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HomeMy WebLinkAbout2011 04 25 Consent 203 Requesting Approval of the City Commission Workshop Minutes of April 12, 2011CITY OF WINTER SPRINGS, FLORIDA CITY COMMISSION MINUTES WORKSHOP TUESDAY, APRIL 12, 2011 - 5:00 P.M. CITY HALL — COMMISSION CHAMBERS 1126 EAST STATE ROAD 434, WINTER SPRINGS, FLORIDA Mayor Charles Lacey Deputy Mayor Jean Hovey - Seat One Commissioner Rick Brown - Seat Two Commissioner Gary Bonner - Seat Three Commissioner Cade Resnick - Seat Four Commissioner Joanne M. Krebs - Seat Five CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - APRIL 12, 2011 PAGE 2 OF 7 CALL TO ORDER The Workshop of Tuesday, April 12, 2011 of the City Commission was called to Order by Mayor Charles Lacey at 5:03 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Mayor Charles Lacey, present Deputy Mayor Jean Hovey present Commissioner Rick Brown, present Commissioner Gary Bonner, present Commissioner Cade Resnick, present Commissioner Joanne M. Krebs, present City Manager Kevin L. Smith, present City Attorney Anthony A. Garganese, absent PUBLIC INPUT Mr. Corey Green, Seminole County Fire Department: commented on the current Pension Plan; Fire employees pay and benefits; concerns with possible changes to the Pension Plan; the Winter Springs Pension Plan versus FRS (Florida Retirement System); economic issues; and that the City Commission consider the impact of any changes on his colleagues. Mayor Lacey mentioned for the Record that he and the City Commission had received a letter from Mr. David Myers of the Seminole County Fire Department. City Manager Kevin L. Smith recognized and thanked Mr. James Talley, Police Department who has been serving our country abroad. REGULAR AGENDA REGULAR 600. Office Of The City Manager REQUEST: Requesting The City Commission Receive A Presentation From Gabriel Roeder Smith & Company (Winter Springs Pension Plan Actuarial Consultant) With General Pension Discussion To Follow. FISCAL IMPACT: No Funding Is Requested As Part Of This Agenda Item. CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP — APRIL 12, 2011 PAGE 3 OF 7 COMMUNICATION EFFORTS: This Agenda Item Has Been Electronically Forwarded To The Mayor And City Commission, City Attorney /Staff, The Board Of Trustees, And All eAlert /eCitizen Recipients; And Is Available On The City's Website, LaserFiche, And The City's Server. Additionally, Portions Of This Agenda Item Are Typed Verbatim On The Respective Meeting Agenda Which Has Also Been Electronically Forwarded To The Individuals Noted Above; And Which Is Also Available On The City's Website, LaserFiche, And The City's Server; Has Been Sent To City Staff, Media/Press Representatives Who Have Requested Agendas /Agenda Item Information, Homeowner's Associations /Representatives On File With The City, And All Individuals Who Have Requested Such Information; And Has Been Posted Outside City Hall; Posted Inside City Hall With Additional Copies Available For The General Public; And Posted At Five (5) Different Locations Around The City. This Agenda Item Is Also Available To Any New Individual Requestors. City Staff Is Always Willing To Discuss This Or Any Agenda Item With Any Interested Individuals. RECOMMENDATION: The City Manager Is Requesting The Mayor And City Commission Receive The Presentation From Gabriel Roeder Smith & Company And Allow For Discussion Of The City's Pension Plan. Manager Smith introduced this Agenda Item for discussion Mr. Larry Wilson, A. SA., Senior Consultant and Actuary, Gabriel Roeder Smith & Company, One East Broward Boulevard, Suite SOS, Ft. Lauderdale, Florida: addressed the Mayor and City Commission and reviewed his findings. Commissioner Joanne M. Krebs inquired about pay increases. Brief discussion. Mr. Wilson continued his presentation to the City Commission. In referencing unfunded liability, Mr. Wilson pointed out, "When we came aboard we were asked to look at the Actuarial Basis that was being used and — there was also a Plan Amendment that took place at that time. We found the assumptions to be not quite what was being used within the State so we went a little more conservative in the assumptions, to be more in line with Plan experience." Continuing, Mr. Wilson noted, "We also at the same time changed the actuarial cost method to again a more common method that's being used in the State. It is the method that's used by the Florida Retirement System. It's the method that produces the most level contribution requirements over the period, so it has extra stability in it and it's kind of - the gold standard of funding methods." Discussion Mr. Wilson then reviewed a PowerPoint presentation with the Mayor and City Commission. Tape 1 /Side B Mr. Shawn Boyle, Director, Finance and Administrative Services Department addressed the City Commission. Mr. Wilson continued with his PowerPoint presentation and noted, "Shawn (Boyle) mentioned, the Actuaries do not have recommendations as to what the benefits should be. We just point out, if you do them, what is the financial impact." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - APRIL 12, 2011 PAGE 4 OF 7 With further comments, Manager Smith suggested to the City Commission, "My thought process and recommendation to you all for your consideration is - we take a look at the current Defined Benefit Pension Plan we have and we maintain that Plan for our current employees. Our new hires after a date certain, call it September 1S — my recommendation is that we put all new employees on a Defined Contribution Plan; details to be worked out in the next few months. In order to maintain that Defined Benefit Plan for our current employees, there are several things we have to think of though. What does that Defined Benefit Plan look like ?" Continuing, Manager Smith added, "We don't have a COLA (Cost -of- Living Adjustment) - quite frankly if we did, as I recommend to you to maintain a DB (Defined Benefit) Plan for our current employees, when I suggest to you what I think that should look like, my recommendation to you would be to remove that COLA (Cost -of- Living Adjustment)." Manager Smith explained that regarding a COLA (Cost -of- Living Adjustment), "From a Finance side, it's one of the most expensive components of a Defined Benefit Plan. So for that reason, if we did have it, I'd be recommending to you to delete it. Health insurance subsidies are something that a typical DB (Defined Benefit) Plan has. Disability components is something a DB (Defined Benefit) Plan typically has. We have neither." Further components. Manager Smith then noted, "So far, the Defined Benefit program that I would suggest to you is in line with what we currently have." Continuing, Manager Smith then said, "We currently have a situation where your final compensation is based on your highest three (3) years of service." Manager Smith explained, "My recommendation and my experience and my feeling is that it should be changed from three (3) to five (5) years." Similarly to that, we also have a situation right now where overtime and sick and vacation payouts are pensionable; they are applicable to your pension calculations. Just a personal feeling is I don't think that's the intent of the program. I don't think that's right." Further, Manager Smith noted, "My recommendation to you is that we remove that — we bring that back to base pay, i.e., regularly scheduled hours. Those two (2) items alone save us almost four hundred thousand dollars ($400,000.00) on our annual compensation. A significant reduction, just for those items alone. Cliff Vesting is something else we talked about. Not a huge financial savings but my personal feeling is I think you should be here seven (7) years before you are eligible for a Pension." Further comments. Manager Smith then noted, "My recommendation would be DC (Defined Contribution) Plan for new employees. On that point, while I am on it, the way that that helps us with sustainability and managing of the DB (Defined Benefit) Plan as amended, is it gives us a finite pool of employees and a finite cost to start paying off as those employees start to retire. So, we create a finite group, a finite amount and instead of adding to that, now we're paying that off over time and at some point in time we won't have that cost any longer." Additionally, Manager Smith pointed out that "The Board of Trustees has heard this presentation. They have asked if they could digest the information and come back and discuss it further. That meeting has not occurred yet. I would ask moving forward, as we look to make a decision here, that my recommendation is that if the Commission is on board with what we've discussed tonight or what I've recommended tonight, as it may be further amended, that we make this official action take place this Fiscal Year prior to October 1. There are a few reasons for that. So, I would ask that probably no later than July, budget time and preferably sooner, because Larry (Wilson) would have some work to do; that I be allowed to come back in front of you all for some type of final decision, or sooner if you all are of the mindset to do so." CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - APRIL 12, 2011 PAGE 5 OF 7 Commissioner Rick Brown mentioned he would like time to consider this and noted, "Your recommendation would be to cut over to a DC (Defined Contribution) at some point in the future — for a benefit of picking a date... " Manager Smith added, "... Prior to October 1S t ... " Commissioner Brown continued, "... Maintaining the DB (Defined Benefit) for existing; but if we do that, removing the benefit accrual on overtime and sick; Cliff Vesting at seven (7) years; no COLA (Cost -of- Living Adjustment), no Insurance subsidies. What else ?" Mayor Lacey added, "Three (3) year to five (5) year." Manager Smith then remarked, "There is something else — for a variety of reasons, the market, recruitment retention, just a variety of reasons - recommendation would also include that that DC (Defined Contribution) Plan for new employees not be attributed to public safety employees. Public safety employees which are for us, Police, because there would be no new Fire employees. Police recommendation would be that we maintain the current benefit structure under the DB (Defined Benefit) Plan for new sworn Police Officer hires after the effective date... " Commissioner Brown added, "...With the modifications." Manager Smith agreed and said, "With the modifications." Commissioner Krebs also said that she would like time to review this information and added, "I would also like to hear and possibly meet with the Pension Board regarding their thoughts and feelings as well." Commissioner Brown noted he also agreed with this suggestion. Discussion continued. Manager Smith then pointed out, "One of things that I also would be suggesting is an increase in the contribution level from our employees. Currently we are at three percent (3 %). Some level of increase beyond that three percent (3 %)." Mayor Lacey asked Manager Smith, "You are not ready to define the parameters of the DC (Defined Contribution) yet." Manager Smith responded, "Not at this point in time. I wanted to hear from the Commission first." With further remarks, Manager Smith pointed out, "The numbers that I articulated to you would be inclusive of a five percent (5 %) contribution to the DC (Defined Contribution) Plan for the purpose of just a starting point." Commissioner Cade Resnick asked, "In the Plan that you have got now, any changes to retirement ages ?" Manager Smith stated, "That is still on the table for discussion. As it stands right now, the most reasonable thought I had was going to the DC (Defined Contribution) Plan for new employees, that we'd maintain those current benefit levels for our current employees." Further comments followed on unfunded liability and was there any option to encourage early retirement, possibly through incentives. Discussion. As to the next steps in this process, Mayor Lacey mentioned, "We heard that we would like the BOT (Board of Trustees) to review the data again and give us their consideration. What is the process from that point on ?" Manager Smith responded by saying, "I think we need to reconvene a Board of Trustees meeting to get their input, then reconvene — either an Agenda Item or another Workshop with this group." Manager Smith then inquired if the City Commission preferred, "A joint meeting with the BOT (Board of Trustees) or would you just like me to bring forward their recommendations after they convene ?" CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP - APRIL 12, 2011 PAGE 6 OF 7 Commissioner Krebs noted her preference for a joint meeting with the Board of Trustees. Commissioner Resnick, Commissioner Brown, and Deputy Mayor Jean Hovey noted they agreed. Mayor Lacey asked if there was Consensus. With no objections, Commissioner Gary Bonner suggested, "I think a wider Workshop format." Manager Smith remarked, "Then I would opine that we give you all sufficient time to digest this information and then schedule that joint meeting; again, asking that no later than mid -July, preferably June, we try to reach some type of final decision - allow Larry (Wilson) time to prepare all the documents, and filings for the State in order to implement any changes that you all may decide." Mayor Lacey asked if the Board of Trustees had seen Phase III. Manager Smith stated, "Yes." Discussion followed on a possible date for a joint meeting with the Board of Trustees and when the City Commission might be ready to further discuss the materials related to this discussion. With discussion, some members of the City Commission asked that they be given a couple of weeks to review the information before reconvening. Commissioner Krebs asked to meet with Mr. Boyle. Discussion continued on when to hold a joint meeting with the Board of Trustees Mayor Lacey stated, "May 2 d , (2011) or May 3r (2011) work fine for me." Commissioner Bonner agreed and noted, "I can do either." Deputy Mayor Krebs also agreed and said, "The 2nd (May 2011) is fine." Manager Smith suggested, "Could I request Mayor, Commissioners, that we hold May 3r (2011) as an alternate as we talk to the Board of Trustees Members on their availability ?" Mayor Lacey stated, "Okay." Commissioner Bonner inquired if any models for a Defined Contribution Plan had been considered. Manager Smith responded, "We would be looking at selecting a program — that is quality for a variety of reasons and that would have different levels of risk investment vehicles within those programs. Typically they set up different structures and a variety of options and we certainly afford the employees that were on that Plan, their choice of those options." Continuing, Commissioner Bonner suggested, "There may be a transition option afforded to employees who would be otherwise retained in the Defined Benefit Plan so that they would have the choice, should they choose, to go to the Defined Contribution Plan if they saw that to be more attractive for their individual needs." Manager Smith remarked, "I'd consider that also and that's some details that I would want to discuss with Larry (Wilson) to see the legalities and the operational aspects of doing so." Additional comments ensued on a proposed joint meeting with the Board of Trustees, which will be held on May 2nd 2011 as a first choice, or May 3, 2011 as a second choice. Discussion followed on a suggested time when the meeting would begin, and Mayor Lacey suggested, "6:00 (p.m.)." Deputy Mayor Krebs commented, "6:00 (p.m.) is fine with me." No objections were voiced. Mayor Lacey summarized the meeting would commence at "Six o'clock (p.m.)." Discussion. Commissioner Brown and Mayor Lacey thanked Mr. Wilson CITY OF WINTER SPRINGS, FLORIDA MINUTES CITY COMMISSION WORKSHOP — APRIL 12, 2011 PAGE 7 OF 7 ADJOURNMENT Mayor Lacey adjourned the City Commission Workshop at 6:33 p.m. RESPECTFULLY SUBMITTED: ANDREA LORENZO- LUACES, MMC CITY CLERK APPROVED: MAYOR CHARLES LACEY NOTE: These Minutes were approved at the 1 2011 City Commission Regular Meeting.