Item #15 First Reading of Ordinance Amending the City of Ocoee Municipal Police Officers’ and Firefighters’ Retirement Trust Fund Amending Section 30, Supplemental Benefit Component for Special Benefits: Chapters 175 and 185 Share Accounts 4014r
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AGENDA ITEM COVER SHEET
Meeting Date: November 7, 2017
Item # JS
Reviewed By: ~�
Contact Name: Charles J. Brown Department Director: Chir ., n
Contact Number: X 3022 City Manager: Rob Fran ',/./
Subject: First Reading of Ordinance Amending the City of Ocoee Municipal Police Officers'
and Firefighters' Retirement Trust Fund Amending Section 30, Supplemental Benefit
Component for Special Benefits: Chapters 175 and 185 Share Accounts
Background Summary:
The Pension Board for the City of Ocoee Municipal Police Officers' and Firefighters' Retirement Trust Fund is
governed by City of Ocoee Ordinances and State Statutes. On May 16, 2017, the City Commission approved
an ordinance amendment to the Police and Fire Pension fund which established a share account. The changes
to the pension ordinance are required to administer the 185 share accounts and distribute the current year 185
excess premium tax money.
Issue:
The State of Florida required that all municipal pension plans establish a share plan as defined in Florida State
Statue 175 Firefighters and 185 Police Officers. The State of Florida further required that the City and
members negotiate for the distribution and use of the excess state monies; and if no agreement can be made,
the default is to distribute the monies, half to members' share plan and half to pay the City's pension fund
liability. During the most recent Police contract negotiations, an agreement was not made as to the use of the
excess premium tax money. The excess tax money will be distributed based on the terms of this amendment
for this year. The Firefighters are currently working from the mutual consent from the last negotiated contract.
Effective September 30, 2017, the initial allocation, $193,673.55 will be allocated to individual Member Share
Accounts as provided in this ordinance amendment.
Recommendations:
Staff respectfully recommends the Commission adopt the changes as amended in the attached Ordinance for
the City of Ocoee Municipal Police Officers' and Firefighters' Retirement Trust Fund.
Attachments:
Draft Ordinance Amendment drafted by pension legal counsel for the City of Ocoee Municipal Police Officers'
and Firefighters' Retirement Trust Fund Pension Board, the Actuarial Report from Foster and Foster.
Financial Impact:
Actuarial Impact Statement Attached. There are no new financial impacts to the City.
Type of Item: (please mark with an x'7
Public Hearing For Clerk's Dept Use:
x Ordinance First Reading Consent Agenda
Ordinance Second Reading Public Hearing
Resolution Regular Agenda
Commission Approval
Discussion&Direction
Original Document/Contract Attached for Execution by City Clerk
Original Document/Contract Held by Department for Execution
Reviewed by City Attorney Dana Crosby-Collier 10-13-2017 via email N/A
Reviewed by Finance Dept. Previously Reviewed May 2nd Ordinance Amendment N/A
Reviewed by 0 N/A
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF OCOEE, FLORIDA,
RELATING TO THE CITY OF OCOEE MUNICIPAL
POLICE OFFICERS' AND FIREFIGHTERS'
RETIREMENT TRUST FUND; AMENDING ORDINANCE
NUMBER 2010-019, AS SUBSEQUENTLY AMENDED;
AMENDING SECTION 30, SUPPLEMENTAL BENEFIT
COMPONENT FOR SPECIAL BENEFITS; CHAPTERS 175
AND 185 SHARE ACCOUNTS; PROVIDING FOR
SEVERABILITY OF PROVISIONS; REPEALING ALL
ORDINANCES IN CONFLICT HEREWITH AND
PROVIDING AN EFFECTIVE DATE.
SECTION 1. Authority. The City Commission of the City of Ocoee has the authority to
adopt this ordinance pursuant to Article VIII of the Constitution of the State of Florida and
Chapter 166, Florida Statutes.
SECTION 2. That the City of Ocoee Municipal Police Officers' and Firefighters'
Retirement Trust Fund adopted by Ordinance No. 2010-019, as subsequently amended, is hereby
further amended by amending Section 30, Supplemental Benefit Component for Special
Benefits; Chapters 175 and 185 Share Accounts,to read as follows:
SECTION 30. SUPPLEMENTAL BENEFIT COMPONENT FOR SPECIAL
BENEFITS; CHAPTERS 175 AND 185 SHARE ACCOUNTS.
FIREFIGHTERS. There is hereby established an additional plan component, for
Firefighter Members, to provide special benefits in the form of a supplemental retirement,
termination, death and disability benefits to be in addition to the benefits provided for in the
previous Sections of this Plan, such benefit to be funded solely and entirely by Chapters 175-and
185, Florida Statutes, premium tax monies for each plan year which are allocated to this
supplemental component as provided for in Section 175.351 and 185.35, Florida Statutes.
Amounts allocated to this supplemental component ("Share Plan") shall be further allocated to
the members and DROP participants in a manner to be agreed upon.
POLICE OFFICERS. There is also hereb established an additional Ilan component
for Police Officer Members, to provide special benefits in the form of a supplemental retirement,
termination, death and disability benefits to be in addition to the benefits provided for in the
previous Sections of this Plan, such benefit to be funded solely and entirely by Chapter 185,
Florida Statutes, premium tax monies for each plan year which are allocated to this supplemental
component as provided for in Section 185.35, Florida Statutes. Amounts allocated to this
supplemental component ("Share Plan") shall be further allocated to the members and DROP
participants as follows:
1. Individual Member Share Accounts.
The Board shall create individual "Member Share Accounts" for all actively
employed Police Officer plan Members and Police Officer DROP participants and maintain
appropriate books and records showing the respective interest of each Member or DROP
participant hereunder. Each Member or DROP participant shall have a Member Share Account
for his share of the Chapter 185, Florida Statutes, tax revenues described above, forfeitures and
income and expense adjustments relating thereto. The Board shall maintain separate Member
Share Accounts, however, the maintenance of separate accounts is for accounting purposes only
and a segregation of the assets of the trust fund to each account shall not be required or
permitted.
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2. Share Account Fundin..
A. Individual Member Share Accounts shall be established as of September
30, 2017 for all Members and DROP participants who were actively
employed as of October 1, 2016. Individual Member Share Accounts
shall be credited with an allocation as provided for in the following
subsection 3. of any premium tax monies which have been allocated to the
share plan for that Plan Year, beginning with the Plan Year ending
September 30, 2017.
B. Any forfeitures as provided in subsection 4., shall be used as part of future
allocations to the individual Member Share Accounts in accordance with
the formula set forth in subsection 3.A.
3. Allocation of Monies to Share Accounts.
A. Allocation of Chapter 185 Contributions.
(1) Effective as of September 30, 2017, the amount of any premium
tax monies allocated to the share plan, including the initial
allocation set forth in paragraph (2) below, shall be allocated to
individual Member Share Accounts as provided for in this
subsection. Members retiring (or entering DROP) on or after
October 1, 2016 and prior to September 30, 2017 shall receive an
allocation. In addition, all premium tax monies allocated to the
Share Plan in any subsequent Plan Year shall also be allocated as
provided for in this subsection. Available premium tax monies
shall be allocated to individual Member Share Accounts at the end
of each Plan Year on September 30 (a"valuation date").
(2) Initial Allocation. Accumulated premium tax revenues in the
amount of $193,673.55 shall be allocated in the initial allocation
on September 30, 2017. Only members and DROP participants
with at least one year of credited service on May 31, 2017 shall
receive a share of this initial allocation of accumulated premium
tax revenues. The amount to be allocated to the share account of
each member or DROP participant who is eligible for an allocation
shall be an amount equal to a fraction of the total amount, the
numerator of which shall be the individuals total full months of
Credited Service as of May 31, 2017, and the denominator of
which shall be the sum of the total months of Credited Service as
of May 31, 2017, of all individuals to whom allocations are being
made. For purposes of this paragraph, Credited Service shall not
include purchased service for pre-employment military service or
prior police service with another employer.
(3) On each subsequent valuation date after September 30, 2017, each
current actively employed Member of the plan not participating in
the DROP, each DROP participant and each Retiree who retires or
DROP participant who has terminated DROP participation in the
Plan Year ending on the valuation date (including each disability
retiree), or Beneficiary of a deceased Member (not including
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terminated vested persons) who is otherwise eligible for an
allocation as of the valuation date shall receive a share allocation
based on an allocation method to be determined.
(4) Re-employed Retirees shall be deemed new employees and shall
receive an allocation based solely on the Credited Service in the
reemployment period.
B. Allocation of Investment Gains and Losses.
On each valuation date, each individual Member Share Account shall be
adjusted to reflect the net earnings or losses resulting from investments
during the year. The net earnings or losses allocated to the individual
Member Share Accounts shall be the same percentage which is earned or
lost by the total plan investments, including realized and unrealized gains
or losses, net of brokerage commissions, transaction costs and
management fees.
Net earnings or losses are determined as of the last business day of the
fiscal year, which is the valuation date, and are debited or credited as of
such date.
For purposes of calculating net earnings or losses on a Member's share
account pursuant to this subsection, brokerage commissions, transaction
costs, and management fees for the immediately preceding fiscal year
shall be determined for each year by the investment consultant pursuant to
contracts with fund managers as reported in the custodial statement. The
investment consultant shall report these annual contractual fees to the
Board. The investment consultant shall also report the net investment
return for each manager and the net investment return for the total plan
assets.
C. Allocation of Costs, Fees and Expenses.
On each valuation date, each individual Member Share Account shall be
adjusted to allocate its pro rata share of the costs, fees and expenses of
administration of the Share Plan. These fees shall be allocated to each
individual Member Share Account on a proportionate basis taking the
costs, fees and expenses of administration of the Share Plan as a whole
multiplied by a fraction, the numerator of which is the total assets in each
individual Member Share Account (after adding the annual investment
gain or loss) and the denominator of which is the total assets of the fund as
a whole as of the same date.
D. No Right to Allocation,
The fact of allocation or credit of an allocation to a Member's Share
Account by the Board shall not vest in any Member, any right, title, or
interest in the assets of the trust or in the Chapter 185, Florida Statutes, tax
revenues except at the time or times, to the extent, and subject to the terms
and conditions provided in this Section.
E. Members and DROP participants shall be provided annual statements
setting forth their share account balance as of the end of the Plan Year.
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4. Forfeitures.
Any Member who has less than seven (7) years of Credited Service and who is
not otherwise eligible for payment of benefits after termination of employment with the City as
provided for in subsection 5. shall forfeit his individual Member Share Account. Forfeited
amounts shall be included and used as part of the Chapter 185 tax revenues for future allocations
to individual Member Share Accounts on each valuation date in accordance with the formula set
forth in subsection 3.A.
5. Eligibility For Benefits,
Any Member (or his Beneficiary) who terminates employment as a Police Officer
or Firefighter with the City or who dies, upon application filed with the Board, shall be entitled
to be paid the value of his individual Member Share Account, subject to the following criteria:
A. Retirement Benefit.
(1) A Member shall be entitled to one hundred percent (100%) of the
value of his share account upon normal or early Retirement
pursuant to Section 6, or if the Member enters the DROP, upon
termination of employment.
(2) Such payment shall be made as provided in subsection 6.
B. Termination Benefit.
(1) In the event that a Member's employment as a Police Officer or
Firefighter is terminated by reason other than retirement, death or
disability, he shall be entitled to receive the value of his share
account only if he is vested in accordance with Section 9.
(2) Such payment shall be made as provided in subsection 6.
C. Disability Benefit.
(1) In the event that a Member is determined to be eligible for either
an in-line of duty disability benefit pursuant to Section 8,
subsection 1. or a not-in-line of duty disability benefit pursuant to
Section 8, subsection 3., he shall be entitled to one hundred percent
(100%) of the value of his share account.
(2) Such payment shall be made as provided in subsection 6.
D. Death Benefit.
(1) In the event that a Member or DROP participant dies while
actively employed as a Police Officer or Firefighter, one hundred
percent (100%) of the value of his Member Share Account shall be
paid to his designated Beneficiary as provided in Section 7.
(2) Such payment shall be made as provided in subsection 6.
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6. Payment of Benefits,
If a Member or DROP participant terminates employment for any reason or dies
and he or his Beneficiary is otherwise entitled to receive the balance in the Member's share
account, the Member's share account shall be valued by the plan's actuary on the next valuation
date as provided for in subsection 3. above, following termination of employment. Payment of
the calculated share account balance shall be payable as soon as administratively practicable
following the valuation date, but not later than one hundred fifty (150) days following the
valuation date and shall be paid in one lump sum payment. No optional forms of payments shall
be permitted.
7. Benefits Not Guaranteed.
All benefits payable under this Section 30 shall be paid only from the assets
accounted for in individual Member Share Accounts. Neither the City nor the Board shall have
any duty or liability to furnish any additional funds, securities or other assets to fund share
account benefits. Neither the Board nor any Trustee shall be liable for the making, retention, or
sale of any investment or reinvestment made as herein provided, nor for any loss or
diminishment of the Member Share Account balances, except due to his or its own negligence,
willful misconduct or lack of good faith. All investments shall be made by the Board subject to
the restrictions otherwise applicable to fund investments.
8. Notional Account.
The Member Share Account is a notional account, used only for the purpose of
calculation of the share distribution amount. It is not a separate account in the System. There is
no change in the System's assets, and there is no distribution available to the Member or DROP
participant until the Member's or DROP participant's termination from employment. The
Member or DROP participant has no control over the investment of the share account.
9. No Employer Discretion,
The share account benefit is determined pursuant to a specific formula which does
not involve employer discretion.
10. Maximum Additions.
Notwithstanding any other provision of this Section, annual additions under this
Section shall not exceed the limitations of Internal Revenue Code Section 415(c) pursuant to the
provisions of Section 15, subsection 11.
11. IRC Limit.
The share account distribution, along with other benefits payable from the
System, is subject to limitation under Internal Revenue Code Section 415(b).
SECTION 3. Repeal of Ordinances. All ordinances or parts of ordinances in conflict
herewith are hereby repealed.
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SECTION 4. Severability. In the event any section, subsection, paragraph, sentence,
clause, phrase or word of this ordinance shall be held invalid by a court of competent
jurisdiction, then such invalidity shall not affect the remaining portions hereof.
SECTION 5. Effective Date. This ordinance shall take effect upon second reading and
adoption.
PASSED AND ADOPTED this day of , 2017.
APPROVED:
ATTEST: CITY OF OCOEE,FLORIDA
By:
Melanie Sibbitt, City Clerk Rusty Johnson, Mayor
(SEAL) ADVERTISED ,2017
READ FIRST TIME ,2017
READ SECOND TIME AND ADOPTED
,2017
UNDER AGENDA ITEM NO.
FOR USE AND RELIANCE ONLY BY
THE CITY OF OCOEE,FLORIDA
APPROVED AS TO FORM AND LEGALITY
THIS day of , 2017.
SHUFFIELD, LOWMAN & WILSON
By:
City Attorney
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�; FOSTER & FOSTER
• ACTUARIES AND CONSULTANTS
May 23,2017
Board of Trustees
do Charlie Brown,Chairman
City of Ocoee
Police Officers' and Firefighters' Retirement Trust Fund
646 Ocoee Commerce Pkwy
Ocoee,FL 34761
Re: City of Ocoee
Police Officers' and Firefighters' Retirement Trust Fund
Actuarial Impact Statement
Dear Board:
Enclosed is the following material,which has been prepared in support of proposed benefit for
Ocoee Police and Fire.
Three(3)copies of the required Actuarial Impact Statement,which outlines the costs associated
with implementing the changes.
Drafts of transmittal letters to the Bureau of Local Retirement Systems and the Bureau of Police
Officers' and Firefighters' Retirement Trust Funds.
It will be necessary for the Chairman to sign one(1)copy of each Actuarial Impact Statement as
the Plan Administrator and forward the Impact Statement along with signed copies of the
proposed Ordinance to the two Bureaus.
If you have any questions concerning the enclosed material,please let me know.
Sincerely,
Dougl 116 zen
DHL/lke
Enclosures
Cc via email with enclosures: Lee Dehner
Livia Nixon
13420 Parker Commons Blvd.,Suite 104 Fort Myers,FL 33912•(239)433-5500•Fax(239)481-0634•www.foster-foster.com
CITY OF OCOEE
POLICE OFFICERS' AND FIREFIGHTERS'
RETIREMENT TRUST FUND
ACTUARIAL IMPACT STATEMENT
May 23, 2017
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 implementation of the following
changes:
1. For Firefighters hired after September 30,2015,and Police Officers hired after the effective date
of the Ordinance associated with this Impact Statement, a reduction in the benefit accrual rate
from 3.50% to 3.25%for all years of Credited Service. Additionally,the maximum benefit for
these new hires is 81.25% of Average Final Compensation.
2. For Firefighters hired after September 30,2015,and Police Officers hired after the effective date
of the Ordinance associated with this Impact Statement, 100%vesting upon the completion of 7
years of Credited Service. This 7 year vesting requirement is also required for meeting the
eligibility requirements for non-line-of-duty Disability Retirements. For purposes of this Impact
Statement,a 7 year vesting requirement has also been utilized for meeting the eligibility
requirements for pre-retirement Death Benefits.
3. For Police Officers hired after the effective date of the Ordinance associated with this Impact
Statement,the minimum Disability benefit(line-of-duty and non-line-of-duty) is 55.00% of
Average Final Compensation.
4. Establishment of a Share Plan. The Police portion of the Share Plan is credited with$193,673.55,
per the attached February 17, 2017 actuarial analysis. The Police portion of State Monies has
been determined under the"Default"provision of Chapter 2015-39,Laws of Florida.
5. Crediting of$470,771 of the Excess State Monies Reserve (Reserve)to the Unfunded Actuarial
Accrued Liability(UAAL). This amount is the sum of the following:
a. Police portion of the Reserve: $167,358.08, as determined under the"Default"provision of
Chapter 2015-39,Laws of Florida.
b. Fire portion of the Reserve: $303,412.77. This is the remaining portion of the existing
Reserve, after allocation of the Police portion of the Reserve to the UAAL and Share Plan.
6. Compliance language pursuant to requirements under the Internal Revenue Code.
CITY OF OCOEE
POLICE OFFICERS' AND FIREFIGHTERS'
RETIREMENT TRUST FUND
ACTUARIAL IMPACT STATEMENT
May 23, 2017
(Page 2)
7. Under Chapter 2015-39,Laws of Florida,the State Monies are allocated as follows:
a. Police Officers
Under the"Default"provision of Chapter 2015-39,Laws of Florida,the first$223,377.02
received annually will offset the City's contribution requirement. Future State Monies
received for the Police Officers' portion of the Plan in excess of$223,377.02 will be split
50/50, with 50% allocated to the newly established Share Plan,and 50% allocated as a credit
to the City's annual contribution requirements.
Additionally, $167,358.08 of the Reserve is allocated as a credit to the UAAL, and
$193,673.55 of the Reserve is allocated to the Police portion of the newly established Share
Plan. Please refer to the attached February 17, 2017 actuarial analysis for details regarding
these calculations.
b. Firefighters
Per Mutual Consent between the City and Firefighter Members,the first$171,631.09
received annually will offset the City's contribution requirement. Since the Mutual Consent
Agreement did not specify the baseline for determination of excess monies,the$171,631.09
is the difference between the prior"frozen" State Contribution of$421,323.57 and the current
Police portion of State Monies determined under the"Default"method($249,692.48).
Future State Monies received for the Firefighters' portion of the Plan in excess of
$171,631.09 will be allocated as a credit against the UAAL. If no UAAL exists,then
Firefighter State Monies in excess of$171,631.09 will offset the City's annual funding
obligation.
Additionally,the Mutual Consent Agreement allocates the Firefighters' portion of the
Reserve to the UAAL. This amount is$303,412.77, which is the remaining portion of the
total Reserve amount of$644,444.40 after allocation of the Police portion to the UAAL and
Share Plan(as described in item 7(a)above).
Amortization Method
The net change in the Unfunded Actuarial Accrued Liability associated with Excess State Monies Reserve
credit is amortized as a level percentage of pay(using the current 2.64%payroll growth assumption)over
20 years.
CITY OF OCOEE
POLICE OFFICERS' AND FIREFIGHTERS'
RETIREMENT TRUST FUND
ACTUARIAL IMPACT STATEMENT
May 23,2017
(Page 3)
The cost impact,determined as of October 1, 2016, as applicable to the fiscal year ending September 30,
2018, is shown below. Longer term cost savings will be realized as new hires with the lower benefit
structure replace existing participants under the current benefit structure.
Proposed Current
Total Required Contribution
% of Total Annual Payroll 43.25% 43.79%
Member Contributions(Est.)
% of Total Annual Payroll 8.00% 8.00%
City and State Required Contribution
% of Total Annual Payroll 35.25% 35.79%
State Contribution(est.) 1 421,324 421,324
% of Total Annual Payroll 5.67% 5.67%
Balance from City
% of Total Annual Payroll 29.58% 30.12%
'Please refer to item 7 of the prior page for description of the use of State Monies utilized for this Impact
Statement.
The changes presented herein are in compliance with Part VII,Chapter 112,Florida Statutes and Section
14,Article X of the State Constitution. Additionally,the undersigned is familiar with the immediate and
long-term aspects of pension valuations and meets the Qualification Standards of the American Academy
of Actuaries necessary to render the opinions contained herein.
Dougla zen,EA,MAAA
Enrolled Actuary#17-7778
STATEMENT OF PLAN ADMINISTRATOR
The prepared information presented herein reflects the estimated cost of the proposed improvement.
Chairman,Board of Trustees
Ms. Sarah Carr
Police Officers'and Firefighters'Retirement Trust Funds
Department of Management Services,Division of Retirement
Post Office Box 3010
Tallahassee,FL 32315-3010
Re: Actuarial Impact Statement
Dear Ms. Carr:
The City of Ocoee has implemented changes to the retirement benefits for its Police Officers and
Firefighters. The amendments are described in the enclosed material.
Pursuant to the provisions of Chapters 175 and 185, we are enclosing the required Actuarial Impact
Statement and a copy of the proposed Ordinance for your review.
If you have any questions or if additional information is needed,please contact us.
Sincerely,
Mr.Keith Brinkman
Division of Retirement
Bureau of Local Retirement Systems
P. O. Box 9000
Tallahassee, FL 32315-9000
Re: Actuarial Impact Statement
Dear Mr. Brinkman:
The City of Ocoee has implemented changes to the retirement benefits for its Police Officers and
Firefighters. The amendments are described in the enclosed material.
Pursuant to Section 22d-1.04 of the Agency Rules,we are enclosing the required Actuarial Impact
Statement and a copy of the proposed Ordinance for your review.
If you have any questions or if additional information is needed,please contact us.
Sincerely,
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
Proposed Benefits Current Benefits
10/1/2016 10/1/2016
A.Participant Data
Number Included
Actives 114 114
Service Retirees 42 42
DROP Retirees 10 10
Beneficiaries 1 1
Disability Retirees 7 7
Terminated Vested 25 25
Total 199 199
Total Annual Payroll $7,432,068 $7,432,068
Payroll Under Assumed Ret.Age 7,432,068 7,432,068
Annual Rate of Payments to:
Service Retirees 1,696,387 1,696,387
DROP Retirees 597,672 597,672
Beneficiaries 12,218 12,218
Disability Retirees 181,068 181,068
Terminated Vested 186,890 186,890
B.Assets
Actuarial Value' 46,264,915 46,264,915
Market Value ' 45,408,536 45,408,536
C.Liabilities
Present Value of Benefits
Actives
Retirement Benefits 31,591,643 31,608,480
Disability Benefits 1,705,202 1,705,803
Death Benefits 453,060 453,262
Vested Benefits 597,775 599,101
Refund of Contributions 53,882 51,708
Service Retirees 18,890,574 18,890,574
DROP Retirees' 8,570,467 8,570,467
Beneficiaries 50,925 50,925
Disability Retirees 1,972,653 1,972,653
Terminated Vested 1,170,027 1,170,027
Share Plan(Police only) 193,674 0
Excess State Monies Reserve 0 664,444
Total 65,249,882 65,737,444
Proposed Benefits Current Benefits
C.Liabilities-(Continued) 10/1/2016 10/1/2016
Present Value of Future Salaries 61,215,034 61,218,225
Present Value of Future
Member Contributions 4,897,203 4,897,458
Normal Cost(Retirement) 1,241,828 1,243,417
Normal Cost(Disability) 112,412 112,461
Normal Cost(Death) 24,476 24,495
Normal Cost(Vesting) 61,754 61,890
Normal Cost(Refunds) 14,407 14,172
Total Normal Cost 1,454,877 1,456,435
Present Value of Future
Normal Costs 11,462,922 11,479,714
Accrued Liability(Retirement) 21,572,520 21,572,520
Accrued Liability(Disability) 844,784 844,784
Accrued Liability(Death) 263,477 263,477
Accrued Liability(Vesting) 246,169 246,169
Accrued Liability(Refunds) 11,690 11,690
Accrued Liability(Inactives)1 30,654,646 30,654,646
Share Plan(Police only) 193,674 0
Excess State Monies Reserve 0 664,444
Total Actuarial Accrued Liability 53,786,960 54,257,730
Unfunded Actuarial Accrued
Liability(UAAL) 7,522,045 7,992,815
Funded Ratio(AVA/AL) 86.0% 85.3%
D.Actuarial Present Value of Accrued Benefits
Vested Accrued Benefits
Inactives' 30,654,646 30,654,646
Actives 9,091,092 9,091,092
Share Plan(Police only) 193,674 0
Member Contributions 4,522,330 4,522,330
Total 44,461,742 44,268,068
Non-vested Accrued Benefits 2,309,793 2,309,793
Total Present Value Accrued Benefits 46,771,535 46,577,861
Funded Ratio(MVA/PVAB) 97.1% 97.5%
Increase(Decrease)in Present Value of
Accrued Benefits Attributable to:
Plan Amendments 193,674
Assumption Changes 0
New Accrued Benefits 0
Benefits Paid 0
Interest 0
Other 0
Total 193,674
Proposed Benefits Current Benefits
Valuation Date 10/1/2016 10/1/2016
Applicable to Fiscal Year Ending 9/30/2018 9/30/2018
E.Pension Cost
Normal Cost(with interest)
%of Total Annual Payroll 2 20.35 20.38
Administrative Expenses(with interest)
%of Total Annual Payroll 2 1.40 1.40
Payment Required to Amortize
Unfunded Actuarial Accrued
Liability over 26 years
(as of 10/1/2016,with interest)
%of Total Annual Payroll 2 21.50 22.01
Total Required Contribution
%of Total Annual Payroll 2 43.25 43.79
Expected Member Contributions
%of Total Annual Payroll 2 8.00 8.00
Expected City&State Contribution
%of Total Annual Payroll 2 35.25 35.79
1 The asset values and liabilities for DROP Members include accumulated DROP
Balances as of 9/30/2016.
2 Contributions developed as of 10/1/2016 are expressed as a percentage of total annual payroll at
10/1/2016 of$7,432,068.
ACTUARIAL ASSUMPTIONS AND METHODS
Mortality Rate Healthy Lives:
Female: RP2000 Generational, 100%Annuitant White
Collar, Scale BB.
Male: RP2000 Generational, 10% Annuitant White
Collar/90% Annuitant Blue Collar, Scale BB.
Disabled Lives:
Female: 60%RP2000 Disabled Female set forward two
years/40%Annuitant White Collar with no setback,no
projection scale.
Male: 60%RP2000 Disabled Male setback four years/
40% Annuitant White Collar with no setback,no
projection scale.
The assumed rates of mortality were mandated by
Chapter 2015-157,Laws of Florida. This law mandates
the use of the assumptions used in either of the two most
recent valuations of the Florida Retirement System
(FRS). The above rates are those outlined in the July 1,
2015 FRS actuarial valuation report for special risk
employees. We feel this assumption sufficiently
accommodates future mortality improvements.
Previously,the RP 2000 Combined Healthy—Sex
Distinct with disabled lives set forward 5 years was
utilized.
Interest Rate 7.95% (previously 8.00%)per year compounded
annually,net of investment related expenses. This
assumption is supported by the Plan's asset allocation
and expected long-term returns by asset class.
Normal Retirement Based on results of an Experience Study dated October
30, 2015, the below table reflects the assumed rates of
retirement once a member attains Normal Retirement
eligibility with at least 25 years of Credited Service:
New Rates—25 or
more Years of
Age Prior Rates Credited Service 1
45 100% 25.0%
46 100% 25.0%
47 100% 25.0%
48 100% 66.7%
49 100% 66.7%
50+ 100% 100%
1 Additionally, 100% assumed retirement upon the
completion of at least 27 years of Credited Service,
regardless of age.
Also as part of the October 30, 2015 Experience Study, the
below table provides rates of retirement for members
attaining Normal Retirement eligibility with less than 25
years of Credited Service:
New Rates—Less
than 25 Years of
Age Prior Rates Credited Service
55 100% 80.0%
56 100% 25.0%
57 100% 25.0%
58 + 100% 100.0%
Early Retirement In conjunction with this valuation,Members eligible for
Early Retirement between the ages 45-54 are assumed to
retire with an immediate subsidized benefit at the rate of
4%per year(except for a 25% assumption at age 50).
The prior assumption was 1%per year of eligibility for
Early Retirement. The new rates were adopted as the
result of the October 30,2015 Experience Study.
Termination Rate According to the below table,based on the October 30,
2015 Experience Study. Prior valuations utilized an
age-based assumption for turnover.
Credited Service Assumed Termination Rate
Less than 10 Years 5.0%
10-14 Years 2.0%
15 or more Years 0.0%
Disability Rate See table below (1205). It is assumed that 75% of
disablements and active Member deaths are service
related. These rates are consistent with other Florida
municipal special risk retirement programs.
%Becoming Disabled
Age During the Year
20 0.14%
30 0.18%
40 0.30%
50 1.00%
Salary Increases According to the below table,based on the October 30,
2015 Experience Study. Prior valuations utilized a flat
6.0% per year until the assumed retirement age.
Credited Service Assumed Salary Increase
Less than 1 Year 13.0%
1-9 Years 5.0%
10 or more Years 4.5%
Payroll Growth 2.64% (previously 3.0% per year), in compliance with
Florida Statutes.
Actuarial Asset Method Each year,the prior Actuarial Value of Assets is brought
forward utilizing the historical geometric 4-year average
Market Value returns,net of fees. It is possible that
over time this technique will produce an insignificant
bias above or below Market Value.
Administrative Expenses $100,422 annually,based on Administrative Expenses
incurred during the prior fiscal year.
Funding Method Entry Age Normal Actuarial Cost method.
SUMMARY OF PLAN PROVISIONS
(Through Ordinance No. 2014-018)
Eligibility Full-time employees who are classified as Police
Officers or Firefighters participate as a
condition of employment.
Credited Service Total years and fractional parts of years of
employment with the City as a Police Officer or
Firefighter.
Salary Total compensation reportable on form W-2,
plus tax deferred, tax sheltered, and tax exempt
items of income.
Effective October 1, 2012, Salary shall not
include overtime pay in excess of 300 hours per
calendar year. Additionally, any unused paid
time off at the time of termination of
employment is not pensionable.
Average Final Compensation Average Salary for the 5 best years of the 10
years immediately preceding retirement or
termination.
Member Contributions 8.0% of Salary.
City and State Contributions Remaining amount required in order to pay
current costs and amortize unfunded past service
cost,if any,as provided in Part VII,Chapter
112,F.S.
Normal Retirement
Date Earlier of Age 55 and 10 years of Credited
Service, or 25 years of Credited Service,
regardless of age.
Benefit 3.5% of Average Final Compensation times
Credited Service.
Form of Benefit Ten Year Certain and Life Annuity
(options available).
Maximum Benefit For Members hired before October 1, 2012,
100% of Average Final Compensation. For
Members hired after September 30,2012, 91%
of Average Final Compensation.
Early Retirement
Eligibility Age 45 and 5 Years of Credited Service.
Benefit Accrued benefit,reduced 3%per year to age 50
and actuarially reduced from age 50 to age 45.
Vesting
Schedule 100% after 5 years of Credited Service.
Benefit Amount Member will receive the vested portion of his
(her) accrued benefit payable at the otherwise
Early or Normal Retirement Date._
Disability
Eligibility
Service Incurred Covered from Date of Employment.
Non-Service Incurred 10 years of Credited Service.
Exclusions Disability resulting from use of drugs, illegal
participation in riots, service in military,etc.
Benefit Benefit accrued to date of disability but not less
than 42% of Average Final Compensation
(Service Incurred). Additionally,the benefit
cannot exceed 91% of Average Final
Compensation for Members hired after
September 30, 2012.
Duration Payable for life(with 120 payments guaranteed)
or until recovery(as determined by the Board).
Optional forms of payment are available.
Death Benefits
Pre-Retirement
Vested Monthly accrued benefit payable to designated
beneficiary for 10 years.
Non-Vested Refund of accumulated contributions
without interest.
Post-Retirement Benefits payable to beneficiary in
accordance with option selected at
retirement.
Board of Trustees a. Two Commission appointees,
b. One Member from each Department
elected by the Membership, and
c. Fifth Member elected by other 4
and appointed by Commission.
Deferred Retirement Option Plan
Eligibility Within 12 months following satisfaction of
Normal Retirement requirements.
Participation Not more than 60 months.
Rate of Return At election of Member(may change once during
DROP period)either: 1) actual net rate of
investment return(total return net of brokerage
commissions,transaction costs, and
management fees),or 2)6.5%.Earnings are
credited each fiscal quarter(2%for Members
entering the DROP after September 30,2012).
Form of Distribution Cash lump sum(options available)payable at
termination of employment.
BAC-DROP
Eligibility After first eligibility for Normal Retirement.
Participation Retroactively applied to date chosen by
Member,but not prior to the date of first
eligibility for Normal Retirement.
Rate of Return Fixed 2.0% effective annual rate.
Form of Distribution Cash lump sum(options available)payable at
termination of employment.