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HomeMy WebLinkAboutSubmittal-Memo-City Manager) TO : FROM : CITY OF MIAMI, FLORIDA 0-0,-,so NO ti'11 W311 ?!0� aHOo2on9nd INTER -OFFICE MEMORANDUM 2H1 OWLNI O3IIIVJ8flS Honorable Mayor Tomas Regalado & City C. o, ssioners December 16, 2009 DATE : FILE : SUBJECT: Status on Pension Discugiof; A : � m REFERENCES� Pedro G. He sand •z, P.E. •1 Z 0 City Manager ENCLOSURES: 3n? • n1 _ rn. va.:;EV The purpose of this memorandum is to report to the City Commission the proggss that. the administration and union leaders have made thus far to mitigate the rising cost of pensions. In recent weeks, discussions have centered on two viable proposals for the FIPO pension. A fundamental component to both proposals with FIPO is a change in the actuarial cost method from aggregate to entry age normal. This modification would further smooth the volatility in contributions over the years and build on our efforts towards stabilizing the pension,. Noteworthy, this change in actuarial cost method requires a resettlement in the amended final judgment in Gates et.al. vs. The City of Miami, etc., et. al. The estimated savings, if the parties do nothing else, amounts to approximately seven million dollars. Moreover, both proposals identify possible dedicated revenue sources to mitigate costs and funding the pension stabilization fund. The difference lies in how the revenue sources are best utilized and the level of complexity of each proposal. Specifically, one of the proposals being considered involves modifications to COLA, which also requires an amendment to Gates. The administration and union leaders are looking at two options or a combination thereof. Thus far, these discussions have been productive however we are still working on fully vetting the proposals, including actuarial review to estimate potential savings. We have identified that the entire process could take anywhere between ten to fourteen months, keeping in mind that this'includes ratification by unions and City Commission, as well as noticing all interested parties, including the retirees. In addition, the parties would have to go before a judge to amend Gates. Therefore, we also continue to explore measures that will provide relief in the more immediate future. We have also met with union leaders to address any potential costs savings to the GESE plan. In particular, one approach being considered is including non -union GESE 09- 0/36?— Submittal f al - me ►rr 0 - c; �'y Malela3e r members to parallel the contribution increases of their union counterparts. The employee would make the same reductions that they are currently withstanding, however part of the amount would go towards pension. We continue to collaborate with the unions to develop strategies to reduce costs to the GESE pension. The goal for the City continues to be stability, affordability, and predictability. The unions and administration continue to work diligently towards a plan that will provide our employees with a competitive but affordable plan for these trying times. Submitted Into the public recordin connection with item I / on 1-1 Priscilla A. Thompson City Clerk