HomeMy WebLinkAbout1985-12-20 - City Commission Joint Special Meeting Minutes11
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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.
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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.
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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
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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
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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.
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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
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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.
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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.
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