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

6- 12- 07 Regular Meeting REVIEW OF PENSION PLANS cont. Mr. Miller asked if the City could elect not to put in 20% but to put in 10%. Mr. Tierney said the requirement is the requirement under the State Law rules to determine the minimum amount to make, they can choose to make more but theyhave to make at least that, but if they want to change the amortization method, then they can make the legal requirement be less. Mr. Tierney addressed the question on the 8% budgeted but not put into the Plan and said it is not a defined contribution plan, the information on the employee' s statement has nothing to do with their benefit. He said whether the City contributes 2% or 8% the employee gets the same; they have no interest in whateffver that amount is. He said the question "was asked if the City paid 8% in 2002 would .. they be better 0 and the answer is probably not because that is when they lost 8%, but that fair way to judge it and thought to do some sort of averaging method is reasonable. He said if they is not a 0 are less than 80% funded they would not get in trouble with the State Actuary, and relative to what he has seen the City is in good shape; the goal Is 100% but it does not mean they have to be there today. He believed relative to the investment performance the City doing thing, hiring professionals is that are allocating the f,lsets at 8% and pointed out the investment policy is the important factor. He commented the Plan has never had a negative cash flow even though it is a mature Plan and taking to do anything equal to or more money required for the Plan is by State Law and Council can choose and it is Council' s prerogative to decide. He said he would strongly recommend taking a report and would be used to determine the having a yea"r delay in its application so that" the 2006 report know the requirements for the 07/ 08 Fiscal Year so that when they set the budget they will contribution and there will not be an issue between budget and the requirement. Mr. Garvie wished to know if there is a way to set up the Fund to level out the amount going out every the reserve funds to use at times when contributions are year. Mr. Tierney replied they have to have lower or take out when contributions are higher, so they can try to pay a fixed amount even though the loops, and it takes they cannot do it by law, they can do it by their own side funds to help through more money than the requirement. He mentioned there is a City with a model that if the City too then the difference is with the employees, split so they share the cost of contributions" got high to excess cost. He said that is one way to help with the funding of the current Plan without having actually change the Plan structure. The Finance Director pointed out starting on page 129 of the backup describe that the City was in 2002. starting to have cash flow problems and liquidating and selling investments g startir:' there be better Larry Cole with Merrill Lynch commented the Advisory Board Is a good idea; may ways to handle the cash flow as right now the amount of money going out every quarter is just slightly more to fund the than the contributions coming in so the Managers do not have to sell assets every quarter retirement benefits; that most cities are probably putting in the minimum contribution required by the conservative options. actuary; and the majority of people that have 401 K options put it in more Mr. Minich received confirmation from Mr. Cole that his firm would be able to provide written comments with suggestions. 27 are the Governmental Angela Ballant with O' Sullivan Creel, mentioned the GASBY 25 and GASSY and display of what is Accounting Standards Board that basically govern the accounting, presentation has all the pension required for the City' s pension plans. She pointed out that Note 6 in the Audit She briefly explained under the plans" broken out as well as all the required disclosures. Governmental Accounting Standards Soard they have to record what the City is actuarially required to the fund, and even if the City were not going to fund that they would have to book liability for difference and if the not funding what was actuarially required they would be making a City were She said the has always funded what they have been comment as auditors they have a problem. City actuarially required to fund.  23 Regular Meeting 6- 12- 07 REVIEW OF PENSION PLANS cont. Ms. Ballant further explained the unfunded AALis just an estimate, it is good information and a good indicator of what is happening but it is just a point in time snap shot, it is disclosure information on page 70 of the Audit and on page 71 there is a ten year history of the annual required contribution and what the City has done, and they have always contributed 100% or more of what is required. She said they feel, as the external auditors, 'that the Plans are in good financial condition, obviously the costs are going up, and thought there are some forward thinking suggestions in what the Finance l Director put together. Mr.' Miller expressed the need to digest the information and maybe make a motion at the next meeting. He said he would like to have the evaluation of the recommendations from Mr. Tierney, Mr. Linn and Mr. Cole. The City Attorney suggested the motion be in the form of direction, they are professionals that. are working for the City and if they cannot meet the timeline they will let Council know they cannot do it. Mr. Miller moved to direct the consultants provide the necessary information so that Council can make a decision at the June 26, 2007 Council Mr. Garvie seconded motion. meeting. During discussion on the h timeline it was pointed out the information would need to be provided by June 21 for the Jurie 26' meeting. Mr. Linn expressed that timeline would be a little quick for him and it would be better if they had more time. ;~ o::'-, Mr. Minich moved to amend the motion that the consultants provide the inform~tion for the first meeting in August. Mr. Hartwell seconded motion. " ' Mr. Minich commented that the information was not available when the 'agenda was published and expressed the hope that the information wiH be thoroughly reviewed and discussed and coordinated with all the staff so that it comes back to Council as a cohesive piece of staff work. Dr. Pullen commented there was a lot of work put into the information and was' made available as soon as possible, it was given a short term and done outstanding in the period of time available. The Mayor called for the vote on the amendment to the motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Pullen, Hartwell, and Minich in favor. Mr. Minich expressed the hope that the information will be shared with all staff members and each consultant so everyone can review all comments so that what comes to Council is a unified position; there' are some great ideas, and that all backup documents are included when the agenda is published. The City Manager concurred they need to review the recommendations and have a unified position from the City tq bring forward to Council and she is committed to work with the Finance Director, the Actuary, the Pension Attomey, and the Auditors so they can bring to Council the ordinance required amendments at that time and have it all as one comprehensive package if Council is ready to move forward. She said she is committed to working together and they all need to be involved because it is a city-wide decision. The Mayor received confirmation that the information would also need to ~e shared with the Advisory Committee. Mr. Miller explained the contribution amounts and trend increased his questions and felt it is too important not to get all the information he could about the subject as~everyone deserves to know everything about their pension fund. The Mayor called for the vote on the motion to direct the consultants to provide the necessary information so that Council can make a decision at the first meeting in August and it carried unanimously with Holmes, Miller, Reeves, Garvie, Pullen, Hartwell, and Minich in favor. 24 Regular Meeting 6- 12~07 RECESS The meeting recessed at 10:45 p. m. RECONVENE The meeting reconvened at 10: 55 p. m. STANDING COMMITTEES/ ADVISORY BOARD REPORTS 0 The Mayor noted there is nothing under this item tonight and mentioned this was added to the age a as a place where the citizen' s advisory committees and standing boards can. make presentatio to Council as