Fort Walton Beach Council agenda — 08-22-2007 special agenda — reading text

budget ordinances, and are a common practice in many Florida cities. The Ft. Walton Beach General Employees' Retirement Plan is reasonably well- funded. The Ft. Walton Beach plan compares favorably to general employee pension plans in 18 other small to medium size Florida cities in terms of current cost ( required contributions) and funded ratio. It appears that the Advisory Committee was originally intended to act as a liaison between the Board of Trustees ( City Council) and employees, and make disability determinations. These functions are entirely appropriate for a committee made up of employees. There isnothingin the plan to suggest that the Advisory Committee should be performing investment- related functions. However, it appears that the Advisory Committee has become involved in investment activities. If the City Council determines that it is advisable for an advisory committee to perform investment- related functions, there are several options for restructuring the committee. A " fixed" City contribution rate is contrary to Florida law. The City cannot " fix" a contribution rate that is less than the annual required contribution, which varies from year to year. 1 Page 23 There are a number ofoptions that the City may wish to consider for reducing retirement costs by restructuring or replacing the existing City retirement plan. These options include: 1. Close the existing City plan to new members and establish a defined contribution plan for future hires. 2. Close the existing City plan to new members and join the Florida Retirement System ( FRS). 3. Terminate the existing City plan, and join FRS or establish a defined contribution plan for all employees. 4. Close the existing City retirement plan to new members, and create a new defined benefit plan with benefits based on a target contribution rate. 5. Freeze existing plan benefits for current members; adjust benefits for future hires. 2 Page 24 Current Status of the General Emplovees' Retirement Fund The actuarial valuation report for the 2006- 07 fiscal year, prepared in March 2007 based on data as of 10/ 1/ 06), reflects the following: Membership 232 active members 103 retired members and beneficiaries ( now receiving benefits) Assets/ Liabilities Assets of $ 29.449 million ( actuarial value) Actuarial accrued liability of $33. 885 million Unfunded actuarial accrued liability of $ 4.436 million Funded Ratio A funded ratio of 87% ( assets divided by actuarial accrued liability) Required Contributions (2006- 07 fiscal year) City - 15.95% of payroll ($ 1. 3 million) Employees - 5% of payroll ($ 385, 782) Total Required Contribution - 20. 95% of payroll ($ 1. 6million) Comparison With Other City Pension Plans The chart on the following page compares the Ft. Walton Beach General Employees' Retirement Fund with general employee pension plans in 18 other small to medium size Florida cities. The chart shows the population of each city, the number of active members, total required contributions, city contributions, and the funded ratio for each Walton Beach plan. The chart is intended to provide a context for evaluating the Ft. and funded status of a plan. Obviously there are many factors that can affect the cost pension plan that are not reflected in the chart. The chart shows that the Ft. Walton Beach plan compares favorably to most of the other city plans in terms of contributions and funded ratio. Specifically: 15 of the 18 other cities have greater total required contributions than Ft. Walton Beach; only 3 cities have lower total required contributions 13 of the 18 other cities have greater city contributions than Ft. Walton Beach; only 5 cities have lower city contributions Only 2 of the 18 other cities have a funded ratio that is better than Ft. Walton Beach ( one other city is the same) 3 Page 25  0-- 1 E o E o '#. '#. g o '#. o.!!! t 0 o 1.0 0 -:: c: C IIS- 0> LO CO I'- I'- J:"'- I'- LO "": Q)-' O LO I'- I'- N O~ t N N~ O> CO COL .s I) COco COLO o I'- LOI'--.;; CO"'- co CO CO I'- I'- CO-g C~( cg: 2 0> r--. co COI'- CO CO ra J UI CJ ra LL .!. ~ I: : I 0 co c: I o C C_ 0 Q) 0 0= 0 J....... J>> LO r--- CIIS LOO> tO"": O> COCO~ NO O-:: J:~~ Q) ._ C. t('i) CO-.;; LO C"')CO 1.0 i) NO> I'- roLO"'-",,:-.;; NNI'- C"')O COLOcO"'- N i)...- CO N...-...-...- N NC"') NN...- ...- N...-...-(' N...- O~ E Q) 30- E L-.... L-.... Q) a:: C z Q) C_ o 0 ~ c: o en J;... J>> oo C"::::: 1.0 2 Q),CIIS C. 01'-"'- 0> OCO~ LO",,: o>...-..