HomeMy WebLinkAboutCity of Tamarac Resolution R-97-2901
Temp. Reso. # 8063
Page 1
November 24, 1997
Revision #1 11/20/97
CITY OF TAMARAC, FLORIDA
RESOLUTION NO. R-97-c2 50
A RESOLUTION OF THE CITY COMMISSION OF
THE CITY OF TAMARAC, FLORIDA, ADOPTING
AND ENACTING AN EARLY RETIREMENT
PROGRAM OFFERING BENEFIT INCENTIVES
TO EMPLOYEES MEETING AGE AND SERVICE
ELIGIBILITY CRITERIA BASED ON A TEN
POINT AND CAFETERIA SELECTION PLAN;
SETTING A SPECIAL EARLY RETIREMENT
WINDOW OF 45 DAYS; PROVIDING THE CITY
MANAGER AUTHORITY TO ADMINISTER THE
PROGRAM; PROVIDING FOR CONFLICTS;
PROVIDING FOR SEVERABILITY; AND
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City Commission of the City of Tamarac, Florida has
considered an Early Retirement Program (ERP) proposal which is attached as
Exhibit A; and
WHEREAS, the ERP proposal provides eligibility criteria for employees
qualified to participate in the Early Retirement Program; and
WHEREAS, the ERP proposal provides benefits (incentives) to eligible
employees electing to retire as a part of the Early Retirement Program; and
WHEREAS, the City has developed a ten point/cafeteria selection plan for
enacting of the Early Retirement Program which is described in the ERP
proposal; and
Temp. Reso. # 8063
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November 24, 1997
Revision #1 11/20/97
WHEREAS, financial analyses including the actuarial impact and a
cost/benefit analysis have been conducted of the ERP proposal assuming full
participation by eligible employees and full replacement of vacant positions; and
WHEREAS, legal requirements have been considered as a part of the
ERP proposal including the Older Workers Benefit Protection Act which governs
permissible early retirement benefits and incentives, the Florida Statutes which
provides for the actuarial soundness of public retirement systems, and the City of
Tamarac Code on pensions and retirement which provides for retirement pension
benefits; and
WHEREAS, the ERP proposal provides for the use of a facilitator for
offering benefit incentives and to provide for employment, retirement and
financial planning counseling to eligible employees; and
WHEREAS, on November 12, 1997, the City Commission authorized an
agreement with Mathis and Associates as facilitator for the Early Retirement
Program; and
WHEREAS, on November 12, 1997, the City Commission approved on
first reading a pension ordinance amendment for a special early retirement
option; and
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Temp. Reso. # 8063
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November 24, 1997
Revision #1 11/20/97
WHEREAS, on November 21, 1997, the Pension Board of Trustees
approved a pension ordinance amendment for a special early retirement option;
and
WHEREAS, on November 26, 1997, the City Commission approved on
second reading a pension ordinance amendment for a special early retirement
option; and
WHEREAS, on November 26, 1997, the City Commission will consider the
resolution herein approving the adoption and enactment of the Early Retirement
Program; and
WHEREAS, after all enacting legislation is approved, a general
announcement of the Early Retirement Program will follow and initial
appointments with the facilitator set; and
WHEREAS, the proposed calendar in the ERP provides for the early
retirement window of opportunity to open on December 15, 1997 and to close on
January 30, 1998; and
WHEREAS, the City Manager recommends adoption and enactment of
the Early Retirement Program proposal attached hereto as Exhibit A; and
WHEREAS, the City Commission of the City of Tamarac, Florida deems it
to be in the best interest of the citizens and residents of the City of Tamarac to
adopt and enact the Early Retirement Program as proposed in Exhibit A.
Temp. Reso. # 8063
Page 4
November 24, 1997
Revision #1 11/20/97
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF TAMARAC, FLORIDA:
SECTION 1: The foregoing "WHEREAS" clauses are hereby ratified and
confirmed as being true and correct and are hereby made a specific part of this
Resolution.
SECTION 2: The Early Retirement Program (ERP) proposal, as set forth
in detail in Exhibit A attached hereto, is hereby approved and adopted.
SECTION 3: The Early Retirement Program window shall officially open
at the beginning of the City's business day on Monday, December 15, 1997 and
shall officially close by the end of the City's business day on Friday, January 30,
1998,
SECTION 4: The City Manager is authorized to administer necessary
forms, documentation, and activities necessary for administering the Early
Retirement Program.
SECTION 5: All resolutions or parts of resolutions in conflict herewith are
hereby repealed to the extent of such conflict.
SECTION 6: 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.
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Temp. Reso. # 8063
Page 5
November 24, 1997
Revision #1 11/20/97
SECTION 7: This Resolution shall become effective immediately upon its
passage and adoption.
PASSED, ADOPTED AND APPROVED this .2-6 day of NmAJ- ",1997.
ATTEST:
CAROL A. EVANS, CMC, CITY CLERK
I HEREBY CERTIFY that I have
ApproV d this RESOLUTI as to form.
r,. E SCHREIBER, MAYOR-
RECORD Mh
MAYOR
CHREIBER
DIST 1:
COMM. MCKAYE
DIST 2:
V/M MISHKIN
DIST 3:
COMM. SULTAN,
DIST 4:
COMM. ROBERT
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EXHIBIT A
CITY OF TAMARAC
EARLY RETIREMENT PROGRAM
(ERP)
PROPOSAL
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iCITY OF TAMARAC
EARLY RETIREMENT PROGRAM (ERP)
I. Definition of Early Retirement
II. Introduction of Early Retirement Program (ERP)
III. Goals of ERP
A. Objectives
B. Strategies
IV. Eligibility requirements for ERP
V. Benefits (incentives) under ERP
VI. Analysis of Financial Impact
0 A. Actuarial
B. Cost/Benefit
VII. Legal Requirements of ERP
A. Compliance with Older Workers Benefits Protection Act (OWBPA)
B. Waiver for age discrimination claims
C. State authorization
D. City authorization
1. Pension Ordinance amendment
2. Support documentation
Vill. Implementation Plan for ERP
A.
Announcement/Notice
B.
Facilitator/Employee meetings
C.
Application process
D.
Initial offers
E.
Retirement and financial counseling
F.
Final offers
G.
Recruitment strategy
H.
Position review process
I.
Operational review process
CITY OF TAMARAC
EARLY RETIREMENT PROGRAM
I. DEFINITION OF EARLY RETIREMENT
The City of Tamarac pension plan pursuant to the City Code, Chapter 16,
Pensions and Retirement, provides for the method, rules and procedures for the
payment of retirement pension benefits. The plan, by way of illustration and not
limitation, provides for conditions of eligibility, standards for vesting of benefits,
and the type, amount and calculation of benefits to be paid. The pension plan
may be amended by the Board of Trustees at any time, provided that such
amendments comply with the applicable sections of the Internal Revenue Code,
other applicable law, and are approved by the City Commission. A pension
benefit is payable if the participant has the appropriate vesting credits and has
reached the applicable retirement age. Early retirement qualification occurs on
the first day after a participant has earned 10 vesting credits (years of service)
and has attained age 55 for general employees. The benefit level for general
employees is two percent of average final compensation reduced by one -fifteenth
for each of the first five years and one -thirtieth for each of the next five years by
which the participant is younger than the normal retirement age. (Tamarac Code)
Early retirement incentives relax some of the usual retirement criteria to allow
employees an earlier retirement than would otherwise be possible, or offer an
improvement in benefits to induce retirement among people who are already
eligible but who would otherwise postpone their retirement in order to earn higher
benefits. These improved benefits are usually available only for a brief time.
(State Legislative Report)
II. INTRODUCTION
The City of Tamarac is considering a special early retirement program for its
general employees. On October 8, 1997, the City Commission approved Phase I
of the three phases which constitute the Early Retirement Program (ERP).
Phase I is the plan design, the products of which are the development of a
comprehensive ERP proposal (this document) and engagement of a program
facilitator (Dr. R. William Mathis). Phase 2 (introduction to City plan) would
consist of official notifications and offers to eligible City employees. Phase 3 is
the implementation phase for managing employee separations and changes to
the organization.
For more than three years, the City has studied and deliberated on critical human
resource concerns. During this time the City has designed and implemented a
pay plan and classification system, acquired and implemented an employee
. appraisal system, identified training deficiencies and begun a formal training
EARLY RETIREMENT PROGRAM
II. INTRODUCTION, (continued)
program for City employees, improved employee benefit and insurance
programs, and completed extensive research on employee retirement options.
As a part of the Major Issues document, early retirement was identified to assist
in the considerable change experienced by the Tamarac government in the past
three plus years. Major Issues pointed out that "The organizational culture in the
City of Tamarac has changed but it is not yet where it needs to be substantially."
While early retirement is not suggested as the cure, it does offer some
opportunity to reevaluate the organization and its programs while offering a
benefit and "Thanks" to those employees who might choose not to participate
further in effecting the change.
III. GOALS
Providing quality service to Tamarac citizens hinges on the City's ability to create
and support a work environment which recognizes that people are the City's
most valuable resource. The ideal situation is one where employees work in a
supportive environment, each individual committed and empowered to provide
quality services to citizens and/or customers. The ideal workforce should be
encouraged and challenged to reach its highest potential, toward the goal of
maximum productivity, creativity, and job satisfaction. (Major Issues)
In the proposed 1997 and 1998 budgets, the City Manager highlighted the needs
and concerted efforts to enhance management practices throughout the City and
the importance of being a competitive employer whose goal it is to help each
employee reach their full potential so that the organization can reach its full
potential. For Tamarac, the time has come to examine exhaustively how it
conducts business, such as technological advancements and abandoning
inefficient and high maintenance equipment of manual processes. From a
human resource perspective, the organization has begun to renew itself through
an infusion of new people and ideas complementing the dedicated contributions
of long standing staff. An early retirement program provides an opportunity to
welcome new resources while acknowledging, with special thanks, the dedication
of long term employees. It allows employees in the latter group, if they choose,
to end their service to the City with a special benefit and with dignity.
As change occurs in today's dynamic workplace, Tamarac, like other
organizations, needs to be flexible. The trend today is that most employees will
work at many different jobs and for many different employers throughout the
course of their careers. The organization, as well as the people within the
organization, must be adaptable if the interests of our customers, the citizens,
EARLY RETIREMENT PROGRAM
III. GOALS, (continued)
are to be well served. Key to the success of this type of organization is
rewarding individual effort and allowing individual choice.
An important part of the overall compensation package required in order to
attract and retain fully qualified, competent and motivated employees is a fair and
competitive benefit package. Competitive benefits for employees does not
necessarily mean more. An innovation of the private sector that has cut costs
and increased the flexibility of organizations to meet both internal and employee
needs has been a significant shift away from traditional pension and retirement
systems. The traditional defined benefit system is not only more expensive to
the organization than alternative plans, but it also falls short of meeting the needs
of today's workers.
The City has an enhanced opportunity, with the implementation of the special
early retirement option, to change the course of its retirement system to become
more flexible. Consideration should be given to offering a defined contribution
program such as a 401 a plan to general employees. A defined benefit program,
such as the City's, does not necessarily meet the needs of today's employees. It
obligates the City to pay benefits to any vested employee upon retirement and
continuing for as long as that individual lives. Given a situation where employees
are likely to move from employer to employer, it makes sense for the City to
adopt a retirement system that satisfies its obligation to the employee during the
time the employee is employed, rather than decades down the road. A shift to a
defined contribution program is estimated to be less costly to the City and may
provide a more substantial benefit to the employee.
As technology continues to change exponentially, skill requirements for
employees change. A successful early retirement program will permit a
reallocation of resources and positions enabling the organization to operate more
efficiently. Often the need to economize or change an operation is hindered
because of the potential impact to employees, i.e., layoffs, change in status, etc.;
an early retirement program provides a "win -win" opportunity to the employer and
employee for assessing and effecting organizational change. While the
experience of senior workers will be missed, the talents, skill level, and training of
the new workers fits the goal of the Tamarac organization to be flexible in today's
dynamic workplace and prepared for 21 st century challenges.
The special early retirement option will be a one-time offer to employees that
meet certain qualifications and will be available for a limited time period. It will
allow for a review of positions as they become vacant and an evaluation of
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EARLY RETIREMENT PROGRAM Temp. Reso. #8063
III. GOALS, (continued)
operations on a meted schedule. It will afford an opportunity for functional and
resource matching to better meet the challenges and goals of the changing
Tamarac organization. It could also represent an opportunity for transition to a
defined contribution program for new hires and/or incumbents. Based on the
City's new classification and pay system, new hires on average will be
compensated at the minimum of the midpoint of the range offsetting costs of the
early retirement benefit increases.
IV. ELIGIBILITY
Employees eligible to participate in the special early retirement program are the
following:
• General employees in the City of Tamarac Employees' Pension Plan who are
age 62 and over as of December 31, 1997.
• General employees in the City of Tamarac Employees' Pension Plan who are
age 57 through 61 with 5 years of credited service as of December 31, 1997.
• General employees in the City of Tamarac Employees' Pension Plan who are
age 50 through 56 with 10 years of credited service as of December 31, 1997.
V. BENEFITS (INCENTIVES)
The City has developed a ten point plan for a cafeteria selection of benefits.
Point configurations shall be based on the following five benefit categories:
• Each elective point shall be equivalent to one year of service credit up o a
maximum use of 5 points. [Available to eligible general employee participants]
• Each elective point shall be equivalent to one and one-half years of age credit
up to a maximum use of 10 points. [Available to eligible general employee
participants]
Each elective point shall be equivalent to 50 percent of the City's proportional
cost of theTamarac health insurance plan based on the employee selected
plan option (exclusive of the waiver program and coverage beyond age 65)
up to a maximum use of 2 points. [Available to eligible general employee
participants employed by the City]
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V. BENEFITS (INCENTIVES) (continued)
• Each elective point shall be equivalent to 50 percent of the cost of a
supplemental plan to Medicare based on the City's supplemental health plan
cost at the time of selection up to a maximum cost of $175 and maximum use
of 2 points. [Available to eligible general employee participants]
• Each elective point shall be equivalent to 5 percent of the current salary of the
incumbent employee or $1,500, whichever is greater, paid as a lump sum up
to a maximum use of 10 points. [Available to eligible general employee
participants employed by the City]
VI. FINANCIAL ANALYSIS
ACTUARIAL IMPACT
The report of actuaries, Gabriel, Roeder, Smith & Company, on the actuarial
impact of the early retirement program is highlighted below. (A copy of the full
report is attached as Appendix C.)
• Assuming a maximum benefit ratio selected by all eligible early retirees and
that all positions are replaced, the City's annual contribution to the pension
plan would increase from approximately $491,000 to $680,000 for a total
annual contribution increase of $189,000.
COST/BENEFIT ANALYSIS
An analysis of the budgetary impact of the early retirement separation has been
completed by the City's Budget Office and is highlighted below. It illustrates
payroll impact assuming all 56 eligible early retirees elect retirement and are
replaced. (A copy of the full analysis is attached as Appendix B.)
• Net annual payroll savings are estimated to equal $91,000. This analysis
compares the current salary plus longevity for 56 incumbents which equals
$1,812,624 to replacement hires for all 56 positions which equals $1,467,863,
plus the costs of the retirement health program equaling an estimated
$65,000 and the increased pension contribution of $189,000 noted above. A
projection for 5 years yields net savings of $560,385.
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VI. FINANCIAL ANALYSIS (continued)
Assuming an average period to recruit for each position of 10 weeks, payroll
savings would yield $532,385 in the first year. One time costs of the ERP
including the election of the lump sum cash benefit is estimated to equal
$126,000 plus administrative costs of $67,000 (i.e., facilitator, actuaries).
The net one time savings equal an estimated $339,000.
There would be a budgetary impact in the first year from the payout of
accrued liabilities from vacation and sick leave for the retiring incumbents of
$345,454.
VII. LEGAL CONSIDERATIONS
Voluntary early retirement plans or incentives are permissible under the Older
Workers Benefit Protection Act (the Act or OWBPA), which amended the Age
Discrimination in Employment Act (ADEA) to extend the prohibition on age
discrimination in compensation, terms, conditions or privileges of employment.
A primary factor that employers must consider when structuring any early
retirement plan is whether the incentive denies or reduces benefits to older
workers while continuing to provide the same for younger ones. Early retirement
incentives that are acceptable under the act apply across the board to all
employees regardless of their age. They may include incentives based on: a flat
dollar amount, a fixed amount per year of service, a percentage of salary to all
employees who reach a certain age, flat dollar increases in pension benefits,
percentage increases in pension benefits, and incentives that credit years of
service and/or age.
Retirement benefits aimed at encouraging early retirement must be voluntary.
While the employee bears the burden of showing that he or she accepted the
retirement involuntarily, the employer must examine the substantive content of
the retirement offer and ensure that the offer was made in an environment free
from coercion. An employer may require an employee to execute a waiver or
release of any potential age discrimination claims in exchange for early
retirement benefits.
A valid release or waiver of rights under the ADEA must be "knowing and
voluntary" and: 1) be part of a written agreement between the employee and the
employer that can be understood by the average individual; 2) specifically refer to
any rights and claims arising under the ADEA; 3) state that the employee is not
waiving any rights or claims that may arise after the date of execution; 4) be in
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VII. LEGAL CONSIDERATIONS (continued)
exchange for consideration (i.e., money) in addition to anything of value to which
the employee may already be entitled; 5) advise the employee in writing to
consult with an attorney before executing the agreement; 6) give the employee a
period of at least 21 days in which to consider the agreement or if a waiver is in
connection with an exit incentive, at least 45 days; and 7) provide for a period of
at least seven days after signing the agreement in which to revoke it and state
that the agreement does not become effective or enforceable until the revocation
period expires. (Commentary & Statutes, the Bureau of National Affairs, Inc.
copyright 1996-1997). The City will require such a waiver as a condition of
receiving the early retirement benefits. The waiver will also release claims under
similar state, county and local laws.
Florida Statutes, Chapter 112, Part VII, provides for the actuarial soundness of
public retirement systems also known as the "Florida Protection of Public
Employee Retirement Benefits Act." The act establishes minimum standards for
the operation and funding of public employee retirement systems and plans and
is applicable to municipal governments which participate in, operate, or
administer a retirement system or plan for public employees, funded in whole or
. in part by public funds. Each retirement system. or plan subject to the provisions
of the act requires regular or special actuarial reports prepared and certified by
an enrolled actuary. The actuarial report provides for the adequacy of employer
and employee contribution rates in meeting levels of employee benefits and/or
changes in benefits. Actuarial experience may be used to fund additional
benefits, provided that the present value of such benefits does not exceed the
net actuarial experience accumulated from all sources of gains and losses. No
unit of local government shall agree to a proposed change in retirement benefits
unless prior to adoption of the change by the governing body it has received a
statement of the actuarial impact of the proposed change.
The City of Tamarac pension plan pursuant to the City Code, Chapter 16,
Pensions and Retirement, provides for the method, rules and procedures for the
payment of retirement pension benefits. The plan provides for conditions of
eligibility, standards for vesting of benefits, and the type, amount, and calculation
of benefits to be paid. The pension plan may be amended by the Board of
Trustees at any time, provided that such amendments comply with the applicable
sections of the Internal Revenue Code, other applicable law, and are approved
by the City Commission. The amending Ordinance to the pension plan for
allowing a special early retirement option has been submitted for consideration
by the City Commission and Board of Trustees.
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VII. LEGAL CONSIDERATIONS (continued)
For bargaining unit employees represented by the Federation of Public
Employees (FPE), union consent to the ERP will be sought.
VIII. IMPLEMENTATION PLAN FOR ERP
A presentation was made at a workshop of the City Commission on November 5,
1997 by City staff and the facilitator on the Early Retirement Program (ERP)
proposal. The tentative calendar for implementation provides for the
authorization by the Commission of Phases 2 and 3 of the ERP at its November
12 meeting along with the first reading of the Pension Ordinance amendment to
allow a special early retirement option. The second reading and public hearing
would follow on November 26, and if approved would enable by Commission
resolution implementation of the Early Retirement Program.
After all enacting legislation is approved, a general announcement of the Early
Retirement Program will follow and initial appointments with the facilitator set.
These will involve an estimated one hour initial time per employee. After this
initial examination of options, a next appointment will be scheduled if interest
exists. Follow up meetings will concern planning sessions on retirement or
transition inclusive of testing and consultation by phone and final offers.
The ERP proposes the use of a facilitator for offering cafeteria options and
variations to accommodate the employee and the City. This will involve a flexible
timeline for individual implementation so as not to leave the City vulnerable to
mass exodus and provision of essential services. The facilitator will also provide
options to the employee for career guidelines, retirement and financial planning,
or moving to another career path.
The chosen facilitator, Mathis and Associates, offers a complete employee
outplacement program. Services involve dealing with emotional reactions and
provides a supportive framework to begin the transition process. The facilitator
will work with the individual employee to explore career options, including career
changes, moving to the private sector, self employment and relocation, and will
result in an informed decision regarding career direction. Vocational testing and
counseling, using structured instruments is offered for employees who have
difficulty making important career decisions and lack focus. Sessions with the
employee, which will include services of a trained Psychologist, will provide a
structured approach to:
• Identifying values, interests, goals, needs and priorities
0 Vocational, personality and management style assessment
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EARLY RETIREMENT PROGRAM
VIII. IMPLEMENTATION PLAN FOR ERP (continued)
• Considering the financial situation
• Completing a self -assessment of skills, accomplishments and desirable job
characteristics
• Identifying other career options
• Making a decision on career goals
The facilitator will assist the employee in developing and preparing job search
materials and marketing strategies. In addition, help can be provided in
identifying target industries and organizations, and in developing networks.
Other assistance may include:
• Resume development and review
• Writing marketing letters and preparing references
• Organizational and employment research assistance
• Developing a focused marketing/job search plan based on career decisions
• Starting a contact network
• Informational interview coaching
• Developing and sharpening interview skills, video taping, if desired
• Joining a support group
In the final phase of the program, the facilitator will periodically review progress
with the employee, and provide coaching and assistance on expanding the
network, sharpening skills and give feedback on progress. Follow-up Job Search
and related counseling assistance will be available, by appointment, for any
employee who is having a difficulty with the search process.
The Personnel and Operating Departments will need to gear up opportunities for
employment, recruiting and hiring replacements or restructuring jobs. While the
schedule provides for up to six months after the window of opportunity closes for
the special early retirement option, it is anticipated that a majority of early retirees
will exit in the early part of the program implementation. This will also present an
opportunity to redefine jobs and assess needs and priorities of the organization.
The Personnel Department and Finance Department (Budget Office) will be
prepared to assist Operating Departments to meet organizational goal
opportunities from the impact of the Early Retirement Program. Operational
reviews may be undertaken as a part of the annual budget process which
commences in February or on a more meted schedule.
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VIII. IMPLEMENTATION PLAN FOR ERP (continued)
The Early Retirement Program will manifest as an exciting and opportunistic time
for the City as well as having a saddened and burdensome effect as the
transition occurs and the organization says farewell and thanks to loyal
employees but hello to new team members to support the change and
challenges of the future. Tamarac is up to the test that the Early Retirement
Program offers.
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