General Employee Pension Board - Regular Meeting

In Ordinance of the Village Council of Miami Shores Village, Florida, amending Chapter 18, Personnel, Article 3, General Employee's Pension Plan, amending Section 18-48, Death Benefits, Providing for Conflict, Providing for Separability, Providing for Codification, Providing for an Effective Date. This item is brought forth by the General Employee Pension Plan through the Pension Attorney.

My name is Adam Levinson. It is a pleasure to be here. In five minutes, my goal is to summarize the ordinance for you. I'm also going to give you a little bit of the background and, of course, answer questions, which is my main goal. And remember, my job is to communicate to you what the Pension Board has put on the table in front of you. You're not required to, of course, adopt anything the Pension Board puts before you, but we want to explain the Pension Board's thinking. I also have the actuary with me, and her job in a minute and a half will be to summarize for you a letter which gives you the cost of various options. And you get to choose any of those options that you want or none of those options. And my job is to help you understand how it all fits together. So if we look at the ordinance itself, I want to bring everyone to the third whereas clause, which I'm going to read. So the whereas clause says whereas, the third whereas clause. on page one of the ordinance, the Board of Trustees of the General Employees Pension Plan recommended enhancing the death benefit for members with 25 or more years of service. And the scenario that we have in front of us, and I like to avoid giving names, but we had a member of the plan who passed away at age 54. He was 54 and a half years, so he was almost 55, 54 and a half years. And he had more than 25 years of service. He had 25.8 years of service. And the way the plan is currently written, so if you flip the page to the ordinance, which is basically a page. That's where the action is. And I'm going to compare paragraphs A, B, and C. So paragraph A, under section 1848, death benefits, says that if a member has not reached early or normal retirement, all they get back is their contributions with interest at 3%. And the value of this member's contributions over 25 years with 3% interest is around $130,000. So if you do nothing, the spouse will receive $130,000. His employee contributions over 25 years with that 3% brings it to $130,000. So if you do nothing, that's what will be paid out. The pension board thought that it's appropriate to pay more than that to enhance the plan because they thought that's a de minimis – $130,000 after 25 years is not much. So their thinking was, let's put him to look almost like he was under paragraph B. What does paragraph B say? Paragraph B describes – and by the way, if I'm speaking too quickly or if I'm confusing people, slow me down. You won't be the first and say, Adam, help me understand this. This is complicated. We're not pension experts. We're council members. So A, again, is if you die without being eligible, you get your money back with 3% interest. That's $130,000. Paragraph B is if you make it to the promised land. What's the promised land? You're eligible for early or normal. And the promised land means you would have had to have 55, age 55, with 15 years of service, but he wasn't 55, he was 54. He had the 15, but he wasn't 55, he was only 54. So that's for early retirement. Or normal retirement is you have to have Let's call it age 62. For normal retirement, he wasn't 62. But he just missed it by six months. So he didn't qualify under B. So what the board has proposed, and this is where I'm going to talk about the process. So I've looked at the minutes, because I know there are questions. And I welcome questions. We want to answer questions. Because remember, you get to make these decisions. Not the pension board. The pension board makes recommendations. So at their April meeting, April 28th, and we, I think, have copies of those minutes. So the April 28th meeting, the board voted unanimously 6-0. One trustee was absent, but 6-0 to look at four options that they talked about at that April meeting, and they authorized the actuary to do a study. So that was a 6-0 motion on April 28th. They picked around a bunch of options and they said study these four options. Two of those options would only have applied to the member we're talking about. The other two options would have applied additionally to any member who dies with at least 25 years of service. So the board authorized April 28th look at four options. Now they could have looked at ten options. They could have looked at You know, there's an unlimited number of ways to amend and enhance a plan. And I will be the first to admit you could have looked at more expensive or the board could have looked at more expensive or less expensive, but they looked at four. One of the reasons they looked at four is the more options you look at, the more expensive it gets. But they thought those four were the ones that you'd be most interested in. So that was April 28th. And then at another meeting, which was July 28th, so I think it's the same date, 28th. But July 28th, the vote was five to one, and they chose scenario C. They chose the third of those four scenarios, which is what we brought to you at the last council meeting. And at that village council meeting, you said you wanted to see more options. And that's why you have this letter from the actuary, which she is happy to go into as much detail as you want on those options. So rather than me doing the math, she can walk you through. She'll give you a minute and a half summary of that letter, which summarizes options. But remember, what does the ordinance say? So I want to focus on paragraph C now. And this is complicated, and I speak quickly. So let's look at C together. So on page two of the ordinance. So A would have been a refund of his money. B is if he made it to the promised land, which he didn't. So option C is what the board recommended and what you asked them to bring back at your last council meeting when this was discussed. So I'm going to read from C. Effective October 1, 2024, upon the death of a member who is not yet eligible, because he wasn't, not yet eligible for normal retirement, but has 25 or more years of service. And then it describes, and this is the pension language, the beneficiary designated by the member shall be eligible to elect to receive a monthly benefit commencing at the date that would otherwise have been normal retirement. So if you would choose to move forward with this new paragraph C, a benefit would be payable, he does have the 25 years, so we don't care that he wasn't that orally or normal, but he does have the 25 years, so the beneficiary would receive, and this is just from the first half of that paragraph, at the date that he would have otherwise have been eligible. And that would apply not just to this member, but to any other member who meets these new requirements if you adopt it, where they're not eligible for normal or early, but they do have at least 25 years of service. So that is the summary of what's in front of you. And there's nothing else in the ordinance of substance. Of course, there's the conflict provisions and the severability, but that's the meat is paragraph C. So I want to pause to answer any questions about C. And I want to pause to answer any other questions about what other cities do or other options you have, because we could give you more expensive options or we could give you less expensive options. But the best person to talk to about cost is the actuary. And our goal is to answer tough questions. We want tough questions. And we want you to think through and chew on, as I know you do, the options that you have. Thank you so much.

I've got a couple of questions, Adam. At the two general employee board meetings ago, there was a vote, and the vote was whatever you said, six to one, to try and help Mrs. Olsen. I'm sorry, just to be clear, there was a five to one that was July 28th, and it was six to zero on April 28th. All right. And then two meetings ago, there was the recommendation brought forward to change the plan. That vote was three to two. There were two people not present, and those were Esmond and myself, which left five people there. Bob Williamson voted against it, and so did Tom Longman. The other three members voted for it. I think you know the ordinance says that in order for a motion to pass that board, it must have four positive votes, which it did not have. So in essence, I don't remember who made that statement, but I want the council and the public to know that. There's no question, they were not advocating not to help Mrs. Olson, and secondly, There's one option that we haven't put in here, which I would say is the second one. And the second one is we could simply take, or maybe I'm mistaken, you answer this. Could we not simply take the money out of the pension fund and pay her in any way that would be equivalent? And so why would you do that? Because instead of changing the whole plan, you would simply be taking care of something which your actuary stated was very rare that an employee would die during the time that they were in service here.

So thank you for that question. I'm going to answer several pieces of the question. So we looked to see, do we have the minutes of another meeting that you're referencing? They were corrected at the last meeting. So because the minutes are always behind, we don't have minutes of that meeting. So that's the first answer. The second answer is, I don't have a recollection. I may not have been at that meeting. I don't remember. But for the sake of argument, for the purpose of being here today, My point is, and again, as a council of a city, you can do whatever you want, but the trajectory was that was the meeting you're talking about was after the fact. The vote was 6-0 to study it with four options. And once the four options were studied, the board recommended, with a vote of 5 to 1, scenario C. So it is properly before you. And anything they voted on at that meeting afterwards, at 3-2, you are correct. The ordinance requires a vote of four trustees to do anything. So anything they voted after was meetings.

So you're saying that two meetings ago, there were six people there?

According to the minutes, and I looked at them today, the vote was 6-0 to do the study with four options. And then the subsequent meeting, which was the July 28th meeting, the vote was five to one, and they selected scenario C. Well, all right. We can look at that.

It's not important. I just – I spoke – the minutes were told to me to be incorrect, and they were supposedly corrected from that – of the previous meeting at the last meeting. And I can bring Tom and Bob here for the next meeting, and I can promise you they will testify that there were five people there, and that, in fact, was the vote.

So if I could answer another part of your question, and I'm glad you're asking these questions because we want to answer questions. So one argument, and I'm not here to sell anything. I don't want to make arguments to convince you. I want to give you facts and you decide what you want to do. But in some of my bigger cities, the way ordinances get to a commission is there's a union who negotiates. So that's door number one of how ordinance goes forward. You don't have a union here, so you don't have unions negotiating. Another way things can be done is the village can do things on its own. There is no need for, and this is the way it works in some cities, the pension boards are given an ordinance by the village that the staff wants. The pension board may or may not look at it, but there's no requirement that the board do anything. So again, you don't have to listen to a recommendation from the board. You can do your own, which is why today you may decide you want to do something more expensive or less expensive. But what you have in front of you, I want the actuary to describe the cost of what is being proposed. which is the – I don't want to get into the cost, but the actuary can describe the cost. So it's basically $28,000 a year is the cost of what the actuary will describe for a 20-year period. That's the cost of what's in front of you. If you want to do something more expensive than $28,000, we can look at that. If you want to do something less than $28,000 per year, You can look at that. But that's what's in front of you now. It applies to the member who passed and anybody else who falls into that scenario. And I'm happy to give you more expensive options and also less expensive options. And I will be very quick to realize that with what's going on in Tallahassee, you may decide you need more less expensive options, which is entirely up to you.

Adam, one more question. You're saying that the board has seen what you're proposing here in this, that that's going to be in the minutes and that this was presented by you to the board. Which meeting would that have been at?

So the November 18th study, which you have, was not at the board meeting because this is very recent, that the study was actually in front of us. So the board has not seen the study. But the board was aware of a ballpark of what was, you're right, the board has not seen this November 18th study.

Okay. Through the chair, if I may. First, I just want to be clear and specific when you said we asked for more options. I think we were all in agreement that we want to do the right thing for the Olson family, but we wanted it to be consistent with what was going on, you know, throughout the entire plan. We didn't want to overshoot we wanted to make it so he was treated like a retired employee basically that was what we requested was to make it more in line with treating him as if he would have made it to retirement rather I don't know what was proposed before it seemed like we were proposing giving the full benefit that mr. Olsen would have gotten And it seemed like that would not have been an option presented to a retired employee in the same situation, if my understanding is correct. To address my colleague's point about why not just do this as a one-off thing, I think he's correct that this, we would hope, is going to be a very rare situation for the village. Mr. Olsen happened to start his career here pretty early in life, which is how he was able to accumulate so many years of service here without hitting retirement. Is that a likely scenario going forward? No. But if it does happen again, why not – why do this all over again? Why go through all this? If we have a good solution and this makes sense and we think this is the right thing to do for an employee in that situation, why not just make it –

part of the deal here.

I do have some questions in regards to our concern about making sure this is consistent. For under the death benefit, the Part B says the amount of such monthly pension will be calculated as if the member had retired the day before the date of death and elected a joint survivor option with 100% continuation to the beneficiary. Then for the new language that we're proposing for Part C, it says terminated employee the day – I'm sorry. The amount of such monthly pension shall be calculated as if the member terminated employment the day before the date of death and elected an actuarially equivalent joint and survivor option commencing as of such – normal retirement date with 100% continuation to the beneficiary, and this is the part that I'm concerned about, without regard to any early retirement reduction. Why is that language for here in Part C but not Part B? That doesn't seem consistent to me, and explain that.

So with regard to C, and thank you for the question, we can amend C to make it less expensive or more expensive. We can do whatever you want. And because the actuary does the calculations, I think it makes sense to have the actuary talk with you about the math. But I do want to answer part of your earlier discussion. So one of the questions is, do you do the benefit just for the member who passed, or do you do the benefit for everybody else who might fall into this relatively rare scenario? And I agree with you, it is relatively rare because the actuary has a rough idea and she splits it out. So there's the cost of doing it, the one-off, versus the cost of doing it for anybody else. And the cost of anybody else is only about $1,000 a year. The lion's share of the cost here is for the member that we're talking about. So you're not really going to save a lot of money if you don't do it for other people, if you just do it for him. So instead of being approximately $27,000 and change, it goes up to around $28,000 if you do it for everybody. That's the difference. So $27,000 a year, it's $27,000, almost $300. If you just do it for the member, if you do it for the member and anybody else, it's around $28,000 per year for 20 years. That's the difference in cost. And that's an annual cost over 20 years. But I would like the actuary to describe the way she calculates it. She can do it relatively simple for you. I didn't ask any of that. Please, the question that I asked.

About the early retirement, why the early retirement language is there. So it's meant to clarify that this is a benefit payable at the imputed normal retirement at the date that would have been his 30 years of service. So because we're calling this a normal retirement benefit, there's no early retirement reduction.

But why does the person in scenario B?

In scenario B, they have an immediate benefit that's not deferred. So in scenario B, you would get an early retirement reduction because that benefit would be payable immediately. But what we're talking about now is if the benefit's payable deferred to his would-be 30 years of service date.

So we set up scenario C that the benefit only gets paid at what would have been the normal retirement date. We're not going to pay it immediately under C. Right. We're only going to pay it at what would have been, in this case, it's 2029, if I'm remembering correctly.

Yes. But why wouldn't you do that for the person in situation B? Why wouldn't you just say, hey, you get paid your full retirement?

Because they're already at. It's an excellent question, but under B, they're already eligible for retirement, whereas C, they're not eligible for retirement, so they have to wait.

But why are they waiting until the full retirement when person B doesn't get that option, but the person in situation C gets defaulted to full retirement?

The benefit in B is a better benefit than the benefit in C. C, you have to wait. B, it's immediate.

That's the difference between B and C. It depends on the scenario that the individual is in.

There's an actual equivalent reduction from the deferred benefit to an immediate benefit. Say that again? There's an actual equivalent reduction from a deferred benefit to an immediate benefit.

Even if one is a full retirement and one is a part of early retirement?

Right. So in IMB, if you're not yet eligible for normal retirement, but you are eligible for early retirement, you would get an early retirement benefit.

Right.

Which is actually reduced from the normal retirement benefit.

Right.

But it would be payable immediately, so you would get it sooner, you'd get it for more years. Gotcha. In scenario C, you would get a normal retirement benefit that is not actually reduced, but it is deferred. So it makes sense that it's not actually reduced.

I don't know if this is possible, but the goal that I am trying to accomplish here is that The family in situation B doesn't look at the people in situation C and say they got a better deal, and the people in situation C don't look at the people in situation B and say they got a better deal. I want them to be treated consistently and fairly. Do you feel like this accomplishes that? Yes.

I do think so, but I will point out that situation C only applies to employees who have at least 25 years of service, and it would apply to anybody who is early retirement eligible who would otherwise fall under B but not get normal retirement eligible, they could also qualify for C. So anybody who's got 25 years of service who qualify for C, if they don't – I'm trying to keep things simple.

B is an immediate payment for people right now. B, you have to cross the promised land. If you're not in promised land, you don't get an immediate payment. C says you're going to have to wait, but you're going to get a payment, as opposed to just getting your money back with interest. And again, if you think that this is too expensive, if $27,000 a change is too expensive per year, then we can do something less expensive.

I haven't heard anybody say that. Adam, nobody is arguing about whether this is too expensive or not. Let me just say one thing to you. I have a monstrous problem with bringing these type of issues straight to council and our pension board that we have selected, elected to look at these type of issues, and they've never seen this. You're coming to council with this, and we have no idea as far as the second part of that that you're presenting, because as you just said, they've never seen it. So I would hope that in the future we could reverse that and at least get you all would be carrying a discussion on with people that were more knowledgeable about what you're talking about, my opinion.

Can I speak now?

Sure. Thank you.

Sorry. No, it's all right. No, I'm just towards Jesse or Mr. Walensky. I have just a few questions. I have a question to the village attorney. This ordinance for... Did the Labor Division of Wiserota look at this? I know we weren't instructed, but this is the first time we're seeing this ordinance. It's not in draft form. And just for the record, is this a first reading of this ordinance?

Yes.

Yes, it's first reading. No, you have contracted separately for your labor, so our office did not review it from that standpoint. In the past, we do cursory reviews, but in this case, no, this version was not reviewed.

Is it best practices for our village attorney to look at an ordinance that this council would be looking at?

We look at the ordinance for legal sufficiency, but if you want a specific area expertise to review this ordinance, we can. You can just instruct us to do so.

Okay. Thank you. And then for the attorney, I understand what we're doing here. This is also to my council member, Mr. Birch, is that our pension... and we've been doing this as a council looking at both committees and also how the structure of finances are done in the village. With how this is written, and I don't think it's best practice, this is a personal opinion, of an ordinance being written for moving forward what would be 25 years, but we never had as a council an examination of maybe it's not a year thing. Maybe it's a balance of two numbers. We just did this, so now you're doing to me, again, and I apologize to the family that, you know, the name of the employee is brought up here, but really what this council is doing is a death benefit is what we're looking at. And obviously there was a loophole in our pension plan, and we came upon it. In my opinion, I mean, even for the advice tonight, it's I received this on Wednesday and this is the pension and you're an actuary and the numbers we're doing is numbers. And then when you do the expensive, inexpensive, it's not about that. It's about the soundness for future employees of here and the employees that are here that have a pension. And it's not a flipping issue to do this. This council has a big heart, and we're trying to do what's right. To me, C is not written correctly. It hasn't been studied correctly. It's been trying to do something to write something that wasn't there. And I don't think that's what you do in an ordinance. And I think the pension board, when it came across that we only have AB, and Mr. Olson is, what are we going to do? And this is what we get? The last time this came before, we had to defer it to go back to your office because that one was. Where is the draft form that this is written in that the pension board and all the professionals there have a discussion about it? Is it that we're altering the pension permanently? Or were there other options for when something happens to an employee in the future? I mean, this is where I don't have answers to all of those tonight. This is just, here's first reading. Okay.

that's where I'm at with this and I would like answers from everybody including my colleagues thank you mr. mayor I think that was like everything he said there you're right no it's not only the board it's all every it's all of it but if we're gonna change a pension that's been in existence for 90 years or 80 years And instead of helping, everybody wants to help this family. I haven't met a person who doesn't say, we shouldn't help her. And I'm all 100% for it. The question is, how do we do it? And is the answer to go in and change a plan that's been in this village for 90 years, and that's the only option? I don't think it is, and it bothers me. That that's why we have a pension board. That's who you all should go to. And to me, not only them, I agree there's other people involved, but that's who I want to hear what they have to say. You know the people on that, and you know what they do.

Certainly, we're spending this time and energy.

We should plug this hole, though, one way or another. Well, I think we ought to just give her the money. If it's $27,000 a year, does that agree that we're going to take that out of the pension?

If this happens again, then that council is going to have to do this all over again.

While we're doing it now, we should – When has it happened before? Anybody been here long enough? It doesn't matter.

The work is the same. We're doing all this work. Let's plug this hole.

you know well that's my opinion but again then let's plug it right let's not i i agree 100 well with that with that said again that it's it's you have to look at the soundness of it the reason it's been successful and i know the actuary went over it there's a lot of people that are dependent upon this fund um there are multiple ways that we could come to a solution on this and what's been presented to me tonight and even the last time that i deferred it is I don't think this is the only solution and that I got it on Wednesday and it's the following Tuesday with what how I understand with actuaries and what we've asked you but even with it I could ask you another question how many employees do we have that have 23 to 29 years worth of service right now

We have, as of the latest evaluation date, we have three with 25 to 29 years of service and seven with 20 to 24 years of service.

So 10 people, right. Possibly 10. Right, but as the report that you ran for us, taking that into consideration.

But what we're talking about in this ordinance is it would only add up a benefit for somebody who dies. after 25 years of service and before becoming eligible for normal retirement. So that's a very small window. Right, but that's what you're writing in the ordinance.

Again, is it best practices to write an ordinance? What we're trying to do is then if we didn't have a death benefit other than somebody who was fully vested, is this prudent as the death benefit ordinance then?

So I can speak to prudence. There is nothing imprudent. or unreasonable about what we have in front of you. If you're comfortable with it, adopt it. If you want to make changes and look at scenarios, we're happy to do that with you.

Adam, you do this all the time, though. It's still so vague. That is not true. I mean, yes. Is it sound? Is it a law? Yes. Should you pass it? But that isn't advice.

It isn't.

When we're making a decision, we have to have answers that the question that I just asked, do we have the numbers for that? or we have to run another thing. I want to know if it's going to be sound. And then also not only sound, is this broad enough? I said this is a death benefit.

So with regard to soundness, and this gets into actuarial requirements in Florida, there is nothing unsound on what's in front of you. I understand. As long as you pay the $27,000, let's round it to $28,000 per year, which is the minimum required contribution, let's call it $28,000 per year, you will fully fund this benefit over a 20-year period. It is by definition actuarially sound.

As an actuary, looking at the funding level of your plan, I have no concerns with the solvency of benefits for everybody else. I have no concerns with benefits not being able to be paid to other people as a result of adding this.

I understand that part of it. What you're missing on this is that this ordinance is written and they want to fix this, and now you're saying 25 years worth of service. Is that the most accurate thing to do for our village?

It is very specific to this case, essentially. So if somebody dies... a few years from now and has 23 years of service, you could be in the same situation. That is true.

Thank you for going six questions to get that answer, but thank you.

Do you hear what I'm asking? The plan changes before you on an actuarial basis.

The plan gets more expensive if you go lower than 25. If you do 24 or 23, it's a more expensive fix.

Yeah, but I would say it's not much more expensive because still the probability of death is small. So you could extend it down. It wouldn't be significantly more expensive if cost is not the issue. You could change the provisions to say anybody who's vested gets a 100% in J&S deferred benefit or whatever option you choose. You could certainly do that.

We didn't have that before you is my point to this then. Is that correct? Yes or no? Those would be correct.

That's a more expensive option.

Was it because you did not have direction to give that to us?

I did not have direction to give you.

And you were only directed to give us C. is what you're saying?

The board looked at four. They had a broad conversation. They chose four. And of those four, they gave you C, which was what you looked at at the last meeting. And now we're giving you not just C, we're giving you the current version with the cost of other options, which is in that November 18th. So what I would be happy to do if you want today, and it's a function of how much time you want to spend, I could give you additional concepts, or we could send it back to the pension board and they could give you more concepts, or you could... Again, what is the definition of a pension board?

What is their duty to do?

So their core function, which is the majority of what they do, is to administer the ordinance as written. And right now, the way it's written is nothing gets paid other than the money back with 3% interest. They can also, they're not required to, but they can also make recommendations. And their recommendation first was to do a study, 6-0. And then once they had the study, they went 5-1. at the July 28th meeting to send this to you.

Who has the given direction for a death benefit for the whole village, not just a one instance? Is it the council? Is it the manager? Who is in the administration who is supposed to do this though that we're looking at and cover a death benefit that we don't have? And what your partner said the last time, I'm sure this is unusual because we don't. And then what comes back to me or us is just this. I don't understand the concept here. I really don't. We're asking for a solution, and I get one thing, and hey, first reading. If nobody sees the absurdity of this, I don't know.

I couldn't agree with you more.

So I think the idea was this was asked for at the last council meeting was to proceed with this ordinance, and that's why the ordinance is important. My understanding, I was at the October 7th village council meeting, and the takeaway that I got was that the council wanted to revise the ordinance that was before them to reflect the 100% JNS reduction option rather than the full accrued benefit. And so Adam went ahead and drafted that ordinance, and we were working on an impact statement for that ordinance with 100% JNS reduction. And then as we were working on that impact statement, we received direction from the the village manager in Yami that there was discussion at the more recent village council that they wanted to see other options, that it wasn't just 100% JNS. And that's why this letter was prepared, the November 18th letter, to just discuss other options and what other plans are doing to give you some background. And so this 100% JNS ordinance is just there in case you want to proceed with 100% JNS, but you don't have to. It's not the only option, and we're not saying you should adopt it. It's just there for your information.

I understand that, but it's also, where was the, you're telling me that this direction, this council here told you 25 years? Did I say that? Who said that?

That was the request that was provided to me by the board, was to prepare a study for that specific plan change.

Samir?

I just wanted to correct something that you just said.

When you were contacted by YAMI, as I requested, it wasn't because there was conversation by this council about any other thing. It's because I thought it would be prudent since that was not discussed, to offer some options to the council.

Okay.

Particularly to look at 50%, 66 and two-thirds, 75%, because I know when you were going at it, you were just going at 100%. I didn't think that that was allowing the council to have the options that I thought that they needed. So I just want you to know it wasn't that there was a conversation here about it. I took it on myself because I think my council needs to have options when they consider something. All right? Thank you.

I'm sorry.

I just got a question. If the 100% J&S is adopted, does that give the beneficiary to our employee a – how does it compare to – If it was our actual employee.

It's about 87% of his benefit.

100% J&S is 87% of what he would receive.

Approximately, yes. The actual reduction is about 13% or so for conversion from a life annuity benefit to 100% J&S benefit.

So it would be 87% of what an employee...

So if you look at page two of the letter or even the benefit calculation form you see, as part of the attachment to this item, I think you have a poor discussion on the calculation. And this shows essentially if he did survive to his normal retirement date, And we calculated his benefit based on the data that was provided, using only salary and service through his date of death. These are the options that would be before him. These are the options you could choose on page two of this death calculation.

Page two of the death letter, options letter.

Right, so this page. So his benefit, his straight life, normal form of benefit, would have been $4,339.00. For the 100% joint and mass survivor annuity, in line one, the straight life annuity, that's the normal form of benefit. That's 2% times service times final average earnings. That's a straight formula benefit under the plan. To choose an alternative optional form of benefit, the benefit is reduced up front for the fact that the benefit is expected to be paid over a longer period of time when adding a beneficiary. So it is then reduced from the 4338.94 in item 1 to 3785.29 in item 3. So that would be the amount that the beneficiary would receive.

I need more time.

Can I just ask a question? Wait. Go ahead. No, go ahead. It's a good opportunity to have a discussion right now, but I do hear. All right.

When an employee retires with a spouse and children, Mm-hmm. How often does somebody in that situation when they retire not choose the 100%?

Pretty often.

What?

It's very often. I mean, it kind of depends on the level of the benefit.

Is that the most common? option that it gets selected by employees when they retire? Assuming they have a spouse?

I don't have the data on that. I don't think it's the most common. I would answer it this way.

The pension board doesn't care what option someone chooses because if you choose 100%, it's less per month.

If you choose the 50%, which is the spouse would only get 50%, it's more per month. So they're actuarial equivalent. So it's a wash from the pension standpoint of which option the member chooses.

Sir, you keep coming at this as like what things are costing, and that's not my concern with any of these questions. It is a concern of mine, but it's not my concern with the questions that I'm asking. I'm trying to get consistency and fairness between different people running through different situations here. So we're making this choice. Like this is a choice that normally the employee would have when they retire. Unfortunately, the gentleman is no longer with us. He can't make this choice. So I would like to – I'm trying to get an idea of what is the typical choice that somebody would choose when they retire in that situation. What is the most common? Is there any outliers here? Do most people choose the 75? Is it an even split? Does nobody ever choose the 66 in that – that's the kind of question I'm asking.

It boils down, and I appreciate the question, it's an individual choice for members. It's how much do they want to give. But the data, like today, what are people, like what are, can you?

Okay, so I could go to the census data and give you statistics. I don't have them in front of me. No, I'm not looking for census data.

I'm looking for our employees, like the history of our pension plan.

Exactly, yes, the census data for the plan, the retirees, what have they elected. I could tell you how many people have elected which form. I don't have the data in front of me right now, but I could go back and look it up and get back to you. But I will tell you that it's very common for people to choose 100%. It's also very common for people to choose a life annuity just because they don't want to take the reduction.

If they have a wife and children, they choose the life annuity?

Yeah.

If it's a small benefit, you're more likely to see a life annuity. If it's a big benefit, you're more likely to see a 100% JNF annuity.

I do have a question on the actuarial for the calculation of monthly retirement benefit. January 1st, 2025 to March 27th, is that from PayStub? You can take your, just gather yourself. Well, first off, where did the numbers for that, for the estimate compensation numbers, where did those numbers come from first?

Mr. Mayor, I'm sorry, because I had questions about this too. Can we, I'm actually curious, can they explain, zoom out a little bit and actually explain the whole system of that?

Okay. The first one, so... Obviously, when we do this, and it's explained below, that's where the math comes, but I'll have her explain that. But the first off is the numbers came from the village hall for pay stub or ADP. Is that where the numbers? So the number for January 1st, 2025 to March 27th, 2025.

That information was provided by human resources to the plan administrator, and that plan administrator provided that information to us.

Okay, so.

Or it may have been financed. Or financed.

So it went through to? Somebody at the. All right. And then I guess my question to that, if you do the math for that one, it's, I think I'll do it in my head. 74% of a year salary is done in three months. Can somebody explain that?

Yes, this has been brought to my attention recently and I did look at that and I thought that does look a little high, but I did get confirmation that employee contributions were deducted from that salary and since the employee was earning approximately $90,000 or $100,000 a year, a three-year total salary of $300,000 is reasonable. Now, it's possible that this is wrong, or it's possible that the dates that are reported are just off. If it's wrong, then we'd be happy to revise it, but this is the information that was provided, and relative to his annual salary, the three are average. The three in total does not seem too far off. We don't audit the salary. We don't go into the payroll codes and check those things. We rely on the plan administrator to provide the total salary for three years and we check for reasonableness.

Right. But it goes back to this council and we have a pension board and I understand that they can make They don't make the law of it of changing the ordinance for the death benefit that we don't have. But I still think this should have been discussed at a different level to us before an ordinance is brought to us, and that's where I'll end my discussion.

So just so I understand, because the mayor is more familiar with this kind of stuff than I am, so if we could just back up. Explain what is going on with these numbers. So this is the three years prior to the employee being deceased, yes? Yes. And that's why we have a little, like, not all of 2022. And we have the remaining four months of 2025.

Right. So it's a three-year total.

And we're supposed to be taking an average of the last three years. Yes. That is how this is done for every employee.

Yes. So the plan formula is you take the final three years of earnings, you take the monthly average for those final three years, multiply it by 2%, multiply it by the years of credit and service, and that gets you the monthly benefit amount payable as a life annuity.

Okay. So I think what we were asking is how is it possible for those four months to – to be so high. Three months. Three months, you're right. But you don't have that.

I don't have that detail.

I'm sorry.

I was just asking. That's OK.

I'm sorry. Through the chair, I was just asking. But this is the auditor's, the actor's time to speak. I apologize.

Okay.

Again, my concern is just consistency. So I just – if this is the way that – in other words, I don't know how we got to that number. I don't know. Maybe that number is correct. I just want to make sure that whatever is being done here is the way that all the other employees are being done and that – We're not cementing some different system here that is different than how the other employees are getting treated.

So, I mean, there may be something suspect with the data that we got, and I will go back and ask about that. But this is a standard calculation that any employee who is retiring would receive. This is exactly the format. The form has been changed a little bit recently, the format, to include this additional information. page for the village's request, but this is exactly the same calculation that anybody else would receive at retirement. And the idea is to give you kind of an understanding of, like, this is the options that he would have if he retired at his normal time and date. And if you're looking at, if you want to judge the possibility of adding a death benefit that is something other than 100% joint and survivor option, does that give you the benefit amounts, essentially, that the beneficiary would receive under each of those options?

For me, it's like, man, a poor guy just missed the death, and we just want to make it right. Like, yes, six months. So I'm not trying to give him, like... special situation. I just want him to be like he got those six months and made it into the thing he was working 25 years for.

Is it possible?

There's two different things here. I mean just for me. One is we're looking as the council is taking a document and then this becomes the death benefit for all employees moving forward. Then The other side of this is where you and I as a council was pushed from pension board to decide on one participant. And they're two different things. Again, when you're making law, there's an ordinance, and this is also the pension. In my experience with doing this, I don't think it's prudent to do what we're doing right now. I know I said I wasn't going to talk anymore.

Well, and I shouldn't talk anymore, but here's an idea. Why don't we just... You're concerned that she needs some money right now. Why don't we just have a council resolution that we're going to pay her $27,000 a month? Okay, if it's the money you're concerned about.

This thing is not paying until 2029.

It's not the money. Okay. All right, fine.

But I'm not ready to do this yet. That's fine. I'm fine. I hear it crystal clear.

To the chair, what I keep hearing as I'm listening to this is we all want to do the right thing. But it sounds like we all need a little bit more time to understand what it's all going to mean. And since the benefit doesn't kick in until 2029 anyways, making a decision tonight or next meeting or whatever really has no actual effect from what I'm understanding. Can I get some clarification?

They're going to send us a bill. Well, no.

The more you talk about it, the more admin expenses you're adding up.

The other question, since it is an ordinance that we know going through this, is the state requirement on second reading, what are we required to do if this is first and then second? Is there 21 days that we have to notify the state because we're altering this? What date is that that we're doing it?

I can give a quick answer and then

Dina can give you the rest of the answer.

So depending upon, and it's page two of the November 18th letter, depending on which of those options you want, and Dina can describe to you the option you selected that's in the ordinance. But this would be converted, this is your point, into an actuarial impact statement. And what the state law requires is that the actuarial impact statement, and this is the guts of that statement, but this has options in it. So the final statement, depending upon the actual version, the final statement This has multiple options, but the final with only one would be sent to Tallahassee on the day, no later than the day of second reading. And that's so that you can see by second reading the actual cost. This gives you several costs depending on which one you want, but you have to give the final version to Tallahassee no later than the day of second reading.

Is this considered a first reading?

This is adequate for first reading, but we don't know which one you want. So that's why you have options. And maybe Dina can speak to the option that's in the ordinance if you wanted to hear. But that's numbers.

I hear a lot of discussion about the fact that you don't have enough information to know this is a reasonable benefit, this is a good benefit. And there is some information on that in this letter that I don't think we've touched on yet. On page three of this letter we talk about is there best practice and what are other plans doing? And so I just want to go over that briefly because it sounds like there's a lot of concern about whether this is something that...

Consistent.

And I think it is consistent. It's definitely consistent with what other people who are retirement eligible would receive, and he just missed that window. So it's very consistent with that. And that's why I was thinking that we were settled on the 100% J&S option, because it's consistent with what is currently provided for anyone who is retirement eligible, the 100% J&S option. Okay so there's no single best practice that all villages or cities across the state of Florida agree is the right death benefit. There is a wide variety and at the end of this page three I actually give you a link to the state database of all of the local retirement systems and what their death benefit provisions are. They're kind of a short abbreviation of the death benefit provisions but you can peruse it and you can see there's a wide variety. plans that pay a lump sum of 50% of salary. There's plans that pay a 10-year only benefit. There's plans that pay a 50% JNS, 100% JNS. There's a wide variety. GRS does not recommend, we don't lobby for any benefit. We don't lobby for a certain benefit level for the village, so we can't tell you to choose a certain option. We can't tell you this is the best option. We just tell you what what other plans are doing and what is and isn't consistent. So points of reference that you might typically look at is the Florida retirement system. The Florida retirement system provides 100% J&S option benefit. And that benefit is provided for anybody who is vested. So if you are vested and you pass away, the 100% J&S option is payable to your surviving spouse either immediately with early retirement reduction or defer to normal retirement date. In the private sector, plans of private companies are required to provide a death benefit that is a joint and survivor option, which is the same as the qualified joint and survivor option in the plan, which has to be either 50%, 75%, or 100% Janus option, generally speaking. And so the qualified joint and survivor option in the private sector is the most valuable on an actuarial basis. So that most valuable option has to be provided as a death benefit to a surviving spouse in the private sector. Just a couple of local plan examples. Miami Springs General provides 100% joint and survivor option for anyone who passes away after attaining 10 years of service. Revere Beach General provides an accrued benefit payable for 10 years only for anybody who passes away after age 50 with 10 years of service, or only a refund if you pass away prior to age 50. So just between those examples, you can see there's a wide variety. But certainly 100% JANUS option is common, and there's absolutely nothing wrong with adopting that option. I would say among the plans that I work on, the two most common options are the 100 percent JNS option or the 10 years certain option. Thank you. So that's my two cents on benchmarking information.

This is a public hearing. Is it okay at this point in time for public comment? Does anyone in the public want to speak?

I thought at least one person in the public would want to speak, but nonetheless. I just wanted to point out something, because Councilmember Walensky had asked this question about how we came up with the dollars. Now, I know those dollars came through our finance department. And typically, if you're looking at your best three years, correct me if I'm wrong, if you fall short on one year, then you make it up on the other year, which is why in 2025, He had just worked three months, but then that's why we used nine months in that other year just to make up the full year. In addition to that, the reason why the 2025 salary looks that high is that he was paid out for his accrued leave time. And he was paid out on his accrued leave time based upon the policy that we have here in the village, particularly one that was made prior to 1979, to those hired after 1979. Am I correct? Did I say – I'm sorry, 2009. And so because of that, that's what plummeted that – not plummeted, but hiked that salary.

So that's compensation for accumulated – Leave time. Leave time, okay. Correct. Is that – yeah, is that how the pension would be calculated for everybody else?

So it was recently brought to our attention that that number of the compensation, which goes into the box of the calculation. So if that number is slightly inflated, then the value of the pension benefit would be smaller. And the cost, it won't be 27 and change. It'll be a little bit less. And the board and the actuary will go through and finalize, depending upon what version of an ordinance you decide to adopt. So it's that best preliminary. But this is the sort of thing that has to be finalized. And if anything, and I don't want to talk about costs, but if anything, the value of the benefit goes down a little bit, and the cost of the benefit goes down once we chew up and verify the actual compensation.

Okay. Right. Mr. Mayor, Mr. Vink. So the question now is, Is that pensionable? I think that's the question.

So I will go to my chair, and I'll pull up the definitions. But as a general rule for this plan, and I have to, this is just brought to my attention, accumulated leave, generally speaking, is not pensionable, which is why it's not pensionable. Correct. Correct.

which is why it may overstate a little bit.

This is crazy.

Okay. So I just noticed something. So, like, there's this gray lettering on that page in the background. It says for discussion only. Yes. So these numbers, you know, which we're now have a little bit of uncertainty on, We're not voting on these numbers. These are just for reference.

Just for you to understand, this is to explain, we're looking at different options, which are the options that participants would be able to choose if he were to retire.

It would be a big concern if we were voting on these numbers, but they're just here for reference. So if the numbers change, they'll just get plugged in.

The definition of pensionable compensation is regular salary or wages paid by the village on a regular payroll to any member, holiday pay and vacation pay. Compensation will not include lump sum cash payments for accumulated leave that is payable upon separation from employment. Compensation in excess of the 41817 limit will be disregarded. So if it includes unpaid leave, which we do not have the breakdown of that information, usually we just get the total. If it includes unpaid leave, then these numbers will need to be revised. They'll be lower, and the cost impact will be lower as well of the ordinance because the benefit amount is lower. But the intent of this was not to give him any more than any other participant. It just seems to be a data issue.

Okay.

I'm going to save my next.

I mean, moving forward for the next time for this, I think there should be two different things for this. And I know we have to do stuff in the sunshine, but this, again, is an amendment to a pension plan. And to have a person's name or employee's name on public record in all this, The next time for staff and everybody else, I do not think this is appropriate. I think we could do that with scenarios or whatever, but this is very difficult. And I understand how Sunshine Law works. I just want to put it on the record next time if this ever, God forbid, happens to somebody. But I think there's a different way we could approach this and do it differently the next time.

Agreed.

Great.

Okay, so does anybody want me to go into the numbers on the letter? No, I don't. At this point? No. It doesn't seem like anybody's going to do this.

Right, so I feel like we don't have all the information we need.

Can we defer this and have a chance to actually ask? For the rest of you all, I got this book today. My pad doesn't work, and so I had, you know, I mean, it's just impossible to be – to be up to date on this in the timeframe that was available. And I feel that there's an awful lot of things here that are not accurate that we need to – and again, it bothers me the most. This has never even been presented to our pension board for us to have people look at it that are supposedly experts in that. So I wish we would defer this right now. I don't see why we have to make We have another meeting in two weeks if you want to do it then. I just don't think it's that critical. And maybe in the meantime we can, you know, have a chance to.

The only thing I would like to clarify on that, and it's, yes, the time is correct that you're saying. I'm talking about processing. Okay. That this is. This is when you're looking at a pension plan, then you're looking, and you're right, to bring it to that board so they can have a discussion at looking at it. Now, they don't. We've already been told they don't have power, but they do have ability to then look at that. Like I said, there's other options to the village from that pension board's perspective of a death benefit for somebody who served here, whether it's what year. We have completion. You're fully vested here at 30 years, and we see that there's something lacking here. That's what the discussion asked about. And when it comes back to us, then we'll be better informed because we had this tonight. But where this sits, again, you said officially this is a first reading or is it? Oh, let's not. If we defer, it's not.

Or table it? Or table it, you know, then it's not a first reading.

Madam Attorney?

I would just suggest that if you do defer it tonight, you give some direction in terms of what you want to take place in that interim. Otherwise, we'll end up at the same spot. So if it's a matter of defer it until it's reviewed at the pension board level, defer it until you get some other additional data, but I just think blanket deferral I would not recommend as much as we should give some instruction about what should take place before it comes back to you.

I'd like to see it deferred until the pension board can at least look at it, and we have their input on what they think. And in the meantime, that gives us an opportunity also, and the other people, as Jerome said, that are involved from the village of Istanbul. We're going to change a retirement plan that's been around 90 years, and we ought to change it right. And we're not going to do that right now.

I would like to add to that. The discussion that was done here, either it's minutes or the video portion of it, should be played at that so they can hear the discussion of the lawyer. I mean, if we're given direction and we're doing this, let's do this correctly.

To the chair, duly noted. I can forward the video prior to the meeting so they're prepared for discussions.

I would appreciate that.

So, trustees, if I could make an addition, and I agree with Leonard and council that it makes sense for the pension board to have some idea of goals. And if I were to simplify the ordinance, the ordinance represents to me inside the box thinking. traditional, inside-the-box, pension-esque thinking. And what might be useful in terms of direction, if you want them to think outside the box, or if you want them to stay within the confines of what they've already given you. So we could tweak it without material changes, or they could try to do outside. In other words, give you other options which are different from what you see, as opposed to permutations of the options you already have. And that would be my question. How far outside the box do you want to go?

Well, that will be on the video, right?

It will be, but I just think that there's other options. Like I said, this is a hard date. This is 25 years. There could be looking at it differently that way. There also could be for moving forward, just they can talk about it and we can talk about it, but then there's an option to handle something like this through the general fund and not affect the pension fund. We have to know the stability of what we're dealing with here and must moving forward. And to Councilmember Burch that he just received this today and it is, I don't know if our pension is that old, but since it's bifurcated, this is an adjustment to it and I think it needs its work done on it. I've certainly done mine.

I just want to be cautious that this process doesn't end up costing more than the actual benefits. And, you know, please let's not, you know, drag. I'm actually, with all my questions and whatever, I'm actually fine, like, with this as a first reading because these numbers here are just, you know, an example. So that can get worked out. I don't think what's been proposed here is, you know, risky or like, you know, it seems very low impact and solves the thing that we're trying to solve. I just want to go further. We're actually talking about tinkering more with the pension. And I don't really think it's certainly that's not really my intent. My intent was to just try to plug this hole and bring it to what we already have. and incorporate it into what we already have. So I would be fine with this as a first reading, but if you guys want to defer, that's fine too. Because my concern is, again, I don't know what we're going to get back that's going to be much different than this. Unless we're talking about really tinkering with the pension, which, you know, if you guys are up for that. Or not.

That's the point. Okay. The thing is that it had AB for all these years, and you're doing C. And what are the reasons you're doing C?

A hole has presented itself that I think we would like to plug.

Is it broad enough?

Yeah, I think it is. I don't know if I was looking at the examples that they gave.

Then the employee that 23 years.

I hear you.

22.

I understand.

And that's the point. This is forever.

For a very rare occurrence. But I understand, but now you're talking about a more complicated solution.

No, not complicated. It's that people who The pension board is there for a reason. This is to me it's they are stewards of it and this is like I said before, I mean in this which we didn't have and his partner told us, we didn't have a death benefit. And it might be that this one as it stands, we just come up with whatever solution it is or an alternative but we don't know that. We have tonight in front of us for this reading is we have C.

I can make, if I could, a quick point about 25 years. That's a very common benchmark or threshold, 25. It's not arbitrary is the point I'm making. Sure, it could be less than 25. It could be more than 25. But 25 by itself is a reasonable, non-arbitrary place to be.

But also, like I said, it might not be a year. It could be a combination. It could be just the person's age. I mean, how, you know, you're doing this for the future, just like they said with traffic. for different stuff where these are based on old numbers, have a discussion, bring it back to us and we'll make a decision. But just to give a C and say decide on it, I don't think it's fair to the community, I don't think it's fair to me.

would also point out and again there's no right answer we already have an age the age is 55 and 15 because that's early retirement so we have already that age so this applies to people who are not 55 but have to have 25 years of service that's the solution getting it at 25 because we already have 55 and 15 and he didn't have the 55 he had 54

Maybe that's, again, you're doing age. There might be a number. That's what I don't know is my point to this. I mean, I get what you presented to us.

Yes, you have choice of C, yes or no.

That's not the way that you deal with pensions as far as I'm concerned. I mean, my council member just got it today.

If we're going to do the defer thing, what are the stipulations?

We just gave guidance. I mean, they'll look at this proposal. Yes, they'll watch this video. I think it's crystal clear for... Motion to defer. Second. All those in favor? Aye.

Are you deferring for the pension board to talk about this?

Yes.

So at the next pension board meeting you would like the board to come up with a scenario that they think is the most fair for other people?

They're going to watch this video.

you all discussed tonight what we discussed and have the information you gave us and then hopefully give us a recommendation and then whoever else in the village we need to talk to you know so that when we come back we'll have recommendations from anybody we can get them from on what the best way for us to change our pension plan is.

If it comes back that this is the one, then this is the one. That's fine.

But a recommendation based on what objectives? Like what? I just told you. Based on fairness, based on price. It's not true.

I mean, there could be a combination of year. I mean, again, it could be year. Obviously, we had a year thing, and it didn't work. So maybe there's something else. I don't know. I'm not a pension attorney or an actuary. But there are other solutions. There's not just one way to deal with this.

Absolutely.

There's a million ways to do it. Okay, so the direction is they have a discussion. They heard us. It seems like we're making a law for one thing. And in my practice, making a law for one thing is not what you do for best practices.

Well, you gave the two examples yourself, Riviera Beach and I think Miami Springs.

I mean, I gave four examples.

All right, so you gave four examples, but my point is they're radically different, and those councils had to believe that that was the best way for their pension to function. And so now Miami Shores needs to find out what the best way for our pension to function is. And we can't do that right now without more information.

I'm hearing like three themes from three different people, which is yes, fairness and consistency. Let's make sure that we have explored all options and that this is going to actually solve the problem. In other words, that we're not going to have more holes like this. Maybe there's a smarter way to where this is a more complete solution. And then I'm also hearing that we want this to go through the pension board and hear what they have to say about it and make sure that they're good with it and whatever ideas they might have. So I think if we can check all those boxes, we'll be happy.

Thank you so much. Thank you. Thank you. To the chair, I just have a quick question. Does the pension board also have any prior directions? Can they look at other means?

I thought I gave you clear direction on that.

No, no, no. I just want to make it clear because I have to ask those questions respectfully to Mr. Mayor.

And just to be clear, I'm in support of my colleagues' concerns, and I'm assuming they're in support of everybody else's concerns. I didn't mean to speak for everybody, but I hope – We're all on the same page.

But, Esmond, if we're going to change our pension plan after all these years, then let's change it to the best one that you can have. I agree with you, sir. Okay? Yeah. And let's talk to whoever we have to talk to to find out what that is.

Everybody.

Everybody. Yes. Oh, there should be public – this should be a public meeting. Oh, yeah. It is a public meeting. It is a public meeting.

Are there any other benefits as well that we should be looking at? Like are there any life insurance benefits? Are there any – That's, I mean, I don't know if the pension board has access to that, but that would be useful information.

Well, interestingly, they have brought it up. Again, that's, we're not going to bring that up. We don't know it.

But let me go on the record that this council that we sit on, that we did change the life insurance policy for the village. So, and it worked out, or unfortunately, or fortunately, it's worked out. So, we have addressed, this council addressed the life insurance policy for the whole, for all the employees.

We will be back, and we will let you know the date of that meeting, and it may be a special meeting. It may be a regular meeting, but thank you so much. Thank you.

Thank you.

Adam, if it's too far away, they can call a special meeting any time they want. I know there's only four meetings a year, but we don't have to wait until whatever their schedule is. You could certainly bring that up. Right. We may try to do a special board meeting. There you go.

Thank you so much, everybody. Happy New Year.