multiplier, than you'd have to use the premium taxes for benefits for Police and Fire that were above that. I believe that's that - and I would certainly respect - if they want to produce something from the Division of Retirement that says that this is no longer in effect. I don't understand how the Agency could disregard the Statute, but it wouldn't be the first time, I will tell that." Mayor Bush said, "Well, thank you. That will be something that I guess we'll have to get an answer at a later Meeting." Discussion. Commissioner Krebs said, "You talked about 185/175. What you didn't tell me was why 185/175, why do we have 185 and l75? What is it meant to do? What is it here for? And once you have it, can you, I don't want to say, I guess, get rid of it? So those are two (2) questions." Mr. Christianson replied, "Why do we have it? I guess if you read in the information I have, which I know you haven't had a chance to do yet, but - what it's designed to do, as I said, is to set up a level, a minimum level of benefits for Police Officers and Firefighters. And one of the things that it does, is it provides for an earlier retirement date than what you currently have in your Plan. I mean you currently have, you can retire under normal retirement at age sixty-five (65). Under 175/185, the minimum date that you have to have is, you have to allow normal retirement - after age fifty-two (52), if you have twenty-five (25) years of service or at age fifty-five (55) if you have at least ten (10) years of service." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 13 OF 15 Mr. Christianson added, "The Chapter 175/185 specifically provides that the City can terminate a Chapter 175 and 185 Plan; that when you terminate the Plan, just like your Plan currently provides, when you terminate the Plan, everybody becomes one hundred percent (100%) vested in their accrued benefit, okay? And to the extent - if your accrued benefits are equal to eight million dollars ($8,000,000), and you have ten million dollars ($10,000,000) in the Plan, everyone would get the - value of their accrued benefit, the eight million dollars ($8,000,000) and the other two million dollars ($2,000,000), some of it would go back to the State and then if there's anything leftover, the City would be able to get some of that money. But, that's specifically provided for in Chapter 175/185." Continuing, Mr. Christianson said, "Earlier, there was a question about, 'Can we have different benefits for different employee groups'? If you're familiar with the Florida Retirement System, they have a different class; they have dozens of different classes of employees who are all provided with different benefits. The Florida Retirement System has a three percent (3%) multiplier for Police Officers and Firefighters. General Employees get 1.65; I think they have to retire later. Police Officers and Firefighters can retire earlier. Okay, that may be another thing that you're looking at as far as your choices are concerned. But, there's a clear basis for being able to differentiate different classes of employees. People that do different things can be provided with different benefit levels." Discussion. Mr. Linn commented, "But what you all really need to look at, is whether after everything's said and done, after you meet all of the minimum benefits that Scott (Christianson) eluded to, there are some minimum benefits that your current Plan doesn't meet, how much will it cost you to do that? Just to qualify to get the State money. That's something that you have to look at - that's ultimately a decision that you're going to have to make. And one thing that I think would be good to challenge Mr. Christianson is of all these 170 plans, Police and Fire Plans that he represents, next time he comes back, ask him to come back with a list of all of those Plans that have City contribution rates of thirteen percent (13%) of payroll. Let's see how many of those 170 Plans that are getting the State money, have contribution rates as low as what you have right now." Commissioner Sally McGinnis said, "When you come back, or if somewhere along the line, I would like that information on that." Commissioner McGinnis added, "I would be interested to know the percentages of..." Mr. Christensen replied, "... There is a book that's available from the State, from the State Department of Administration, that essentially lays out all of the benefits of all of the Plans in the State, the funding levels, the dollar amounts. I mean, it has everything you can think of as far as statistics with regard to governmental Pension Plans in the State of Florida." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 14 OF 15 Mr. Christianson continued, "So you all can get a - I'm sure Jim (Linn) knows what I'm talking about. And you all can get a copy of that document and it will basically provide everything you want." Mr. Linn said, "1 would suggest that since the State report is two (2) years behind, that these gentlemen would have the most up-to-date information on what cities are contributing right now. And that they, that you might ask them to bring..." Mayor Bush stated, "... We could ask Oviedo." Commissioner Robert S. Miller added, "1 would like to see the data that was just requested." Deputy Mayor Blake noted, ..email it to us." Mr. Bradley R. Heinrichs, FSA, EA, Foster and Foster, Inc., 6290 Corporate Court, Suite C-201, Fort Myers, Florida: addressed the City Commission on actuarial studies. Commissioner Miller said, "Well, 1 think we could always go through it with you and pick and choose and you could point out the ones that are most closest to ours. But, 1 would be curious." Mr. Heinrichs said, "Sure. And we'd be happy to be comply and help." Discussion. Tape 2/Side B Further discussion. Mr. Ron Ligthart, 1036 Winding Waters Circle, Winter Springs, Florida: commented on the differences between the private sector and public sector Pension Plans. Mr. Heinrichs continued his comments related to how State money works. Discussion. Mr. Bogdahri also commented on State funds. Discussion. Mayor Bush called a Recess at 9:07 p.m. Mayor Bush called the Workshop back to Order at 9:25 p.m. Due to technical difficulties with the audiotape, the next audiotape was used. Tape 3/Side A CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - SEPTEMBER 27, 2006 PAGE 15 OF 15 Mr. Don Farnum, Maintenance Mechanic, Utility Department: as a previous City Firefighter, Mr. Farnum mentioned that since there wasn't a 175/185 Plan, he was able to transfer to another Department. Captain Jim Wilkins, Community Services Bureau, Police Department: commented on how much a life is worth; their Pension Plan; and that they don't work on commission. Mr. Steve Molnar, : representing the City of Winter Springs Professional Firefighters, Mr. Molnar spoke on the Cody Study and salaries. Mr. Mark Sardo, 997 Sequoia Court, Winter Springs, Florida: as a Board of Trustees Member, Mr. Sardo suggested finding out what the next step would cost. Mr. Vernon Rozelle, 648 Redwood Drive, Winter Springs, Florida: as another Board of Trustees Member, Mr. Rozelle thanked the contributors for participating and agreed that a full evaluation should be considered. Ms. Mendelson spoke "On behalf of all the employees of the City, Police, Fire and General Employees" on the Commission's decisions related to Pension Plan issues; suggested different options related to years of service and/or the minimum age for retirement; and recommended employee participation on the Advisory Board(s). Manager McLemore said, "There is one other matter of business on your Agenda. You cannot Vote on anything tonight, but you can take a Consensus on whether we go to the next step or not in the study methodology." Commissioner Krebs said, "Yes." Commissioner McGinnis said, "Yes, sure." Mayor Bush said, "Yes. I think we should proceed. Do we have Consensus on this, Commissioners? Mr. Gilmore? Mr. Blake is 'Yes'. Unanimous Consensus." ADJOURNMENT Mayor Bush adjourned the Workshop at 9:58 p.m. RESPECTFULLY SUBMITTED: DANIELLE HARKER, ASSISTANT TO THE CITY CLERK AND ~ ,! I. ~---.? ...--....... --- AND LDRflvZO-LUACES, CMC CITV -LERK