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HomeMy WebLinkAboutMinutes_Miscellaneous_04/14/1993_Public Safety Committee r, VILLAGE OF TEQUESTA Post Office Box 3273 • 357 Tequesta Drive Tequesta, Florida 33469 -0273 • (407) 575 -6200 Fax: (407) 575 -6203 3 0 d 4 f�CN coUNjy V I L L A G E O F T E Q U E S T A P U B L I C S A F E T Y C O M M I T T E E M E E T I N G M I N U T E S A P R I L 1 4, 1 9 9 3 I. The Tequesta Public Safety Committee held a scheduled meeting at the Village Hall at 357 Tequesta Drive, Tequesta, Florida, on Wednesday, April 14, 1993. The meeting was called to order at 8:30 A.M. by Chairman Joseph N. Capretta, with Co- Chairman Ron T. Mackail in attendance. Also in attendance were Village Manager, Thomas G. Bradford, Village Clerk Joann Manganiello, Police Chief Carl Roderick and Lt. Steve Allison and Finance Director, Bill Kascevalis. Also attending were: Mike Madden, Florida League of Cities and Steve Palmquist, of Kruse, O'Connor & Ling of Ft. Lauderdale, Florida. II. APPROVAL OF AGENDA Under Agenda Item VI. ANY OTHER MATTERS, Village Manager Bradford requested to speak regarding fire trucks and Station 11, as well as giving the status of the requested pert chart. The Agenda was approved as amended. III. REVIEW OF RETIREMENT PLAN OPTIONS FOR FIREFIGHTERS. Steve Palmquist, of Kruse, O'Connor and Ling. Mr. Palmquist presented various retirement plan options available to the Village: 1) Defined Benefit Plan; 2) Defined Contribution Plan, and the pros and cons of each. Chairman Capretta pointed out that the deciding factor should be the value of the benefits to the employee, comparable to that of Tequesta Police and neighboring jurisdictions at a lesser cost, and that it would be important to have the chosen plan in effect before the fire department is started so that potential employees might have all the facts to make a sound decision. Village Manager Bradford explained that the Fire Chief will begin working on April 27, before the pension plan is implemented, and the first day on the job of other firefighters will be July 21, 1993. Recycled Paper Public Safety Committee Meeting Minutes April 14, 1993 Page 2 ----------------------- Mr. Palmquist, an actuary with his firm, reported that the firm has been in business for 27 years; he has been with the firm 20 years. The firm handles 75 -80 municipal pension plans throughout the State of Florida, with many clients in the immediate neighborhoods. His firm does not receive commissions for the sale of any product, but only fee for service rendered. Mr. Palmquist presented to the Committee two charts: 1) Retirement Benefit Projections; and 2) Retirement Plan Options, with each showing defined benefit plans and defined contribution plans: Defined Contribution Plans = a certain percent of an employees pay is put into a fund and, year by year, along with investment earnings, determines how much the employee will receive by the time he /she retires. Defined Benefit Plan = fixes the benefit at the end of the term, in terms of a percent of a person's compensation. Example: The benefit at retirement may be equal to 20 of the employees' average pay for each year of service. Therefore, • retirement after 20 years of service, at 2 %, would produce • pension for life of 40% of pay. The pay scale is usually averaged over 3 -5 years. Mr. Palmquist explained that the Florida Retirement System (FRS) is a defined benefit plan. With FRS, for special risk employees (police and fire), there is a benefit rate starting this year forward of 3% of pay for each year of service, with a five -year averaging period, with a minimum for retirement of ten years. A person is allowed to retire after 25 years, regardless of age, or at age 55 with ten years of service. FRS also offers a 3% cost -of- living provision which few other plans offer (i.e., after a person retires, his benefit may increase by up to 3% /year, according to CPI) . FRS has an unfunded liability of approximately $16 billion. With a defined benefit plan, most plans start with a big liability for past service. That will not be so in the case of Tequesta firefighters since all service will be in the future. There are two components of cost in a defined benefit plan: 1) regular cost for service accruing; and 2) the amortization payment for past service (which Tequesta will not have). The vast majority of plans covering firefighters throughout the State of Florida are defined benefit plans. More monies are paid to short - service people in defined contribution plans than with defined benefit plans. Public Safety Committee Meeting Minutes April 14, 1993 Page 3 ----------------- - - - - -- Chairman Capretta asked if the creation of an annuity would effect the cost of the plan. Mr. Palmquist answered that that is called an actuarial assumption. In defined benefit plans, assumptions are made as to what will happen in the future: i.e., investment earnings; salary increases; when will people actually retire; turnover in the department, etc. The most important of these is the investment return, which will have a big effect on the cost of the plan. It is presently projected that earnings will be around 7 -8% long term. Florida League of Cities (FLC) allows municipalities to choose which ever plan they want, and already has a pool of monies set up into which the investments are placed, just like a mutual fund. FLC manages the investments, provides actuarial services, etc. Chairman Capretta asked if FLC and FRS are similar in that, once you're in, you're in and can't get out. Mr. Madden answered that it depends on the plan chosen, but generally, once in the program or until retirement is reached, the monies stay with the pool. Vesting time in either plan is chosen by the municipality, usually a ten -year cliff (no vesting before ten years - 100% once ten years is reached). Many municipalities have chosen a plan with 50% vesting after five years, grading up to 100% after ten years. Chairman Capretta stated it was his desire to see an actuarial study done for Tequesta firefighters comparing a defined benefit plan with a defined contribution plan, using FRS as a benchmark. Mr. Palmquist stated that with FRS, the benefits and costs are fixed. Mr. Madden added that there are several costs associated with any plan: actuary/ attorney fees; auditing fees; administrative fee if not done in- house, etc. Village Manager Bradford asked if one of the basic differences between defined benefit and defined contribution is that the risk of investments under defined contribution falls on the employee, but the risk of investments under defined benefit falls on the municipality. Mr. Palmquist stated that was correct. Public Safety Committee Meeting Minutes April 14, 1993 Page 4 Mr. Palmquist explained that in a defined contribution plan, a certain percentage of pay goes into the plan, which earns investment earnings, and whatever the total is in that person's account by the time he /she retires is what is received. On a defined benefit plan, the municipality is effected by the investment plan: if the investment return is good, the cost to the municipality comes down; if the investment return is bad, it makes the cost to the municipality go up. Most firefighter groups do not choose to take a defined contribution plan, but usually select the more secure defined benefit plan. Administrative costs for a defined benefit plan are greater than those with a defined contribution plan. Mr. Palmquist suggested the Village should consider starting out at a modest level on a plan, and easing into something higher, since no Tequesta firefighter will be retiring in the immediate future. A Chapter 175 Plan is based on the number of property policies written in a specific geographic area, based on zip code, which may or may not coincide with municipal boundaries. A premium tax from those homes goes to Tallahassee, which revenue, in turn is distributed to the municipalities that are in the 175 Retirement Plan. Everyone already pays this tax, but Tequesta, not having a Chapter 175 Plan, does not get its share. If Tequesta was in the Chapter 175 Plan, its share would be an approximate $8,300 /year, with strings attached. With a 175 Plan, the State can change the benefits if they so desire, and can also decide how to pay out those benefits. The municipality has no control. With the League of Cities benefit plan, the municipality can create its own benefit package, the municipality can be part of an investment pool, and the League provides actuarial services. ICMA (International City Managers Association) has a defined contribution plan (but not a defined benefit plan) funded both by the municipality and the employee. ICMA has several different investment options which employees can select, and administrative costs are fairly low. Public Safety Committee Meeting Minutes April 14, 1993 Page 5 ----------------- - - - - -- Local Law Retirement Plan allows the municipality to set whatever set of benefits it desires, based on how much is contributed. There has to be an actuary; once per year the plan is audited with required periodic legal service, and this plan can get the Chapter 175 revenue, with certain requirements met. The Plan is not as restrictive as a Chapter 175 Plan. IV. RECOMMENDATION OF RETIREMENT PLAN TO BE IMPLEMENTED BY THE VILLAGE. Co- Chairman Mackail felt it was necessary for Tequesta to be realistic in its goals, objectives and implementation with a Retirement Plan, and needed to be careful regarding unfunded balances. Tequesta must be competitive with other agencies, yet realistic in the approach, with the key factor being length of the program. The Committee recommended that the Village Manager Bradford do a study of neighboring fire departments retirement plans showing benefits regarding key factors, and show what Tequesta's cost would be under each of the scenarios, showing typical employees, high and low ends, projected out 20 years. V. REPORT ON POLICE DEPARTMENT TRAFFIC ENFORCEMENT ACTIVITIES ON COUNTRY CLUB DRIVE. Chief Carl Roderick. Chief Roderick reported on the traffic enforcement record for Country Club Drive for the months of January through April, 1993, with a total of 54 traffic stops, 25 traffic citations, and 23 written warnings. On April 8, a Directed Patrol Order was issued to address complaints of speeders on Country Club Drive, as well as other streets in the Village. Speeders are not cited until they travel 10 miles over the speed limit. Co- Chairman Mackail suggested that complaints regarding speeders be reported to the Police Department, giving the license number of the vehicle, description of the vehicle, and time and location of speeding. The Committee directed the Police Chief to continue with the traffic control as has recently been done, with the same type of report given next month. Public Safety Committee Meeting Minutes April 14, 1993 Page 6 ----------------------- VI. ANY OTHER MATTERS A) Village Manager Bradford explained that the Village plans to buy two fire trucks: 1) brand new Class A 1250 gpm Pumper; and 2) a 75 foot aerial truck. Bids open next week for the new pumper. Depending on bid interest, it is possible all bids would be rejected and the pumper purchased direct. Plans call for the aerial truck to be a refurbished unit, but the new Tequesta Fire Chief is not comfortable with that idea, since it is his position that a city gets rid of the truck for a reason. A new aerial truck will probably be in the $300,000 range. Another option is to bid out the aerial truck, and take time to buy it, building it into the specs. It is possible in the meantime to have a loaner unit while the aerial truck is being built. Mr. Bradford explained that the original proposal was to purchase the two trucks under a lease /purchase arrangement with a ten -year amortization. With Village Council approval, better trucks could be purchased, if they were included in the Bond monies the Village is considering, possibly making the cost per year for the trucks less than that under a lease /purchase arrangement. Chairman Capretta felt that was logical. Village Manager Bradford stated there would be more information on that next week. B) Station 11: Village Manager Bradford stated the Committee needs to consider the lease of Station 11 which the County has with Tequesta, since Tequesta needs to make a decision regarding housing its fire equipment. Otherwise, the Village garage will need to be remodeled for a place to keep the fire trucks. However, in the long run, Station 11 will eventually be obsolete, since it can only hold two trucks. Chairman Capretta felt the initial approach to be taken regarding Station 11 should be, first of all, a negotiating stance with Chief Brice and Commissioner Karen Marcus. If negotiations are unsuccessful, then give notice to vacate in one year. If there is a refusal to vacate, then arbitration. Public Safety Committee Meeting Minutes April 14, 1993 Page 7 ----------------------- C) Village Manager Bradford gave the Committee a detailed update via a pert chart regarding the implementation of the Tequesta Fire Department. VII. ADJOURNMENT There being no further business before the Committee, the meeting was adjourned at 11:00 A.M. Respectfully submitted, Fran Bitters Recording Secretary ATTEST: oann Na ani llo Village Clerk DATE APPROVED: