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March 27, 2009

CITY COUNCIL WORKSHOP


THUR SD AY, APR IL 2, 2009, 4:00 P.M.
HA GLER MAS ON C ONFEREN CE ROOM
SECON D FLOOR , CI TY HA LL

Michael C. Wiggins, Mayor 1) Alvin G. Coby, City Manager


Jewel Cannada-Wynn, Deputy Mayor
Maren DeWeese 2) William D. Wells, City Attorney
Sam Hall
John Jerralds *3) Richard Barker Jr., Director of
Larry B. Johnson Finance
Diane Mack
Megan B. Pratt *4) Employee Executive Committee –
Ronald P. Townsend Brenda Kahalley, Committee
P. C. Wu Representative

*5) Firefighters’ Union – Larry Porto,


Union Representative
*Presentation
*6) Police Union – Robert Bell, Jr.,
Union Representative

If any person decides to appeal any decision made with respect to any matter considered at such meeting, he will
need a record of the proceedings, and that for such purpose he may need to ensure that a verbatim record of the
proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based.

The City of Pensacola adheres to the Americans with Disabilities Act and will make reasonable accommodations
for access to city services, programs, and activities. Please call 435-1606 for further information. Requests must
be made at least 48 hours in advance of the event in order to allow the city time to provide the requested
services.
CITY OF
PENSACOLA
DEFINED BENEFIT
RETIREMENT PLANS
COUNCIL WORKSHOP
APRIL 2, 2009
Pension Plan History
• General Pension – effective April 21, 1932
– Special Act of the State Legislature
– Six (6) trustees
– Included General, Fire and Police
– Closed October 1, 1979, new employees were in
deferred compensation plans
– Reopened October 6, 1997, participants in the Police
Plan were not allowed to join the General Plan
– Plan adopted as an ordinance in 2007
– Closed again June 18, 2007, new employees are now
in Florida Retirement System (FRS)
Pension Plan History
• Fire Pension – effective 1939
– Special Act of the Florida Legislature
– Five (5) Trustees
– Withdrew from the General Pension Plan and created it’s own plan

• Police Pension – effective October 22, 1959


– City ordinance
– Five (5) Trustees
– Police Officers continued in the General Pension Plan
– Police Plan was a supplemental plan
– No longer in General Pension Plan as of October 1, 1979

• Florida Retirement System – joined effective June 18,


2007
– General employees
Basic Retirement Funding Equation

C+I=B+E

C = Contributions
I = Investment Income
B = Benefits Paid
E = Expenses
Issues
• General Pension Plan
– Irrevocable Election to not go to FRS before July 2007
– Now may change Plan?
– Employee Contributions 5.5%

• Fire Pension Plan


– Union Contract included reopening language for pension
and going to FRS was discussed at time of union contract.
– Loss of State Insurance Proceeds if go to FRS
– Employee Contributions 11.0%
– No Social Security or Social Security Replacement Plan

• Police Pension Plan


– Union Contract included reopening language for pension
and going to FRS was discussed at time of union contract.
– Loss of State Insurance Proceeds if go to FRS
– Employee Contributions 0.5%
Pension Cost

• Pensions – Funding Difference between


beginning FY03 to Projected Budget FY10

– City-Wide Increase - $11,014,500

– General Fund Increase – $6,175,200


C it y C o nt r ib ut io n Hist o r y
G ener al F und

B eg inning Pr o ject ed
A ct ual A ct ual A ct ual A ct ual A ct ual A ct ual F Y 0 9 B ud g et F Y 10 B ud g et
FY 2 0 0 3 FY 2004 FY 2 0 0 5 FY 2 0 0 6 FY 2 0 0 7 FY 2 0 0 8 T o t al T o t al

Gener al Pensio n 76 7,4 0 0 1,9 51,12 3 2 ,3 3 6 ,9 72 2 ,58 6 ,3 70 2 ,4 75,10 2 2 ,2 73 ,714 2 ,2 8 9 ,2 0 0 2 ,3 50 , 10 0

F ir e Pensio n 719 ,3 0 0 1,712 ,56 8 2 ,0 8 5,0 6 2 2 ,6 6 2 ,6 19 2 ,79 5,8 3 9 2 ,6 8 9 ,516 2 , 73 1,10 0 2 ,8 6 5,8 0 0
Po lice Pensio n 4 0 2 ,4 0 0 1,18 8 ,58 6 1,4 4 4 ,50 1 2 ,0 53 ,9 9 2 2 ,19 6 ,9 2 9 2 ,4 6 8 ,6 4 1 2 ,4 14 ,8 0 0 2 ,3 9 8 ,6 0 0

F lo r i d a R et . Sys. 116 ,73 7 4 3 3 ,76 3 4 15,2 0 0 3 9 0 ,50 0


T o t al 1,8 8 9 ,10 0 4 ,8 52 ,2 77 5,8 6 6 ,53 5 7,3 0 2 ,9 8 1 7,58 4 ,6 0 7 7,8 6 5,6 3 4 7,8 50 ,3 0 0 8 ,0 0 5,0 0 0

Ot her F und s
B eg inning Pr o ject ed
A ct ual A ct ual A ct ual A ct ual A ct ual A ct ual F Y 0 9 B ud g et F Y 10 B ud g et
FY 2 0 0 3 FY 2004 FY 2 0 0 5 FY 2 0 0 6 FY 2 0 0 7 FY 2 0 0 8 T o t al T o t al

Gener al Pensio n 1,0 0 6 ,4 0 0 2 ,76 8 ,0 0 0 3 ,4 0 2 ,9 9 8 3 ,8 6 2 ,53 9 3 ,73 1,8 2 3 3 ,9 9 5,0 3 6 5,0 6 6 ,4 0 0 4 ,8 6 1,10 0

F ir e Pensio n 52 ,3 0 0 18 9 ,4 2 0 2 4 4 ,4 8 8 2 75,8 9 2 2 2 9 ,58 6 2 70 ,4 6 6 2 9 1,0 0 0 3 2 0 ,4 0 0


Po lice Pensio n 3 3 ,0 0 0 18 6 ,3 9 5 2 0 3 ,4 8 6 2 10 ,50 8 2 6 9 ,3 70 2 9 2 ,6 6 0 2 58 ,70 0 2 3 9 ,2 0 0

F lo r i d a R et . Sys. 115,3 6 6 4 8 8 ,0 75 4 6 5,6 0 0 515,2 0 0


T o t al 1,0 9 1,70 0 3 ,14 3 ,8 15 3 ,8 50 ,9 72 4 ,3 4 8 ,9 3 9 4 ,3 4 6 ,14 5 5,0 4 6 ,2 3 7 6 ,0 8 1,70 0 5,9 3 5,9 0 0

A ll F und s
B eg inning Pr o ject ed
A ct ual A ct ual A ct ual A ct ual A ct ual A ct ual F Y 0 9 B ud g et F Y 10 B ud g et
FY 2 0 0 3 FY 2004 FY 2 0 0 5 FY 2 0 0 6 FY 2 0 0 7 FY 2 0 0 8 T o t al T o t al

Gener al Pensio n 1,773 ,8 0 0 4 ,719 ,12 3 5,73 9 ,9 70 6 ,4 4 8 ,9 0 9 6 ,2 0 6 ,9 2 5 6 ,2 6 8 ,750 7,3 55,6 0 0 7,2 11,2 0 0

F ir e Pensio n 771,6 0 0 1,9 0 1,9 8 8 2 ,3 2 9 ,550 2 ,9 3 8 ,511 3 ,0 2 5,4 2 5 2 ,9 59 ,9 8 2 3 ,0 2 2 ,10 0 3 ,18 6 ,2 0 0

Po lice Pensio n 4 3 5,4 0 0 1,3 74 ,9 8 1 1,6 4 7,9 8 7 2 ,2 6 4 ,50 0 2 ,4 6 6 ,2 9 9 2 ,76 1,3 0 1 2 ,6 73 ,50 0 2 ,6 3 7,8 0 0
F lo r i d a R et . Sys. 2 3 2 ,10 3 9 2 1,8 3 8 8 8 0 ,8 0 0 9 0 5,70 0
T o t al 2 ,9 8 0 ,8 0 0 7,9 9 6 ,0 9 2 9 ,717,50 7 11,6 51,9 2 0 11,9 3 0 ,752 12 ,9 11,8 71 13 ,9 3 2 ,0 0 0 13 ,9 4 0 ,9 0 0
Combined Annual Pensions
Paid As of 9/30/08
100%

75%

50% General
Fire
25% Police

0%
$2,746- $20,000- $40,000- $60,000-
$20,000 $40,000 $60,000 $125,000
General Pension Annual Pensions
Paid As of 9/30/08
$60,000-$100,000 (8)
$40,000-$60,000 (16)
2%
3%

$20,000-$40,000 (134)
26%

$2,746-$20,000 (348)
69%
Fire Pension Annual Pensions Paid
As of 9/30/08
$60,000-$100,000
(6)
3%
$5,718-$20,000 (19)
$40,000-$60,000 11%
(48)
28%

$20,000-$40,000
(100)
58%
Police Pension Annual Pensions
Paid As of 9/30/08

$60,000-$125,000
(36)
$2,145-$20,000
29%
(35)
29%

$40,000-$60,000
(22)
18% $20,000-$40,000
(29)
24%
Retiree and Beneficiary Annual
Pensions Paid As of 9/30/08
Annual Pension General Firefighters Police Officers Total
Number Percentage Number Percentage Number Percentage Number Percentage
<$10,000 152 30.04% 4 2.33% 7 5.74% 163 20.38%
$10,000-$20,000 196 38.73% 15 8.72% 28 22.93% 239 29.85%
$20,000-$30,000 88 17.39% 44 25.58% 22 18.03% 154 19.25%
$30,000-$40,000 46 9.09% 56 32.56% 7 5.74% 109 13.63%
$40,000-$50,000 12 2.37% 24 13.95% 12 9.84% 48 6.00%
$50,000-$60,000 4 0.79% 24 13.95% 10 8.20% 38 4.75%
$60,000-$70,000 5 0.99% 4 2.33% 11 9.02% 20 2.50%
$70,000-$80,000 2 0.40% 1 0.58% 14 11.48% 17 2.13%
$80,000-$90,000 7 5.74% 7 0.88%
$90,000-$100,000 1 0.20% 1 0.82% 2 0.25%
>$100,000 3 2.46% 3 0.38%
506 100.00% 172 100.00% 122 100.00% 800 100.00%

HMO Non Medicare PPO Non Medicare Medicare


Family Family Family
Annual Insurance
Permiums (Paid by Pensioner) $13,904.40 $11,679.12 $5,721.60
Defined Benefit Plans
Active and Retired Participants
As of September 2008

General Fire Police


Pension* Pension Pension FRS
Num ber of Active Participants 345 108 157 293

Num ber of Retired and DROP Participants 608 172 122 N/A

Total FY 2008 Pensions Benefits Paid $10,955,365 $5,466,527 $2,534,905 N/A

Average Annual Pension $18,019 $31,782 $38,432 ** N/A

Annual Pension Highest to Low est


Highest $96,690 $79,186 $125,771 **
Low est $2,746 $5,718 $2,145

Current Annual Retirem ent Benefit 2.1% 3.0% 3.0% 1.60-3.0%


Percentage Based On Years Of Service Max 63% Max 75% Max 100% Max 100%

* General Pension closed effective June 18, 2007.

** Police and General Benefits


City Contribution Percentage
Fiscal Year 2009
Employee City Total
• General Pension 5.5% 49.58% 55.08%
• Fire Pension 11.0% 58.00% 83.72%
• Police Pension 0.5% 35.68% 45.03%

• FRS
– Regular Class 0.00% 9.85% 9.85%
– Senior Mgmt Class 0.00% 13.12% 13.12%
– Elected Official Class 0.00% 16.53% 16.53%
– Special Risk Class 0.00% 20.92% 20.92%
General Pension
Cost As A Percentage Of Salaries
History

PRE-
PAYMENT STATE
ANNUAL CITY RESERVE INSURANCE EMPLOYEE TOTAL ACTUAL
CONTRIBUTIONS USED PROCEEDS CONTRIBUTIONS CONTRIBUTIONS

FY 03 11.30% 9.88% 0.00% 5.50% 26.68%


FY 04 28.60% 0.00% 0.00% 5.50% 34.10%
FY 05 33.77% 0.00% 0.00% 5.50% 39.27%
FY 06 37.63% 0.00% 0.00% 5.50% 43.13%
FY 07 35.74% 0.00% 0.00% 5.50% 41.24%
FY 08 43.42% 0.00% 0.00% 5.50% 48.92%
FY 09 Budgeted 49.58% 0.00% 0.00% 5.50% 55.08%
FY 10 Projected 53.23% 0.00% 0.00% 5.50% 58.73%
General Pension Contribution
History

State
City Pre-Payment Insurance Employee Total
Contributions Reserve Used Proceeds Contributions Contributions

FY 03 1,760,559 1,444,925 - 858,380 4,063,864


FY 04 4,611,350 - - 886,797 5,498,147
FY 05 5,860,702 - - 953,417 6,814,119
FY 06 6,477,705 - - 946,730 7,424,435
FY 07 6,247,958 - - 961,556 7,209,514
FY 08 6,268,750 - - 794,006 7,062,756
FY 09 Budgeted 7,359,900 - - 816,500 8,176,400
FY 10 Projected 7,211,000 - - 745,100 7,956,100
Pensacola General Employees
Pension Fund
Cash & Equivalents,
2,086,853, 2.6%
Total Market Value
$79,373,573 (02/28/09)

Fixed Income,
37,173,321, 46.8%

Equities,
40,113,399, 50.5%

Total Market Value Total Market Value


$100, 202,547 (9/30/08) $119,690,414 (9/30/07)
Fire Pension
Cost As A Percentage Of Salaries
History

STATE
ANNUAL CITY INSURANCE EMPLOYEE TOTAL ACTUAL
CONTRIBUTIONS PROCEEDS CONTRIBUTIONS CONTRIBUTIONS

FY 03 18.20% 9.09% 11.00% 38.29%


FY 04 40.60% 13.20% 11.00% 64.80%
FY 05 46.83% 11.71% 11.00% 69.54%
FY 06 53.80% 12.34% 11.00% 77.14%
FY 07 58.33% 14.79% 11.00% 84.12%
FY 08 56.10% 15.15% 11.00% 82.25%
FY 09 Budgeted 58.00% 14.72% 11.00% 83.72%
FY 10 Projected 57.80% 14.50% 11.00% 83.30%
Fire Pension Contribution
History

State
City Pre-Payment Insurance Employee Total
Contributions Reserve Used Proceeds Contributions Contributions

FY 03 771,210 - 507,383 441,869 1,720,462


FY 04 1,807,624 - 587,799 489,752 2,885,175
FY 05 2,424,270 - 579,686 568,735 3,572,691
FY 06 2,938,511 - 674,181 600,810 4,213,502
FY 07 3,025,425 - 766,923 570,531 4,362,879
FY 08 2,959,982 - 799,135 580,431 4,339,548
FY 09 Budgeted 3,022,100 - 766,923 573,200 4,362,223
FY 10 Projected 3,186,178 - 799,135 606,418 4,591,731
Pensacola Firefighters’ Relief
and Pension Fund
Cash &
Equivalents,
Total Market Value 1,130,799, 1.8%

$63,560,489 (02/28/09)

Fixed Income,
29,722,120, 46.8%

Equities,
32,707,570, 51.5%

Total Market Value Total Market Value

$78,805,728 (9/30/08) $92,553,922 (9/30/07)


Police Pension
Cost As A Percentage Of Salaries
History
PRE-
PAYMENT STATE
ANNUAL CITY RESERVE INSURANCE EMPLOYEE TOTAL ACTUAL
CONTRIBUTIONS USED PROCEEDS CONTRIBUTIONS CONTRIBUTIONS

FY 03 7.10% 1.05% 9.66% 8.50% 26.31%


FY 04 19.00% 3.43% 10.44% 5.50% 38.37%
FY 05 19.00% 9.70% 10.62% 2.50% 41.82%
FY 06 28.59% 0.10% 10.25% 0.50% 39.44%
FY 07 31.26% 0.00% 8.40% 0.50% 40.16%
FY08 35.60% 0.00% 8.54% 0.50% 44.64%
FY09 Budgeted 35.68% 0.00% 8.85% 0.50% 45.03%
FY10 Projected 36.78% 0.00% 7.81% 0.50% 45.09%

Note: Actuarial Report not approved by the Police Pension Board for FY10 contributions. Will use FY09 contribution rates.
Police Pension Contribution
History

State
City Pre-Payment Insurance Employee Total
Contributions Reserve Used Proceeds* Contributions Contributions

FY 03 432,241 61,122 717,421 589,016 1,799,800


FY 04 1,285,399 231,940 706,380 375,764 2,599,483
FY 05 1,759,486 676,096 662,759 192,508 3,290,849
FY 06 2,264,514 7,438 662,759 36,327 2,971,038
FY 07 2,466,299 - 662,759 39,445 3,168,503
FY 08 2,761,301 - 662,759 38,793 3,462,853
FY 09 Budgeted 2,673,500 - 662,759 37,500 3,373,759
FY 10 Projected 2,637,800 - 662,759 35,900 3,336,459

* Can only apply $619,399 for contributions each year.

Note: Actuarial Report not approved by the Police Pension Board for FY10 contributions. Will use FY09 contribution rates.
Pensacola Police
Pension Fund
Cash &
Equivalents,
Total Market Value 1,223,163, 3.0%

$40,719,075 (02/28/09)

Equities, Fixed Income,


18,662,448, 45.8% 20,833,464, 51.2%

Total Market Value Total Market Value

$51,605,517 (9/30/08) $57,273,509 (9/30/07)


Reconciliation of Contribution
Increases
Reason General Pension Fire Pension Police Pension

Due to Net Negative Investement Returns $1,446,348 $1,914,778 $1,255,369

Due to Losses $2,550,140

Due to Plan Amendments $125,060 $1,292,809

Due to Actual Experience Different From Assumptions $233,808 $296,996 $50,655

Due to Method Changes $1,772,594 ($731,624) ($515,362)

Due to Payroll Different Than Assumed ($891,734) $292,919

Due to Demographic Changes $201,184 $934,450 ($173,990)

Total Increase in Contributions $5,437,400 $2,414,600 $2,202,400


Schedule of Funding Progress All
Pension Plans Combined
Actuarial Actuarial
Actuarial Market Value of Value of Accrued Unfunded
Valuation Assets (In Assets (In Liability AAL Funded Covered
Date Millions) Millions) (AAL) (UAAL) Ratio Payroll

9/30/1996 150,365 137,985 153,906 15,921 89.66% 16,180


9/30/1997 183,885 160,673 202,892 42,219 79.19% 21,613
9/30/1998 193,079 178,871 215,707 43,144 82.92% 23,491
9/30/1999 212,846 195,938 245,823 49,885 79.71% 25,492
9/30/2000 218,485 212,436 263,454 51,018 80.63% 23,994
9/30/2001 201,000 219,296 269,514 50,218 81.37% 24,810
9/30/2002 182,189 215,402 265,855 50,353 81.02% 25,650
9/30/2003 198,604 218,376 289,820 71,444 75.35% 25,873
9/30/2004 213,850 220,312 300,882 80,570 73.22% 27,059
9/30/2005 228,941 225,817 308,689 82,872 73.15% 29,864
9/30/2006 239,103 235,791 306,766 80,975 76.86% 30,372
9/30/2007 269,518 254,956 332,464 77,508 76.69% 27,449
9/30/2008 231,023 261,441 355,032 93,091 73.64% 26,572
Schedule of Funding Progress
General Pension
Actuarial Actuarial
Actuarial Market Value of Value of Accrued Unfunded
Valuation Assets (In Assets (In Liability AAL Covered
Date Millions) Millions) (AAL) (UAAL) Funded Ratio Payroll

9/30/1996 74,086 68,668 71,524 2,856 96.00% 6,937


9/30/1997 81,634 81,634 110,292 28,658 74.00% 11,889
9/30/1998 89,237 89,287 118,515 26,228 75.30% 13,932
9/30/1999 103,000 97,992 131,148 33,156 74.70% 15,465
9/30/2000 105,501 104,738 140,905 36,167 74.30% 14,030
9/30/2001 95,993 106,476 141,680 35,204 75.20% 14,480
9/30/2002 86,264 104,817 140,310 35,493 74.70% 15,445
9/30/2003 91,598 105,000 155,855 50,855 67.40% 15,286
9/30/2004 97,324 104,027 160,845 56,818 64.70% 15,708
9/30/2005 103,608 104,435 157,913 53,478 66.10% 16,904
9/30/2006 107,866 106,662 157,417 50,755 67.76% 17,598
9/30/2007 119,690 113,372 163,684 50,312 69.26% 14,807
9/30/2008 100,490 115,679 166,311 50,632 69.56% 13,546
Schedule of Funding Progress
Fire Pension

Actuarial Actuarial
Actuarial Market Value of Value of Accrued Unfunded
Valuation Assets (In Assets (In Liability AAL Funded Covered
Date Millions) Millions) (AAL) (UAAL) Ratio Payroll

9/30/1996 51,744 46,524 56,321 9,797 82.60% 3,971


9/30/1997 63,055 51,924 60,774 8,850 85.40% 4,038
9/30/1998 65,803 57,390 65,082 7,692 88.20% 3,754
9/30/1999 72,288 63,803 76,345 12,542 83.60% 4,189
9/30/2000 73,950 70,000 82,307 12,307 85.00% 4,321
9/30/2001 66,082 73,385 85,681 12,296 85.60% 4,427
9/30/2002 60,355 71,441 83,645 12,104 85.50% 3,887
9/30/2003 67,208 72,891 85,334 12,443 85.40% 4,103
9/30/2004 72,892 73,263 85,214 11,951 86.00% 4,468
9/30/2005 78,536 74,679 92,165 17,486 81.00% 5,025
9/30/2006 84,440 78,872 97,021 18,149 81.30% 4,840
9/30/2007 92,554 85,956 100,973 15,017 85.10% 5,041
9/30/2008 78,885 88,835 107,803 18,968 82.40% 5,513
Schedule of Funding Progress
Police Pension
Actuarial Actuarial
Actuarial Market Value of Value of Accrued Unfunded
Valuation Assets (In Assets (In Liability AAL Funded Covered
Date Millions) Millions) (AAL) (UAAL) Ratio Payroll

9/30/1996 24,535 22,793 26,061 3,268 87.46% 5,272


9/30/1997 31,095 27,115 31,826 4,711 85.20% 5,686
9/30/1998 33,631 30,194 36,418 6,224 83.39% 5,805
9/30/1999 37,558 34,143 38,330 * 4,187 89.08% 5,838
9/30/2000 39,034 37,698 40,242 * 2,544 93.68% 5,643
9/30/2001 38,925 39,435 42,153 2,718 93.60% 5,859
9/30/2002 35,570 39,144 41,900 2,756 93.40% 6,318
9/30/2003 39,798 40,485 48,631 8,146 83.20% 6,484
9/30/2004 43,634 43,022 54,823 11,801 78.50% 6,883
9/30/2005 46,797 46,703 58,611 11,908 79.68% 7,934
9/30/2006 50,135 50,257 62,328 12,071 80.60% 7,153
9/30/2007 57,273 55,628 67,807 12,179 82.04% 7,601
9/30/2008 ** 51,698 57,427 80,918 23,491 70.97% 7,513

* Estimated Numbers

** Actuarial Report not approved by the Police Pension Board as of 9/30/08 contributions. Will use prior year contribution rates.
General Pension Phased-In
Recognition of Investment Income
P e n s i o n Ye a r 20 0 7 2 00 8 20 0 9 2 01 0 20 1 1 2 0 12 2 01 3 2 0 14

Fi s c a l Ye a r 20 0 5 2 00 6 20 0 7 2 00 8 20 0 9 2 0 10 2 01 1 2 0 12

GE NE RAL

C u r r e n t Ye a r In v e s t me n t In c ome 2 47 , 1 91 7 9, 66 1 1 , 3 6 4, 2 9 1 (4, 92 2 , 39 4 )

Fi r s t P r i o r Ye a r 1 43 , 7 25 2 4 7, 19 1 7 9, 6 6 1 1 , 36 4 , 29 1 (4 , 9 22 , 3 94 ) - - -

Se c o nd P r i or Ye a r 3 27 , 3 29 1 4 3, 72 5 2 4 7, 1 9 1 7 9 , 66 1 1 , 3 64 , 2 91 (4 , 9 22 , 3 94 ) - -

T h i r d P r i o r Ye a r (2 , 9 01 , 6 07 ) 3 2 7, 32 9 1 4 3, 7 2 5 24 7 , 19 1 79 , 6 61 1 , 3 64 , 2 91 (4, 9 2 2, 3 9 4) -
Fou r t h P r i o r Ye a r (2 , 8 82 , 1 86 ) (2, 9 0 1, 60 7 ) 3 2 7, 3 2 9 14 3 , 72 5 2 47 , 1 91 79 , 6 61 1, 3 6 4, 2 9 1 (4 , 92 2 , 39 4 )
T o t a l R e c o gn i z e d Inv e s t me n t Ga i n(Lo s s ) (5 , 0 65 , 5 48 ) (2, 1 0 3, 70 1 ) 2 , 1 6 2, 1 9 7 (3, 08 7 , 52 6 ) (3 , 2 31 , 2 51 ) (3 , 4 78 , 4 42 ) (3, 5 5 8, 1 0 3) (4 , 92 2 , 39 4 )
Fire Pension Phased-In
Recognition of Investment Income

Pension Year 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012

FIRE

Current Year Investment Income 172,338 314,925 205,125 1,122,345 (3,822,672)

First Prior Year 626,288 172,338 314,925 205,125 1,122,345 (3,822,672)

Second Prion Year (1,892,186) 626,288 172,338 314,925 205,125 1,122,345 (3,822,672)

Third Prior Year (2,203,903) (1,892,186) 626,288 172,338 314,925 205,125 1,122,345 (3,822,672) -

Fourth Prior Year (143,102) (2,203,903) (1,892,188) 626,289 172,336 314,924 205,125 1,122,343 (3,822,672)

Total Recognized Investment Gain(Loss) (3,440,565) (2,982,538) (573,512) 2,441,022 (2,007,941) (2,180,278) (2,495,202) (2,700,329) (3,822,672)
SUMMARY
• The cumulative funding of all 3 plans is 73.64% funded
• 9/30/07 - $270 million in assets
• 9/30/08 - $231 million in assets
• 2/28/09 - $183 million in assets
• Pension Plan Investments are market sensitive
• Earnings need to be looked at as long range – 30 to 40
years
• General Pension is closed to new members. New
general employees hired are placed in FRS.
Future Issues
• Litigation
– Fire
– General

• Actuarially no cost amendments to the Fire Pension Plan


- approved when collective bargaining agreement
ratified
- Need to send to legislature

• Pension Obligation Bonds


Cost Reduction Options
General Pension Possible Benefit Changes
Employer Contribution Rate
Unfunded Total
Accrued Employer
ITEM Liability (UAL) Normal UAL Total Contribution

Valuation Results - Baseline 50,631,882 14.31% 38.92% 53.23% 7,210,946

1. 1.6% Accrual Rate 48,201,033 12.30% 37.05% 49.35% 6,685,298


Reduction from Baseline 2,430,849 2.01% 1.87% 3.88% 525,648

2. 1.05% Accrual Rate 44,833,165 10.20% 34.46% 44.66% 6,050,305


Reduction from Baseline 5,798,717 4.11% 4.46% 8.57% 1,160,641

3. Life Annuity Normal Form 47,155,105 12.50% 36.25% 48.75% 6,603,187


Reduction from Baseline 3,476,777 1.81% 2.67% 4.48% 607,759

4. Benefit Freeze 46,260,420 2.53% 35.56% 38.09% 5,160,136


Reduction from Baseline 4,371,462 11.78% 3.36% 15.14% 2,050,810

5. 5 Year Final Average Salary 48,656,388 13.60% 37.40% 51.00% 6,908,537


Reduction from Baseline 1,975,494 0.71% 1.52% 2.23% 302,409
6. Eliminate COLA 45,829,543 12.11% 35.23% 47.34% 6,412,210
Reduction from Baseline 4,802,339 2.20% 3.69% 5.89% 798,736

*Administrative expenses and adjustment for timing of contributions only

Note: The sum of any 2 benefits added together will not be the exact amount if combined.
Fire Pension Possible Benefit Changes
Employer Contribution Rate
Unfunded
Accrued Total
Liability Employer
ITEM (UAL) Normal UAL Total Contribution

Valuation Results - Baseline 18,968,619 29.72% 28.08% 57.80% 3,186,178

1. 2.5% Accrual Rate (max 75%) 16,114,404 26.84% 25.26% 52.10% 2,871,930
Reduction from Baseline 2,854,215 2.88% 2.82% 5.70% 314,248

2. 2.0% Accrual Rate (max 75%) 14,749,263 20.48% 23.24% 43.72% 2,410,050
Reduction from Baseline 4,219,356 9.24% 4.84% 14.08% 776,128

3. 10 Year Certain Life Annuity Normal Form 15,657,536 24.00% 24.57% 48.57% 2,699,546
Reduction from Baseline 3,311,083 5.72% 3.51% 9.23% 486,632

4. Benefit Freeze 14,181,790 6.90% 36.01% 42.91% 2,365,815


Reduction from Baseline 4,786,829 22.82% -7.93% 14.89% 820,363

5. 5 Year Final Average Salary 16,289,469 26.14% 25.33% 51.47% 2,837,039


Reduction from Baseline 2,679,150 3.58% 2.75% 6.33% 349,139

6. Eliminate COLA 9,973,547 17.91% 18.79% 36.70% 2,022,647


Reduction from Baseline 8,995,072 11.81% 9.29% 21.10% 1,163,531

Note: The sum of any 2 benefits added together will not be the exact amount if combined.
Police Pension Possible Benefit Changes
Employer Contribution Rate
Unfunded
Accrued Total Employer
ITEM Liability (UAL) Normal UAL Total Contribution

Valuation Results - Baseline 23,491,042 22.55% 20.87% 43.42% 2,637,749

1. 2.5% Accrual Rate (max 75%) 16,932,118 18.94% 15.04% 33.98% 1,928,540
Reduction from Baseline 6,558,924 3.61% 5.83% 9.44% 709,209

2. 2.0% Accrual Rate (max 75%) 11,291,444 15.56% 10.03% 25.59% 1,298,220
Reduction from Baseline 12,199,598 6.99% 10.84% 17.83% 1,339,529

3. 10 Year Certain Life Annuity Normal Form 17,824,132 19.39% 15.84% 35.23% 2,022,458
Reduction from Baseline 5,666,910 3.16% 5.03% 8.19% 615,291

4. Benefit Freeze 7,292,693 4.00% 6.48% 10.48% 200,593


Reduction from Baseline 16,198,349 18.55% 14.39% 32.94% 2,437,156

5. 5 Year Final Average Salary 20,244,375 20.69% 17.99% 38.68% 2,281,651


Reduction from Baseline 3,246,667 1.86% 2.88% 4.74% 356,098

6. Eliminate COLA 13,652,657 16.91% 12.13% 29.04% 1,557,413


Reduction from Baseline 9,838,385 5.64% 8.74% 14.38% 1,080,336

IMPORTANT NOTE: Minimum benefits that may be required by law have neither been defined nor valued.

Note: The sum of any 2 benefits added together will not be the exact amount if combined.
Where Do We Go From Here?

Savings Combinations
General, Fire & Police Combined
Life Annuity Normal Form
Fiscal Year 2010
City City
Contribution Contribution
Before Before
Plan Changes Changes Changes

General Pension $ 7,210,946 $ (607,759) $ 7,818,705


Fire Pension 3,186,178 (486,632) 3,672,810
Police Pension 2,637,749 (615,291) 3,253,040
Total Savings $ 13,034,873 $ (1,709,682) $ 14,744,555
General, Fire & Police Combined
5 Year Average Final Salary
Fiscal Year 2010
City City
Contribution Contribution
Before After
Plan Changes Changes Changes

General Pension $ 7,210,946 $ (302,409) $ 7,513,355

Fire Pension 3,186,178 (349,139) 3,535,317

Police Pension 2,637,749 (356,098) 2,993,847

Total Savings $ 13,034,873 $ (1,007,646) $ 14,042,519


General, Fire & Police Combined
0.5% Reduction in Accrual Rate

City City
Contribution Contribution
Before After
Plan Changes Changes Changes

General Pension $ 7,210,946 $ (525,648) $ 6,908,537

Fire Pension 3,186,178 (314,248) 2,837,039

Police Pension 2,637,749 (709,209) 2,281,651

Total Savings $ 13,034,873 $ (1,549,105) $ 12,027,227


General, Fire & Police Combined
Freezing Plan Benefits
Fiscal Year 2010
City
Contribution
Before City Contribution
Pla n Changes Changes After Cha nge s

Gene ra l Pension $ 7,210,946 $ (2,050,810) $ 5,160,136

Fire Pension 3,186,178 (820,363) 2,365,815

Police Pension 2,637,749 (2,437,156) 200,593

Subtotal $ 13,034,873 $ (5,308,329) $ 7,726,544

Loss of Contribution from State Insurance


Proceeds Fire and Police $ 1,418,435 $ 1,418,435

Ne t Savings* $ (3,889,894)

Ne t City Obligation $ 9,144,979

*Net savings a ssumes no other pension plan provide d for employee s.


Issues
Boards will determine how the plan will continue
if the plans are frozen

• Purchase annuities – immediate cost to city to purchase


annuities
• Payout all participants, retired and active, in a lump-sum –
immediate cost to city to fund lump-sums
• Continue as they are currently – city’s annual cost will be
determined by actuary each year
What do you provide employees

– Defined Contribution Plan – General, Fire &


Police

– FRS for Fire and Police


• Employees would have choice which plan current
or FRS
• Close plans would lose the state insurance
premium tax money

– Provide No Retirement Plan


QUESTIONS
City of Pensacola
Employee’s Executive
Committee

City Council Workshop


April 2, 2009
Employee’s Executive Committee

 Represents and Protects The Interest Of All


Members of the Civil Service
 Created By Laws of Florida
 Ch 84-510 Section 17
Employee’s Executive Committee
Chairperson Brenda Kahalley Group 5 Police, Fire, MIS

Vice-Chairperson Anthony Bosso Group 6 Energy Services of Pensacola

Finance, Community
Secretary Yvette McLellan Group 1 Development, Housing,
Employee Services, Engineering

Treasurer Michael Laven Group 4 Airport, Library Port

Gene Ryder Group 2 Parks & Recreation

Public Works, Sanitation


Toney McCreary Group 3
Services & Fleet Management

Alternates Cheryl Jackson Group 1


Eric Ervin Group 2
Darryl Singleton Group 6
City of Pensacola General Pension Plan

 Change is Necessary
 Allow For Thorough Research And
Comparisons
 Independent Party
 Informed Decision
 Consensus
“Cadillac Pensions”

 Average Civil Service Worker


 608 Current General Pension Retirees
 Average Pension - $18,019
 68.77% Receive Less Than $20,000 Per Year
 Family Health Insurance - $14,000 Per Year
Civil Service Employees
Yearly Salary 30 Years (63%)
Position Starting Salary Maximum Salary Maximum Pension

Clerk I 19,115 29,702 18,712.26


Clerk II 20,092 31,220 19,668.60
Clerk III 21,091 32,760 20,638.80

Customer Service Representative I 23,171 35,214 22,184.82


Customer Service Representative II 24,545 38,188 24,058.44

Maintenance Worker I 20,092 31,220 19,668.60


Maintenance Worker II 21,091 32,760 20,638.80
Maintenance Worker III 23,171 35,214 22,184.82

Public Safety Telecommunicator I 24,585 38,188 24,058.44


Public Safety Telecommunicator II 27,040 41,558 26,181.54

Equipment Operator II 23,171 35,214 22,184.82


Equipment Operator III 24,545 38,188 24,058.44
Teamwork

 Budgets and Personnel Reduction


 73 Full Time Positions Since FY 2008
 No Pay Increases
 FY 2009 - $1,122,000
 FY 2010 – $2,244,000
 Personal Budgets Being Tightened
 Health Insurance
 Groceries
 Gasoline
Pension Structure Changes
 Three Changes In Past 30 Years
 1979 – Closed General Pension To New
Employees. New Employees Put In Deferred
Compensation Plans
 1997 – Reopened General Pension
 Employees Allowed To Buy In Years of Service
 One-Time Chance
 2007 – Closed General Pension to New
Employees
 New Employees Put In Florida Retirement System
 Existing Employees Allowed To Remain In Current Plan
Or Join Florida Retirement System
 Irrevocable Decision
Civil Service Employees Affected
 Customer Service Employees
 Equipment Operators
 Picks Up Garbage
 Mows Parks
 Library Workers & Recreation Aids
 After School
 Computer Labs
 Hurricane/Disaster Recovery
Independent Study
 Support Hiring Outside Consultant
 Evaluate and Compare
 Similar Cities
 Neighboring Governmental Agencies
 State and Federal Governments
 Will Provide Clearer Picture
Thank You
Pensacola Firefighters Relief
and Pension Fund

 Good News, Bad News


Brief History

 In 1939 the state establishes Chapter


19112 Section 175.041 Laws of Florida
allowing collection of excise tax on
casualty insurance for the purpose of
funding dedicated firefighter pension
plans.
Where it Went Wrong !
 1957- revealed no portfolio
 1961- $2,962,000 (original unfunded) loss
over the 18 years
 1971- (14 year delay)-”stair-step funding”
assumes 64.6% of payroll 1991-2011
 Paid $4,000 of recommended $135,000 initial
payment
 2008-required payment $1,462,359 (original
unfunded-grown now to $9,166,787)
THE GOOD NEWS!
 Paid off in 7 years:
 2008 - $1,936,150

 2015 - $613,946

 *Don’t give up now, almost there!*

 2038 - $0!
A Well Managed Plan
 Return on investment:
2004 - 15.1%
2005 - 10.2%
2006 - 10.6%
2007 - 14.5%
2008 - (13.3%) - Rank in top 30%
PENSACOLA POLICE PENSION

ROB BELL
PRESIDENT
FRATERNAL ORDER OF POLICE,
LODGE 71
CHAIRMAN
POLICE PENSION BOARD
Pension Plan History
• – Police Pension – effective October 22, 1959
• – City ordinance
• – Five (5) Trustees
• – Police Officers continued in the General
Pension Plan
• – Police Plan was a supplemental plan
• – No longer in General Pension Plan as of
October 1, 1979
“CADILLAC PENSION”
• OFFICERS HIRED PRIOR TO 1979
– PARTICIPATED IN BOTH THE GENERAL AND
POLICE PENSIONS
– THIS PROVIDED THESE OFFICERS WITH A
COMBINED 4% BENEFIT
– ONLY 4 REMAIN
CURRENT PENSION
• DEFINED BENEFIT
– 3% MULTIPLIER
– MINIMUM 25 YEARS OF SERVICE
– VESTED IN 10 YEARS
– AVERAGE PENSION $38,432.00
PENSION HISTORY
• PRIOR TO 1997
– 2% MULTIPLIER
– MINIMUM 30 YEARS OF SERVICE
– 10 YEARS VESTED

1997 GENERAL PENSION WAS RE-OPENED


POLICE AND FIRE WERE EXCLUDED
PENSION HISTORY
(CONT.)
• IN LIEU OF THE GENERAL PENSION
PARTICIPATION:
– CITY STAFF ENHANCED THE POLICE PENSION.
• FROM 2% TO A 3% MULTIPLIER
• DECREASED MINIMUIM YEARS OF SERVICE FROM 30
TO 25 YEARS
• THESE INCREASES BROUGHT US IN LINE WITH OTHER
LAW ENFORCEMENT PENSIONS
PENSION HISTORY
(CONT.)
• FURTHER PLAN ENHANCEMENTS
– 2003 CONTRACT NEGOITATIONS
• IN LIEU OF PAY RAISES CITY STAFF PROPOSED A
REDUCTION IN THE OFFICER’S CONTRIBUTION TO THE
PENSION PLAN TO .5% FROM 8.5%
THIS REDUCTION WAS SPREAD OUT OVER A 3 YEAR
PERIOD
COMPARISONS
POLICE PLAN FRS (SPECIAL RISK CLASS)
3%
25 YEARS
6 YEARS VEST.
0
100% MAX
• OUR PENSION IS COMPARABLE IN BENEFITS
TO THE MAJORITY OF OTHER 185 PLANS
ACROSS THE STATE
• DUE TO INVESTMENTS OUR PENSION HAS
OUT PERFORMED MANY PLANS IN FLORIDA
• IN TOP 30TH PERCENTILE FOR THE QUARTER
WHY PUBLIC SERVICE
PRIVATE/PUBLIC
BETTER SALARY
PAY FOR EDUCATION
LESS OR NO BENEFITS/LITTLE OR NO PENSION

OFFICERS WANT TO MAKE A DIFFERENCE


OFFICERS HAVE A SENCE OF COMMUNITY PRIDE
OFFICERS ACCEPT LESS PAY FOR BETTER
BENEFITS AND PENSIONS
• PENSIONS AND BENEFITS ARE RECRUITING TOOLS

• LAW ENFORCEMENT IS A HIGH LIABILITY AREA


– EDUCATION AND EXPERIENCE ARE VITAL IN REDUCING THE
CITIES EXPOSURE TO LIABILITY

A DEFINED BENEFIT PENSION HELPS IN RETAINING EXPERIENCED


POLICE OFFICERS
HIGH RISK BENEFIT
BECAUSE OUR LIFE IS ON THE LINE
FOR YOU EVERYDAY