23-019 1 ORDINANCE 23-019
2
3 AN ORDINANCE OF THE CITY OF BOYNTON BEACH FLORIDA AMENDING
4 ARTICLE II OF CHAPTER 18 OF THE BOYNTON BEACH CODE OF
5 ORDINANCES ENTITLED EMPLOYEES' PENSION PLAN AMENDING
6 SECTION 18-94 TO PROVIDE FOR PENSION CONTRIBUTIONS BY DROP
7 MEMBERS; AMENDING SECTION 18-127 DEFERRED RETIREMENT OPTION
8 PLAN TO PROVIDE FOR 8 YEAR DROP; REPEALING SECTION 18-300
9 CREATION OF CONSOLIDATED DEFERRED RETIREMENT OPTION PLAN OF
10 ARTICLE XI OF CHAPTER 18 OF THE BOYNTON BEACH CODE OF
11 ORDINANCES; PROVIDING FOR CODIFICATION CONFLICT, SEVERABILITY,
12 AND AN EFFECTIVE DATE.
13
14 WHEREAS,the City of Boynton Beach (the"City")maintains a defined benefit pension plan
15 for its general employees as stated in Chapter 18, Article II of the City Code of Ordinances, known
16 as the Employees' Pension Plan of the City of Boynton Beach, Florida ("Plan");
17 WHEREAS, the Plan permits general employee members to participate in a Deferred
18 Retirement Option Plan ("DROP") for up to five (5) years, and requires a contribution for DROP
19 members;
20 WHEREAS, the City desires to amend the Plan to provide for an eight-year DROP and to
21 adjust the amount of contributions for DROP members for any participation period beyond five
22 (5) years;
23 WHEREAS, to implement the changes related to the extension of the DROP participation
24 period, it is necessary to adopt an ordinance amending the Plan as set forth in Chapter 18, Article
25 II of the City Code of Ordinances;
26 NOW THEREFORE BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF
27 BOYNTON BEACH FLORIDA
28
29 Section 1. The foregoing WHEREAS clauses are hereby certified as being true and
30 correct and are incorporated herein by this reference.
31
32 Section 2. Section 18-94 of Article II of Chapter 18 of the Boynton Beach Code of
33 Ordinances is hereby amended as follows:
34 Sec. 18-94. Employee contributions required: *
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35 Subject to the limitations imposed in section 18-95, employees who are members of the
36 plan shall contribute 7% of monthly earnings to the fund for that month. Effective the
37 first full payroll period after thirty days following October 1, 2023 the employees
38 participating in the DROP beyond five (5) years will contribute 3% of their salary
39 beginning with the sixty-first month of DROP participation. Pursuant to Code section
40 414(h)(2), the city shall pick up the member contributions required by this section. The
41 contributions so picked up shall be treated as employer contributions in determining tax
42 treatment under the Code. The city shall pick up the member contributions from funds
43 established and available for salaries, which funds would otherwise have been designated
44 as member contributions and paid to the Fund. Member contributions picked up by the
45 city pursuant to this subsection shall be treated for purposes of making a refund of
46 members' contributions, and for all other purposes of this and other laws, in the same
47 manner and to the same extent as member contributions made prior to the effective date
48 of this section.
49 Section 3. Section 18-127 of Article II of Chapter 18 of the Boynton Beach Code of
50 Ordinances is hereby amended as follows:
51 Sec. 18-127. Deferred retirement option plan.
52 (a) A deferred retirement option plan ("DROP") is hereby created.
53 (b) Eligibility to participate in the DROP is based upon eligibility for normal service
54 retirement in the plan.
55 (c) Participation in the DROP.,
56 (1) Prior to October 1, 2023. participation in the DROP must be exercised within
57 the first 30 years of employment; provided, however,that participation in the DROP,when
58 combined with participation in the retirement plan as an active member may not exceed
59 35 years. The maximum period of participation in the DROP is five years prior to October
60 1, 2023. An employee's election to participate in the DROP plan shall be irrevocable and
61 shall be made by executing a resignation notice on a form prescribed by the city.
62 (2) Effective October 1.2023. participation in the DROP must be exercised within
63 the first 30 years of employment;provided, however,that participation in the DROP,
64 when combined with participation in the retirement plan as an active member may
65 not exceed 38 years. The maximum period of participation in the DROP is eight
66 years. An employee's election to participate in the DROP plan shall be irrevocable
67 and shall be made by executing a resignation notice on a form prescribed by the city.
68 (3) Employees who are already participating in the DROP on the effective date of
69 this Ordinance will have the option to elect to participate in the eight (8) year DROP
70 by completing a form provided for that purpose. This election into the extended
71 eight (8) year DROP is a one-time opportunity. The election to participate in the
72 eight (8) year DROP must be made within 30 days of September 14, 2023. The
73 election will permit the employee to remain in the DROP for up to eight (8) years, to
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74 elect a new rate of return under section 18-127(f),and require the employee to make
75 a 3% employee contribution while participating in the DROP beyond sixty (60)
76 months.Any change in the method of crediting earnings will be effective the first of
77 the month following the date of the election.
78 (d) Upon exercising the right to participate in the DROP, an employee's creditable
79 service, accrued benefits and compensation calculation shall be frozen and shall utilize the
80 average of the five highest of the ten years immediately preceding participation in the
81 DROP as the compensation basis. Accumulated, unused sick and vacation leave shall be
82 included in the compensation calculation as provided for and limited by the definition of
83 annual earnings; provided, however, that a minimum balance of 120 hours of sick leave
84 and 120 hours of vacation leave shall be maintained by the employee and excluded from
85 this calculation.The retained leave balance, including any additions, shall be distributed at
86 the conclusion of DROP participation and separation from service. In accordance with the
87 definition of annual earnings, the accumulated sick and vacation leave that is includable
88 in the compensation calculation will phase out but hours may still be transferred up to the
89 maximum permitted by the Code, provided the minimum number of sick and vacation
90 leave remains on the books. DROP participants who remain in the DROP beyond sixty
91 (60) months will make a contribution of 3% during their DROP participation
92 beginning with the sixty-first (61) month of participation.
93 (e) Payment shall be made into the employee's DROP account as if the employee had
94 terminated employment in the city in an amount determined by the employee's selection
95 of the payment option.
96 (f) An employee's account in the DROP program shall earn interest in one of three ways.
97 The selection of the earnings program shall be made prior to the first deposit in the DROP
98 account and may be modified once each year by the participant during their participation
99 in the DROP. The investment method may be changed each year effective January 1,
100 however, the method must be elected prior to January 1 on a form provided by the Board
101 of Trustees. Employees who are in the DROP. as of the effective date of this
102 Ordinance, may change their method for the crediting of interest at the time that
103 they elect to participate in the 8 year DROP. This mid-year change in the crediting
104 of earnings is a one-time opportunity. The election to change the method for
105 crediting must be made within 30 days of September 14, 2023.The earnings method
106 elected will be effective the first of the month following the election.
107 The options are:
108 (1) Gain or lose interest at the same rate as the plan;
109 (2) At an annual fixed rate of 7%; or
110 (3) A percentage of the DROP account will be credited with interest gains or losses at
111 the same rate earned by the pension plan and the remaining percentage will be credited
112 with earnings at a guaranteed rate of 7%. The actual percentage shall be selected by the
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113 member on a form provided by the Board of Trustees. The total of the two percentages
114 must equal 100%.
115 The participant's DROP accounts will be assessed an administrative fee that is based upon
116 the ratio that the participant's DROP account bears to the fund as a whole.
117 (g) Employees who entered the DROP prior to October 1, 2023 and did not elect
118 to participate in the eight year DROP An employee shall terminate service with the city
119 at the conclusion of five years in the DROP. Employees who enter the DROP on or after
120 October 1, 2023 shall terminate service with the city at the conclusion of eight years
121 in the DROP.
122 (h) All interest shall be credited to the employee's DROP account on the last day of the
123 month in which the member separates from service.In the event that a member dies while
124 in the DROP, interest shall be prorated to the last business day of the month preceding
125 the death of the member.
126 (i) Upon termination with the city, an employee may receive payment within 45 days of
127 the member requesting payment or may defer payment until a time not later than the
128 latest date authorized by Section 401(a)(9) of the Internal Revenue Code at the option of
129 the member.
130 (j) Payments from the DROP may be received as a lump sum installment payment or
131 annuity, provided, however, that at all times, the DROP shall be subject to the provisions
132 of the Internal Revenue Code.
133 (k) No payment may be made from the DROP until the employee actually separates
134 from service with the city.
135 (I) If an employee shall die during participation in the DROP, a survivor benefit for the
136 monthly pension amount shall be payable in accordance with the form of benefit chosen
137 at the time of entry into the DROP. An employee entering into the DROP or a member
138 participating in the DROP post-employment may designate a beneficiary(ies) to receive
139 payment of the DROP balance in a lump sum upon his or her death in accordance with
140 sections 18-118 and 18-120. In the absence of the designation of a beneficiary, the
141 remaining balance shall be paid in full to the first class of the following relative which has
142 a member(s) (on a pro rata basis, if there is more than one member): the spouse married
143 to the member on date of death;dependent children of the member;the living parents of
144 the member; or the estate of the member.This payment operates as a complete discharge
145 of all obligations of the Fund under the Plan and shall not be subject to review but shall
146 be final, binding, and conclusive on all persons ever interested hereunder.
147 (m) Upon commencement of participation in the DROP,the member shall no longer be
148 eligible for disability retirement from the pension plan. If a member becomes disabled
149 during the DROP period, the member shall be treated as if he or she retired on the day
150 prior to the date of disability.
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151 (n) Notwithstanding the provisions of Section 18-125 of this plan. Participants in the
152 DROP must terminate employment and participation in the DROP before any re-
153 employment may occur.
154 Section 4. Section 18-300 of Article XI of Chapter 18 of the Boynton Beach Code of
155 Ordinances is hereby repealed in its entirety as follows:
156 . • r r r . • •
157 _ • . - - •- - - - - - .. - . e - •.
158 (a) A city employee deferred retirement option plan ("DROP") is hereby created,
159 amending, implementation, all conflicting provisions in existing DROP plans for general
160 employees.
161 (b) Employees who reach eligibility for normal service retirement in the employee's
162 fetirement plan may elect to enter DROP.
163 (c) An employee may elect to participate in the deferred retirement option plan
164 ("DROP")provided they make the election no later than 30 days after reaching their normal
165 retirement date. Notwithstanding the foregoing, upon enactment of this section,
166 employees who have ached-ner- al rcti-rcment date and d+d net cn4e -DROP may make
167 their initial election to participate in the DROP no later than 90 days after the
168 implementation date of this section.
169 (d) An election to participate in the DROP plan is irrevocable.
170 (e) Employees may elect to participate by submitting an election to enter DROP to the
171 city's Human Resource Department ("Department") on a form available from the
172 Department for that purpose. On receipt of the election to enter DROP, the Department
173 will notify the administrator of the pension plan in which the employee participates.
174 (f) Participation in the DROP must be exercised within the first 30 years of combined
175 credited service (25 for law enforcement officers).
176 (g) An employee shall not participate in the DROP for more than five years.
177 (h) Upon an employee's election to participate in the DROP, the employee shall cease
178 to be an employee of the retirement plan and is precluded from accruing any additional
179 - .- - - ._ •_. - - - - - - -- -- - -- -- - - - - .. - _.
180 (the term retiree and employee herein are synonymous for employees who elect to enter
181 DROP). The amount of credited service and final average salary freeze as of the date of
182 entry into the DROP.
183 (i) Accumulated, unused sick (over 120 hours) and vacation leave (over 120 hours) shall
184 be deemed cashed out and included in the compensation calculation; provided, however,
185 that a minimum balance of 120 hours of sick leave and 120 hours of vacation leave shall
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186 be maintained by the employee and excluded from this calculation. The retained Ieavc
187 balance, including any additions, shall be paid to the employee at the conclusion of DROP
188 participation and separation from service.
189 (j) DROP plan account shall be established for each employee who elects to participate.
190 These are not actual accounts but nominal accounts and balances are kept as a
191 bookkeeping process.
192 (k) Payment shall be made into the employee's DROP account as if the employee had
193 retired from the employ of the city. Payments into the DROP will be made monthly over
194 the period the employee participates in the DROP, up to a maximum of 60 months, or,
195 pursuant to 101(A)(9)of the Internal Revenue Code, payments age 70.5, whichever occurs
196 first.
197 (I) An employee's participation in the DROP shall terminate at the end of five years and
198 the employee shall separate from city employment.Upon entering the DROP,an employee
199 ;hall file with the Board a non revocable letter of resignation from city employment. The
200 binding letter of resignation shall establish a deferred termination date in accordance with
201 the limitations of this DROP which may be amended if an employee wished to separate
202 from employment earlier than the deferred termination date.
203 .. . - - - - - -• - - -- ---e - - ''" - -- - - -- - - -
204 loan balances on a quarterly basis with quarterly statements provided. In the event than
205 a ► -- _ _ - _ - - - - -- e•e' - - - - - - - - - -- -- -' -- -
206 the month preceding the death of the employee.
207 (n) During the period of the employee's participation in the DROP plan,the employee's
208 normal retirement benefit shall be accounted for and paid into the employee's DROP plan
209 account.
210 (o) The employee's DROP plan account shall be invested with the retirement plan assets
211 and credited with interest equal to the overall net (earning less costs) investment rate of
212 return on the retirement plan assets during the period of the employee's participation in
213 the DROP plan. Notwithstanding fund performance, the crediting rate will be no less than
214 0% and no more than 8%.
215 (p) At the conclusion of the retiree's participation in the DROP plan, and as a condition
216 of participating in such plan, the retiree will continue retirement and terminate city
217 employment.The retiree will thereafter receive a normal monthly retirement benefit at the
218 same rate as previously calculated upon entry into the DROP, but the monthly amount will
219 - -- - - -- - • -- . - - - - - -- - - - -- •'•• - - - -- --
220 -- - = - -- - - -- - - -- -- - - -- e•e• - - - -- - _ _ -- _. _
221 maximum participation period, no earnings will be credit OP balance and no
222 further DROP deposits will be made.
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223 (q) No amount can be paid from the retirement plan until the DROP employee
224 terminates employment.
225 - -- - -- - •- , -- - • --' !ROP plan account will thereafter be distributedto
226 the retiree in a cash lump sum, which can be rolled over or paid in cash unless the retiree
227 elects an alternative distribution (also known as a rollover). Direct rollover may be
228 - - - - - - - - - -- - -- _ - •- - _ _ -- -- - _ --
229 (s) If a retiree dies before distribution of the retiree's DROP plan account commences,
230 the account balance shall be distributed paid to the retiree's designated beneficiary in a
231 lump sum, which can be rolled over or paid in cash at the beneficiary's discretion.
232 (t) Distribution of an employee's DROP plan account shall begin as soon as
233 administratively practicable following the employee's termination of employment. The
234 employee must elect the distribution within, but in no event later than, 15 days following
235 the employee's termination date. If the employee does not timely request the withdrawal
236 of the asset in the DROP plan, no further earnings will be credited on the DROP balance.
237 (u) Any form of payment selected by the employee must comply with the minimum
238 distribution requirements of the IRC 101(A)(9), which states that payments must
239 commence by age 72, provided that the retiree did not reach age 70 Vz before December
240 31, 2019.
241
242 Section 5. The provisions of this Ordinance are declared to be severable and if any
243 section, sentence, clause or phrase of this Ordinance shall for any reason be held to be invalid or
244 unconstitutional, such decision shall not affect the validity of the remaining section, sentences,
245 clauses, and phrases of this Ordinance but they shall remain in effect, if being the legislative intent
246 that this Ordinance shall stand notwithstanding the invalidity of any part.
247 Section 6. It is the intention of the City Commission of the City of Boynton Beach that
248 the provisions of this Ordinance shall become and be made a part of the Code of Ordinances of
249 the City of Boynton Beach Florida.The Sections of this ordinance may be renumbered re-lettered
250 and the word Ordinance may be changed to Section Article or such other word or phrase in order
251 to accomplish such intention.
252
253 Section 7. That this Ordinance shall be effective immediately upon adoption on
254 Second Reading, except as otherwise specifically provided herein.
255
256 FIRST READING THIS 5th DAY OF September, 2023.
257
258 SECOND, FINAL READING and PASSAGE THIS 14th DAY OF September, 2023.
259
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260 CITY OF BOYNTON BEACH, FLORIDA
261
262 YES/ NO
263 Mayor-Ty Penserga
264 ✓
265 Vice Mayor-Thomas Turkin
266 t7
267 Commissioner-Angela Cruz
268
269 Commissioner-Woodrow L. Hay
270 L7
271 Commissioner-Aimee Kelley
272
273 VOTE S<31
274
275
276
277 A sT:
278 9, ,
279 11 .
280 Maylee D_ -sus, WA, MMC 'en .a
281 City CI:r Ma •r
282
283 - e'‘' APPROVE RM:
o�INTON
284 (Corporate Seal) i 4'C� vz;4ATE••�0i
285 :O;6° 1 VS- ►,
286 fl__. ": SVAP�Eovj � David N. Tolces
287 %v;•\NGOR)20 ; Interim City Attorney
288
1.9
289 ,'`��`� FLOR��