HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 05_05/05/2008Minutes -Regular Village Council Meeting 10/11/07
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• 4. Presentation by Steve Palmquist, Gabriel Roeder, Smith & Company
regarding the possibility of reducing firefighter contributions from
6.1 % back to 5%.
Mr. Palmquist apologized that he had not attended last month because of an error on
his calendar. He presented a proposed change to the Police and Firefighters Pension
Plan, explaining the firefighters currently paid 6.1 % of their pay out of their own pockets
into the pension plan and the police paid 5% out of their own pockets into the pension
plan. The Pension Board had proposed a plan to reduce the firefighters' contribution of
6.1 % to 5%--the same rate paid by the police officers. Mr. Palmquist referred to the
Supplemental Actuarial Report which he had provided, explaining that under Florida
Statutes 175 and 185 the firefighters and police received revenue from the State of
Florida, which was a tax on casualty and property insurance written within the Village
limits. The firefighters were now receiving revenue from the State that exceeded the
amount the Village was allowed to take credit for against their contribution; under State
rules the only way that money could be used was to provide more benefits for the
firefighters. The request by the firefighters to reduce their contribution to 5% would be
such a benefit, since it was reducing the amount the firefighters would have to pay in
contributions. The increase in annual cost associated with this change was $7,000; the
amount the Village could take credit for would increase that same $7,000, making the
contribution amount from the Village unchanged. In other words, this proposal would be
financed by Chapter 185 revenue.
• Mayor Humpage commented the Village was about to enter into negotiations and this
could be a negotiable item. Mr. Palmquist advised that was correct, and he was not
pushing for this one way or the other-he was only providing information. Mayor
Humpage commented this was really anon-actionable item tonight. Council Member
Turnquest noted in 2005 the firefighters had requested their contribution rate be
increased from 5% to 6.1 %, and asked how often this was going to happen and stated
he did not like an up-and-down scenario. Mr. Palmquist commented the firefighters had
asked for a benefit which they had funded through their contributions and normally the
rate did not change from year to year, but he was not privy to the thinking that led to the
request to reduce back to 5%. Council Member Turnquest commented it seemed when
it was not in their favor they wanted to change the rate. Mr. Palmquist advised now they
had the State revenue to pay for this and the only way to tap into that extra revenue was
to provide another benefit to the firefighters. Council Member Paterno referred to Mr.
Palmquist's report and asked why the figures were as of 2005; Mr. Palmquist explained
that was the date of the last actuarial evaluation and another one would be done as of
October 1, 2007. Council Member Paterno also noted return on investment was less
than the 8% target; and salary increases during the last two years were a little more
than 6%, so he believed the assumptions would be found incorrect when a new
evaluation was done, and he believed it would cost the Village more money. The
assumptions made in 2005 for this pension fund had not materialized, and this fund had
not done as well as the General Employees Pension Fund, which had performed better
than expected. Council Member Paterno also stated he believed this was a negotiable
• item. Council Member Amero agreed this was a negotiable item; and expressed
Minutes -Regular Village Council Meeting 10/11/07
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• 4. Presentation reducing firefighter contributions from 6.1% back to
concern the calculations came out perfectly with zero increase in Village contributions.
Mr. Palmquist explained that was because the baseline for State revenue had been
increased by the amount of the cost increase, which was the way the State required
them to do this exercise, and there was enough State revenue to pay for it. Vice Mayor
Watkins asked if this would continue into the future, to which Mr. Palmquist responded
in both 2006 and 2007 the State revenue amount had been larger that it had been in
2005. There was no guarantee of the amount of State funds in the future, but for
firefighters it was tied to property insurance; for police it was tied to casualty insurance.
Mayor Humpage stated he wanted to wait, thanked Mr. Palmquist for his presentation,
and advised that a decision would be made on this soon.
5. Cost Presentation by Steve Palmquist regarding paying interest on
employee contributions per Gabriel, Roeder 8~ Smith Company
calculations proposal.
Mr. Palmquist noted he had previously reviewed this proposal to allow interest on
member contributions, which almost all other pension plans did, with the Village
Council. Right now, a General Employee who left the Village only received back the
amount of money they had put into the plan, without any interest. The proposal was to
apply 3% interest on any such refund. Mr. Palmquist advised this was one of the most
• modest changes in benefits that one could imagine; the cost associated with this would
only add something like $100-$200 per year cost to the Village. Vice Mayor Watkins
verified with Mr. Palmquist this contribution was mandatory for employees. Mayor
Humpage commented he could see a couple of ways, but he would like to do this during
negotiations. Council Member Amero commented he had given his opinion he would
not be voting for this, and had given his reasons, one of which was the six-year vesting
here, and he wanted to give the bonuses to the people who stayed six years; also, he
believed this was not done in government or in private businesses and he saw no
reason to start it here. Mr. Palmquist advised in the great majority of contributory
pension plans interest was paid on contributions. Council Member Amero asked if that
was for voluntary contributions; Mr. Palmquist stated, no, that was for mandatory
contributions; this was mandatory. Council Member Amero commented he had
misunderstood that, and verified with Mr. Palmquist that municipalities in general
government paid interest on mandatory contributions. Mr. Palmquist responded it was
not mandatory that they do so, but the vast majority of plans did. Council Member
Amero commented he had understood it was the opposite way. Mayor Humpage
commented it was the employees' money, it cost the Village nothing, and he would like
to negotiate this. Council Member Amero stated he agreed. Mayor Humpage thanked
Mr. Palmquist for his presentation.
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