PB 11/17/2009 Minutes - Laserfiche WebLink

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Police/Fire Pension Board Meeting November 17, 2009 Page 3 Salary increases recognized averaged only 2.9%. The actuarial assumption was 6% so the actual increase was very good for the plan. The future value that would be needed to pay for all future benefits would be $14,763,232. The actuarial value at fiscal yearend was $6,854,844. The difference, $7,908,388, is what remains to be funded. The funding is scheduled over multiple years which is how the actuary determines the funding requirement each year. The prior year administrative expenses are also built into the next year's funding requirement. The excess state monies reserve is $1,105,965 at fiscal yearend. There was no special fire distribution for FY 2009. The funding standard account tracks excess contributions where the City has access to that when the City may need to draw from it during tight budget years. The balance in the case of the City of Casselberry was created from perhaps excess state contributions. Patrick is not certain that the balance may be restricted to fund future benefits. If the City were to "short fund" the plan in a year to take advantage of the money in the Funding Standard Account ($163,372 at 9/30/09) it will not affect the balance of money held in the Excess State Monies Reserve. Mr. Donlan leads a discussion about the "Stop Restart" ordinance next. In 1996 a one-time opt out was offered to leave the Florida Retirement System. The City opted out and for a few employees the City collected more than enough from excise taxes to pay for current benefits. In 1999 the law was changed to require that excess state money over the frozen amount must be used to pay for benefit enhancements. Frozen contributions do not change with raises in salaries or increased membership. There is a method to change the frozen amount through something called a "Stop Restart" ordinance. The City would reduce benefits to perhaps a 2% multiplier compared to 3% now in effect. With the reduction in benefits the frozen state funding would be reset at zero. Then the City passes a "benefit improvement" which reestablishes pre-existing benefits. The frozen amount is reset also at a higher amount reflecting higher current salaries and larger membership. It is legal and Patricia Shoemaker (with the Division of Retirement) has approved it. If a Stop Restart ordinance is implemented the current frozen amount ($183,117) is reset at something higher. To the extent that State money exceeds the new frozen amount it can be shared through a Share Plan. The Stop Restart could reduce plan benefits as far a State minimum with corresponding frozen amount at zero. It's also possible to reset what was in place for the plan in 1999 with a corresponding frozen amount calculated for that level. By implementing a Stop Restart future distributions to members could be impacted. It is possible to engineer the Stop Restart ordinance to go down to any level like a 2.9% multiplier instead of 3%. The affect would be to moderate the change that would be authorized to the frozen amount by enacting a Stop Restart ordinance. Trustee William Jensen asked if the balance of excess state monies would be affected by the passage of a Stop Restart ordinance. Would there be fewer dollars available at the inception of a Share plan for distribution to members? If the Stop Restart is enacted to the fullest extent possible then the City will be able to use all State monies for quite a while and there would be no money available for distribution to Share Plan members. If the City and the members wanted to do a Share Plan somewhere in between there may be something left for Share distribution. East Naples Fire District passed a Stop Restart and a Share Plan. In the case of East Naples the excess state monies was drawn down to pay for a multiplier increase. If no multiplier increase is enacted for Casselberry then the excess state money would be used to seed the Share Plan. In the end given no other benefit enhancements the order of implementation does not matter. If the Share Plan is implemented first the Excess State Monies Reserve would be applied to share