AGENDA MEMORANDUM

 

 

Meeting Date:              June 23, 2008

 

From:                           Edward F. Smyth, Jr., Deputy City Manager

 

Subject:                       One-Time Early Retirement Option Consisting of a Reduction in the Early Retirement Penalty and Expanded Eligibility for Retiree Health Insurance

 

 

Staff Recommendation:

Staff recommends adoption of a one-time early retirement option (by ordinance) and the amendment of Resolutions 4152 and 4846 modifying eligibility for health insurance on retirement (by resolution).

Analysis:

On May 23, 1988 the City Commission adopted Resolution No 4152 which provides that the City will provide health insurance, at the City’s expense, for employees who retire after October 1, 1988 with fifteen or more years of continuous service and who are fifty-eight years or older on their retirement date.  The cost of dependent coverage remained the responsibility of the employee.

On February 27, 1995, the City Commission amended this policy with the adoption of Resolution No 4846.  This amendment provided that an employee who retired at the age of fifty-five or later, but not yet fifty-eight would receive health insurance, at the City’s expense, from and after attaining the age of fifty-eight, provided the employee paid the premiums of the insurance from the date of retirement until the employee reached the age of fifty-eight.

On December 12, 2005, the City Commission again amended the policy with the adoption of Resolution No 7538.  This amendment established a ceiling on costs that will be borne by the City at $400 per month for retiree health insurance premiums.  The adoption of this amendment to the policy quantifies the City’s liability to provide this benefit over time. 

As the fiscal results of Amendment 1 and the effects of the receding economy are negatively impacting the City’s revenues, we have explored means to reduce personnel expenses while adhering to our organizational goals of Fiscal Responsibility and a Caring Organization.  As a result, we are proposing (under separate cover) to “freeze” the General Employee’s Pension Plan and establish a Defined-Contribution Plan (401(a)), which will produce considerable savings to the City.  In consideration of the impact of this change on our long-time employees, staff is recommending the adoption of a one-time early retirement option.  The option has two components, a reduction in the early retirement penalty, and a change in the eligibility for retiree health insurance.  They are as follows:

 

Early Retirement Penalty Reduction

Attached is an Ordinance which will reduce the early retirement reduction factor (currently 3.33% per year for each year under age 65) for employees who select this option and provide the necessary notice by close of business on July 2, 2008.  The actual date of retirement may be as late as July 31, 2008.  The reduction schedule is as follows:

 

Years of Credited Service at Retirement on or prior to July 31, 2008

Annual ERR Factor

35 or More

0%

30 to 35

1.5%

25 to 30

2.0%

20 to 25

2.5%

 

Health Insurance Eligibility

Under the current policy, employees are eligible for City-paid health insurance upon the attainment of 58 years of age with a minimum of 15 years of service.  If the employee retires between 55 and 58, and pays the premiums until age 58, the City will pay for the coverage after age 58.  Under the proposed one-time offer, the eligibility would be expanded to include full city-paid coverage (up to a $400 maximum premium) at ages younger than 58, provided the employee meets certain time-in-service requirements.

 

Only employees who have reached at least the age of 50 and completed at least 20 or more years of service will be eligible under this plan. It is recommended that the Commission offer to provide health insurance coverage to any employee who is eligible for this early retirement option according to the following schedule:

Age 58, with 15 years of continuous service

Age 57, with 17 years of continuous service

Age 56, with 19 years of continuous service

Age 55, with 21 years of continuous service

Age 54, with 23 years of continuous service

Age 53, with 25 years of continuous service

Age 52, with 27 years of continuous service

Age 51, with 29 years of continuous service

Age 50, with 30 years of continuous service

 

For the purpose of both calculations, continuous years of service would be calculated as of the last day of service (no later than July 31, 2008) and not the date of notice to the General Employees Retirement Pension Board for the purpose of this program.

 


 

Options:

1.  Approve both the Resolution and the Ordinance

2.  Such alternative action as the Commission may deem appropriate

Fiscal Impact: 

 

Submission Date and Time:    6/25/2008 2:11 PM____

 

Department: Administration

Prepared by:  EF Smyth, DCM                     

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   _________________________

 

Attorney Review :       Yes___  No ____

_______________________________

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. _______JB_________                                     

                              

Deputy C.M. ________EFS________                                                                         

 

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________

 


 

ORDINANCE NO._______________

 

AN ORDINANCE OF THE CITY OF LEESBURG, AMENDING THE CITY OF LEESBURG GENERAL EMPLOYEE'S PENSION PLAN TO PROVIDE A ONE-TIME EARLY RETIREMENT INCENTIVE WINDOW; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING AND EFFECTIVE DATE.

 

BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:

 

SECTION 1: That Section 6, Benefit Amounts and Eligibility, of the City of Leesburg Retirement Plan for General Employees, adopted by Ordinance 03-57 of the City of Leesburg, as subsequently amended, is amended by adding subsection 6., Early Retirement Incentive Window, to read as follows:

 

6. Early Retirement Incentive Window

A.        Members who are or will be eligible for early retirement as set forth in subsection 3. of this Section 6 and have completed at least twenty years of service and have reached the age of 50 on or before July 1, 2008 shall be deemed “Eligible Members” and may elect to receive the benefits set forth in this subsection 6., on the condition that they make a written election, delivered to the Board on or before July 2, 2008, to retire on or before July 31, 2008.

B.         Eligible Members, as determined by A. above, shall be eligible to retire on or before July 31, 2008 and receive an Early Retirement Benefit as set forth in subsection 4. of this section 6, but for purposes of determining the pension benefit, the early retirement reduction factor (ERR) provided for in subsection 4.B. (3.33%) shall be changed and applied as follows:

 

Years of Credited Service at Retirement on or prior to July 31, 2008

Annual ERR Factor

35 or More

0%

30 to 35

1.5%

25 to 30

2.0%

20 to 25

2.5%

 

 

Section 2:  That all ordinances or parts or ordinances in conflict herewith be and the same are hereby repealed.

 

 

Section 3:  That this ordinance shall take effect immediately upon adoption.

 


 

 

PASSED AND ADOPTED at the regular meeting of the City Commission of the City of Leesburg, Florida, held on the    30th  day of     June   ,2008.

 

 

 

 

 

                                                                            __________________________

                                                                             Mayor

 

ATTEST:

 

 

 

__________________________

City Clerk

 

 

APPROVED AS TO FORM:

 

 

 

________________________________

CITY ATTORNEY