Fort Walton Beach Council agenda — 05-12-12 special police reorganization — reading text

faithfully faithfully protectprotect andand serveserve ourour communitycommunity andand itsits citizens.citizens. 4.4. Submission.Submission. 4.4. 1.1. ThisThis staffstaff reportreport memorandummemorandum isis respectfullyrespectfully submitted.submitted. PacketPacket Pg.Pg. 66  3. 1. b CITY OF FORT WALTON BEACH DATE: April 23, 2012 TO: Bob Mcams, City Manager FROM: Brandy Ferris, Finance Director SUBJECT: Suoolementary Considerations if Police Services are Contracted 1. Backeround 1. 1. As requested, the City Council received a Law Enforcement Services Proposal from the Okaloosa County Sheriff' s Office (OCSO) on February 28, 2012. The Proposal offers the City a one -year contract, including a continuing option to renew with the same terms and conditions, with the exception of the contract price, which would be negotiated on an annual basis. The initial cost of the contract is $ 3, 820, 463. 1. 2. Some considerations if Police Services are contracted me identified below. 2. Discussion Accrued Sick and Vacation Leave 2. 1. Accrued sick and vacation leave payouts for terminated employees are estimated at 537K. This one -time payout would come from General Fund fund balance, of which there is approximately $ 800K currently available. Unemplovment Compensation 2. 2. The City currently has 62 swom and non -sworn filled positions in the Police Department. Current employees would have the opportunity to apply for positions with the OCSO, subject to meeting minimum qualification requirements, including residency within Okaloosa County. 23. Unemployment compensation may potentially be available to employees terminated through a reduction in force. The cost to the City is $ 275 /week per employee for a maximum of 26 weeks. The potential weekly cost of $ 17K would be recurring to the extent that the effected employees were not placed with the OCSO or were unable to find new employment. The average claim period is currently 21 weeks. Retirement Plan 2. 4. if no other action is taken by City Council, the Pension Plan terminates by option of law. Upon termination, the difference between the value of plan assets and the value of accrued benefits would have to be paid by the City ( currently $ 6. 1M). In addition, the Pension Board would be solely responsible for determining how the accrued benefits in the Plan would be paid out Depending on the option chosen by the Board, the current 6. 1M could increase accordingly. This increase has been substantial for other Cities who have terminated their Plans, in some instances increasing the liability by more than one- half the original amount. 2. 5. City Council could elect to " freeze' the Pension Plan vs. " terminating" the Pension Plan. Under this scenario, the City would not be required to pay the difference between the value of plan assets and the value of accrued benefits ( currently $ 6. 1 M) upfront. The Plan would be kept in operation, paying benefits as they become due, while not accruing any future service related liability. Each year, the Plan would have gains and losses that Packet Pg. 7  3. 1. b would affect the remaining amount of the liability that the City would be required to pay. 16. Retirement costs would continue upon Plan freeze, however, these costs, and the retirement liability would eventually be eliminated, as service related costs would not continue to accrue and there would be no new entrants to the Plan. The current budgeted annual contribution is $ 672K. It is likely that the continued cost would range between 400K - S800K and would continue for as much as 20 years. 2. 7. An actuarial valuation would be required to determine the actual amount of the continued costs and the length of time the costs would continue. The cost of the actuarial valuation is S9K and would take approximately 30 days to complete. 2. 8. Any changes to the pension plan, with the exception of Plan termination, are mandatory subjects of impact bargaining. 2001 Facilities Bond 2. 9. The Police Department' s portion of the annual debt service on the 2001 Capital Improvement Revenue Bond is budgeted in the current fiscal year at $ 175K. This debt continues until FY 2030 -31 at an average annual debt service of $173K. 210. This debt payment could be alleviated, by leasing the building, subject to the annual approval of the Board of County Commissioners, as outlined in the Proposal. The Proposal provides for a credit to the annual contract in the amount of $ 174, 379 as compensation for this lease. Cu, rent Vehicles and Equipment 2. 11. The City' s current vehicles and equipment have a book value at September 30, 2011 of 575K. The fleet includes 67 vehicles. Disposal or transfer of these assets would need to be addressed. 3. Recommendation 3. 1. This memo is provided for informational purposes to assist the City Council in its decision making process, therefore, no recommendation is set forth. Supplementary Cost Considerations 2, 000, 000 1, 800, 000 - -- - 400, 000 t,20o, 0oo 1, 000, 000 8w,000 600, 000 _.. 400, 000 200, 000 F ty"z .4 1'YA .4 1'1h +,F y0 +F ti1 -F 1,10 F+. 10 -(E y0 ,(4 L1' -{F y'L 4jL's F 4 lh F+. y0 FJ•L^ F-L,LO ,,F t0 F- iy0 Fi ti F,.y'L Debt (mitigated if building leased to CC50) Pension ( assumes Plan freeze) m Unemployment (assumes 21 week average) Final Leave Payout Packet Pg. 8 Page 1: 42 05/ 011201209:06:39 Ad Number 34490798 Ad Key Order Number 34207941 Salesperson 25- Maureen Wiltse PO Number a Publication Customer 2002525 City of Fart Walton Beach Northwest Florida Daily News Section Classified 2006 Contact Lareine Van Eften Sub Section Classified 2006 Addreard 107 Miracle Strip Parkway SW Category 1100 Legal Advertising Addrbi Dates Run 051072012 -05/ 072012 City St Zip Fort Walton Beach FL 32548 Days 1 Phone - 850) 833 -9525 Size 1 x 7. 63, 72 Hiring Fax 850) 833 -9640 Words 225 Credit Card Ad Rate Legals Rate Printed By Maureen Wiltse Ad Price 119.48 Entered By Maureen Wllse Amount Paid 0. 00 Amount Due 119.48 Keywords 2397 Spl Mtg 5110112 Notes Notice Zones 1ep123W WNSON CIIYoFFOHT BFACH NOTICE OF SPECIAL COUNCILIAE IA) Legal . 1 CrrvOFr The City City of CFog of on Fog Wagon Beech, will Wr1LTON G ekkal NOTICF SPEUP in a SpFirt MB agande COUNCIL MEETINGMEETING to Ch.