HomeMy WebLinkAboutCity of Tamarac Resolution R-2011-026Temp. Reso. #12000
February 28, 2011
Page 1
1
CITY OF TAMARAC, FLORIDA
RESOLUTION NO. R-2011- o2_ 6
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF TAMARAC, FLORIDA SUPPORTING
AMENDMENTS TO CHAPTERS 175 AND 185 TO
PROVIDE CITIES WITH THE RIGHT TO PROVIDE
PENSION BENEFITS DETERMINED THROUGH
COLLECTIVE BARGAINING; TO PERMIT CITIES TO
UTILIZE INSURANCE PREMIUM TAX REVENUES TO
PAY FOR POLICE AND FIREFIGHTER PENSIONS
WITHOUT RESTRICTIONS OR MANDATES; TO
PROHIBIT THE STATE DIVISION OF RETIREMENT FROM
IMPOSING POLICIES AND MANDATES RESULTING IN
COST INCREASES; TO RECOGNIZE HOME RULE
POWERS OF CITIES; PROVIDING FOR CONFLICTS;
PROVIDING FOR SEVERABILITY; AND PROVIDING FOR
AN EFFECTIVE DATE.
WHEREAS, the City of Tamarac opposes unfunded state mandates in that
mandates impose state -initiated policy changes and programs onto the City; and
WHEREAS, the legislature has imposed significant state mandates onto the
City of Tamarac relative to the operation of the City police officer and firefighter
pension plans by mandating certain pension benefit levels and mandating the use of
premium tax revenues to fund certain pension plan costs; and
WHEREAS, prior to 1999, the City of Tamarac was largely free to collectively
bargain with local police and fire unions, or provide for the non -unionized police and
1
Temp. Reso. #12000
February 28, 2011
Page 2
firefighters, the pension benefits that best fit the priorities and needs of the City and
its police and firefighters; and
WHEREAS, in 1999, the legislature substantially revised how the City of
Tamarac could use insurance premium tax revenues to fund its police and firefighter
pension plans by requiring the City to use any increase in the tax revenues to
provide new, extra pension benefits to police and firefighters; and
WHEREAS, since 1999, the requirement to provide new, extra pension
benefits to police and firefighters with increases in insurance premium tax revenues
has collectively required cities across the state to provide more than $400 million in
new, extra pension benefits to police and firefighters; and
WHEREAS, state law continues to require the provision of new, extra
pension benefits to police and firefighters even though the cost of funding the current
level of pension benefits provided to police and firefighters is significant; and
WHEREAS, the cities have limited ability to manage pension costs because
of state laws and interpretations of those laws by the State Division of Retirement,
the effect of which is cities must raise pension benefits for police and firefighters, but
cannot lower them, even if collectively bargained and approved by their unions; and
WHEREAS, the City of Tamarac supports flexibility in state law that would
allow cities to address their local pensions locally, and needs for the legislature to
remove barriers in state law that prohibit this flexibility.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF TAMARAC, FLORIDA:
Temp. Reso. #12000
February 28, 2011
Page 3
SECTION 1: That the foregoing "WHEREAS" clauses are hereby ratified and
confirmed as being true and correct and are hereby made a specific part of this
Resolution. Exhibit attached hereto as Exhibit A is incorporated herein and made a
specific part of this resolution.
SECTION 2: That the City of Tamarac hereby requests the legislature to
remove state mandates, including removing the requirement to provide new, extra
pension benefits to police and firefighters, and allow the City to use insurance
premium tax revenues to pay for pension benefits already provided to police and
firefighters.
SECTION 3: That the City of Tamarac hereby requests the legislature to
prohibit the State Division of Retirement from imposing administrative policies that
result in increased costs to the City in providing police and firefighter pension plans.
SECTION 4: That the City of Tamarac hereby requests the legislature to
remove itself from the local collective bargaining process with police and firefighters.
SECTION 5: That the City of Tamarac urges the legislature to pass and the
Governor to approve the above recommendations relating to police and firefighter
pension plans in the 2011 legislative session.
SECTION 6: That the City of Tamarac City Clerk is hereby authorized to
transmit a copy of this resolution to Governor Rick Scott, the Florida Legislature, and
the Florida League of Cities, Inc.
SECTION 7: All resolutions or parts of resolutions in conflict herewith are
hereby repealed to the extent of such conflict.
Temp. Reso. #12000
February 28, 2011
Page 4
SECTION 8: If any clause, section, other part or application of this Resolution
is held by any court of competent jurisdiction to be unconstitutional or invalid, in part
or application, it shall not affect the validity of the remaining portions or applications
of this Resolution.
SECTION 9: This Resolution shall become effective immediately upon its
passage and adoption.
PASSED, ADOPTED AND APPROVED this
TAMA,,y
v ST 030SH�D a
co 1963 : a
L 'O-
ATTEST; '�O SEP .•' k`':
PETER M. J. R1 HAR1JSON, CRM, CMC
CITY CLERK
I HEREBY CERTIFY THAT I HAVE
APPROVED THIS RESOLUTION
AS TO FORM.
!§AMUEL S. 6QfIEN
CITY ATTORN
9A day of 2%m4e,201 1.
1� - 4-i (I
w
PAMELA BUSHNELL
MAYOR
RECORD OF COMMISSION VOTE:
MAYOR BUSHNELL
DIST 2: V/M GOMEZ 01
DIST 3: COMM. GLAS R
DIST 4: COMM. DRESSLER
Use of Insurance Premium Tax Revenues for Police and Firefighter Pensions under
Chapters 175 and 185, Florida Statutes
Prior to 1999
Prior to 1999, cities were largely free to bargain with local police and fire unions, or provide for
the non -unionized police and firefighters, the pension benefits that best fit the priorities and
needs of the city and its police and firefighters. Cities were required to use insurance premium
tax revenues for "extra pension benefits" for police and firefighter pension plans operating under
chapters 175 and 185. "Extra pension benefit" was defined at that time to mean benefits in
addition to or greater than those provided to general employees of the city. Therefore, prior to
1999, cities were restricted in using insurance premium tax revenues to pay for only the
incremental cost of police and fire pension benefits that exceeded the pension benefit levels
given to general employees of the city.
Police and firefighters pensions are funded from four primary sources: insurance premium tax
revenues; employee contributions; earnings on pension fund investments; and employer
contributions. By law, the city is ultimately responsible for all pension plan assets and liabilities,
and is required to fund pension plans on a sound actuarial basis.
Also, prior to 1999, cities were not required to meet the minimum pension benefit levels
established in chapters 175 and 185. A few cities operated what are known as "Chapter Plans,"
which provide pension benefits at the set minimum levels in chapters 175 and 185. However, the
vast majority of cities participating in chapters 175 and 185 are known as "local law plans," and
these plans provide various pension benefits with some benefits not meeting the minimum
benefit levels and other benefits exceeding the minimum benefit levels. For example, prior to
1999, a city may have provided a 3% accrual rate rather than the minimum accrual rate of 2%;
however, the city may not have met another chapter minimum such as a minimum retirement age
of 52 with 25 years of service. Finally, prior to 1999, cities could use insurance premium tax
revenues as a funding source for their police and firefighter pension plans even if those plans did
not meet all of the minimum benefit provisions in chapters 175 and 185.
1999.Legislation
The 1999 law fundamentally changed how cities provide and pay for police and fire pensions
under chapters 175 and 185. The law requires all plans operating under chapters 175 and 185,
including "local law plans," to meet all the minimum pension benefit standards in chapters 175
and 185, regardless of if the pension benefits exceeded various minimum benefit levels.
The law also substantially revises how cities use insurance premium tax revenues in providing
"extra pension benefits" to police and firefighters. While the 1999 legislation did not change the
definition of "extra pension benefit" (pension benefits given to police/fire greater than pension
benefits given to general employees), the Division of Retirement immediately imposed an
interpretation that to be an "extra pension benefit" the benefit not only had to exceed the benefit
level given to general employees but it also had to have been provided after March 12, 1999 (the
effective date of the 1999 legislation).
The 1999 legislation made a distinction between insurance premium tax revenues generated prior
to 1997 and those generated after 1997. The law defined a new term of "addition premium tax
revenues" to mean insurance premium tax revenues received by a city that exceed the amount
received for calendar year 1997. The law goes on to state that if a city police or fire pension plan
did not meet the minimum pension benefit levels provided in chapters 175 and 185, "additional
premium tax revenues" were to be used to incrementally fund the cost of complying with the
minimum benefit requirements. (At that point in time a handful of cities did not meet all of the
minimum pension benefit provisions of chapters 175 and 185.) Then, once the minimum
pension benefit provisions were met, "additional premium tax revenues" were required to
provide "extra pension benefits." As noted above, an "extra pension benefit" must be a pension
benefit in excess of a pension benefit provided to general city employees, and under the Division
of Retirement's interpretation, the "extra pension benefit" must have been provided after March
12, 1999. In 2004, the legislature amended the definition of "extra pension benefit" to include
the Division of Retirement's interpretation that to be an extra pension benefit the benefit has to
have been provided after March 12, 1999.
The distribution of insurance premium tax revenues for the year 1997 amounted to
approximately $70 million. This amount is typically referred to as the "base year" amount, and
represents an amount of money that cities may use to pay for the level of pension benefits in
existence prior to March 12, 1999. Any amounts over the $70 million generated in future years
had to have been used under the law to meet any minimum pension benefit level that was not
already met by the pension plan, and once all minimum pension benefit levels were met, any
additional increases in premium tax revenues had to have been used to provide new, additional
pension benefits to police and firefighters. (Please see the attached chart to see the amount of
insurance premium tax revenues estimated to be used for "extra pension benefits.")
Cities Attempting To Reduce Pension Benefit Levels
Due to severe budget constraints and rapidly increasing personnel costs, cities over the last few
years have attempted to reduce pension costs for general employee, police and firefighter
pensions. Numerous cities, including the cities of Miami Beach, Port Orange, and Naples, have
considered reducing pension benefit levels for police and firefighters to levels below those in
effect on March 12, 1999 (the effective date of the 1999 legislation). The Division of Retirement
has adopted a non -rule based policy that if a police or firefighter pension benefit is reduced to a
level below those in effect on March 12, 1999, that pension plan will be in violation of either
chapter 175 or 185, and the plan will forfeit all future insurance premium tax revenues. (The
City of Miami was confronted with the Division's interpretation in actions taken by the City to
reduce its police and firefighter pension benefits in October -November, 2010; however, in a
letter dated January 28, 2011 the Division determined that the City of Miami's pension plan met
a very narrow statutory exemption which deems any local law plan created by special act of the
Legislature on or before May 23, 1939 to be in compliance with the provisions of chapters 175
and 185.) Unfortunately, practically all cities do not meet this narrow exemption, which may
have application to just the cities of Jacksonville and Miami. Therefore, even if a city attempts
to get police and firefighter pension costs under control, the city's actions are often subject to
objection by the Division of Retirement.
h
aW
v
� A
m
V1 00 C1 0 0 0 0 0 0 0 0 00 m N
v o0 N �o �O M m N 00 V� `O V1 + -+ V1 Vl � n �o C\
w Cp-arilpn00Wlr-r-lD - mGNGN -- -~ - mNNmCDN
�N [gym't-0=�teq �cVm�����DnC�
d
4�
:r
C�
Aocaaoao 000aocaoaac000C)
yaaaaaaa0(=C> aaaaaaael; , oaaa
ego;. 0t--_Dr=aaC>0C> ;�c�o1c0Mcvv;oonent-en
bN k P N om0 to 000Z N� ooc^ C o00 m� omo^ 00 N C� - �
Q h* SN9��� VIb4644ru4�N64ca464b46�9�bm9bN464bN46V46964660 6nS601 64
"C
o• �
a�
°pq
aaccaaaocc
aaaaaaaaaa
CT a 000 Nl
M 0V C1 M a N
+
Y�
M- �nankna1�0�
V) 00
W
—
i M — N M Itt
69 69 G9 En GOq Q t 69 69 G9 64
W
o g g g C)
�.� a a a c' a a
.raaaaao
..O. nvmi�-aZni0000-(5) Nt rf)n too'oranocqc�acnvnn c�v�
C." oo �t --qr n w) o a� Z o m a m ,c N v, :r Z
awnNtr ,--� �6C --�Nm c14,00 gN'ttmIt'
O
NMMm d'-rt qret �T �T WV')�o�o [-nn0001---- -- -+
a A 69 G9 s9 69 64 64 69 60!t G9 cfr 64 64 64 Uq 64 e4 &M 64 64 es 64 64 b4 64 69 64 64
N m V7 �O n p0 ON G rl N m et in �a r- 00 ON G rl N m
00000000000000wON0� 0\0 471 ON ON as ON ON = 0 = = OC?CO
ON ON O, O, C1 � 01 O1 as ON ON ON O\ O\ ON ON O` G O O G G G G C O
r-4 I" r-4 r-4 r-o r-1 r-1 r-4 r• " W rH rl ri " rH rl N N N N N N N N N
F