Fort Walton Beach Council minutes — 08-22-07 special minutes — reading text

97 MINUTES OF THE SPECIAL COUNCIL MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA AUGUST 22, 2007 INTRODUCTION A special meeting of the City Council of Fort Walton Beach, Florida, was held on Wednesday, August 22, 2007 at 5: 30 p. m. in the Council Chambers at City Hall, with the following present: Mayor Mike Anderson Councilmen: Mike Holmes, Virgil Miller, Dennis Reeves, Bill Garvie; Dr. Wayne Pullen, Jim Hartwell and Mike Minich. Also Present:Joyce Shanahan, City Manager; Helen Spencer, City Clerk; Lisa Absher, Finance Director; Toni Craig, City Attomey; and Department Directors. CALL TO ORDER The Mayor called the meeting to order. PLEDGE The Mayor led in the Pledge of Allegiance. RES. 07- 17: CDBG ANNUAL ACTION PLAN The Mayor read the resolution by title. A RESOLUTION OF THE CITY OF FORT WALTON BEACH, AUTHORIZING THE SUBMISSION OF THE CONSOLIDATED PLAN/ ANNUAL ACTION PLAN AND AN APPLICATION OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS; AUTHORIZING THE CITY MANAGER TO SIGN THE GRANT AGREEMENT; PROVIDING AN EFFECTIVE DATE. The CDS Director mentioned the City' s CDBG entitlement for fiscal year 2007/ 08 is $ 148, 027. 00. She went over the projects and amounts allocated as recommended by the Citizen Advisory Committee. She requested approval of the resolution. There was a question on the make- up of the Citizens Advisory Council, and if it is an official City committee if there is an ordinance that establishes who is on the committee. The CDS Director and the explained the Citizens Advisory Council has been on- going for 20+ years, is made up of citizens makes the to fill She said it was not a committee created or committee appointment a vacancy. appointed by Council, that the CDBG Program and HUD requires it to be a citizens committee and the grant does not require that Council appoint it and neither does the ordinance. An opinion was requested of the City Attomey on the legality of the committee, VIkIo replied she would have to look at it and bring it back to Council. It was commented that if requesting grants there should be some official standing of the committee. The CDS Director explained in the Agreement with the CDC on the Administration of the CDBG Program it is anticipated that the CDC Board would be the Citizens Advisory Board for the grant. Pruitt During discussion there was explanation that the Youth Enrichment Program supports the Chester summer program; the Clearance and Demolition Program funds are set aside to assist homeowners with the cost; the Program Administration allocation will be used by the Community Development Corporation to cover staff costs for administration of the grant; and that the CDBG allocation is insufficient to meet the Homeless and Other Special Needs Activities, however, 15% of the grant can be used for public service. She said each year it is advertised and opened for agencies to request money under the public service could be category to assistance in addressing the needs of the homeless; and potentially CRA funds used if it is a project addressed in the CRA Plan, not funded by the City in the last three years, and it met all the criteria. 98 Special Council 8- 22- 07 RES. 07- 17 The question was asked of the City Attomey the timeline on an opinion regarding the Citizens Advisory Committee. She expressed her agreement with the CDS Director that it be placed in the Agreement with the Community Development Corporation when they take over the administration of the CDBG program and she will make sure it is put into the Agreement. Dr. Pullen moved to approve Res. 07- 17. Mr. Garvie seconded motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Pullen, Hartwell, and Minich in favor. "" GENERAL EMPLOYEES PENSION FUND Presentation of professional analyses of General Employees Pension Fund. Mr. Minich moved to suspend Roberts Rules of Order. Mr. Holmes seconded motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Pullen, Hartwell, and Minich in favor. Jim Linn, Pension Attomey with Lewis, Longman & Walker; Mike Tierney, Plan Actuary with Actuarial Concepts; and Angela Balent, with O' Sullivan Creel, City's Auditor, were present to discuss and answer questions on their professional analysis reports. Mr. Linn noted the three reports are all consistent in their findings and conclusions. He began by providing a brief general overview of the current status of the Plan. He reviewed that the Pension Plan is a Defined Benefit Plan where the benefits are based on a formula that includes a member's years of service, final average earnings and a benefit multiplier; the City is required under the law to fund the pension plan on a sound actuarial basis which means the City must annually contribute the annual required contribution ( ARC) determined by the actuary; the City has always paid the annual required contribution to the plan; the plan has always been funded in accordance with the law; and pointed out the chart which shows a retirement plan comparison with other Florida Cities and noted the funded ratio for the City is 87% which compares generally favorably with most of the other cities in the sampling. He noted of all the cities there is only one that is 100% funded ration and there are many funds that have a lower funded ratio than the City of Fort Walton Beach. He commented that the funded ratio has fallen from 100% to 87% in the last few years should not be a sign the pension fund is in trouble because a lot of other funds and investment plans had similar types of losses over that period. The question was asked if the City should try to achieve a 100% funded ratio and if so, how they would do it. Mr. Tierney replied the City should not focus on the 100%; that the purpose of the actuarial funding is to automatically get it to 100% by the time they need 100%. He said to focus on anyone year along the path is not as important as making sure they are on the path to 100% funding by the time they need it. He said, to put it in perspective, as of a year ago there was almost $30 million in market assets, the annual payments to retirees are $ 1. 6 million, the retiree liability for the next 20 years is worth about$ 18. 9 million of the $ 30 million, so the rest of the assets already there are on the way to fully funding the active retirees some time in the future and then those payments get paid out over the next 20-25 years after that. He said in terms of needing the money, there is plenty of money to meet the obligations for a long period of time in the future and the only important thing is to have a standardized method of measurement to see where they are, but that should not be the focus. He said the City should make sure that the requirement is paid and if they want to deal with how to keep the contributions more stable, that is where to spend the focus and time. He said the City will get to 100% by the nature of the way the actuarial cost methods vvork. Mr. Linn explained the each City had a different total required contribution because each plan is separate, has different assets and liability, and has different benefit structure, so every plan has to be looked at individually, separately by an actuary. He said the State mandates that the Actuary for each plan certify that the funding of the plan is in compliance with the Statutes; it is the actuary who determines what the required contribution needs to be. Special Council 8- 22- 07 99 GENERAL EMPLOYEES PENSION FUND cont Mr. Tierney explained the funding ratios are not used to determine how much should be paid into the plan. He said the actuary makes sure that the plan is actuarially sound, meaning funding recommendations will balance the plan in accordance with the rules under State law, and that it will get to where it needs to be some time in the future. He said to have it 100% can depend on the interest rate used and the assumptions made. He said the plan will always be in actuarial balance, the only issue is how much you have to pay to get there and not focus on the funded status but to spend time on how to manage the annual contribution requirements. There was some discussion on whether or not putting in more than the annual contribution requirements would build up a cushion and reduce the volatility. Mr. Tierney commented it is a Council policy decision whether to adopt a philosophy going forward to put in more than the requirement in some years to build up a cushion. There was a question on the comment in the City Auditor' s report that there is a shift in the financial health of the Plan, and whether the Plan is in good health. Ms. Balant explained it was a comment that the status of funded ratio has shifted downward in the past several years which she did not believe was the result of any action or inaction taken by the City, but believed is the result of the market conditions of the stock market in that time period. She expressed her belief that the Plan is in very good financial condition. Mr. Linn next reviewed the past funding practices where historically the City has budgeted an amount for retirement that is based on an estimate from the Actuary received prior to the beginning of the fiscal year, which has generally been based on the prior years required contribution amount and the actual Required Contribution Amount has not been received by the City until after the budget is adopted. In those years when the amount budgetedfor retirement contributions exceeded the Annual required contribution, funds budget in accordance with the City' s own budget ordinance which were transferred to other areas of the contains language that expressly authorizes budget transfers that are approved by the Finance Director or City Manager, and Council approval is not required unless there is a change to the total dollar amount of the budget. He noted the Actuary and the City's Auditor recommend that in going forward the City move to the payment delay model for future actuarial valuations. He explained with the payment delay model the City' s annual required contribution would be determined based on the Actuary' s report received before the budget is adopted, which means the amount budgeted will be the actual annual required contribution amount and there will be no more difference during the year once the payment delay method is incorporated into the budget. Mr. Tierney added if the City wants to have stabilization they need to figure out a budgeted amount that will overall allow them to lower the volatility. He said he has fixed it actuarially so that the report the City receives will be the requirement in a timely manner so the budget will always match. The City Attomey received confirmation that none of the issues need to go back before the General