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HomeMy WebLinkAbout1985-12-20 - City Commission Joint Special Meeting Minutes11 :7 MAIL REPLY TO: P.O. BOX 25010 TAMARAC, FLORIDA 33320 5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321 TELEPHONE (305) 722-5900 December 5, 1985 N O T I C E WORKSHOP MEETING CITY COUNCIL AND THE PENSION BOARD There will be a Joint Workshop Meeting of the City Council and the Pension Board on Friday, December 20, 1985 at 1:00 P.M. in the Council Chambers of City Hall, 5811 NW 88 Avenue, Tamarac. The purpose of the meeting is to discuss areas of concern. The public is invited to attend. Marilyn Bertholf, CMC City Clerk 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 v rbs m rer: rd k,cludes J. AN EQUAL OPPORTUNITY EMPLOYER POLICY OF NONDISCRIMINATION ON THE BASIS OF HANDICAPPED STATUS CITY OF TAMARAC, FLORIDA JOINT CITY COUNCIL/PENSION BOARD WORKSHOP DECEMBER 20, 1985 Tape CALL`TO-,ORDER: Mayor Philip B. Kravitz called the meeting to 1 order on Friday, December 20, 1985 at 1:00 F.M. in the Council Chambers. ROLL CALL: PRESENT - COUNCIL• Mayor Philip B. Kravitz Vice Mayor Helen Massaro Councilman Raymond J. Munitz PENSION BOARD Larry Perretti Frank Etheredge Steve Melnick Robert Helton Ruth Russo Judith Kitograd Judy Deutsch Morris Haber Peter Prior AL 0 PRESENT: Jon M. Henning, City Attorney V. Diane Williams, Secretary ABSENT AND EXCUSED: COUNCIL Councilman Arthur H. Gottesman Councilman Sydney M. Stein PENSION BOARD George Strittmatter Mike Vaillant Mayor Kravitz stated, at this morning's meeting of the Pension Board, certain items were proposed for discussion and copies were distributed. He said all the items proposed for dis- cussion would require an amendment to the ordinance. The Mayor said, under Membership of the Pension Board, the Board voted to recommend to Council to eliminate a voting member from the Charter Board. The City Attorney stated discussion was held that perhaps the Finance Director should not be a voting member but merely serve as a staff advisor. He said there was also a question as to whether the trustee should be an employee appointed by Council, as it is now, or Council may want to appoint a member of the public as a trustee. Mr. Henning reported there was additional discussion as to whether the Charter Board member should be removed altogether or whether he should be a non -voting member. Mayor Kravitz stipulated the question of the Charter Board member was voted on by the Pension Board, and the other issues cited by the City Attorney were recommendations and discus- sions. Mr. Henning concurred that the Board voted asking him to pre- pare an ordinance to remove the Charter Board member from the Pension Board. He added, as a followup to this morning's meeting, a compromise may be a nonvoting membership. Peter Prior clarified the vote was taken on the Charter Board member not to eliminate him from the Board but to eliminate him as a voting member. J 11 12/20/85 /vdw V/M Massaro inquired why the Board did not want the Charter Board to have a voting member. Steve Melnick answered the Pension Board is for the employees and should be operated by the employees. He said they were attempting to streamline the Board and that the composition of the Board, at present, was basically "stacked" against the employees with members of management. Mr. Melnick said the Charter Board, in no other city, has a vote. Mayor Kravitz said there were only two cities who had Charter Boards. Mr. Melnick reasoned the Charter Board member does not belong on the Pension Board as a voting member because no contribution is made by the Charter Board. Mr. Melnick said, however, he had no objection to a citizen -at large sitting on the Pension Board as a voting member. The City Attorney said the Charter Board was empowered with the function of investigation. He said part of the reason this has precipitated is that within the last few months, the Charter Board has shown an interest in investigating certain actions of the Pension Board which raised a question of conflict of in- terest. He said Council, through the ordinance, regulates the Board but the Pension Board felt if the Charter Board was in- vestigating them, they should not be a part of the committee. The Vice Mayor said their actions or reactions may have arisen because of various questions by Council. She said Council has a lot of questions concerning the Board, not in a critical sense, but to insure that it is functioning properly, safely and to avoid a catastrophe at some point in time. C/M Munitz stated that he felt very strongly that anyone who is a member should have the right to vote. He explained that it seemed ludicrous to have a Board member sit, listen and partake in discussions only to not have the power of his vote to place his opinions on record. C/M Munitz said there should be no distinction between a voting member and a non -voting member but believed every one should be entitled to vote if they are willing to give it the time so that their opinion has some meaning. Peter Prior said, originally, the Charter Board member was placed on the Pension Board under Mayor Falck's administration. He said they have expanded and are still growing and removing the Charter Board member from the Board was not a retaliatory action but was done in an effort to streamline the Board. Mr. Melnick stated that the Board has recommended to Council that the ordinance be amended eliminating a Charter Board member as a member of the Pension Board. He said this recom- mendation was made in an effort to get the Pension Plan moving forward to where it benefits the employees. Mr. Melnick said the City's pension plan, policewise, is the worst in Broward County and reasoned that it was due to stagnation. C/M Munitz said to "streamline" the Pension Board possibly eliminating a valuable opinion could be counterproductive to what the Board wished to achieve. He said it was not a question of the number of members on the Board but a question of the quality and the input each member provided. Steve Melnick explained it was the Board's intention to reduce the number of voting members not advisory members. C/M Munitz said it was his opinion that the Charter Board designee, the Finance Director and the trustee should be members of the Board and empowered with the right to vote. Ruth Russo informed C/M Munitz that was the way the present plan was setup. She said there was a conflict as to the trustee member because, originally, the trustee was a nonvoting member but eventually became a voting member and she did not believe there was any supporting legislative action. 2 12/20/85 /vdw Ll J Judy Deutsch recalled, when the plan was incepted, there was an administrative board and a Board of Trustees. The trustees were charged with the investment aspect of the plan. The administrative board was charged with insuring the benefits were distributed equitably in accordance with the plan's provisions. Ms. Deutsch said they lost that some place. V/M Massaro stated that certain things needed to be straightened out to get the Board and the Pension Fund back on the right track. She said that was the whole purpose of every- thing that has been happening recently, and the sooner that was done, the better. The Vice Mayor concurred with C/M Munitz that anyone who sits on the board should have a right to vote. Peter Prior said the Charter Board does not participate nor contribute money into the Pension Plan and that was one of their justifications for removing the Charter Board as a voting member. He said the Board's reasoning was if you contribute to the plan, you should have a vote but if you do not contribute, you should not have a vote. The City Attorney said the Mayor contributed a lot because City Council provides a certain percentage of the monies. C/M Munitz said if that were the case, every member of Council should sit on the Pension Board. Mr. Prior disagreed with the Vice Mayor's statement "to get the Pension Board back on track" he did not feel they had fallen off "track" and if they had, he wanted her to explain where the Board had. V/M Massaro said she only meant in terms of clari- fication because she was not interested in fighting with the Pension Board. She said Council was interested in all employ- ees and wanted the very best for them and explained that was the best they could do and still continue to take care of the residents of the City. She said when things occur, as with ESM, everybody is affected. V/M Massaro cautioned the Pension Fund should be protected at all times, and if the Charter Board appeared as if they were overly involved, it was because they were trying to protect this fund. Mr. Henning stated they had stumbled across an important point as far as committees. The Pension Board, in essence, is an advisory committee to the Council, and Council has the final say. The Council, by its ordinance, either controls everything and the Pension Board can be dismissed whereby Council will make all the decisions if or Council is too busy, they can relinquish or delegate some of their responsibility, to a degree, through the ordinance to allow the Board to function and make certain decisions. He said the discussion was center- ed around who should sit on this advisory committee. The City Attorney announced that at a future Council meeting, the Council will be asked to appoint an employee to fill the vacancy of trustee to the Pension Board unless Council decides otherwise. Mr. Henning said the ordinance, as written, pro- vides for Council to appoint an employee as a trustee. V/M Na-ssaro questioned how they would know that an employee has the knowledge to be a trustee. The City Attorney answered no more than any committee member appointed by Council. She said the ordinance may need to be changed because the more know- ledgeable people appointed to this Board, the will be. better off they II. Contributions by the City Mayor Kravitz said a question was raised that the ordinance specified the City was required to contribute 6.8% of the payroll to the fund. The Mayor said the amount fluctuated depending upon the actuarial requirements. Steve Melnick distributed handouts to Council members. He ex- plained the evaluation indicated 5.84% was contributed by the 3 12/20/85 /vdw City to the plan last year. However, Mr. Melnick said the City ordinance reads equal to 6.8% of covered member payroll for police officers. He said the percentage was not met and he consulted with their attorney and Mr. Clayton, head of the State Police Retirement Plan, and learned that the City must contribute, by their own ordinance 6.8%. C/M Munitz said the total contribution was determined on an actuarial basis which is divided by the covered payroll and then you arrive at a percentage. The City Attorney said he believed there was an error in the ordinance. He said the question is the position of the Pension Board and Council as to whether the so called "typo" is cor- rected or are they making demands for more money, Judy Deutsch referenced last year's evaluation and stated the ordinance reads, "The City shall make an annual contribution to the trust fund in an amount at least equal to 6.8% of covered member payroll". Last year the City made a 6.95% contribution to the Pension Plan of covered member payroll. If broken down by individual groups, the percentage varied and one group was below 6.8%. Frank Etheredge said covered member payroll included everybody. Mr. Melnick said the interpretation he received from Tallahassee and an attorney he spoke to indicated that the Police Pension was to be considered separate. However, he said the investments were mixed for investment purposes only. Mr. Melnick said the Police Fund must, by ordinance, be 6.8%. V/M Massaro asked what would happen if their ordinance did not stipulate 6.8%. He said then the City would not be in vio- lation. Mr. Melnick said the City's first priority should be the future costs, impending costs, expenses and budget and then they will know what they can do to work together to improve it. Tape The City Attorney said he did not have the exact answer but it 2 was possible they were all correct. He said under some circum- stances the police and fire are separate and required separate calculations. Mr. Henning said, according to the statements given by Judy Deutsch, the City has satisfied the ordinance requirements. C/M Munitz asked if the amount met the actuarial requirements. The City Attorney said he was sure it did because that was where the numbers originated. He speculated that in a parti- cular year when this ordinance was amended, the percentage that year was 6.8 and instead of stating, "based on actuarial study", the City reinserted 6.8 not realizing that it needed a revision every year. The City Attorney stated he viewed it as a typographical error but did not know if others viewed it as vested rights for additional contributions for past years. Mr. Henning suggested the ordinance be changed. Mr. Melnick said the ordinance would have to be reworded and they would have to sit down with their attorney and figure out the amounts owed for past years. The City Attorney said the ordinance would fluctuate from year to year depending on what the actuary required. C/M Munitz stated, in other words, the amount necessary would be determined first and then divided by the covered payroll to determine the percentage. III. Pension Expenses/Budget Mayor Kravitz said the Pension Board has outstanding expenses and a question has been raised as to who will pay the expenses. C/M Munitz stated it did not make any difference because if the expenses were paid from the Pension Fund, the City would have to contribute additional monies to the fund to make it actuarially 4 12/20/85 /vdw sound. Mayor Kravitz said there was a difference and asked the City Attorney to give an explanation. The City Attorney replied if they had the money in a CD and the income was fixed, one advantage might be to defer some of the expenses for part of the fiscal year. The question is would Council be interested in taking an extra $10,000 to $20,000 to be paid to experts to determine if the income from the pension investments could be increased and that may pay for itself. C/M Munitz said the fallacy in the discussion was the talk of percentages and cautioned them to think in terms of the dollar amount needed to maintain the fund The City Attorney said if the monies actuarially sound. expended for these bills did not have an impact on the fund, it would indicate the plan as sound and the next year the actuary will allow them to reduce the percentage. Mx. Henning stated the ordinance was the vehicle for Council to tell the Pension Board what they can and cannot do. He said the present ordinance was silent and that he would like to draft a new one upon direction from Council. Ruth Russo said there was a problem created because they were working with three different State statutes and stated they needed a lot of legal input. She said the Board felt, in order to correct the ordinance, they needed an attorney who is well versed in pension matters and can blend the three State statutes. Steve Melnick said the letter he distributed earlier indicated this would have to be checked but is supposedly prefunded when the actuary does the study. Mr. Morris Haber stated the Pension Board was paying Investment Council 1/2 percent of 100% to invest 40% of the money given to him. He said they were actually paying him more than 1% for the 40% that he is investing. C/M Munitz stated Investment Council was performing services for that money. Mr. Haber said if the money were invested in government securities and kept at the Federal Reserve Bank, there would be no costs for security holdings, and the Board would know their return and there would be no cost for Investment Council and a bank resulting in a savings which the City could give to the Board to use for a budget. C/M Munitz said anyone who is investing in the market and using his own brain does not belong in the market. C/M Munitz said certain administrative expenses were locked into the fund. Mr. Melnick said the money could and should come out of the Pension Fund. He said the City Attorney drafted an ordinance which indicated that anything which exceeded a certain amount would have to be approved by Council. C/M Munitz said there has to be a safeguard. The City Attorney said there was an outstanding bill of $1,000.00 owed to Muller & Mintz who visited at his request. He said Mr. Gerald Rogers of Muller & Mintz had discussions with Mr. Facciani, who was hired by the Board and paid for by the Council, which resulted in approximately $435.00 in additional expenses. The City Attorney said the Board also requested several hundred dollars to pay a part-time secretary to take the minutes of the monthly meeting at $75.00 per meeting. There is also an outstanding bill from Kruse & O'Connor for $2,555.00. Mr. Henning asked for Council's approval of these outstanding bills from the Pension Plan at a future meeting. Mr. Melnick said the payment of all the bills with the exception of the Facciani bill, which was not requested by the Pension Board, should be paid out of the pension funds. 5 12/20/85 /vdw V/M Massaro asked, at whose request did Muller & Mintz con With Mr. Facciani. The CityConfer O'Connor request because theyencounteredaasproblemaandKruse & Mr. Facciani agreed to answer the additional $435.00, questions and charged an C/M Munitz said services were rendered. City Attorney said they were rendered but The authorization and suggested the he questioned the that it was unauthorized Y contact Mr. Facciani indicating pay it. negotiate a settlement, ignore it or The City Attorney informed he had drafted an ordinance which stated the Pension Plan be allowed a budget of up to l% of the assets, which will be approximate) said the budget would be funded either�b00 for this year. He the Plan or a combination of both which y ishtoCbeydetermined by the City Council. C/M Munitz asked if the 1% would include t amount of money he said what Y Paid to Investment Council. is included in the The City Attorney determined. He said those dolla investments. C/M Munitz srs00could $come00°uasoo be aid consideration of 1% would be a the impractical figure if consideration was very given Board pays to the Investment Council. to the money the Mr. Henning said they bu consultants and has no Y and sell stock through their commissions because the idea how much is paid to stockbrokers as losses and os Y were computed in the net gains and would replace theamoniestif the stockVmarketscrao questioned who shed. C/M Munitz said all expenses would have to be authorized, and should come means the contribution bout of the fund Properly y the Cot itself, even if it Plan soundness of the Y to maintain the actuarial is ne wo11 be a City then, indirect) the paying for it. He said it was still a very necessary expense. IV. Actuarial Study Items Steve Melnick distributed a Police Pension Surveyreceived Personnel departments in Broward Count eived from departments' pension tans. Y concerning their police Police officers was the worst einsathethCounty's benefits for requested that the benefits be increased for all the Melnick within the City. He said the Citythe groups retirement age and their benefithas pension police officers over but they would like to resume contributiostothelpensionare f plan. C/M Munitz said, generally speaking, disability benefits for early retirement. Mr. Melnick asked that disability be increased to 60% of their salaries and that it be taken out of the pension fund. Mayor Kravitz asked the cost and Mr. Melnick answered on Police officers, it would be $23,000 yearly. He said for Problem with the City's contributions Part of the evaluation was based on the City'scontra receivingtyionswas the actuarial State premium refunds. However, last year hey7receivedin e$66m00ed 0. Frank Etheredge said it would cost the City increase the benefits for all employees; Judy yearly to authas orized tsed o aClong-term disability Y Deutsch replied Policy which Council had for the same benefit. would cost approximately $50,000 retire on it, Mr. Melnick said an employee could not He said the long-term disability insurance involved $50,000 being spent constant) and nothing in return. Ms. Deutsch stated, in effect, hetwawould get that they were self -insuring the disabilitysaying great risk because one person out on disabiityncould, indeffect, cost the fund a million dollars over his life span. Mr. Melnick questioned why no other City used it. r were losing sight of the fact that the Board eisstryingtton r they the employees' retirement benefits. Protect 6 12/20/85 /vdw ' Peter Prior asked if they needed to go the way of a public referendum because if so, he would start work on a petition. C/M Munitz said if Council agreed he would not need a petition. Ms. Deutsch said Council may very well have protected the employees today if members of the Board had not stopped it going before them. She said, conceivably, they would have had a benefit because it was Council's authorization to go out to bid. Ms. Deutsch stated if it was their greatest concern to protect the employees, why not take one step forward. Mr. Melnick said Council should pay for it from the General Fund but not from the pension funds. She said if that was his concern it should not have been because his benefit was a defined benefit. She said it does not matter what is in the fund because it was Council's concern and not theirs as board members. Mr. Melnick said it made a difference if the insurance policy were cancelled after one year, then there is no disability. Ms. Deutsch reiterated her request that they take one step forward because it was better than what they had yesterday. V. Pension Survey of Benefits in Other Cities. Mr. Melnick indicated that he had distributed the information. No further discussion was held on this subject. Tape Mayor Kravitz said if it was the opinion of the Board that these 3 issues be brought before Council, he would agendize the item for a future Council meeting for a possible change in the ordinance. Judy Kitograd agreed with C/M Munitz and Steve Melnick that the Board must prioritize the issues. She said the actuarial study was very interwoven and if they allow accrued benefits, the plan will have more money in the fund but will need to be reviewed by an expert. Steve Melnick said he disagreed with the Mayor's idea of presenting Council with all the issues at once and suggested that the Board focus on one issue. The City Attorney said the one subject the Board has elected not to place on the agenda was investments. He said he did not know what the answer is but stressed that there needed to be compromises. The City Attorney urged the Board to address investments, at least on the short term. C/M Munitz stated when there is discussion of investments, consideration must also be given to profits which may be made from investments, which is an unknown that no actuary can determine for the Board. In other words, any profit or income from any of the investments increases the amount available and could very well decrease the amount of money that the City has to come up with to maintain the fund actuarially sound. Mr. Henning said there were very few people in the public or on Council who are willing to accept investments as a two-edged sword. He said they treat them as a potential loss and people must accept the fact that there is also a potential gain. The City Attorney said if it was successful, it saves money for the public. C/M Munitz said many of the funds, with which he has been familiar with over the years, have a variable portion of their pension and a fixed portion. The fixed portion has an actual percentage which is earned automatically. Mr. Melnick said Ms. Deutsch has often said their jobs, as Pension Board members, is to check on the investments and insure they are going well. C/M Munitz asked him what qualifications he possessed to check on the investments. Mr. Melnick said they hired Investment Council to monitor the Plan's investments. C/M Munitz said that costs money. Ms. Deutsch said the Board's hands have been tied and they cannot perform the duties of their positions which has become an insurmountable prob- lem for them. C/M Munitz stated if they really wanted to accom- plish something definite, they should limit the item or items to be discussed in the order of importance and the Board should determine the order of preference. 7 12/20/85 /vdw , Mayor Kravitz adjourned the meeting at 3:42 P.M. CITY CLERK This public document was promulgated at a cost of $109.08 or $3.03 per copy to inform the general public and public officers and employees about recent opinions and considerations by the City Council of the City of Tamarac. P-J I 12/20/85 a. /vdw J