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CITY OF MIAMI, FLORIDA
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INTER -OFFICE MEMORANDUM
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Honorable Mayor Tomas Regalado
& City C. o, ssioners
December 16, 2009
DATE : FILE :
SUBJECT: Status on Pension Discugiof;
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Pedro G. He sand •z, P.E. •1 Z 0
City Manager ENCLOSURES: 3n? • n1
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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