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HomeMy WebLinkAboutCC 1979-09-27 Discussion ItemCITY or M1IAMI. FLORIDA INTER -OFFICE MEMORANDUM re): FROM: Joseph R. Grassie City Manager re4,2 Elena Rodrigue2, cretary The Miami City Empl. •Retirement System & Plan DATE: September 14, 1979 FILE;. ;,,n;tci, Cost of LivingIncrease To Retirees REFERENCE9s. The enclosed package was brought up by Commissioner J. L.-Plummer, Jr. at the meeting of September 13,.1979, as an item for discussion.' It was his request that the attached package be reviewed by the Commissioners, and that the item be placed again on the agenda. of the City of Miami Commission Meeting of September 27, 1979:. I respectfully request' that this item be September 27th for discussion. TO: FROM: CITY OF MIAMI. FLORIDA INTEROFFICE MEMORANDUM City Commission cjt r;.4 Elena:Rodrigudz,48ecretary The Miami City Empl. Retirement System & Plan OATS: SUBJECT: September 12, 197;9 Cost of..Living,Increase To Retirees Attached, please find a copy the motion made 'by.the City s. 1 Co at their meeting of July 11, 979. Also find copies of thesstuFriend & Co. for the Plan,` and Alexander & Alexander studyrby E. H. of the impact, of a .5% (one half of Alexander for the System, one percent) increase for eacfull year dsiocehreefireme t for all retired employees with :percentagebenefits. 0, $300, or $400 of present monthly 1light of the .979, and - in At the: System's meeting of August 30, n in de by present Budget constraint being faced, a motion Gary:: Houck to recommend to the City .Cornrnissionot to grant the „cost of living" increase. This motion was seconded; by Carlos , "yes" -votes �J..BertzeT, Garcia and passed by a 7 to 1 vote. vB. Jennings J. Ber Reese. C. Garca, . V. Grimm, G . Houck, E. Jaremko 3 Dissenting: D. March. � 197had ' The Plan, at their meeting of August 31, 19799sGunderson ion to James the make,a motion to recommend to the City "costof living" increase to retirees. His motion; was seconded by Yes votes:. � C.E. dGL. and passed by a 5 t, 2 vote 3. Gunderson Dissenting: A. Harris, C.E. Co,x, ` De. Jesus, H. Gary, P. Jcffre, LTV CIF CV(AMi GLERL REFIGRAT MEETING DATE: JULY 11, 1979 CITY MALL -DINNER KEY A MOTION AUTHORIZING AND DIRECTING THE CITY MANAGER TO COOPERATE IN THL DISTRIBUT:ON OF PROMOTIONAL MATERIALS TO ENCOURAGE PARTI- CIPATION BY CITY Fr1; LOYEES IN THE U. S. SAVINGS BOND PROGRAM. M 79-476 Gi/Go A NOTION AUTH0)77.IA3 AND DIRECTING THE CITY MANAGER TO REQUEST M 79-477 AN ACIUARIAL STUDY JF THE IMPACT OF A .57, (ONE HALF OF ONE PERCEN ) P1/Gi INCREASE FOR ELC:1 FULL YEAR SINCE RETIREMENT FOR ALL RETIRED EMPLOYEES WITH PERCENTAGE LIMITED TO THE FIRST $200. $300 of $400 OF PRESENT MONTHLY BENEFITS AND TO REPORT HIS FINDINGS TO THE CI COMXISSIO::. A M:.0:7 ALIA0...IZING AND DIRECTING THE CITY MANAGER TO GIVE THE M 79..490 IOLPH::1. TSE OPPORTUNITY TO =le BEER IN THE ORANGE BOWL Fe/La S': D::T; UNTIL T'.E EXPIRATION OF THEIR PRESENT LEASE (JULY 1, 1960 NOES: Pi, Go. CONDITIONED U?GN NO EXPENSE WHATSOEVER BEING INCURRED BY THE CITY OF l:LAMI IN CO::s: C;TION WITH SAID BEER SALE: FURTHER CONDITIONED UPDN THE PAY:ZiI OF 32% ON BEER SALES TO THE CITY OF MIAMI IF BEER IS SOLD IN THE ORANGE BOWL STADIUM THIS YEAR. A MOTION INSTRUCTING THE CITY MANAGER TO IMMEDIATELY DRAFT GUIDE- M 79-491 LINES AND LECAL LANGUAGE TO PUT OUT FOR PUBLIC BID THE CONCESSION Fe/La AT THE ORANGE BOWL STADIUM FOR THE PERIOD BEGINNING JULY 1980 NOES: Go, P1. THROUGH JULY, 1986 AND TO COME BACK TO THE CITY COMMISSION FOR FINAL APPROVAL OF THE EXACT WORDING OF SUCH BIDS; FURTHER IN- STRUCTING THE CITY•l4ANAGER TO AFFECT THE ADVERTISING OF THESE BIDS AS QUICKLY AS POSSIBLE (EARLY 1980) SO THAT INSTALLATION OF ANY NEEDED EQUIPMENT MAY BE ACCOMPLISHED; FURTHER PROVIDING THAT THE EXPENSE OF SUCH INSTALLATION SHALL BE BORNE ENTIRELY BY THE CONCL:;SIONAIRE; PROVIDING THAT MINIMUM BIDS FOR FOOD, BEVERAGE AND £LER BE A MINIMUM OF 357,; FURTHER PROVIDING FOR POSTING OF A 100,000 BID BOND AND FURTHER PROVIDING THAT ACCORDING TO A CON- TRACT SIGNED IN 1977 BETWEEN THE MIAMI DOLPHINS AND THE CITY OF MZAMI, PARAGRAPH 12, THAT THE CITY SHALL GIVE MR. ROBBIE 30 DAYS 0 ACCEPT OR REJECT THE HIGHEST BID TENDERED; FURTHER PROVIDING THAT IF MR. ROBBIE ELECTS TO ACCEPT TEE HIGH BID THAT THE ESCAPE CLAUS PRESENTLY CONTAINED IN HIS CONTRACT BE•CHANGED FROM 3 YEARS TO 4 YEARS; FURTHER PROVIDING THAT IF MR. ROBBIE REJECTS SUCH BID PROPOSAL WITHIN THE 30 DAY PERIOD PURSUANT TO PARAGRAPH 12, THE CITY OF MIAMI SHALL THEN AWARD THE CONCESSION TO THE HIGHEST BIDDER. A MOTION TO ACCEPT THE PROPOSED RESOLUTION (PACKET ITEM B) CON- M 79.492 CERNING THE ORANGE BOWL SCOREBOARD AND INSTRUCTING THE CITY Fe/Go MANAGER TO AMEND THE PROPOSED AGREEMENT, GIVING PRIORITY TO THE NOES: P1 CONCESSIONAIRE FOR THE ADVERTISING ON THE ORANGE BOWL SCOREBOARD GRANTING• A PRIMARY RIGHT FOR USE OF THE SCOREBOARD TO INSURE THAT COMPET:.:VE PRODUCTS NOT SOLD BY THE ORANGE BOWL CONCESSIONAIRE EDWARD H.-;FRIEND S, COMPANY • CONSULTING 4CTUAAIt5 ?.'CMPLOT[L IcNCrtT PLAN coNSULTANTS CASUALTY PI• SA • COWARD Al. ♦RIE ND, Rs, A., LC •„ PRLSIOt NT..i. 0• lot arts. ear •Clots.. of .CIV1.!tt JONN S PLR•C CA, SENIOR VICE •PRLbIDC NT: JOMN A MAC DOUGALL, JP.i f. S. A., r.c A., S?•.NI0D VICC-'PLSIDC .' r Or tot .rlolGl. 1CAOtr, 01, .CIU.. t5 - - ALSCRT Pint. Soo A.S A, •. C A., VICC-PRLSIC". •tqt. 0, Tot ••ItS 0 .C10to, or •C,W t! OUSTAVt A. •R Au8E, P. C.A.!, •.C.A., VIC L-PRC5.1•ENT qrAt• Of r«l art•,C.. .Uel r, of ACf..A t2 Pelt 0 VC tl..t. •SS'T VICC•DoESIDENT r/rota C•..t.rtr,C•. .e•Cto. Of r.0l;,t. t1 DAVID r SLrrCIVCNG•, A 5, A.,•SS'T VICE-PPCSICEN-- JANC O. PACCLLI, A.5: A, ASS'? VICC-PRESIDENT •t«11. of ,.( art.K...C.o1., 0• •;,W.t1 . OCOPGE L. !CPIS.., r. S. A„ A55'T VICC-PRL5IDCNT •Ir11. 0• tot •n.,Car .C.DI•. 01 .C,.•..11. • Ms. Elena Rodriguez Secretary Miami City General Employees'. Retirement Plan Post Office. Box 330708 Coconut Grove Station Miami, Florida 33133 Dear Elena: Pursuant to your request dated August 8, 1979, this actuarial study evaluates proposed ad hoc cost -of -living increases for all retirees. of the Miami City General Employees' Retirement Plan. The proposed ad hoc increases are equal to 1/2% for each full year since retirement for all retirees, with percentage increases limited to the first $200, $300, or $400 of present monthly benefits. The attached table presents the results of the study. The increase in the unfunded past service liability as a result of each proposed ad hoc increase is displayed in item D. The recommended additional annual City contribution is displayed in item F, expressed both as a dollar amount and as a percentage of payroll. It is an indisputable fact that inflation erodes the benefits of re- tirees on a fixed income. Any arguments based upon the needs of re- tirees for protection against such erosion are convincing. INTCRNATIONAL OLDS SUILOIN0 • __.��" sUI?t SOO �SOO II'STPILCT, N, W., WASItfNOTON, 0. C, !coos 1Mor) 71111.110SO ;,. ROSLRT, J. **nos, r.s. *.., r. C.A. s., V. C • rt•At. O•./NI stiorisOA. ACAetr, or.;,w• tl PAUL,b LISCOSD, r C A 5 •lalto or ,.t 1801.101. tet;tr, 0' .C,+•••lS Miami City General Employees' Re- tirement Plan; Actuarial Study on Proposed Ad Hoc Cost -of -Living In- creases for All Retirees (6000) COWARD H. FRIEND & COMPANY Ms. Elena Rodriguez August 16, 1979 Page Two However, it is also an indisputable fact that the current financial status of the Plan is in serious condition. In order to meet its,cur- rent level of benefit payments, the Plan has had to liquidate assets in addition to using every dollar of City and member contributions made to the Plan. Any additional benefit payments, such as the proposed ad hoc cost -of -living increases, would likely necessitate the liquida- tion of additional assets. This process could only go on for so long before the Plan would be bank- rupt, placing even the current level of.benefit payments in jeopardy. Consequently, for this reason and also since the funding of the Plan is presently under discussion (and, likely, a resolution will be em- braced before the end of this fiscal year), we strongly recommend that.. the consideration of the granting of any ad hoc cost -of -living increase be postponed to a later date. Sincerely, DFB: sf Attachmen B. Total Annual Benefits C. Increase in Annual Benefits as Result of the Ad Hoc Cost -of - Living Increase D. Increase in Unfunded Past Service Liability as a Result of the Ad Hoc Cost -of -Living Increase E. Increase in Amortization Pay- ment as a Result of the Ad Hoc Cost -of -Living Iwease: (.0739000 x (M- P'. Recommended Additional Annual City Contribution as a Result of the Ad Hoc Cost -of -Living In- crease Expressed as a: it I; MIAMI CITY:. GENERAL EMPLOYEES' RETIREMENT PLAN Evaluation. of Proposed Ad Hoc Cost -of -Living Increase for All Retirees Increase Equal to 1/2% for Each Full Year Since Retirement on Monthly Benefits Up to: II $200 $300 $400 II 1,255 1,255 1,255 l $5,946,439 $5,946,439 $5,946,439 I) 1 i it it ▪ Percentage of Payroll [F(a) ; + $29,169,114] . 324% .253%. !Retirees' includes'. retired participants; Pants.' The Ordinances call for the, amortization, of the unfunded over 35 years from October 1; '1976... .376'% • Alexander 8 Alexander Inc. Consulting Acluanal Division Two Piedmont Center 3565 Piedmont Road. N E Atlanta, Georgia 30305 Telephone 404 261.3400 TWX 810.751.8433 Ms. Elena Rodriquez, Secretary Miami City Employees' Retirement System Retirement Office Post Office Box 330708 Miami, Florida 33183 Dear Elena: The purpose of this letter is to provide the increase in annual Retirement System costs for a one -tune adjustment in benefits to currently retired em- ployees, as outlined in the City Commission Motion 79-477. Our understanding of the adjustment is that present retirement benefits would be increased by .5% on the first $200, $300, or $400 of current monthly. benefits for each full year since retirement as of January 1, 1979. There will be no increases for partial years.. _. lexander lexander Following are the costs and cost components for each chance: A. Unfunded Supplemental Liability B. Increase in (A) C.:Amor tization,of (B) over 35 years from 10/1/76 0,368,000 70,967,000 71,248,000 71,511,000 +599,000 +880,000 +1,143,000' D. Annual:Benefits. 6,594,784 6,660,406 6,690,530 6,718,291 + 65,662 + 95,746 + 123,507 E. Increase in (D) Consistent with our recommended funding approach for the 1978 increases, we recommend that the additional contributions for this benefit liberalization be at least equal in magnitude to the amount of initial increase in annual benefit payments. These are the amounts shown in line E, the level annual payments of which would amortize the increased liabilities over approximately a'.16-year period. • Page Two Ms. Elena Rodrigues, Secretary Miami City Employees' Retirement System August 23, 1979 Iexandc. Texan&' The actuarial basis Used for calculation of the additional liabilities and amortization of the additional costs is the same as that adopted for the year beginning October 1, 1977 (i.e., 7% interest and 1951 Group Annuity Mortality Table). We feel that two points should be noted with respect to the proposed changes. The first is that the form of the change does not reflect the pattern of inflation since a participant's retirement. For example, an individual who had been retired 10 years would have received an increase of about 5% both last year and this year, while one who had been retired 5 years would have received only half that amount in each year. Since some increases were granted last year, perhaps a better approach would be to consider a flat percentage increase for all participants who had been retired at least one year. The second point to be noted is that the additional deposits associated with the cost -of -living increases are included in the total System costs for comparison to the 4 mills limit, in the analysis and proposal of the Finance Director. If you have questions, or we`may help further, please let us know.