HomeMy WebLinkAbout1985-07-11 - City Commission Joint Special Meeting Minutes•
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MAIL REPLY TO:
P.O. BOX 25010
TAMARAC, FLORIDA 33320
5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321
TELEPHONE (305) 722.5900
July 2, 1985
NOTICE OF WORKSHOP MEETING
CITY COUNCIL OF TAMARAC, FLORIDA
There has been a Joint Workshop Meeting of the City Council
and the Pension Board scheduled for Thursday, July 11, 1985,
at 9:00 a.m., in the Council Chambers of City Hall,
5811 NW 88 Avenue, Tamarac.
The purpose of this meeting is to discuss certain aspects of
the Employee Retirement Plan.
The public is encouraged to attend.
OAL.�' eZ2"t-�
Carol E. Barbuto
Assistant City Clerk
AN EQUAL OPPORTUNITY EMPLOYER
POLICY OF NONDISCRIMINATION ON THE BASIS OF HANDICAPPED STATUS
MAIL REPLY TO:
P.O. BOX 25010
TAMARAC. FLORIDA 33320
5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321,p
TELEPHONE (305) 722-5900
***REVISED
July 10, 1985
NOTICE OF
JOINT WORKSHOP MEETING
CITY COUNCIL AND THE PENSION BOARD
There has been a Joint Workshop Meeting of the City Council
and the Pension Board scheduled for Thursday, July 11, 1985,
at 9:00 A.M. in the Council Chambers of City Hall, 5811 NW
88 Avenue, Tamarac.
The purpose of the meeting is to discuss the following:
1. Pension Plan Expenses
2. Pension Plan Design - Facciani Report
3. Investments
4. Long -Term Disability
The public is encouraged to attend.
Marilyn Bertholf, CM_;�9'
C
Ci ty Cl erk
Pursuant to Section 286.0105, Florida Statutes
If a person decides to appeal any decision made by the city
Council with respect to any matter considered at such meeting or
hearing, he will need a record of the proceedings and for -such
purpose, he may need to ensure that a verbatim record includes
the testimony and evidence upon which the appeal is to be based.
a
AN EQUAL OPPORTUNITY EMPLOYER
POLICY OF NONDISCRIMINATION ON THE BASIS OF HANDICAPPED STATUS
Tape 1
6
CITY OF TAMARAC, FLORIDA
JOINT WORKSHOP MEETING
CITY COUNCIL AND PENSION BOARD
July 11, 1985
CALL TO ORDER: Mayor Kravitz called the meeting to order
at 9;00 A.M. on Thursday, July 11, 1985 in the Council
Chambers of City Hall.
ROLL CALL: CITY COUNCIL- PRESENT:
Mayor Philip B. Kravitz
Vice Mayor Helen Massaro
Councilman Arthur H. Gottesman
ABSENT:
Councilman Raymond J. Munitz
Councilman Sydney M. Stein
PENSION BOARD -PRESENT:
Judy Deutsch
Larry Perretti,
Stephen Melnick
Peter Prior
Norma Bairan
Lucy Curtis
Jim Godin
Acting City Manager
ABSENT:
George Strittmatter
Robert Helton
ALSO PRESENT:
Jon Henning, City Attorney
Robert Klausner, Attorney FOP
Ruth Russo, Representative PPE
Melanie Reynolds, Aide to Charter Board
Michael McGrane, President FOP
V. Diane Williams, Secretary
1. PENSION PLAN EXPENSES:
Judy Deutsch said that this year the Pension Board had
recommended that they have their own operating budget. She
said that based on prior year's expenses, Dan Saale
recommended that $7,000.00 be appropriated for Actuarial
Services, $18,000.00 for Investment Custodial Services, and
$5,000.00 for Travel, Other, which encompasses any local and
state seminars regarding Pension, for a total budget of
$30,000.00. She said that was sent to the City Manager for
inclusion as a recommended item in the new budget.
Mayor Kravitz said that was at the request of the Police and
Fire Departments in the Pension Board meeting.
Jon Henning, City Attorney, said it was presented as a budget
proposal so that if this workshop or later Council action
decides to entertain it as part of the budget, then it is in
the format to act on.
Mayor Kravitz said this money was to come from general funds
of the City.
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Mr. Henning rear' from Florida Statutes 175.351 (9)(c), (10),
and (11) and explained that in order to have a plan, it has
to be actuariay sound, the actuary must be paid by the plan
or the municipality, and wherever the shortfall is, the City
must contribute in order to qualify. He said there are
certain advantages to the Pension Plan knowing what the funds
are and whether they came from the City and if given a
budget, will have a certain amount of control over it.
Lucy Curtis asked what is considered normal costs.
Robert Klausner, Attorney for Fraternal Order of Police, said
there are two kinds of costs in a Pension - Normal Costs and
Unfunded Liability. He explained that when a Pension Plan is
started, the employees who worked for many years, accrued
years of credit, which is an Unfunded Liability. He said the
City would have a liability to give them a Pension based on
all the past years but there would be no money in it. He
explained that Normal Costs is the yearly amount of money
which must be spent, such as legal fees, actuarial fees,
investment fees, as well as the amount of money that must be
spent that year in benefits. He said the fund must have a
certain amount of liquid assets to be able to pay existing
retirees and all costs during that year, as well as be able
to set aside payment on that Unfunded Liability so that all
of it can be paid off over a forty year period.
Judy Deutsch said there is, in the proposed budget,
$18,000.00 for the new fiscal year for Investment Custodial
Services.
Mr. Henning said the Investment Counsel's fee is one --half of
one percent of the gross, which is about $10,000.00 and this
was being paid by the Council quarterly. He said there were
brokerage fees which came out of the fund because they would
determine the net cost or value of the securities that were
traded.
Judy Deutsch said the bank's custodial fees came from the
general fund but commissions for investments came out of the
money that was invested.
V/M Massaro asked what right the Investment Counsel has to
invest in anything but government securities.
Mr. Henning said that he consulted with Gordon Rogers of
Muller & Mintz, Attorneys, and referred to Florida Statutes
175.071 which lists the type of investments that the Pension
Board can direct to be made. He said stocks and bonds are
permitted but there are very conservative restrictions as to
percentages placed on them. He said that if the City wanted
to impose the Charter provisions on the Pension Plan, and
referred to Florida Statutes 7.08(c), it can be done but it
goes back to Chapter 175.351(10) which states that if the
plan does not make any money, the City has to pick up the
shortage. He said that he has not explored this fully but
the Charter or Council restrictions can probably be imposed
on the Pension Plan because the statutes seem to say what it
may do, not what it must and section 175.301 refers to funds
that are under the responsibility of the Finance Director.
V/M Massaro said that funds under the responsibility of one
person, such as the Finance Director, would have no advantage
unless he was bonded to that extent because he must be able is
to support the amount of money he is responsible for.
Mr. Henning concluded that the Council could make some
restrictions but must be prepared to make the subsidies if
the investments are too conservative.
Stephen Melnick asked if those State Statutes supersede the
City Charter.
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2
V/M Massaro said it probably would but would ask if
everything required under the State Statutes is complied with
because the City would be the one to have to pick up the
slack if something went wrong. She said there is a two and
one-half million dollar deficit in this City now and said she
does not feel the City should be paying the expenses on this
account if there is money. She said she can not find anywhere
that the City is responsible by agreement or contract to pay
those expenses. She said the City must find out how much
money is coming in from the various sources, how much there
is in the account, how much would this account earn, does the
City have a slack to pick up and until these questions are
answered and it is evident that the City can financially take
it, she will not approve the proposed budget. She said some
of this budget must be cut.
Stephen Melnick said that some of these things are very
necessary and if the City wants to keep its employees for a
long period of time, the Pension Plan could be a benefit that
makes the difference.
V/M Massaro said the City does have a good Pension Plan, good
wages, vacation periods, and sick leave. She said the City
also must cut down on any spending that can be avoided. She
said there are responsible investments that can be made that
may not bring in as large a return but also involve less
risk. She said she needs to see how much money comes into
this fund from different sources and what the cost of this
fund really is. She said the fund should pay its own
expenses and if, at the end of the year, there is a deficit
then it would be the responsibility of the Council.
Peter Prior asked V/M Massaro if she sees any improprieties
in the investments at this time.
V/M Massaro said she did not but questioned if this Plan
meets the State requirement and if it does then the possible
loss is cut down. She said the City has the right to control
the expenditures since it has to make it up, if necessary,
and in the meantime, all expenses must come out of the fund.
C/M Gottesman said he thinks that it is unfair for the
Pension Board to ask the City to pay for their expenditures
to go to the seminars and then try to enhance the fund at the
expense of the City. He said if Pension Board members wish
to be further educated, it is their responsibility to pay for
it.
Peter Prior stated that the Pension Board is trying to get
the tools to do the best job possible and does not feel
members should pay to educate themselves for the benefit of
everyone.
Stephen Melnick said that if members learn how to invest
money at seminars and save the City money, it benefits
everyone.
Judy Deutsch said that in regard to travel, until this year,
only two members attended one seminar and the funds were
taken from the departmental budget. She said the Facciani
seminar was a local, free meeting that she attended. She
said the members need to educate themselves in order to
effectively do the job as fiduciaries and elected
administrators of the board. She said that when this board
decided that it wanted an independent actuary to review the
Plan and make suggestions, it appeared before Council for
approval prior to contracting with him and the bill came
before the Council.
Mr. Henning said that V/M Massaro has asked if that bill was
paid and he said that he was under the impression that it had
been.
7/11/85
Jim Godin said, in regard to bonding, that there is an
insurance policy for three million dollars which covers the
board members if they are being held personally liable. He
said it does not cover any loss due to stocks.
Robert Klausner said that the State Department of Insurance
is the custodian and source of the Chapter 175 and 185
monies. He explained that the money is actually a rebate
from insurance companies and for every dollar of coverage and
premiums that is written on fire insurance, the State gives
two percent of that premium to the municipalities and one
percent for casualty insurance for police. He said Chapter
175 and 185 say that if a City wants to participate in
receiving that money, the standards must be met and if
investment is made outside the guidelines that are stated in
those chapters, the State performs an annual audit of the
fund and reviews the actuarial report, accounting reports,
and investment reports before it gives the municipality the
money each year. He stated that this Pension Plan is
following the guidelines because the actuary checks it out
each year and there are two places in Florida where the
annual reports for pension must be sent -- one to the State
Department of Administration, Division of Retirement, and one
to the Bureau of Police and Fire Pensions in the Department
of Insurance. He stated that Florida is the model in the
United States for management and reporting of public employee
pension plans.
Tape 2 V/M Massaro said the Investment Counsel Company and the
Tamarac Pension Plan dated February 28th have figures of the
performance and on April 3, 1985, the stocks we're down
$33,498.00 and it yielded 3.7 percent. She asked why
thousands of dollars are being paid for this.
Judy Deutsch said that she had contacted the Investment
Counsel and asked them for a recap since January, 1984. She
said that at that time they were given two million dollars
and the total return has been 24.1 percent net, for a total
value of $2,481,000.00. She added that it is the best
performance this Plan has had since its inception.
V/M Massaro said that if the investment had been in
government securities, the value would be there no matter
what happened to the market. She said the percentage could
not be much worse than 3.7 percent. She added that if the
board wanted to turn these stocks in now, $35,000.00 would be
lost.
Mr. Klausner said that in order to run the fund, there must
be a custodial bank to make the transfers and pay the
benefits. He said the expenses may be paid directly as a
budget item of the City commission or the fund pays the
expenses directly but when it comes time for the City's
contributions to the fund, that much more money is going to
be needed against the payroll authorization.
Mr. Henning summarized by saying what was heard today was to
omit the risk, omit the sophistication and go with a straight
return. He said there may be a smaller percentage but the
Investment Counsel fees, the stock brokerage fees, and some
of the banking fees must be added.
Mr. Klausner said that based on the comments regarding the
Investment portfolio, the return was 24 percent on a two
million dollar investment, which means a net return of
$480,000.00 was made.
Mr. Henning said that he was told by Mr. Rogers that most
city general funds pay the expenses. He said that through a
telephone survey of six cities, Lauderdale Lakes is the only
city that the general fund of the City pays for the Plan. He
said that Lauderhill, Pompano Beach, Hollywood, Oakland Park
and Fort Lauderdale all pay out of the fund.
11
is
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V/M Massaro said that she personally gets an insurance bill
with a Fort Lauderdale address which means that the money
goes to that City. She said a campaign should be started and
the different sections, presidents and clubs in the City
should be engaged to have everyone return their bills if they
are not properly addressed.
It was suggested that the Public Information Committee handle
this project.
Mayor Kravitz summarized by saying that V/M Massaro does not
feel that the City is in a position to go along with the
proposed budget of the Pension Plan and the City Attorney
said that there is a choice of taking expenses from the Plan
or from the City.
Mr. Klausner said the actuary is the one who fixes the
pension costs at the beginning of the year, studies the plan
and advises how much will be needed. He said in the income
category, there is a fixed amount of money that comes from
the State.
Mayor Kravitz said he recently received copies which
specifically say that under Chapter 175, the monies go into
the pension trust fund for municipal Fire Fighters and the
same for the Police.
Mr. Klausner said the money may be commingled with general
employee monies so long as the benefits paid out under the
fund are greater for Fire Fighters and Police than for
general employees. He said the biggest expenditure is
benefits and other expenses are professional fees, seminars
and office needs. He added that the more fees that are
spent, the larger the City's share gets. He explained that
if it is decided that the Plan will not pay for these
expenses, just benefits, the City's share on the payroll side
gets smaller but the general City budget must include pension
expenses.
Mr. Henning said that he assumed that the City Council will
ultimately pass, by ordinance, an amendment to the Plan as to
where the expenses are going to come from. He said that as
to the approval of the individual expenditures, if paid by
the Council, the Council has the final say. He said the Plan
has more control if it pays its own way.
Mr. Klausner said the investment income should always be as
big as possible and the fund always wants to try to keep
expenses down. He said actuarial, accountant, custodial
bank, Investment Counsel fees will always have to be paid.
Judy Deutsch said this is a Defined Benefit Plan which puts
no pressure on the employee.
Jim Godin asked Mr. Henning if it is possible to have direct
management from the Finance Department which would avoid
expenses.
Mr. Henning said it is possible.
Peter Prior said that in the past, the Finance Department has
made investments for the Pension Board and they have been
less than satisfying compared to the 24 percent return of
this year. He said if the board is to tell the Finance
Department where to put the money, who will tell the board
where to put the money since they are not experts. He also
suggested that if the expense item of the budget for the
Pension Plan, in regard to travel and seminars, is turned
down by the Council, they do not deny the department heads
add expenses for travel on their budgets.
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5
2. PENSION PLAN DESIGN -- FACCIANI REPORT
Tape 3
Judy Deutsch said there is great concern for escalating costs
in the Pension Plan. She said Facciani and Company was
authorized at a cost of $7,500.00, to review the Plan from an
actuarial point of view and return for recommended changes.
They were told that the board's objective was to increase
benefits. She said the Plan is extremely well -funded and
while in this position, would like to make the improvements.
She said it was projected that if this Plan was terminated
and a Defined Contribution Plan was adopted, there is enough
money to buy twice the amount of benefits that have been
projected for the employees without ever contributing any
more money. She added that when looking to the future when
there are more retirees, the Plan should be reviewed and
changes that are in the best interest of the employees be
made.
Stephen Melnick said a request for an actuarial study was
made at the last meeting and asked if a decision has been
made.
V/M Massaro asked Dan Saale if the City is still in a
position that they have to fund this program.
Dan Saale said that is a joint decision of the Council and
the Pension Board. He said the Pension Plan is fairly
wealthy in the amount of money that it has verses the amount
of benefits presently being paid out. He said the Plan is
strong and may want to consider bearing the cost themselves.
Mr. Klausner said the report is needed because state law
requires that before any legislative changes in a Pension
Plan is made, an actuarial impact study must be made.
Stephen Melnick asked if the Pension Board has the authority
to take the money from the fund for this.
V/M Massaro said that it has been indicated that before any
money can be spent, approval must be given by Council.
Mr. Klausner said the board wants to know if the City Council
wants to take the position that expense costs of the fund be
taken out of the assets of the fund or if the Council wants
to make it a budget line item - Pension Expense Costs.
Mayor Kravitz said the question is if the Council should
reject paying for the actuarial study, does the board have
the right to pay it from their funds.
V/M Massaro said that in her personal opinion, the Council
would recognize that actuarial study is important and can be
done if paid out of the fund.
Mr. Henning said the board is trying to get a $30,000.00
budget and wants to know how the Council would feel about
this budget coming out of the fund.
Mayor Kravitz suggested it be put on the next Council Meeting
agenda scheduled for July 24, 1985.
3. INVESTMENTS
Mayor Kravitz advised that the date of the monthly meeting of if
the Pension Board has been changed from the first Thursday of
the month to the fourth Thursday in order to give the
Investment Counsel an opportunity to bring the report more up
to date. He suggested that when that report is received, all
Council members are given a copy.
Mr. Godin referred to Chapter 12.02 of the Charter and asked
if the Pension Plan comes under the Charter.
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6 �.
Mr. Henning explained that the Charter mandates that the City
have a plan and when the plan was established, it had to be
advertised and available to the public.
4. LONG TERM DISABILITY
Judy Deutsch said that the Pension Plan is to provide
benefits for retirees. She said there is a disability
provision in the Plan in order to comply with Chapters 175
and 185. She said the present benefit is 20 percent of
salary at time of injury and there are very few employees who
could pay their bills on 20 percent of their salary. She
said her primary concern is that the benefits that have been
set aside for retirement are being eroded. She added that
this does not affect the employees because they have a
Defined Benefit Plan. She said that this Plan has become a
Disability Plan and it should be a Retirement Plan and that
money is being used to pay disability. She said she does not
believe disability belongs in the plan. She stated that when
the Plan was incepted, one percent was to be collected from
employees initially, in order to comply with Chapters 175 and
185 with the least financial impact on the City.
V/M Massaro asked if Chapters 175 and 185 require a
Disability Plan.
Judy Deutsch said they do but it stipulates with ten years of
service. She said that provision is not in this Plan and it
must be provided for Police and Fire but does not have to be
provided for general employees. She said it is being
provided for all employees and the history of disability
payouts has been more for general employees than for Police
and Fire. She suggested that a separate Disability Plan,
apart from the Pension, be provided.
Stephen Melnick said he is presently out on workman's
Compensation and one can not survive on 20 percent of his/her
salary.
Mayor Kravitz said that he believes that the actuary will
point out what additional cost it would be to the City to
change that Plan to give more benefits.
Vice Mayor Massaro asked if it is possible for employees to
set up a Disability Fund for themselves without the City
being involved. She said it is up to an employee to save
money to be used at a time when he/she is ill or disabled and
not depend on anyone else for their comforts.
C/M Gottesman said that at time of disability, in addition to
the 20 percent of one's salary from the Pension Fund, an
amount of money is received from Social Security.
Jim Godin said that is a disability provision from Social
Security and there is a one year waiting period.
Stephen Melnick said that just the necessities, such as food,
electric, telephone and mortgage costs a lot more than 20
percent of his salary and because of the economy, bills,
children, and medical bills, it is impossible to save for
"future comfort needs" as V/M Massaro suggested.
Mr. Henning asked Larry Perretti if one of the items that
come under the $1000.00 worth of benefits on the latest
contracts is a Disability Plan that can be purchased.
Mr. Perretti agreed that there is but
they and the I.A.F.F. have not chosen
not in the F.O.P. as
it.
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7 r
Mr. Henning said it seems to be agreed that there is a need
for disability provisions but the question is how will it be
funded. He said it also seems like it is agreed that
insurance is the way to go instead of the City Plan. He
added that the dollars that are being put into the Plan for
the 20 percent benefit may be better spent going to an
insurance company which is better equipped to provide the
disability coverage and the determination that one is
permanently disabled. He said that about two years ago, an
amendment to the personnel manual called injury time was
proposed which was a compromise that approximately one week
salary might be paid for injury time over and above salary
and sick leave, if it was an on-the-job injury and some other
benefits were also included. However, no action was taken.
Mr. Godin said he has been working on investigation of a
Disability Plan through an insurance company and one
requirement is 75 percent of the employees must participate.
Peter Prior said insurance companies will not insure Police
and Firemen.
Judy Deutsch explained that when a Disability Policy is taken
out through an insurance company they have both accident and
injury relating to the job and free time. She said it is
coordinated with Workman's Compensation so the premiums
become more realistic.
Peter Prior suggested that a Disability Plan for Fire
Fighters and Police cover retirement at a 75 percent
disability rate for fully disabled and 50 percent if
partially disabled.
Mr. Godin said he would further investigate insurance
companies and report the findings to Council as soon as
possible.
Mayor Kravitz suggested Mr. Godin attend the next Council
Meetng with this information.
V/M Massaro suggested letters from the insurance companies be
received.
Mr. Henning suggested that a City staff member also be
responsible to further investigate this.
it was suggested that Judy Deutsch be the staff member
involved.
Stephen Melnick requested this be placed on the July 24th
City Council Meeting agenda at 10:00 a.m.
Mayor Kravitz agreed and ADJOURNED the meeting at 11:15 a.m.
Assistant City Clerk
This public document was promulgated at a cost of $182.60 If
or $10.74 per copy to inform the general public and public
oficers and employees about recent opinions and consider-
ations by the City Council and Pension Board of the City of
Tamarac.
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16 Tape 1
F1
CITY OF TAMARAC, FLORIDA
JOINT WORKSHOP MEETING
CITY COUNCIL AND PENSION BOARD
July 1l, 1985
CALL TO ORDER: Mayor Kravitz called the meeting to order
at 9:00 A.M. on Thursday, July 11, 1985 in the Council
Chambers of City Hall.
ROLL CALL_: CITY COUNCIL- PRESENT:
Mayor Philip B. Kravitz
Vice Mayor Helen Massaro
Councilman Arthur H. Gottesman
ABSENT:
Councilman Raymond J. Munitz
Councilman Sydney M. Stein
PENSION BOARD -PRESENT:
Judy Deutsch
Larry Perretti,
Stephen Melnick
Peter Prior
Norma Bairan
Lucy Curtis
Jim Godin
Acting City Manager
ABSENT:
George Strittmatter
Robert Helton
ALSO PRESENT:
Jon Henning, City Attorney
Robert Klausner, Attorney FOP
Ruth Russo, Representative FPE
Melanie Reynolds, Aide to Charter Board
Michael McGrane, President FOP
V. Diane Williams, Secretary
1. PENSION PLAN EXPENSES:
Judy Deutsch said that this year the Pension Board had
recommended that they have their own operating budget. She
said that based on prior year's expenses, Dan Saale
recommended that $7,000.00 be appropriated for Actuarial
Services, $18,000.00 for Investment Custodial Services, and
$5,000.00 for Travel, Other, which encompasses any local and
state seminars regarding Pension, for a total budget of
$30,000.00. She said that was sent to the City Manager for
inclusion as a recommended item in the new budget.
Mayor Kravitz said that was at the request of the Police and
to Fire Departments in the Pension Board meeting.
Jon Henning, City Attorney, said it was presented as a budget
proposal so that if this workshop or later Council action
decides to entertain it as part of the budget, then it is in
the format to act on.
Mayor Kravitz said this money was to come from general funds
of the City.
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1
J
Mr. Henning read from Florida Statutes 175.351 (9)(c), (10),
and (11) and explained that in order to have a plan, it has
to be actuarily sound, the actuary must be paid by the plan
or the municipality, and wherever the shortfall is, the City
must contribute in order to qualify. He said there are
certain advantages to the Pension Plan knowing what the funds
are and whether they came from the City and if given a
budget, will have a certain amount of control over it.
Lucy Curtis asked what is considered normal costs.
Robert Klausner, Attorney for Fraternal Order of Police, said
there are two kinds of costs in a Pension - Normal Costs and
Unfunded Liability. He explained that when a Pension Plan is
started, the employees who worked for many years, accrued
years of credit, which is an Unfunded Liability. He said the
City would have a liability to give them a Pension based on
all the past years but there would be no money in it. He
explained that Normal Costs is the yearly amount of money
which must be spent, such as legal fees, actuarial fees,
investment fees, as well as the amount of money that must be
spent that year in benefits. He said the fund must have a
certain amount of liquid assets to be able to pay existing
retirees and all costs during that year, as well as be able
to set aside payment on that Unfunded Liability so that all
of it can be paid off over a forty year period.
Judy Deutsch said there is, in the proposed budget,
$180000.00 for the new fiscal year for Investment Custodial
Services.
Mr. Henning said the Investment Counsel's fee is one-half of
one percent of the gross, which is about $10,000.00 and this
was being paid by the Council quarterly. He said there were
brokerage fees which came out of the fund because they would
determine the net cost or value of the securities that were
traded.
Judy Deutsch said the bank's custodial fees came from the
general fund but commissions for investments came out of the
money that was invested.
V/M Massaro asked what right the Investment Counsel has to
invest in anything but government securities.
Mr. Henning said that he consulted with Gordon Rogers of
Muller & Mintz, Attorneys, and referred to Florida Statutes
175.071 which lists the type of investments that the Pension
Board can direct to be made. He said stocks and bonds are
permitted but there are very conservative restrictions as to
percentages placed on them. He said that if the City wanted
to impose the Charter provisions on the Pension Plan, and
referred to Florida Statutes 7.08(c), it can be done but it
goes back to Chapter 175.351(10) which states that if the
plan does not make any money, the City has to pick up the
shortage. He said that he has not explored this fully but
the Charter or Council restrictions can probably be imposed
on the Pension Plan because the statutes seem to say what it
may do, not what it must and section 175.301 refers to funds
that are under the responsibility of the Finance Director.
V/M Massaro said that funds under the responsibility of one
person, such as the Finance Director, would have no advantage
unless he was bonded to that extent because he must be able
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to support the amount of money he is responsible for.
Mr. Henning concluded that the Council could make some
restrictions but must be prepared to make the subsidies if
the investments are too conservative.
Stephen Melnick asked if those State Statutes supersede the
City Charter.
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V/M Massaro said it probably would but would ask if
everything required under the State Statutes is complied with
because the City would be the one to have to pick up the
slack if something went wrong. She said there is a two and
one-half million dollar deficit in this City now and said she
does not feel the City should be paying the expenses on this
account if there is money. She said she can not find anywhere
that the City is responsible by agreement or contract to pay
those expenses. She said the City must find out how much
money is coming in from the various sources, how much there
is in the account, how much would this account earn, does the
City have a slack to pick up and until these questions are
answered and it is evident that the City can financially take
it, she will not approve the proposed budget. She said some
of this budget must be cut.
Stephen Melnick said that some of these things are very
necessary and if the City wants to keep its employees for a
long period of time, the Pension Plan could be a benefit that
makes the difference.
V/M Massaro said the City does have a good Pension Plan, good
wages, vacation periods, and sick leave. She said the City
also must cut down on any spending that can be avoided. She
said there are responsible investments that can be made that
may not bring in as large a return but also involve less
risk. She said she needs to see how much money comes into
this fund from different sources and what the cost of this
fund really is. She said the fund should pay its own
expenses and if, at the end of the year, there is a deficit
then it would be the responsibility of the Council.
Peter Prior asked V/M Massaro if she sees any improprieties
in the investments at this time.
V/M Massaro said she did not but questioned if this Plan
meets the State requirement and if it does then the possible
loss is cut down. She said the City has the right to control
the expenditures since it has to make it up, if necessary,
and in the meantime, all expenses must come out of the fund.
C/M Gottesman said he thinks that it is unfair for the
Pension Board to ask the City to pay for their expenditures
to go to the seminars and then try to enhance the fund at the
expense of the City. He said if Pension Board members wish
to be further educated, it is their responsibility to pay for
it.
Peter Prior stated that the Pension Board is trying to get
the tools to do the best job possible and does not feel
members should pay to educate themselves for the benefit of
everyone.
Stephen Melnick said that if members learn how to invest
money at seminars and save the City money, it benefits
everyone.
Judy Deutsch said that in regard to travel, until this year,
only two members attended one seminar and the funds were
taken from the departmental budget. She said the Pacciani
seminar was a local, free meeting that she attended. She
said the members need to educate themselves in order to
effectively do the job as fiduciaries and elected
administrators of the board. She said that when this board
decided that it wanted an independent actuary to review the
Plan and make suggestions, it appeared before Council for
approval prior to contracting with him and the bill came
before the Council.
Mr. Henning said that V/M 14assaro has asked if that bill was
paid and he said that he was under the impression that it had
been.
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Jim Godin said, in regard to bonding, that there is an
insurance policy for three million dollars which covers the
board members if they are being held personally liable. He
said it does not cover any loss due to stocks.
Robert Klausner said that the State Department of Insurance
is the custodian and source of the Chapter 175 and 185
monies. He explained that the money is actually a rebate
from insurance companies and for every dollar of coverage and
premiums that is written on fire insurance, the State gives
two percent of that premium to the municipalities and one
percent for casualty insurance for police. He said Chapter
175 and 185 say that if a City wants to participate in
receiving that money, the standards must be met and if
investment is made outside the guidelines that are stated in
those chapters, the State performs an annual audit of the
fund and reviews the actuarial report, accounting reports,
and investment reports before it gives the municipality the
money each year. He stated that this Pension Plan is
following the guidelines because the actuary checks it out
each year and there are two places in Florida where the
annual reports for pension must be sent - one to the State
Department of Administration, Division of Retirement, and one
to the Bureau of Police and Fire Pensions in the Department
of Insurance. He stated that Florida is the model in the
United States for management and reporting of public employee
pension plans.
Tape 2 V/M Massaro said the Investment Counsel Company and the
Tamarac Pension Plan dated February 28th have figures of the
performance and on April 3, 1985, the stocks we're down
$33,498.00 and it yielded 3.7 percent. She asked why
thousands of dollars are being paid for this.
Judy Deutsch said that she had contacted the Investment
Counsel and asked them for a recap since January, 1984. She
said that at that time they were given two million dollars
and the total return has been 24.1 percent net, for a total
value of $2,481,000.00. She added that it is the best
performance this Plan has had since its inception.
V/M Massaro said that if the investment had been in
government securities, the value would be there no matter
what happened to the market. She said the percentage could
not be much worse than 3.7 percent. She added that if the
board wanted to turn these stocks in now, $35,000.00 would be
lost.
Mr. Klausner said that in order to run the fund, there must
be a custodial bank to make the transfers and pay the
benefits. He said the expenses may be paid directly as a
budget item of the City commission or the fund pays the
expenses directly but when it comes time for the City's
contributions to the fund, that much more money is going to
be needed against the payroll authorization.
Mr. Henning summarized by saying what was heard today was to
omit the risk, omit the sophistication and go with a straight
return. He said there may be a smaller percentage but the
Investment Counsel fees, the stock brokerage fees, and some
of the banking fees must be added.
Mr. Klausner said that based on the comments regarding the
Investment portfolio, the return was 24 percent on a two
million dollar investment, which means a net return of
$480,000.00 was made.
Mr. Henning said that he was told by Mr. Rogers that most
city general funds pay the expenses. He said that through a
telephone survey of six cities, Lauderdale Lakes is the only
city that the general fund of the City pays for the Plan. He
said that Lauderhill, Pompano Beach, Hollywood, Oakland Park
and Fort Lauderdale all pay out of the fund.
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V/M Massaro said that she personally gets an insurance bill
with a Fort Lauderdale address which means that the money
goes to that City. She said a campaign should be started and
the different sections', presidents and clubs in the City
should be engaged to have everyone return their bills if they
are not properly addressed.
it was suggested that the Public Information Committee handle
this project.
Mayor Kravitz summarized by saying that V/M Massaro does not
feel that the City is in a position to go along with the
proposed budget of the Pension Plan and the City Attorney
said that there is a choice of taking expenses from the Plan
or from the City.
Mr. Klausner said the actuary is the one who fixes the
pension costs at the beginning of the year, studies the plan
and advises how much will be needed. He said in the income
category, there is a fixed amount of money that comes from
the State.
Mayor Kravitz said he recently received copies which
specifically say that under Chapter 175, the monies go into
the pension trust fund for municipal Fire Fighters and the
same for the Police.
Mr. Klausner said the money may be commingled with general
employee monies so long as the benefits paid out under the
fund are greater for Fire Fighters and Police than for
general employees. He said the biggest expenditure is
benefits and other expenses are professional fees, seminars
and office needs. He added that the more fees that are
spent, the larger the City's share gets. He explained that
if it is decided that the Plan will not pay for these
expenses, just benefits, the City's share on the payroll side
gets smaller but the general City budget must include pension
expenses.
Mr. Henning said that he assumed that the City Council will
ultimately pass, by ordinance, an amendment to the Plan as to
where the expenses are going to come from. He said that as
to the approval of the individual expenditures, if paid by
the Council, the Council has the final say. He said the Plan
has more control if it pays its own way.
Mr. Klausner said the investment income should always be as
big as possible and the fund always wants to try to keep
expenses down. He said actuarial, accountant, custodial
bank, Investment Counsel fees will always have to be paid.
Judy Deutsch said this is a Defined Benefit Plan which puts
no pressure on the employee.
Jim Godin asked Mr. Henning if it is possible to have direct
management from the Finance Department which would avoid
expenses.
Mr. Henning said it is possible.
Peter Prior said that in the past, the Finance Department has
made investments for the Pension Board and they have been
less than satisfying compared to the 24 percent return of
this year. He said if the board is to tell the Finance
Department where to put the money, who will tell the board
where to put the money since they are not experts. He also
suggested that if the expense item of the budget for the
Pension Plan, in regard to travel and seminars, is turned
down by the Council, they do not deny the department heads
add expenses for travel on their budgets.
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2. PENSION PLAN DESIGN - FACCIANI REPORT
Tape 3
Judy Deutsch said there is great concern for escalating costs
in the Pension Plan. She said Facciani and Company was
authorized at a cost of $7,500.00, to review the Plan from an
actuarial point of view and return for recommended changes.
They were told that the board's objective was to increase
benefits. She said the Plan is extremely well -funded and
while in this position, would like to make the improvements.
She said it was projected that if this Plan was terminated
and a Defined Contribution Plan was adopted, there is enough
money to buy twice the amount of benefits that have been
projected for the employees without ever contributing any
more money. She added that when looking to the future when
there are more retirees, the Plan should be reviewed and
changes that are in the best interest of the employees be
made.
Stephen Melnick said a request for an actuarial study was
made at the last meeting and asked if a decision has been
made.
V/M Massaro asked Dan Saale if the City is still in a
position that they have to fund this program.
Dan Saale said that is a joint decision of the Council and
the Pension Board. He said the Pension Plan is fairly
wealthy in the amount of money that it has verses the amount
of benefits presently being paid out. He said the Plan is
strong and may want to consider bearing the cost themselves.
Mr. Klausner said the report is needed because state law
requires that before any legislative changes in a Pension
Plan is made, an actuarial impact study must be made.
Stephen Melnick asked if the Pension Board has the authority
to take the money from the fund for this.
V/M Massaro said that it has been indicated that before any
money can be spent, approval must be given by Council.
Mr. Klausner said the board wants to know if the City Council
wants to take the position that expense costs of the fund be
taken out of the assets of the fund or if the Council wants
to make it a budget line item - Pension Expense Costs.
Mayor Kravitz said the question is if the Council should
reject paying for the actuarial study, does the board have
the right to pay it from their funds.
V/M Massaro said that in her personal opinion, the Council
would recognize that actuarial study is important and can be
done if paid out of the fund.
Mr. Henning said the board is trying to get a $30,000.00
budget and wants to know how the Council would feel about
this budget coming out of the fund.
Mayor Kravitz suggested it be put on the next Council Meeting
agenda scheduled for July 24, 1985.
3. INVESTMENTS
Mayor Kravitz advised that the date of the monthly meeting of
the Pension Board has been changed from the first Thursday of
the month to the fourth Thursday in order to give the
Investment Counsel an opportunity to bring the report more up
to date. He suggested that when that report is received, all
Council members are given a copy.
Mr. Godin referred to Chapter 12.02 of the Charter and asked
if the Pension Plan comes under the Charter.
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Mr. Henning explained that the Charter mandates that the City
have a plan and when the plan was established, it had to be
advertised and available to the public.
4. LONG TERM DISABILITY
Judy Deutsch said that the Pension Plan is to provide
benefits for retirees. She said there is a disability
provision in the Plan in order to comply with Chapters 175
and 185. She said the present benefit is 20 percent of
salary at time of injury and there are very few employees who
could pay their bills on 20 percent of their salary. She
said her primary concern is that the benefits that have been
to set aside for retirement are being eroded. She added that
this does not affect the employees because they have a
Defined Benefit Plan. She said that this Plan has become a
Disability Plan and it should be a Retirement Plan and that
money is being used to pay disability. She said she does not
believe disability belongs in the plan. She stated that when
the Plan was incepted, one percent was to be collected from
employees initially, in order to comply with Chapters 175 and
185 with the least financial impact on the City.
V/M Massaro asked if Chapters 175 and 185 require a
Disability Plan.
Judy Deutsch said they do but it stipulates with ten years of
service. She said that provision is not in this Plan and it
must be provided for Police and Fire but does not have to be
provided for general employees. She said it is being
provided for all employees and the history of disability
payouts has been more for general employees than for Police
and Fire. She suggested that a separate Disability Plan,
apart from the Pension, be provided.
Stephen Melnick said he is presently out on Workman's
Compensation and one can not survive on 20 percent of his/her
salary.
Mayor Kravitz said that he believes that the actuary will
point out what additional cost it would be to the City to
change that Plan to give more benefits.
Vice Mayor Massaro asked if it is possible for employees to
set up a Disability Fund for themselves without the City
being involved. She said it is up to an employee to save
money to be used at a time when he/she is ill or disabled and
not depend on anyone else for their comforts.
C/M Gottesman said that at time of disability, in addition to
the 20 percent of one's salary from the Pension Fund, an
amount of money is received from Social Security.
Jim Godin said that is a disability provision from Social
Security and there is a one year waiting period.
Stephen Melnick said that just the necessities, such as food,
electric,. -telephone and mortgage costs a lot more than 20
percent b7f his salary and because of the economy, bills,
children-, and medical bills, it is impossible to save for
"future comfort needs" as V/M Massaro suggested.
Mr. Henning asked Larry Perretti if one of the items that
come under the $1000.00 worth of benefits on the latest
contracts is a Disability Plan that can be purchased.
Mr. Perretti agreed that there is but not in the F.O.P. as
they and the I.A.F.F. have not chosen it.
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Mr. Henning said it seems to be agreed that there is a need
for disability provisions but the question is how will it be
funded. He said it also seems like it is agreed that
insurance is the way to go instead of the City Plan. He
added that the dollars that are being put into the Plan for
the 20 percent benefit may be better spent going to an
insurance company which is better equipped to provide the
disability coverage and the determination that one is
permanently disabled. He said that about two years ago, an
amendment to the personnel manual called injury time was
proposed which was a compromise that approximately one week
salary might be paid for injury time over and above salary
and sick leave, if it was an on-the-job injury and some other
benefits were also included. However, no action was taken.
Mr. Godin said he has been working on investigation of a
Disability Plan through an insurance company and one
requirement is 75 percent of the employees must participate.
Peter Prior said insurance companies will not insure Police
and Firemen.
Judy Deutsch explained that when a Disability Policy is taken
out through an insurance company they have both accident and
injury relating to the job and free time. She said it is
coordinated with Workman's Compensation so the premiums
become more realistic.
Peter Prior suggested that a Disability Plan for Fire
Fighters and Police cover retirement at a 75 percent
disability rate for fully disabled and 50 percent if
partially disabled.
Mr. Godin said he would further investigate insurance
companies and report the findings to Council as soon as
possible.
Mayor Kravitz suggested Mr. Godin attend the next Council
Meetng with this information.'
V/M Massaro suggested letters from the insurance companies be
received.
Mr. Henning suggested that a City staff member also be
responsible to further investigate this.
It was suggested that Judy Deutsch be the staff member
involved.
Stephen Melnick requested this be placed on the July 24th
City Council Meeting agenda at 10:00 a.m.
Mayor Kravitz agreed and ADJOURNED the meeting at 11:15 a.m.
ya� e -
Assistant City Clerk
This public document was promulgated at a cost of $182.60
or $10.74 per copy to inform the general public and public
oficers and employees about recent opinions and consider-
ations by the City Council and Pension Board of the City of
Tamarac.
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