03-058ORDINANCE 03-
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF
BOYNTON BEACH, FLORIDA ESTABLISHING A LIMITED
EARLY RETIREMENT INCENTWE PROGRAM; PROVIDING
REQUIREMENTS FOR PARTICIPATION; PROVIDING CRITERIA
FOR QUALIFICATION; APPROVING AND ISSUING A
STATEMENT OF ACTUARIAL IMPACT; APPROVING THE FORM
OF AGREEMENT FOR PARTICIPATION IN THE LIMITED EARLY
RETIREMENT INCENTWE PROGRAM; DIRECTING CITY
ADMINISTRATION TO FURNISH A COPY TO THE DWISION OF
INSURANCE; PROVIDING FOR SEVERABILITY, CONFLICTS
AND AN EFFECTIVE DATE.
WHEREAS, the City Administration has formulated a Early Retirement Incentive
Program, available as limited herein for participation by full-time employees, who, on
September 30, 2004, have been full-time employees for a minimum of fifteen years and are
within three (3) years of early or normal retirement; and
WHEREAS, t he City Commission h as evaluated the actuarial impact of offering the
!early retirement program hereinafter described, prepared by Gabriel, Roeder, Smith &
i Company; and
WHEREAS, the City Commission finds that it is in the best interests of the City to offer
early retirement to employees and that implementation of the early retirement program
described herein will have positive administrative and fiscal benefits to the City.
NOW THEREFORE, B E I T ORDAINED B Y T HE CITY COMMISSION O F T HE
'CITY OF BOYNTON BEACH, FLORIDA:
Section 1. The foregoing whereas clauses a re t rue a nd correct a nd constitute t he
findings of the Commission necessary to support this Ordinance.
Section 2. The City Commission hereby creates an Early Retirement Incentive
Program for any full-time City employee who, as of September 30, 2004,'will have achieved:
a minimum of fifteen years employment with the City; and
is within three (3) years of early or normal retirement.
Employees who meet both criteria for participation are hereinafter referred to as "Eligible
Employees".
Section 3. Eligible Employees may participate in the early retirement program only
if they execute, and do not subsequently rescind, an Agreement for Participation and Waiver no
S:\CA\Ordinances\ERIP- 2003\Revised Draft - ERIP 102003.doc
tater than 5:00 P.M., on Monday, January 23, 2004, designating a last date of employment not
tater than September 30, 2004. The last day of employment must be coordinated with and is
subject to the consent of the City manager.
Section 4. Eligible employees who elect to participate will receive:
(1) Three years added to year of years of service time and/or years of age.
In no event will the credited time of service or years served exceed three years
total.
(2) The City of Boynton Beach will continue to pay health insurance at
prevailing single coverage premium rates for all employees who elect to
participate, for a period of three (3) years following the date of their actual
retirement.
(3) When necessary to fully vest an employee in the police or fire service for
years credited pursuant to this incentive, but not actually served or rendered, the
pension administrator and the plan actuaries shall provide a benefit calculation
factor for such police or fire employee which, when applied, result in the
employee receiving the full retirement benefit set forth herein, without offset or
penalty.
4) Eligible employees accrued sick and vacation time will be paid out over
a three (3) year period at the payout rate which is otherwise applicable to the
employee.
Section 5. No employee who has signed a participation Agreement is eligible for
during the balance of their employment with the City.
Section 6. The City Commission adopts, issues and certifies as its own, the final
of actuarial impact and analysis of the proposed Early Retirement System prepared by
Roeder, Smith & Company for Police and Fire Pensions, and General Employees,
copies of which are attached hereto as composite Exhibit "A".
Section 7. The City administration and the administrators of the retirement plans, in
accordance with the requirements of Chapter. 112, Florida Statutes, and Rule 60Tol.004, are
directed to certify and furnish a copy of this Ordinance together with the statement of actuarial
impact referenced herein to the Department of Management, Division of Insurance. The City
and_plan administrators are authorized to make such supplemental filings with
Division of Insurance as is necessary to effectuate this Early Retirement Incentive Plan.
S:\CA\Ordinances\ERIP- 2003\Revised Draft- ERIP 102003.doc
2
Section 8. The City Commission authorizes t he City Manager a nd City Clerk t o
execute Agreements for Participation In Early Retirement Incentive Program and Waiver of
Rights forms with eligible employees. A copy of the Agreement for Participation is attached
hereto as Exhibit "B".
Section 9. The City Commission adopts and ratifies t he Commencement Notice,
Acknowledgement of Receipt of Program Commencement Notice, Information Fact Sheet, and
Employee Declination to Participate forms, heretofore prepared by the City administration,
copies of which are attached hereto as Exhibits "C", "D .... E" and "F" respectively. The City
Administration is authorized to modify these forms when modification is necessary to facilitate
the objectives of this Ordinance or when amendment is required to conform the forms to
requirements of state or federal law. In the event of a dispute over the meaning, interpretation,
or application of Exhibits "B", "C", "D", "E", and "F", the decision of the City Manager as to
the meaning, interpretation or application shall be controlling.
Section 10. All ordinances or parts of ordinances in conflict herewith be and the
same are hereby repealed.
Section 11. Should any section or provision of this ordinance or portion hereof, any
paragraph, sentence or word be declared by a court of competent jurisdiction to be invalid, such
decision shall not affect the remainder of this ordinance.
Section 12. This ordinance shall become effective immediately upon passage.
FIRST READING this ~ day of October, 2003.
SECOND, FINAL READING AND PASSAGE this 5' day of November, 2003
CITY,OF BO~i"'NTON~?EACH,[LORIDA
~.TTTEST: /") , .
Ci~Clerk -
Commissioner
OR, ORaTE
1920
~:\CA~O]~i~ ERIP 102003.doc
GA, BFI. IEL,, ROEOER, SMITH & C~OMPANY
Consultants &
301 East LaS Ola~ $1vc[. · Suite 200 · Ft, Lauder~taie. Ft. 33301.2254 · 954-527-1616 · FAX 954-525-0083
October 17', 2003
Ms. Barbara LaOue
Pension Administrator
C~ of Boynton Beach
General Employees' Pension Plan
100 E. Boynton Beach Boulevard
Boynton Beach, Florida 33425-0310
Re: General Employees Pension Plan
Dear Barbara:
As requested, we have prepared the enclosed Actuarial impact Statement for the proposed Eady
Retirement Incentive Program (ERIP). Under the ERiP, employees who have 15 or more years of
service as of 9130/04 and are wilhin 3 yearn of early or normal retirement woulo be eiigible to
receive an additional 3 years of credit towards early or normal retirement.
We welcome your questions and comments.
Sincerely yours,
J, Stephen Palmquist
Enclosures
Cc: Diane Reese
EXHIBIT "A"
CITY OF BOYNTON BEACH GENERAL EMPLOYEES PENSION PLAN
Impact Statement - October 17, 2003
Description of Amendment
An Early Retirement Incentive PI;n (ERIP) woulc~ be established. Under the
ERiP, employees who have 15 or more years of service as of 9/30/04 and are
within 3 years of early or normal retirement wouE be eligible to receive an
additional 3 years of credit towards early or normal retirement.
Those wino elect to retire under the EP..IP will also benefit from the City's
continuation of payment of health insurance premiums for three years. Since this
benefit is not par~ of the Pension Fund, the Impact Statement does not reflect the
payment of such premiums.
Funding Implications of Amendment
An actuarial cost estimate is attached. The amendment would increase the required
employer contribution by $125,154 if all eligible members actually retire.
Certification of Administrator
I believe the amendment to be in compliance with Part Vll, Chapter 112, Florida Statutes
and Section 14, Article X of the Constitution of the State of Flodc~a.
For 1he Board of Trustees
as Plan Administrator
SUPPLEMENTAL ACTUARIAL VALUATION REPORT
Plan
City of Boynton Beach General Employees' Pension Plan
Valuation Date
October 1, 2002
Date of Report
October 17, 2003
Report Requested by
Board of Trustees
Prepared by
J, Stephen Palmquist
Group Valued
Active and Inactive Employees
Plan Provisions Being Considered for Change
O
An Early Retireme.qt Incentive Plan (ERIP) would be established. Under the
ERIP, employees who have 15 er more years of service as of 9/30/04 and are
within 3 years of eady or normal rMirement would be eligible to receive an
additional 3 years of credit towards early or normal retirement.
O
Those who elect to retire under the ERIP will also benefit from the City's
continuation of payment of health insurance premiums for three years. Since this
benefit is not part of the Pension Fund, the Impact Statement does not reflect the
payment of such premiums.
Particioanta Affected
Employees who retire after the effective date of the amending ordinance.
Actuarial Assumptions and Methods
Same as October 1, 2002 Actuarial Valuation Report with these exceptions:
O
O
O
100% of the 53 eligible members will actually retire.
There will be a number of new hires equal to the number of members who retire.
There would be a number of promotions equal to the number of members who
n~re. Tl~ose promoted would be the remaining highest paid pa~tic~ts, and
their raise would be 5% of pay,
Some of the key assumptions/methods are:
Investment return -
Salary increase -
Cost Method -
8.0% per year
4.2 to 7.8% per year depending on age.
Entry Age Normal
Amo~izafion Pedodfor Any lncreasein Actuarial Accrued Liability
$0 years
Summary ofDataUsedin Repo~
See a~achedpage.
Actuarial Impact of Proposal(a)
See attached page(s). The proposal would increase the annual required contribution by
$125,154 if all 53 eligible members retire. Covered payroll would decrease by about
$761,000,
Special Risks
Previously
None.
Involved With the
Proposal That the
Plan Has Not
Been Exposed to
Other Co~t Considerations
The cost associated with the ERIP will vary based on tt~e number of employees who
elect to participate.
Possible Conflicts With IRS Qualification Rules
None
£nrolled Actua~ No. 02-1560
^. Yalu~tion Bat,
B. ARC to Be Paid During
Fiscal Year Ending
C. Assumed Date of Employer Contdb.
D. Annual Payment to Amortize the
Untundecl Actuarial Liability
E. Employer Normal Cost
F. ARC if Paid on the Valuation
Date: D+E
G. ARC Adjusted for Frequency of
Payments
H. ARC as % of Covered Payroll
1. Assumed Rate of Increase in Covered
Payroll to Contribution Year
J. Covered Payroll for Contribution Year
K, ARC for Con~bution Year. H x J
L. ARC as % of Covered Payroll in
Contribution Year: K + J
9/30i2003
10/1512003
[.19,600)
1,443,336
1,423,736
1,542,574
7.37 %
0.00 %
20,937,211
1,542,574
7.37
9/30/2003
10/15/2003
150,387
1,388,862
1,539.249
1,667,728
8.27
0.00
20,176.662
1,667,728
8.27
A. Valuation Date October 1, 20021 October 1, 2002
~efore C,hanges ERIP
B. Actuarial Present Value of Ail Projected
Benefits for
1, Active Mernoers
a. Service Retirement Benefits $ 62,§82,844 $ 51,461,800
b. Vesting Benefits 3,487,711 3,509.735
c. Disability Ber~efits -
d. Preretirement Death Benefits 2,125,979 1,802,034
e. Return of Member Contributions 271,364 325,547
f. Total 68,567,898 57,0{)9,115
2. Inactive Members
a. Service Retirees & Beneficiaries 24,705,040 24,705,040
b. Disability Retirees 307,331 307,331
c. Terminated Vested Members 1530,741 !..5f144~477
d. Total 25,643,112 40,156,848
3. Total for All Members 94,2! ! ,010 97.255,964
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25 59,574..635 72,516,
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35 54,017,978 NA
E. Plan Assets
1. Market Value 54,855,585 54,855,585
2. Actuarial Value 62,228,999 62,226,999
F. Actuarial Present Value of Projected
Covered Payroll 183,666,568 184,297.412
G. Actuarial Present Value of Prcjected
Member Contributions I 2,856.660 12,900,819
.,
A. V~luation Oate
B. No~mal Cost for
1. Service Retirement Benefits
2. Vesting Benefits
3. Disability Benef'~s
4. Preretirement Death Benefits
5. Return of Member Contributions
6 Total for Future Benefits
7. Assumed Amount for Administrative
Expenses
8. Total Normal Cost
Expected Member Corrtdbution
Employer Normal Cost; B8-C
Employer Normal Cost as % of
Covered Payroll
October 1, 2002
Before Changes
$ 2,427,961
23g,975
9(3,813
97,458
2,865,207
43,734
2,908,941
1,465,605
1,443,336
6.89 %
October 1,200~.
ERIP
$ 2,335,891
230,576
97,023
94,004
2,757,494
43.734
2.801.228
1,412,366
1,388.862
6.88 %
, ' I-- Bef'm Changes ! After Changes
.. ...... ~~'~', ,,. ,.,:,~.~ ,..~.-.~,.,,. ~.: ::~ , ~,. .... ~' ,~.::~,,.~,~,~ ,~. · ,,, ...... ;~ ~ ~' ....
Number 542 542
Covered Annual Payroll $ 20,937,Zll $ 20,176,662
Average Annual Payroll $ 38,630 $ 37,226
Average Age 43.6 41.9
Average Past Service ! 8.0 I 6.3
Average Age at Hire ,,, I 35'61 35.6
Number
Annual Benefits
Average Annual Benefit
Average Age
Number
Annual Benefits
Average Annual Benefit
Average Age
Number
Annual Benefits
Average Annual Benefit
Average Age
174
$ 2,723,258
$ 15,651
69.7
3
$ 29,332
$ 9,777
62.6
10
105,385
10.539
45.3
174
$ 2.,723,258
$ 15,651
69.7
3
29,332
9,777
62.6
63
$ 1,777,994
$ 28,222
54.0
CiTY OF BOYNTON BEACH PENSION SYSTEMS
Initial Effects of EaHy Retirement Incentive Plan Assuming All
Eligible Employees Elect to Retire
Numar of Employees ~
A.
Elating ERIP 53 21 19 93
B. In~se i~ Annual
Ci~ Pension Cost $ 125,154 $ 57,818 $ 103,366 $ 286,338
C. D~mase in Annual
Pa~oll 761,000 814,000 852,0~ 2,427,090
D. Net ~st (Savings)
= B-C (635,8~) (756,182) (748,63~) (Z 140,662)
..Assumptions
The City will hire as many new employees as the number who retire.
The City will promote as many remaining employees as the number who
retire. Pay will in.ease by 5% due to the promotions.
Other Costs/Savings
The figures above do not take into account costs or savings in other areas,
such as, Social Security taxes, vacation pay. longevity pay, etc. The Cily's
continuation of health insurance premium payments over the next 3 years is also not
reflected.
Prepared by Gabrie!, Roeder, Smith and Company
October 17, 2003
GABRIEI~ ROEDER, SMITH & COMPANY
Consultants & A'_t',~'~ies
301 East I~s O;es b~Iv,'J. · Sui~ 200 '~ Ft. Lau(:lerdale. FL 33301 ,Z254 · 95,1-527-t616 · FAX 954-625-00~a
October 17, 2003
Ms. Barbara LaDue
Pension Administrator
City of Boynton Beach
100 E. Boynton Beach Boulevard
Boynton Beach, FlOrida 33425-0310
Re: Police Officers~ Retirement Fund
Dear Barbara:
As requested, we have prepared the enctosecl Actuarial Impact Statement for the pmposecl Early
Retirement incentive Program (ERIP). Under the ERIP, police officers who have 15 or more
years of service as of 9f30/04 and am within 3 years of early or normal retirement would be
eligible to receive an increased benefit accrual factor equivalent to 3 extra years of credited
sendce.
We welcome your questions and comments.
Sincerely yours,
Enclosures
Cc: Diane Reese
EXHIBIT "A"
CITY OF BOYNTON BEACH MUNICIPAL POLICE OFFICERS' RETIREMENT FUND
Impact Statement - October 17, 2003
Description of Amendment
0
0
An Early Retirement Incentive Plan (ERIP) would be established. Under the
ERIP, i~lice officers who nave 15 or more years of service as of 9/30/04 and are
within 3 years of early or normal retirement would be eligible to receive an
increased benefit accrual factor equivalent to 3 extra years of credited service.
Those who elect to retire under the ERIP will also benefit from the City's
continuation of payment of health insurance premiums for three years. Since
this benefit is not part of the Pension Fund, the Iml:)act Statement does not
reflect the payment of such premiums.
Funding Implications of Amendment
An actuarial cost estimate is attached. The amendment would increase the required
employer contribution by $57,818 if all eiigible members actually retire.
Certification of Adminis~-ator
I believe the amendment to be in compliance with Part VII, Chapter 112, Florida
Statutes and Section 14, Article X of the Constitution of the State cf Florida.
For the Board of Trustees
as Plan Administrator
SUPPLEMENTAL ACTUARIAL VALUATION REPORT
Plan
City of Boynton Beach Municipal Police Cfficers' Retirement Fund
Valuation Date
October 1, 2002
Date of Report
October 17, 2003
Report Requested by
Board of Trustees
Prepared by
J. Stephen Palmquist
Group Valued
Active and inactive police officers.
Plan Provisions Being Considered for Change
An Early Retirement Incentive Plan (ERIP) would be established. Under the
ERIP, police officem who have 15 or more years of service as of 9/30104 and are
within 3 years of early or normal retirement would be eligible to receive an
increasecl benefit accrual-factor equivalent t~ 3 extra years of credited service.
O
Those who elect to retire under the ERIP will also benefit from the City's
continuation of payment of health insurance premiums for three years. Since
this benefit is not part of the Pension Fund, the Impect Statement does not
reflect the payment of such premiums.
Participants Affected
Ail active police officers who have not retired or entered the DROP.
Actuarial Assumptions and Methods
Same as October 1, 2002 Actuarial Valuation Report wilh these exceptions:
O
o
o
100% of the 21 eligible members will actually retire.
There will be a number of new hires equal to the number of members who retire.
There would be a number of promotions equal to the number of members who
retire. Those promoted would be the remaining highest paid participants, a~,d
their raise would be 5% of pay.
Some of the key assumptions/methoCs are:
Investment return - 8.5% per year
Salary increase - 5.0% - 6.5% per year
Cost Method - Froz. e~ Entry Age
Amortization Period for Any Increase in Actuarial Accrued Liability
30 years
Summary of Data Used in Report
See attached page.
Actuarial Impact of Proposal(s)
See attact~ed page(s). The proposal would increase the required employer contribution
by $57,818 if all 21 eligible members retire. Covered payroll would aecrease by about
$814.000.
Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to
Previously
Other CoJt Considerations
The cost associated with the ERIP will vary based on the number of police officers who
elect to participate.
Possible Conflicts With IRS Qualification Rules
None
Enrolled Actuary No. 02-1560
B. ARC to Be Paid During
Fiscal Year Ending
C. Assumed Date of Employer Contdb.
D. Annual Payment to Amortize
Unfunded Actuarial Liability
E. Employer Normal Cost
F. ARC if Paid on the Valuation
Date: D+E
G. ARC Ac~justed for Frequency of
Payments
H. ARC as % of Covered Payroll
I. Assumed Rate of Increase in Covered
Payroll to Contribution Year
J. Ccvered Pay~clt for Contribution Year
K. ARC for Contribution Year: H x J
L. Estimate of State Revenue in
Contribution Year
M. Required Employer Contribution [REC)
in Contribution Year
N. REC as % of Coverect Payroll irt
Contribution Year: M + J
October 1,2002
Before; Changes
9/30/2003
10i 15/2003
$ 233,374
1,538,895
1,772,269
1,929,458
26.14 %
0.00 %
7.382,088
1,929,458
1,486,004
20.13 %
I I
October 1,2002
ERIP
9t30t2003
10/15t2003
$ 413.016
1,412,360
1,825,376
1,987,276
30.26 %
0.00 %
6,567,§84
1,987.276
1,543,822
23.51%
I I _
A, Valuation Date October 1, 2002 October 1, 2002
Before Changes ERIF
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits $ 24,538,122 $ 17,605,690
b. Vesting Benefits 423,469 362,684
c. Disability Benefits 1,432,154 1.306,918
d. Preretirement Death Benefits 415,709 350,492
e. Return of Member Contributions 33~:656 394,96g
f. Total .... 27.148,110 20,020,753
2. Inactive Members
a. Sen/ice Retirees & Beneficiaries 18,755,883 18,755,883
b. Disability Re~ees 3,123,091 3,123,091
c. Terminated Vested Members 577,762 10,490,404
d. Total 22,456,736 32,369,378
3. Total for Alt Members 49,604,846 52,390,131
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25 40,604,148 43,332,102
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35 35,236,404 NA
E. Plan Assets
1. Market Value 26,777,811 26,777,811
2. Actuarial Value 32,133,373 32,133,373
F. Actuarial Present Value of Projected
Covered Payroll 52,914,509 52,124,080
G. Actuarial Present Value of Projected
Member Contributions 3,704,016 3,648,685
A. Valuation Date
B. Actuarial Present Value of Projected
Benefits
C. Actuarial Value of Assets
D. Unfunded Actuarial Accrued Liability
E. Actuarial Present Value of Projected
Member Contributions
F. Actuarial Present Value of Projected
Employer Normal Costs: B-C-D-E
G. Actuarial Present Value of Projected
Covered Payroll
H~ Employer Normal Cost Rate: F/G
I. Covered Annual Payroll
J. Employer Normal C. x3st: H x I
K. Assumed Amount of Administrative
Expenses
L. Total Employer Normal Cost: J+K
M, Employe~' Normal Cost as % of
Covered Payroll
October 1, 2002
8afore Changes
$ 49,604,846
32,133,373
3,371,705
3,704,016
10,395,752
52,914,509
19.65 %
7,382,088
1,450,580
88,315
1,538,895
20.85 %
October 1, 2002
ERIP
$ 52,390,131
32,133,373
6,099,659
3,648.685
~0,508,414
52,124,080
20.16 %
6.567,684
1,324,045
88,315
1,412,360
21.50 %
· 1 Before Changes I Aftra' Chain ~s
Numb~ t 19 119
Cove~ Annual Paymlt $ 7,382,088 $ 6,567,6~
Average 4nnual Payroll $ 62,034 $ 55,191
Average Age 36.0 33.7
Ave~ Past Se~e 7.7 4.9
Avem~ Age at Him 28.3 28.8
Number 54 54
Angel ~neffis $ 1,789,409 $ 1,789,~9
Average Annual Benefit $ 33,137 $ 33,137
Avem~ Age 53.7 53.7
Numar 16 16
Annual Beneffis $ 3~8,596 $ 328,596
Average Annual Benefit $ 20.537 $ 20,537
Av~age Age 52.7 52.7
N~r 5 26
Annual Benefits $ 72,~8 $ 1,132,982
Average ~nual Ben~t $ 14,402 $ 43,576
Ave~e A~ 39.5 42.2
CITY OF BOYNTON BEACH PENSION SYSTEMS
Initial Effects of Early Retirement Incentive Plan Assuming All
Eligible Employees Elect to Retire
A. NumOer of Employees
Electing ERIP 53 21 19 93
B_ Increase in Annual
City Pension Cost $ 125,154 $ 57,818. $ 103,366 $ 286,338
C. Decrease in Annual
Payroll 761,000 814,00C 852,000 ~.427,000
D. Net Cos~ (Savings)
= B-C (635,846) (756,~82) (748.634) (2,140,562)
Aa~umption_s
The City will hire as many new employees as the n~mber who retire.
The City wilt promote as many remaininG employees as the number who
retire. Pay will ~ncrease by 5% due to ihe promotions.
Other Costs/Savings
The figures above do not take into acco.Jr~t costs or savings in other areas,
such as. Social Security taxes, vacation pay, longevity pay. etc. The City's
continuatioll of health insurance premium payments over the next 3 years is also not
reflected,
Prepared by Gabriel, Roeder, Smith aclO Compar~¥
October 17. 2003
GABRIEI~ ROEDER, SMITI~ & COMPANY
Cofls~it&flt~ & Act~ri~
301 Easl ).as Olas B(vcl. ,, Sure 200 * I::t Lauder~;e, ~c1,.33301.PP54 · 954-527.1616 · FAX 954-525-0083
October 17, 2003
Ms. Barbara LaDue, Pension Administrator
Boynton Beach Firefighters Pension Board
City of Boynton Beach
150 N.E. 2nd Avenue
Boynton Beach, Flodda 33435
Re: Rrefighters Pension Fund
Dear Barbara:
As requested, we have prepared the enclosed Actuarial Impact Statement for the proposed Early
Retirement Incentive Program (ERIP). Under the ERIP, firefigt~ters who have 15 or more years of
service as of 9/30104 and are within 3 years o! early or normal retirement would be eligible to
receive an increased benefit accrual factor equivalent to 3 extra years of credited service.
We welcome your questions and comments.
Sincerely youm,
E~.closures
Cc: Diane Reese
EXHIBIT
~.U03
CITY OF BOYNTON BEACH MUNICIPAL FIREFIGHTERS PENSION FUND
Impact Statement - October 17, 2003
Description of Amendment
O
An Eady Retirement incentive Plan (ERIP) would be established. Under the
ERIP, firefighters who have 15 or more years of service as of 9/30/04 anti are
within 3 years of eady or normal retirement would be eligible to receiv9 an
increased benefit accrual factor equivalent to 3 extra years of creditecl service.
Those who elect to retire under the ERIP wilt also benefit from the City's
continuation of payment of health insurance premiums for three years, Since
this benefit is not part. of the Pension Fu~d, the Impact Statement does not
reflect the payment of such premiums.
Funding Implications of Amendment
An actuarial cost estimate is attached. The amendment would increase ;he required
employer contribution by $103,366 if all eligible members actually retire.
Certification of Administrator
! believe the amendment to be in compliance with Part VII, Chapter 112. Flodda
Statutes and Section !4, Article X of the Constitution of the State of Florida.
For the Board of Trustees
as Plan Administrator
SUPPLEMENTAL ACTUARIAL VALUATION REPORT
Plan
City of Boynton Beach Municipal Firefighters' Pension Trust Fund
Valuation Date
October 1, 2002
Date of Report
October 17. 2003
Report Requested by
Board of Trustees
Prepared by
J. Stephen Palmquist
Group Valued
Active and inactive fireflghters.
Plan Provisions Being Considered for Change
An Early Retirement Incentive Plan (ERIP) would be established. Under the
ERIP, flrefighters who have 15 or more years of service as of 9/30/04 and are
within 3 years of ea~ty or normal retirement would be eligible to receive an
increased benefit accrual factor equivalent to 3 extra years of credited service.
Those who elect to retire under the ERIP will also benefit from the City's
continuation of payment of health insurance premiums for three years. Since
this benefit is not part of the Pension Fund, the !reDact Statement does not
reflect the payment of such premiums.
.Particlpant~,Affected
All active firefighters who have not retired er entered the DROP.
Actuarial Assumptiorm and Methods
Same as October 1, 2002 Actuarial Valua~on Report with these exceptions;
100% of the lg eligible members will actually retire.
There will be a number of new hires equal to the number of members who retire.
There would be a number of promotions equal to the number of members who
retire. Those promoted would be the remaining highest paid participants~ and ·
their raise would be 5% of pay.
Some of the key assumptions/methods are:
Investment retum -
Salary increase -
Cost Method -
8.5% per year
6.5% per year
Frozen Entry Age
Amortization Period for Any Increase in Actuarial Accrued Uability
30 years
Summary of Data Used in Report
See attached page.
Actuarial Impact of Proposal(a)
See attached page(s). The proposal would increase the required employer contribution
by $103.366 if all 19 eligible members retire. Covered payroll would decrease by about
$852,000.
Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to
Previously
None.
Other Cost Considerations
The cost associated with the ERIP will vary based on the number of firefighters who
elect to participate.
Possible Conflicts With IRS Qualification Rules
None
J~tephen Palmquist, ASAJ~IAAA, FCA -
Enrolled Actuary No. 02-1560
A. Valuation Date { October 1, 2002 October 1. 2002
~ Before Changes ERIP
B. ARC to Be Paid During
Fiscal Year Ending i 9f30/2003 9/30t2003
C. Assure ed Date of Em pleye,~ Contrib, 10/15/2,003 10/15/2003
D. Annuai Payment to Amortize
Unfunded Actuarial Liability $ :)92,184 $ 496,007
E. Employer Normal Cost 956,733 847,856
F. ARC if Paid on the Valuation
Date: D+E 1,248,917 1,343,863
G. ARC Adjusted for Frequency of
Payments i ,359,690 1,463,055
H. ARC as % of Covered Payroll 26.44 % 34.10 %
I. Assumed Rate of Increase in Covered
Payroll to Contribution Year 0.0C % 0.00 %
J. Covered Payroll for Contribution Year 5,143,446 ~4,290,982
K. ARC for Contribution Year: H x J 1,359,690 1,4§3,056
L. Estimate of State Revenue in
Contribution Year 463,29G 463,290
M. Required Employer Contribution (REC)
in Contribution Year 896,400 999,766
N. REC as % of Covered Payroll in
Contribution Year: M ~ J 17.43 % 23.30 %
A Valuation Date October I; 2002 October 1. 2002
Before Changes ERIP
B. Actuarial Present Value of Ali Projected
Benefits for
1. Active Members
a. Service Retirement Benefits $ 21.260,258 $ 13,332,347
b. Vesting Benefits 1,207,337 1,200,096
c. Disability Benefits 917,329 880,863
d. Preretirement Dea~.h Benef'~s 275,065 232,813
e, Return of Mere bar Contributions 119.558 161,654
f. Total ....
23,779.547 15,807,773
2. Inactive Mere
a. Service Retirees & Beneficiaries 21,929,364 21,929,364
b. Disability Retirees
c. Term inated Vestee Mere bars 852,264 12,871,337
d. Total 22,781,628 34,800,701
3. Total for All Mere bars 46,561,175 50,608,47,t.
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25 39,432,154 4Z.34'~ ,510
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35 35,5C9,006 NA
E. Plan Assets
1. Market Value I 30,440,069 30,440,069
2. Actuarial Value 33,877,028 33,877,028
F. Actuarial Present Value of Projectecl
Covered Payroll 38,370,194 41,681,676
G. Actuarial Present Value of Projected
Mere bar Contributions 2,885,913 2,917, 717
A. Valuation Date October 1, 2002 October 1, 2002
Before Changes ERIP
B. Actuarial Present Value of Projectecl
Benefits $ 46,561,175 $ 50,608,474
C. Actuarial Value of Assets 33,87'7,028 33,877,028
D. Unfunded Actuarial Accrued Liability 3,¢93,416 6,402, 772
E. Actuarial Present VakJe of Projected
Mem bar Contributions 2,685,913 2:917,717
F. Actuarial Peasant Value of Projected
Employer Normal Costs: B-C-D-E 6,504,818 7,410,957
G. Actuarial Present Value of Projected
Covered Payroll 38,370,194 41,681,676
H. Employer Normal Cost Rate: F/G 16.95 % 17.78 %
I. Covered AnnuaIPayroll 5,143,446 4,290,982
J. Employer Normal Cost: H x I 871,814 762,937
K, Assumed Amount of Administrative
Expenses 84,919 84,g 19
L. Total Employer Normal Cost: J~-K 956,733 847,856
M. Employe~ Normal Cost as % of
Covered Payroll 18.60 % 19.76 %
~ ,~. ] Before Chan,~es After Changes
Number 83 83
Covered Annual Payroll $ 5,143,446 $ 4,Z90.982
Average Annual Payroll $ 81,g69 $ 51,69g
Average Age 37.5 33.7
Average Past Service 9.6 5.2
Average Age at Hire 27.g 28.5
Number 55 55
Annual Benefits $ 2,075,066 $ 2,075,066
Average Annual Benefil $ 37,7Z8 $ 37,728
Average Age 56.9 56.9
Num bar I 0 0
Annual Benefits1 $ 0 $ 0
Average Annual Benefit $ 0 $ 0
Average Age 0.0 0.0
Number 5 24
Annual Benefits $ 87,714 $ 1,404,256
Average Annual Benefit $ 17,543 $ 58,511
Average Age 42.7 44,6
CITY OF BOYNTON BEACH PENSION SYSTEMS
Initial Effects of Early Retirement Incentive Plan Assuming All
Eligible Employees Elect to Retire
., . . ;, ,.. ~,~ ,.,~. ,.,. :".-.'..,- .................
A. Number of Employees
Electing ERIP 53 21 19 93
B. Increase in Annual
City Pension Co,~t $ !25,154 $ 57,818 $ 103,366 I $ 286,338
I
C. Decrease in Annual
Payroll 761,000 814,000 852,000 2,427,000
D. Net Cost (Savings)
= B-C (635,846) (756,182) (748,634) (2,140,662)
The City will hire as many new employees as the number who retire.
The City will promote as many remaining employees as the number who
retire. Pay will increase by 5% due to the promoticns.
Other Costs/Savings
The f'~jures above do not take into account costs or savings in other areas,
such as, Social Security taxes, vacation pay, longevity pay. etc. The City's
continuation of health insurance premium payments over the next 3 years is also not
reflected.
P~epared by Gabdel, Roeder, Smith anti Company
October 17, 2003
EXHIBIT "B"
AGREEMENT FOR PARTICIPATION IN EARLY
RETIREMENT INCENTIVE PROGRAM
AND
WAIVER OF RIGHTS
THIS AGREEMENT for Participation in Early Retirement Incentive Program (hereinafter referred to as
Agreement) is entered into between the City of Boynton Beach, Florida (hereinafter referred to as City)
and (hereinafter referred to as Employee), this __ day
of _, 200_.
WHEREAS, the City has announced an early retirement incentive program which provides incentive
benefits for participation; and
WHEREAS, the City has prepared and distributed a Program Commencement Notice and a information
Fact Sheet setting forth the terms and conditions for participation in the Early Retirement Incentive
Program; and
WHEREAS, the Employee has been provided with a copy of the Program Commencement Notice and
Information Fact Sheet setting forth the terms and conditions for participation in the Early Retirement
Incentive Program; and
WHEREAS, the Employee has been advised that the Employee has up to forty-five (45) days in which
to consider the terms and conditions of this Agreement; and
WHEREAS, the Employee has acknowledged understanding of the benefits associated with the Early
Retirement Incentive Program; and
WHEREAS, the employee has been advised to consult with an attorney prior to the execution of this
Agreement and has had such opportunity; and
WHEREAS, the Employee is eligible for participation in the Early Retirement Incentive Program based
upon the Employee's years of service and age;
NOW, THEREFORE, the City and the Employee, in exchange for the mutual covenants expressed
herein and which are derived from the creation of and participation in the Early Retirement Incentive
Program agree as follows:
All representations and statements set forth in the foregoing Whereas clauses are true and
correct and constitute material representations of each party to the other.
2. The Employee agrees to participate in the Early Retirement Incentive Program.
o
The last day of employment of Employee with the City of Boynton Beach is
, a date which has been approved by the City Manager.
The City will credit the Employee, who has a minimum of 15 years of credited service
and who is within three years of normal or early retirement, either three years to the
S:\CA\Ordinances~ERIp - 2003~ERIP Package 100703.doc
employees' time of service or age or, both so that a minimum criteria for normal or early
retirement is satisfied. When necessary to fully vest an employee in the police or fire
service for years credited pursuant to this incentive, but not actually served or rendered,
the pension administrator and the plan actuaries shall provide a benefit calculation factor
for such police or fire employee which, when applied, result in the employee receiving
the full retirement benefit set forth herein, without offset or penalty.
o
Non Police/Fire employees retirement cap is 75% of Final Average Compensation. Any
employee who elects to participate in the Early Retirement Program may not receive time
that would cause them to exceed the 75% cap.
o
Non Police/Fire employees who elect to participate in the Early Retirement Program and
who doe not meet Normal Retirement criteria will be assessed a 3% penalty for each year
they do not meet normal retirement criteria.
o
Employee shall receive any payment for any tmused annual leave and/or sick leave in
accordance with current City policy. The total cost of the pay-out will be added to the
employees gross wages for pension calculation purposes. However, the actual pay-out
will be made in three (3) equal installments. The first installment will be on the
retirement date set forth in paragraph 3 above. The second installment will be paid on
December 1, 2004. The third installment will be paid on December 1, 2005.
o
Employee must complete all termination clearance procedures established by the City
prior to the receipt of final payment from the City.
°
The City shall continue to pay medical coverage premiums for the Employee until the
end of the month on the 3rd anniversary of employees retirement date. The Employee may
continue participation in the medical plan offered by the City on the date stated above,
but such continued participation shall be at the sole expense of the Employee. The
current monthly premiums are as follows:
Health HMO PPO-$100 ded.
Single Coverage $386.76 $386.76
Employee plus spouse $690.21 $690.21
Employee plus children $636.30 $636.30
Employee plus family $799.95 $799.95
Dental insurance coverage will not be paid by the City of Boynton Beach after
employee's last date of employment. If the employee wishes to continue dental insurance
it will be at the employees expense.
10.
The Employee will be responsible for the payment of all premiums for insurance
coverage for family members other than the Employee. City will deduct the premium for
additional spouse, child or family coverage for the month of retirement from the
Employee's final pay check. Thereafter monthly amounts for additional spouse, child or
family coverage will be deducted from Employee's monthly pension check. No notice
will be sent to employee concerning payments for additional coverage.
11.
This Agreement contains the entire understanding of the parties hereof superseding all
communications between the parties, whether oral or written, and this Agreement may
S:\CA\OrdinancesLERIp - 2003\ERIP Package 100703.doc
12.
13.
14.
15.
16.
17.
not be altered, amended, or modified or otherwise changed, nor may any o f the terms
hereof be waived except by written instrument executed by both parties.
By countersigning below, Employee acknowledges that Employee understands and
agrees to this Agreement and that Employee has been advised by the City to consult with
an attorney regarding Employee's rights and that Employee has had the opportunity to do
SO.
Employee releases the City of Boynton Beach, Florida, its officers, employees, trustees
and agents, from and against, any and all liability or causes of action arising out of the
City's offer of an Early Retirement Incentive Program or Employee's decision to
participate in the program.
Employee acknowledges understanding of Employee's rights under the Older Workers'
Benefit Protection Act and the Age Discrimination and Employment Act and waives any
right or claim provided by either of those Acts against the City.
Employee agrees not to seek or accept reemployment with the City of Boynton Beach.
Employee agrees that he/she will not seek or accept promotion or transfer after executing
this Agreement.
THIS AGREEMENT MAY BE REVOKED BY THE EMPLOYEE FOR A
PERIOD OF SEVEN (7) DAYS FOLLOWING EXECUTION OF THIS
AGREEMENT. THEREAFTER, THIS AGREEMENT IS IRREVOCABLE BY
THE EMPLOYEE.
IN WITNESS WHEREOF, the City and the Employee execute and enter into this Agreement.
Witnesses as to Employee:
(Print) Witness Name
Witness Signature
(Print) Witness Name
Witness Signature
(Print) Employee Name
Employee Signature
STATE OF FLORIDA
COUNTY OF PALM BEACH
On this ~ day of ,2004, before me, the undersigned Notary Public of
the State of Florida, personally appeared and whose name is
Subscribed to the within instrument, and he/she acknowledged that he/she executed the same.
S:\CA\Ordinances\ERIP - 2003kERIP Package 100703.doc
WITNESS my hand and official seal.
Notary Public - State of Florida
(Seal)
__ Personally known to me
Produced Identification:
EMPLOYER/CITY OF BOYNTON BEACH:
Attested to:
Mayor City Clerk
City Manager
S:\CA\Ordinances~ERIP - 2003\ERIp Package 100703.doc
EXHIBIT "C"
CITY OF BOYNTON BEACH
EARLY RETIREMENT INCENTIVE PROGRAM
COMMENCEMENT NOTICE
The City of Boynton Beach, Florida announces an Early Retirement Incentive Program. This program is
available for participation by Full-Time Employees who, on September 30, 2004, will be within three
years of normal or early retirement and have attained at least 15 years of service. The City has prepared
an Information Fact Sheet which provides a detailed overview of the program. The City has prepared an
Agreement For Participation in Early Retirement Incentive Program and Waiver of Rights form which
interested Employees will be required to sign to participate in the program. Both the Information Fact
Sheet and the form Agreement are available for review and may be obtained from the Finance
Department.
Eligible employees who wish to participate in the Early Retirement Incentive Program must execute an
Agreement for Participation and Waiver of Rights by 5:00 P.M., on January 23, 2004.
DATED: December 1,2003.
S:\CA\Ordinances~ERIp. 2003~ERIP Package 100703.doc
EXHIBIT "D"
CITY OF BOYNTON BEACH
EARLY RETIREMENT INCENTiVE PROGRAM
ACKNOWLEDGEMENT OF RECEIPT OF PROGRAM COMMENCEMENT
NOTICE AND INFORMATION FACT SHEET
The Undersigned, a current employee of the City of Boynton Beach, Florida, acknowledges, that he/she:
o
o
Was given a PROGRAM COMMENCEMENT NOTICE, INFORMATION FACT SHEET,
AGREEMENT FOR PARTICIPATION IN EARLY RETIREMENT INCENTIVE PROGRAM
AND WAIVER OF RIGHTS, and DECLINATION TO PARTICIPATE form, describing the
Early Retirement Incentive Program being offered by the City of Boynton Beach.
Was advised that he/she may have rights which are protected under the Older Workers'
Protection Act or the Age Discrimination in Employment Act.
Was advised to consult with an attorney prior to executing an Agreement For Participation in
Early Retirement Incentive Program.
Was advised that he/she may have up to forty-five (45) days to consider the Agreement For
Participation in Early Retirement Incentive Program.
Was advised that he/she may revoke his/her Agreement For Participation in Early Retirement for
a period of seven (7) days following execution of the Agreement.
Is aware that he/she may not seek or accept a promotion following execution of the Agreement
for Participation
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
200 .
Signed, sealed, and delivered
in the presence off
WITNESSES:
day of
(Witness Signature)
(Employee Signature)
(Print Name of Witness
(Print Name of Employee)
(Witness Signature)
(Print Name of Witness)
S:\CA\Ordinances\ERip _ 2003\ERIp Package 100703 doc
EXHIBIT "E"
CITY OF BOYNTON BEACH
EARLY RETIREMENT INCENTIVE
PROGRAM FACT SHEET
FACTSHEET
Based on the City's current staffing needs and requests of employees, the City is offering an Early
Retirement Incentive Program (ERIP). Eligible employees are not required to accept the offer and
participate in the program.
WHO IS ELIGIBLE?
Any full-time employee who, on September 30, 2004, will have been a full-time employee for a
minimum of fifteen years and is within three (3) years of normal or early retirement. In order to
participate an eligible employee must execute an Agreement for Participation and Waiver document by
5:00 P.M., on Monday, January 23, 2004, designating a last day of employment, not earlier than April
30, 2004, and not later than September 30, 2004. The actual retirement date must be approved by the
City Manager who shall take into consideration the operational impact on the department from which
the employee is retiring.
An employee who elects to receive the Early Retirement Incentive Program cannot also participate in
the Deferred Retirement Option Plan.
HOW WILL IT WORK?
If you are eligible to participate in the program and elect to do so, you will receive:
Three (3) years added to your years of service time and/or years of age. In no event will the
additional years service or age exceed three (3) total years. (General Employees for example, i.e.
If you have 15 years of service and you are age 59, 3 years would be added to your age; if you
have 22 years of service and are age 55, 3 years would be added to your years of service; if you
have 15 years of service and are age 62, 3 years would be added to your years of service. At no
time will additional service time be added that would give the employee more than 75% of their
final average compensation. For Police and Fire only, the pension administrator and the plan
actuaries shall provide a benefit calculation factor, when applied, will result in the employee
receiving the full retirement benefit set forth herein, without offset or penalty.
The City of Boynton Beach will continue to pay health insurance at the single coverage rate
for 1095 days following the employees actual day of retirement for all employees who elect
to participate in the early retirement program. Dental insurance coverage will .not be paid by
the City after employees last date of employment with the City.
IS THIS A ONE TIME OPPORTUNITY?
S:\CA\Ordinances~ERIP _ 2003~EILIp Package 100703.doc
At the time, the City does not anticipate offering this program again.
HOW LONG DO I HAVE TO MAKE A DECISION?
You will have up to 45 days from the date of formal notification, December 1, 2003, to accept or reject
this offer. If you elect to participate, by signing an Agreement for Participation and Waiver, you will
have an additional seven (7) days following signing to notify the City that you revoke your decision to
participate.
SHOULD I SEEK LEGAL AND FINANCIAL ADVICE BEFORE I MAKE MY DECISION?
Yes, you should seek the advice of legal and financial counsel before accepting or rejecting this offer.
WILL I BE REQUIRED TO SIGN ANY TYPE OF WAIVER TO ACCEPT THE PLAN?
Yes, you will be required to sign an Agreement for Participation in Early Retirement which includes a
Waiver and a general release of all claims against the City. A copy of the Agreement for Participation in
Early Retirement is available for your review.
CAN I REVIEW THE AGREEMENT, RELEASE AND WAIVER NOW?
Yes, the documents have been released and are available in the Finance Department.
WHERE CAN I GET MORE INFORMATION?
You should contact either of the following individuals:
Diane Reese, Finance Director
Barbara LaDue, Pension Administrator
(561) 742-6312
(561) 742-6081
BY SIGNING THE AGREEMENT FOR PARTICIPATION IN THE EARLY RETIREMENT
INCENTIVE PROGRAM AND WAIVER OF RIGHTS, IS AN EMPLOYEE WAIVING WORKERS'
COMPENSATION CLAIMS?
No. The Waiver contained in the Agreement is a waiver of age discrimination claims only. An
employee does not waive claims arising from Workers' Compensation claims.
BY SIGNING THE AGREEMENT FOR PARTICIPATION IN THE EARLY RETIREMENT
INCENTIVE PROGRAM AND WAIVER OF RIGHTS, IS AN EMPLOYEE WAIVING WAGE AND
HOUR MATTERS?
No. The waiver contained in the Agreement is a waiver of age discrimination claims only. An
employee does not waive claims arising from wage and hour matters.
S:\CA\Ordinances\ERIP. 2003kERIP Package 100703.doc
WHAT IF INSURANCE PREMIUMS INCREASE AFTER AN EMPLOYEE'S RETIREMENT
DATE?
For the first three (3) years after the retirement date the City pays the full premium for the employee
coverage, regardless of whether it increases, decreases or remains the same. The employee is
responsible for payment of all of the premiums for dependent coverage whether it increases, decreases
or remains the same.
BY SIGNING THE AGREEMENT FOR PARTICIPATION IS THE EMLOYEE PROHIBITED FROM
SEEKING OR ACCEPTING PROMOTIONS OR TRANSFERS?
Yes. No employee, after signing his/her Agreement for Participation, may seek or accept a promotion or
transfer to another position.
IMPLEMENTATION DATES:
OFFER OF PROGRAM
December 1, 2004
LAST DAY TO SIGN AGREEMENT
TO PARTICIPATE
January 23, 2004
EARLIEST RETIREMENT DATE
April30,2004
LAST DAY OF EMPLOYMENT
September 30, 2004
S:\CA\Ordinances~ERIP - 2003~ERIp Package 100703.doc
EXHIBIT "F"
CITY OF BOYNTON BEACH
EARLY RETIREMENT INCENTIVE PROGRAM
EMPLOYEE DECLINATION TO PARTICIPATE IN
THE CITY OF BOYNTON BEACHS'
EARLY RETIREMENT INCENTIVE PROGRAM
The undersigned, a current employee of the City of Boynton Beach, Florida, acknowledges that after
receipt and careful review and consideration of the PROGRAM COMMENCEMENT NOTICE and
INFORMATION FACT SHEET describing the Early Retirement Incentive Program dated
, (the "program"), being offered by the City of Boynton Beach, the undersigned
has decided not to accept the Program.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
200 .
__ day of
Signed, sealed and delivered
in the presence off
WITNESSES:
Witness Signature
Employee Signature
Print Name
Print Name of Employee
Witness Signature
Print Name
DATED:
S:\CA\Ordinances~ERIP - 2003~ERIP Package 100703.doc