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HomeMy WebLinkAbout2006 11 20 Handout Given by Byron Giltz For Agenda Item 301 Date: November 20, 2006 The attached two (2) documents were distributed to the City Commission by Mr. Byron Giltz at the November 20, 2006 City Commission Special Meeting, during the discussion of Regular Agenda Item "301." City of Winter Springs City Commissioners Employees Retirement Benefits November 20, 2006 "Control" seemed to be the key word and major thrust at the Phase B workshop. If Control is balanced with a five member Board of Trustees, having equal input, practicing in accordance with State of Florida law, exercising proper monitoring, proper accounting procedures and reporting, Control could be very beneficial. Control should be defined in great detail and be administered by the full Board. If the City Commissioners amend the current Dermed Benefit Plan and Trust for Employees of the City of Winter Springs, ("Plan"), to appoint the five member City Commission as the Retirement Committee, thus the Board of Trustees, it would then be required to manage and administer the Plan according to the Plan documents as amended. I know the Commission, or a balanced Board of Trustees made up of employees and appointees, would both respect all employees equally and add value to the Plan and to the entire City. The other theme I heard repeatedly was the opinion of the citizens/taxpayers/voters of Winter Springs. As an all of the above for over 10 years, I put my trust in the hands of the City Commissioners and the Mayor to manage and administer all aspects of the City. That is why over 10,000 of us voted on November 7th. 1 I really do not think citizens focus on the City employees' retirement benefits. Their concerns focus on their families, their jobs, education facilities, public safety, recreation, shopping, dining and way down the list would be the details of City agreements, including the retirement plans. My opinion would be for the Commission not to be concerned about the voters in this matter, but do consider Control that is structured prudently and efficiently. In conclusion, please seriously consider proceeding with Phase C and Phase D. I think it would contribute factual advice and be very informative to retain outside, independent professionals to assist you through the process to arrive at prudent conclusions. Thank you for your time. Byron Giltz 407-977-8096 troontrace{tUaol.com HELPING SHAPE FLORIDA'S FUTuRE'i9 www.lIw-law.com LEWIS, loNGMAN &WALKER, P.A ATTORNEYS AT LAW REPLy To: TALLAHASSEE March 9, 2006 Kevin Smith, Assistant City Manager City of Winter Springs 1126 East State Road 434 Winter Springs, FL 32708-2799 Re: Dear Kevin: City of Winter Springs Defined Benefit Plan and Trust - ~eed for Comprehensive Review and Revision . As you know, I have provided pension-related legal services to the City of Winter Springs since 2001. My first assignment involved assisting the City in implementing the merger of the old money purchase plan into the defined benefit plan, and revising various provisions of the defined benefit plan to accom lish the Ci 's ob'ective of providing a more secure retirement ro for its employees. At the last pension board meeting in January I outlined several reasons why I believe the City of Winter Springs Defined Benefit Plan and Trust needs to be comprehensively reviewed, updated and revised. Briefly: · The current plan document (58 pages, single spaced) is extremely long and difficult to work with. In my experience, a typical governmental plan is about 40 pages long, double-spaced. · The current plan is overly complicated. It contains many provisions that are relevant to private sector pension plans established in compliance- with the Employee Retirement Income Security Act (ERISA). But most provisions of ERISA are not applicable to governmental plans. For example, the plan definition of "hours of service" (section 1.24) is more than 2 pages long and is not relevant to a governmental defined benefit plan. This and a number of other ERISA compliance provisions in the plan can be eliminated. Bradenton 1001 3rd Avenue West Suite 670 Bradenton, FL 34205 (941) 708-4040 Fax: (941) 708-4024 Jaeksol1ville 9428 Baymeadows Road Suite 625 Jacksonville, FL 32256 (904) 737-2020 Fax: (904) 737-3221 Tallahassee Post Office Box 10788 (32302) 125 South Gadsden Street. Suite 300 Tallahassee. FL 32301 (850) 222-5702 Fax: (850) 224-9242 West Palm Beach 1700 Palm Beach Lakes Blvd. Suite 1000 West Palm Beach. FL 3340 I (561) 640-0820 Fax: (561) 640-8202 September 21, 2006 Page 2 · The current plan needs to be updated to comply with recent changes to the Internal Revenue Code. · The current plan is not an "off the shelf" plan. It contains many SPecific provisions that address the City's unique objectives. The merger of the old money purchase plan into the defined benefit plan is a good case in point. The rights of employees under the old money purchase plan have to be specifically addressed. Another example is the benefit provisions that were adopted in May 2005 to provide for a gradual increase in the benefit multiplier for service prior to October 1, 2000 over a four year period. It would be impossible to use an "off the shelf' plan to replace the current plan without substantial modification, or significant changes in what the plan now provides. For all the above reasons I have recommended that th Ian document be thorou ~ an atto~r~~~ with governmental w.. and then an re . my JU gmen s IS, ~ snowu ~ u6~ :sooner ritther than later, whether this project is handled by me or another attorney. 1 Please feel:free to call me if you have any questions concerning this matter. Sincerely, James W. Linn JWUes Division of Retirement Contact Sheet Sarabeth Snuggs, Director DIVISION OF RETIREMENT PO BOX 9000 TALLAHASSEE, FL32315-9000 Emall sarabeth.snuaas@dms.mvflorida.com Phone (850) 488 - 5541 Fax (850) 488 - 5290 Keith Brinkman, Chief Bureau of Local Retirement Systems DIVISION OF RETIREMENT PO BOX 9000 TAllAHASSEE, Fl32315-9000 Email keith.bfinkrnan(wdms.mvflorida.com Phone (850)488-2784 Fax (850)921 -2161 Charles Slavin, Actuary Bureau of Local Retirement Systems DIVISION OF RETIREMENT PO BOX 9000 TALLAHASSEE,FL3231~9000 Email charles.slavin@dms.mvtJorida.com Phone (850) 488 - 2784 Fax (850) 921 - 2161 Patricia F. Shoemaker, Benefits Administrator Municipal Police Officers' and Arefighters' Retirement Trust Funds Office DIVISION OF RETIREMENT PO BOX 3010 TALLAHASSEE.FL3231~3010 Email mof@dms.mvflorida.com Web http://www.myflorida.com/frslmpf Phone (850)922-0667 Fax (850) 921 - 2161 Jim Lind stated that in order for the plans to receivelbe eligible for the 175/185 monies, the city must first fully fund all of the provisions of 175/185. · I believe that the 175/185 monies can be used to fund the minimum benefits, and the benefits are not mandated to be funded by the city. Any minimum benefits that cannot be fully funded with the current level of state monies can be set aside to be funded by future additional state monies as they may come available. eM said that the city would be on the hook for funding future benefit increases that the legislature may add to the statutes. · Again, any additional minimum benefits are not mandated to be funded by the sponsor. The plan could 'bank' the 175/185 monies until there was enough to fund the additional benefit. Jim Lind said that the state monies were 'capped' at 6% of payroll. This blanket statement is not correct · The police monies have no cap. Past distributions have indicated that the gross collection, less the service charge of 7.3%, has been distributed to the plan. · Fire monies are also reduced by the 7.3% service charge, with the balance available for the initial distribution. The distribution amount is 'capped' at 6% of payroll or 50% of the amount available, whichever is greater. The remainder of monies (those not paid under the 6% or 500A. calculation) are available for the supplemental distribution. While there is no guarantee that the supplemental payments will be made, 86% of fire plans had money available for a supplemental distribution this past October. General soe:e:estion The pension board should have an independent actuary calculate the cost of each benefit adjustment from current to minimum - The Board could use the 175/185 monies to fund the benefits in the order they are interested in - i.e. 55/10 and 52/25 could be first, etc., in the event that all could not be funded by the initial state money allocations. Division of Retirement Key Folks: · Patricia Shoemaker. Benefits Administrator · Julie Browning, Accountant · Melody Mitchell, Government Analyst · Martha Moneyham. Administrative Secretary (850) 922-0667