2016-05-02IV
CITY OF OKEECHOBEE
MAY 2, 2016, REGULAR CITY COUNCIL MEETING
55 SE 3RD AVENUE * COUNCIL CHAMBERS * OKEECHOBEE, FL 34974
SUMMARY OF COUNCIL ACTION
AGENDA
CALL TO ORDER — Mayor
May 2, 2016, City Council Regular Meeting, 6:00 P.M.
OPENING CEREMONIES
Invocation to be given by Reverend Jim Shevlin, Church of Our Saviour;
Pledge of Allegiance to be led by Mayor Kirk.
MAYOR, COUNCIL AND STAFF ATTENDANCE - City Clerk
Mayor James E. Kirk
Council Member Noel A. Chandler
Council Member Mike O'Connor
Council Member Gary Ritter
Council Member Dowling R. Watford, Jr.
City Administrator Marcos MontesDeOca
City Attorney John R. Cook
City Clerk Lane Gamiotea
Deputy City Clerk Bobbie Jenkins
Police Chief Denny Davis
Fire Chief Herb Smith
Public Works Director David Allen
PROCLAMATIONS AND PRESENTATIONS — Mayor
A. Proclaim the week of May 1 through 7, 2016, as "Municipal Clerks Week."
PAGE 1 OF 5
COUNCIL ACTION - DISCUSSION - VOTE
Mayor Kirk called the May 2, 2016, Regular City Council Meeting to order at 3:02 P,M. (which is a change in the
regular meeting schedule in order to provide for the Pension Consultants to be present)
The invocation was offered by Reverend Shevlin of the Church of Our Saviour; the Pledge of Allegiance was led by
Mayor Kirk.
City Clerk Gamiotea called the roll:
Present
Present (entered Chambers at 3:13 p.m.)
Present (entered Chambers at 3:13 p.m.)
Present
Present
Present
Present
Present
Present
Present
Present
Present
Mayor Kirk presented the following proclamation to City Clerk Gamiotea and Deputy City Clerk Jenkins, which read:
"Whereas, the Office of the Municipal Clerk, a time honored and vital part of local government exists
throughout the world; and Whereas, the Office of the Municipal Clerk is the oldest among public servants;
and Whereas, the Office of the Municipal Clerk provides the professional link between the citizens, the local
governing bodies and agencies of government at other levels; and Whereas, Municipal Clerks have pledged
to be ever mindful of their neutrality and impartiality, rendering equal service to all; and Whereas, the
Municipal Clerk serves as the information center on functions of local government and community; and
Whereas, Municipal Clerks continually strive to improve the administration of the affairs of the Office of the
Municipal Clerk through participation in education programs, seminars, workshops and the annual
meetings of their state, province, county and international professional organizations; and Whereas, it is
most appropriate that we recognize the accomplishments of the Office of the Municipal Clerk.
534
AGENDA
MAY 2, 2016 - REGULAR MEETING - PAGE 2 OF 5
COUNCIL ACTION - DISCUSSION — VOTE
535
IVA
PROCLAMATIONS AND PRESENTATIONS CONTINUED
A. Proclaim the week of May 1 through 7, 2016, as "Municipal Clerks Week'
continued.
B. Proclaim the month of May 2016, as "Mental Health Awareness Month."
V. AGENDA - Mayor
A. Requests for the addition, deferral or withdrawal of items on today's
agenda.
VI. MINUTES — City Clerk
A. Motion to dispense with the reading and approve the Summary of Council
Action for the April 19, 2016, Regular Meeting.
VII. UNFINISHED BUSINESS
A. Discuss OUA's request for the current pension plan to be amended to add
language that would allow the OUA to split from the plan and allow for the
transfer of assets and liabilities attributable to OUA employees to an OUA
retirement program — City Administrator (Exhibit 1).
Now, Therefore, 1, James E. Kirk, Mayor of the City of Okeechobee, do recognize the week of May 1 through
May 7, 2016, as `MUNICIPAL CLERKS WEEK,' and further extend appreciation to our Municipal Clerk, Lane
Gamiotea, and to all Municipal Clerks for the vital services they perform and their exemplary dedication to
the communities they represent."
Mayor Kirk read and presented the proclamation to Suncoast Mental Health Center representatives, Mr. Art Ciasca,
CEO; Ms. Cathy Cordeiro, Director of Operations; Ms. Deb Pizzimenti, Director of Outreach; and Ms. Amanda
Sackett, Lead Case Manager: "Whereas, mental health is essential to everyone's overall health and
well-being; and Whereas, mental health helps to sustain an individual's thought processes, relationships,
productivity and ability to adapt to change or face adversity; and Whereas, mental illness adversely affects
those abilities and often is life -threatening in nature; and Whereas, one in four adults experiences mental
health problems in any given year and such problems can contribute to onset of mental illness; and
Whereas, 12 youth under the age of 24 commits suicide every day in the United States; and Whereas, in
2014 there were 8 suicides in Okeechobee County; and Whereas, one in 17 adults lives with mental illness
such as major depression, bipolar disorder or schizophrenia; and Whereas, approximately one half of
chronic mental illness begins by the age of 14 and three-quarters by age 24; and Whereas, every citizen and
community can make a difference in helping end the silence and stigma that for too long has surrounded
mental illness and discouraged people from getting help; and Whereas, public education and civic activities
can encourage mental health and help improve the lives of individuals and families affected by mental
illness. Now, Therefore, 1, James E. Kirk, by virtue of the authority vested in me as Mayor of the City of
Okeechobee, Florida, do hereby proclaim the month of May 2016 as MENTAL HEALTH AWARENESS
MONTH."
Mayor Kirk asked whether there were any additions, deferrals, or withdrawals on today's agenda. There were none.
Motion and second by Council Members Ritter and Watford to dispense with the reading and approve the Summary
of Council Action for the Regular Meeting of April 19, 2016. There was no discussion on this item.
VOTE:
KIRK — YEA CHANDLER — YEA O'CONNOR — YEA
RITTER — YEA WATFORD — YEA MOTION CARRIED.
Administrator MontesDeOca invited Pension Attorney Scott Christiansen of Christiansen and Dehner, P.A., Pension
Auditor, Mr. Jay McBee of DiBartolomeo, McBee, Harley and Barnes, P.A., and Pension Actuary, Ms. Melissa Algayer
of Gabriel Roeder Smith and Company to address the questions from the previous meeting.
MAY 2, 2016 - REGULAR MEETING - PAGE 3 OF 5
590
11 AGENDA 11 COUNCIL ACTION - DISCUSSION — VOTE 11
VII. UNFINISHED BUSINESS CONTINUED
A. Discuss OUA's request for the current pension plan to be amended to add
language that would allow the OUA to split from the plan and allow for the
transfer of assets and liabilities attributable to OUA employees to an OUA
retirement program continued.
Mr. McBee offered a clear definition of the two options available for the City General/OUA Pension Plan in question.
The cost -sharing multiple -employer plan is defined as having pension obligations to the employees of more than one
employer pooled into one fund and using these same assets to pay the benefits of the employees of any employer that
provides pensions through the pension plan. The agent multiple -employer plan separates and maintains an account
for each employer so that each employer's share of the pooled assets is legally available to pay the benefits of only its
employees.
Attorney Christiansen responded to the question as which name best identifies the operation of this Pension Plan. It is
his opinion that it is a cost -sharing multiple -employer type plan. All of the assets are coming into the Plan, as one fund,
the benefits are being paid from one fund. Mr. McBee added, it has historically been identified as a cost -sharing plan
as well.
To officially identify the Plan as an agent multiple -employer, Attorney Christiansen explained, would require
amendments, not only to change the name, but to also provide two separate funds where benefits are paid for each
employer. The investment fund could remain as one, or be separated into two accounts, including different investment
methods. The employers could offer different benefits for their employees. However, the City, as the Plan Sponsor is
completely responsible for all liability of the Plan. While the agent multiple -employer gives the OUA Board some
additional flexibility for decisions on benefits of their employees and investments, the City would be financially
responsible for those decisions, should the OUA be unable to contribute their financial portion each year. Another
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plan, completely operated and responsible by the OUA. Essentially, it would phase out the OUA from the existing
Plan, once all their employees retired or withdrew.
Council Member Watford asked what mortality table is used in actuary calculations and what is the current rate of
return? Ms. Algayer responded the Plan uses the RP-2000 Mortality Table Report, the current rate of return is 7
percent. In 2014, two mortality tables were released, RP-2014 and MP-2014. However, there is now a new mortality
improvement project scale, MP-2015. Attorney Christiansen added based on recent laws, all pensions will be required
to update their Mortality Tables, and confirmed that it will not be the ones released in 2014.
When asked whether there was a downside to the City Council changing the Plan to an agent multiple -employer,
Attorney Christiansen responded he did not see any at all. Mr. McBee interjected, the concern would only be, as
previously explained, the City is the Plan Sponsor and ultimately responsible for all employees participating, that
applies regardless of identifying it as a cost -sharing multiple -employer or agent multiple -employer plan. Attorney
Christiansen added, the Plan is sound, it has one of the highest funded percentages within the State, and the City
does not assume a huge investment return each year, which makes it even better. Discussion continued between the
Mayor, Council, Pension Consultants, Administrator MontesDeOca, and OUA Executive Director John Hayford.
MAY 2.2016 - REGULAR MEETING - PAGE 4 OF 5
b 3'1
AGENDA
VII. UNFINISHED BUSINESS CONTINUED
A. Discuss OUA's request for the current pension plan to be amended to add
language that would allow the OUA to split from the plan and allow for the
transfer of assets and liabilities attributable to OUA employees to an OUA
retirement program continued.
COUNCIL ACTION - DISCUSSION — VOTE
Questions from members of the public included, Mrs. Janet McKinley, OUA Assistant Finance Director, who asked,
under an agent plan, could the OUA have the option to freeze their pension plan, as a result of not being able to make
the required contribution in any year? Attorney Christiansen answered that could be an option, but the City Council
would have to be willing to amend the Plan to allow for it. Ms. Jackie Dunham, General/OUA Pension Trustee, asked
whether the investment value would decrease should the OUA no longer participate, since that would reduce the
amount being contributed to the Plan. Attorney Christiansen answered, the Plan will receive the same rate of return,
even though there is less to invest. City Finance Director Riedel asked, under the agent type plan, understanding the
City is the Plan Sponsor, could the OUA be responsible for any deficiency of the City should we not be able to make
our contribution in any year? Attorney Christiansen stated he did not believe it would, only the Plan Sponsor is liable.
The State has mechanisms to sanction the City should it allow the Pensions to become underfunded. However, he
would have to research whether the City or the State would have those same types of recourse over the OUA.
Council Member Chandler moved to direct Attorney Christiansen to prepare an ordinance or resolution
creating a new retirement Plan for the OUA employees only, subject to the City creating a new plan, which
allows sufficient time for the OUA to transfer their portion of the pension funds and establish a separate
retirement plan, as well as amending the City General Plan be established for only City employees, and all
assets and liability attributable to the OUA would transfer with them, including all active and retired OUA
employees; seconded by Council Member O'Connor for discussion.
Council Member Watford opened the discussion by stating, he did not support the motion, although he agreed with the
principal of it. He added, should the OUA Board officially decide to create and operate their own retirement plan, they
need to request that. The City Council should not force the decision on them. Council Member Ritter and Mayor Kirk
echoed the same stance. The full impact of how much liability the City is assuming through this Pension Plan has
come to light from the amount of research into this matter. The Mayor and Council noted their concern of the liability,
and whether it was in the best interest of the City to continue. Attorney Christiansen stated, in an effort to ease their
concerns, that the OUA has never defaulted on their portion of the plan's contribution, and he did not understand or
foresee any reason why they ever would.
City General/OUA Pension Trustee Chair, Mr. Jamie Mullis, addressed the Council urging them not to approve the
motion. He stated, the Pension Board is happy with the Plan and does not want to split from the City. He asked that
they take time to discuss the matter with the OUA Board, through whatever means is legally available.
Council Member O'Connor rescinded his second, in the spirit of working together. Councilman Chandler
followed by rescinding his motion from the floor. Councilman Chandler then moved to notify the OUA Board,
by official action of the Citv Council, the Citv General/OUA Pension Plan will remain identified as a
cost -sharing multiple -employer plan; seconded by Council Member Watford.
MAY 2, 2016 - REGULAR MEETING - PAGE 5 OF 5
53e
11 AGENDA 11 COUNCIL ACTION - DISCUSSION — VOTE 11
VII. UNFINISHED BUSINESS CONTINUED
A. Discuss OUA's request for the current pension plan to be amended to add
language that would allow the OUA to split from the plan and allow for the
transfer of assets and liabilities attributable to OUA employees to an OUA
retirement program continued.
Vill. NEW BUSINESS
A. Discuss political signage at the main intersection — Councilman Watford
IX. ADJOURNMENT — Mayor
Please take notice and be advised that when a person decides to appeal any decision made by the City Council with
respect to any matter considered at this meeting, he/she may need to insure that a verbatim record of the proceeding
is made, which record includes the testimony and evidence upon which the appeal is to be based. City Clerk media are
for the sole purpose of backup for official records of the Clerk.
ATTEST: Dowling R. Watford, Jr., Mayor Pro-Tempore
Lane amiotea, CMC, City Clerk
VOTE:
KIRK — YEA CHANDLER — YEA O'CONNOR — YEA
RITTER — YEA WATFORD — YEA MOTION CARRIED.
A tradition within Okeechobee is for local candidates to stand along the sidewalks at the traffic light located at
Parrott Avenue and North Park Street (also known as the "main intersection"), holding their campaign signs and
waive at drivers on election day. Over the years as elections have changed to include early voting, the candidates
have extended their days appearing at the main intersection as well as bringing additional campaign volunteers to
waive and hold signs.
Council Member Watford stated he has been approached by concerned citizens regarding safety issues due to the
large number of candidates seeking office in the 2016 Election. He asked whether the City could limit the number of
volunteers each candidate could have without violating free speech. Attorney Cook stated he recently researched
the issue, according to Florida Statute 106.1435(3) "Pursuant to chapter 479, no political campaign advertisements
shall be erected, posted, painted, tacked, nailed, or otherwise displayed, placed, or located on or above any state or
county road right-of-way." Council Member Chandler asked for clarification whether holding a sign is considered
displaying it. Attorney Cook responded yes.
Mayor Kirk cautioned everyone that enforcing this would be going against tradition and could possibly create a
larger issue. Candidates have always been told they can hold a campaign sign, but they could not erect it within the
rights -of -way or within FLAGLER PARKS. Chief Davis advised, his Department will monitor the situation closely and
address all safety violations or concerns as necessary. This solution was satisfactory at this time. No action was
taken or required on this matter.
There being no further discussion, nor items on the agenda, Mayor Kirk adjourned the meeting at 4:37 P.M.
aNDEPENDENT
NEWSMEDIA INC. USA
STATE OF FLORIDA
COUNTY OF OKEECHOBEE
Before the undersigned authority personally appeared Katrina
Elsken, who on oath says she is the Publisher of the Okeechobee
News, a three times a week Newspaper published at Okeechobee,
in Okeechobee County, Florida, that the attached copy of
advertisement being a U,i� c' hlll�
in the matter of
in the 19th Judicial District of the Circuit Court of Okeechobee
County, Florida, was published in said newspaper in the issues of
Affiant further says that the said Okeechobee News is a
newspaper published at Okeechobee, in said Okeechobee County,
Florida, and that said newspaper has heretofore been published
continuously in said Okeechobee County, Florida each week and
has been entered as second class mail matter at the post office in
Okeechobee, in said Okeechobee County, Florida, for a period of
one year next preceding the first publication of the attached copy
advertisement, and affiant further says that she has neither
paid nor promised any person, firm or corporation any discount,
rebate, commission or refund for the purpose of securing this
advertisement for publication in the said newspaper.
Katrina Elsken
Sworn to and s ibscribed before me this
`g day of a 0 AD
Notary Public, State of Florida at Large
*k;PM ,
ANGIE BRIDGES
MY COMMISSION # FF 976149
• P;
EXPIRES:ApdI20 2020
BMW TM Notary Public Ufberwrtibars
Okeechobee N.
107 SW 17th Stre
Okeechobee, Fl rla
863-763 4
PUBLIC NOTICE
CITY COUNCIL MEETING CHANGE
IOTICE IS HEREBY GIVEN that the Crty Coundl for the friy of Okeedho-
ee vn11 change the Regular Meeting, scheduled for Tues., May 3, 2016, fi
m. to Mon., May 2, 2016, at 3 p.m., or as soon thereafter as poss ble,
t City Hall, 55 SE 3rd Ave, Rm 200, Okeechobee, Florida. The pubOc is In,,
tted and encouraged to attend. Contact City Adm'len tlon al
�63-763-3372, or websfte dlvofokercnobee com to obtain a copy of the
ANY PERSON DECIDING TO APPEAL any decision made by the C
C-ounol wlfh respell to any matter considered at this meeting vnll need
ensure a verbatim record of the proceeding Is made and the record Indur
the testimony and evidence upon which the appeal will be based. In as
dance with the Americans with D'rsabil'dles Ad ((ADA), arty person wilt
disadliry as defined by the ADA, that needs spedal accommadatlon to p
proceeding,
business days prio proceeding 863-763- Clerk's Office no alter thant
BE ADVISED that should you Intend to stowany document, picture, vk
or it. to the Council In support or opposition to arty din on the agen
a copy of the document, picture, video, or item MUST be provided to
Guy tlerk for the Crtys records. -
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City of Okeechobee, May 2, 2016 meeting Minutes taken during the meeting by L. Gamiotea
I. CALL TO ORDER: Mayor Kirk called the Regular City Council Meeting to order on May 2, 2016, at 3:02 P.M. in the
Council Chambers, Room 200 located at City Hall, 55 SE 3rd Avenue, Okeechobee, Florida 34974.
II. OPENING CEREMONIES: The invocation was given by Reverend Jim Shevlin, Church of Our Saviour; the Pledge of
Allegiance led by Mayor Kirk.
III. MAYOR, COUNCIL MEMBERS AND STAFF ATTENDANCE - City Clerk
Mayor James E. Kirk Present
Council Member Noel Chandler
Council Member Mike O'Connor
Council Member Gary Ritter
Council Member Dowling R. Watford, Jr.
City Attorney John R. Cook
City Administrator Marcos MontesDeOca
City Clerk Lane Gamiotea
Deputy City Clerk Bobbie Jenkins
Police Chief Denny Davis
Fire Chief Herb Smith
Public Works Director David Allen
Absent entered 3:13 p.m.
Absent, entered 3:13 p.m.
Present
Present
Present
Present
Present
Present
Present
Present
Present
IV. PRESENTATIONS AND PROCLAMATIONS — Mayor
A. Proclaim the week of May 1-7, 2016 "Municipal Clerks Week."
Mayor Kirk read and presented a certificate of proclamation to Lane Gamiotea, City Clerk, which read: "Whereas, the
Office of the Municipal Clerk, a time honored and vital part of local government exists throughout the world, and
Whereas, the Office of the Municipal Clerk is the oldest among public servants; and Whereas, the Office of the
Municipal Clerk provides the professional link between the citizens, the local governing bodies and agencies of
government at other levels; and Whereas, Municipal Clerks have pledged to be ever mindful of their neutrality and
impartiality, rendering equal service to all; and Whereas, the Municipal Clerk serves as the information center on
functions of local government and community; and Whereas, Municipal Clerks continually strive to improve the
administration of the affairs of the Office of the Municipal Clerk through participation in education programs,
seminars, workshops and the annual meetings of their state, province, county and international professional
organizations; and Whereas, it is most appropriate that we recognize the accomplishments of the Office of the
Municipal Clerk. Now, Therefore,/, James E. Kirk, Mayor of the City of Okeechobee, do recognize the week of May 1
through May 7, 2016, as "MUNICIPAL CLERKS WEEK, "and further extend appreciation to our Municipal Clerk,
Lane Gamiotea, and to all Municipal Clerks for the vital services they perform and their exemplary dedication to the
communities they represent."
B. Proclaim the month of May 2016 as "Mental Health Awareness Month."
Mayor Kirk read and presented a certificate of proclamation to Art Ciasca, CEO, Cathy Cordeiro, Director of Operations,
Deb Pizzimenti, Director of Outreach, Amanda Sackett, Lead Case Manager, of Suncoast Mental Health Center, which
read: "Whereas, mental health is essential to everyone's overall health and well-being; and Whereas, mental health
helps to sustain an individual's thought processes, relationships, productivity and ability to adapt to change or
face adversity; and Whereas, mental illness adversely affects those abilities and often is life -threatening in nature;
and Whereas, one in four adults experiences mental health problems in any given year and such problems can
contribute to onset of mental illness; and Whereas, 12 youth under the age of 24 commits suicide every day in the
United States; and Whereas, in 2014 there were 8 suicides in Okeechobee County; and Whereas, one in 17 adults
lives with mental illness such as major depression, bipolar disorder or schizophrenia; and Whereas, approximately
Page 1 of 6
one half of chronic mental illness begins by the age of 14 and three-quarters by age 24; and Whereas, every citizen
and community can make a difference in helping end the silence and stigma that for too long has surrounded
mental illness and discouraged people from getting help; and Whereas, public education and civic activities can
encourage mental health and help improve the lives of individuals and families affected by mental illness. Now,
Therefore, 1, James E. Kirk, by virtue of the authority vested in me as Mayor of the City of Okeechobee, Florida, do
hereby proclaim the month of May 2016 as "Mental Health Awareness Month."
Art, Chair Suncoast, 501c3 organization, since 1998, located next to the court house. Children between the ages of 8 and
18, 1 in 5 kids will have a mental illness of some sort. Fail more classes, more absences, retained in grade level, 50% will
drop out of high school left untreated, then 75% of that 50% will be arrested before being an adult.
Adult treated, increase disability rates, increase employment productivity. Untreated and under treated ruin and end lives,
appreciate opportunity to raise awareness.
V. AGENDA —Mayor
A. Requests for the addition, deferral or withdrawal of items on today's agenda. There were none.
Chandler entered chambers.
O'Connor entered chambers.
VI. MINUTES — City Clerk
A. Motion and second by Council Members Ritter and Watford to dispense with the reading and approve the summary
of Council Action for the April 19, 2016, Regular Meeting.
VOTE:
KIRK — YEA CHANDLER — YEA O'CONNOR — YEA
RITTER — YEA WATFORD — YEA MOTION CARRIED.
VII. UNFINISHED BUSINESS
A. Discuss Okeechobee Utility Authority's request for the current pension plan to be amended to add language that
would allow the OUA to split from the plan and allow for the transfer of assets and liabilities attributable to OUA
employees to an OUA retirement program — City Administrator (Exhibit 1).
In order to get the questions answered by the Council.
Pension Attorney Scott Christainsen with Christiansen & Dehner, P.A.
Jay McBee, CPA with DiBartolomeo, McBee, Hartley & Barnes, P.A.
Melissa Algayer, Actuary for the Pension Plans with Gabriel, Roeder, Smith & Company
definition, Jay McBee, for comparison purposes. When you have a cost sharing plan, multiple employers with one
,( �> large pool, assets from any employer can be used to pay any of the employees of any employer in the plan. Agent is
multiple segments only each employer is responsible for each employees payments.
Actuary, two break downs City and OUA. Funded ratio for the City is 114.5% and OUA 88.9% as of
Watford at mortality rate? RP2000 mortality table baWWfates from 2000 study, projecting life span improves. Is there
another one since? 2014 yes. Will it be required to use it? No, the newer one is a 3 diamentional table.
Scott — F.S. just passed we'll have to use the same, will not be the 2014 one.
Actuary — longevfity is a little bit higher. Watford what is our rate of return? 7%
Watford to Scott — been involved in our plan forever, as I understand the request isnt' to split from our plan its just to change
it?
MDO but it leads on or if we don't change name then it will be a split to request. Watford okay that's the or but not the
request.
Page 2 of 6
Scott — has to do with the fact if you have a Acost sharing plan, my op
nion as to what we have, all of the assets .are coming
to the plan, the plan says there is one fund and that's where the benefits are being paid out. If agent plan, have to amend
fund to state two funds for pay outs for each employers. Really more of a separation because you have a two in one.
Investments will still be one fund.
v WWatford would they invest separately?
They could.
Cook is the city responsible for deficient for either of the employees benefit payouts?
Jay city is responsible as the plan sponsor,\
Scott — IRS looking more closely at govt pension plans, utility authority would be one type that they would be looking at and
as a potential issue for the OUA should they separate and need a tax attorney to make sure they stay that.
MDO — has the OUA met their contribution rate, and has it been adjusted.
Actuary both put in 12.9%, until this 15/16 FY we didn't have a separate % Q
Kirk — agent still be responsible for OUA benefits? ;
Scott — potentially yes.
Watford — whats the down side to change to agent multiple employer?
Scott — I don't see it at all
Jay — the concern would be the question the mayor asked. And that's on either designation.
Watford told by GASB rules should be cost sharing or agent?
Scott — my opinion you are a Cost Sharing.
Jay — historically that's what it has been too.
Watford Ord 714 adopted this total cost per year adopted ..... based on each .....
Leads me to believe according to this agreement they have agreed to pay their cost and weve agreed to pay our costs.
Scott — yes.
Watford according to this if in fact if their plan is lacking they have to make up the part they are lacking, according to this
agreement?
Scott — according to this ordinance and the way they have been doing since, they have been paying their portion.
They do not have separate funds in whats going out, the fund paying out the benefits is one fund.
Watford so why are we here? In your opinion?
Scott — I scratch my head due to the type of plan it is. OUA doesn't have control over their plan, if they want to be able to
make changes they have to go through you. To get out they still have to come to you. Can share experience with you,
Kissimmee pension plan, they split out, moved all the money out and they did it.
Watford — any detriment to us if OUA pulled out? Scott — less people, administrative costs, loss potential liability of their
employees, including their retirees (as we did it in Kissimmee).
/ Kirk in the agent employers, can those employers have different benefits?
Scott — yes, particularly since you have language for the 2 contribution. _~~
MDO — operate differently, could OUA make it optional to future employees?
Scott — close the plan to new employees? Kissimmee water authority stayed in general plan, they closed plan to new
employees and set up defined contribution plan for their new employees. ---
Noel — in our pool invested the same? Now, yes. Same in the agent employer designation.
Kirk — if we make changes to go agent, potential liability,...
Ritter — unless we split we have potential liability as the plan sponsor. FRS plan is a cost sharing but the state is the plan
sponsor.
Jay — bottom falls out, actuary valuation, see larger % allocable share in the contribution rate.
Cook — under cost sharing ..... agent, could only pool from our %.
Jay — you could have separate investement %
Ritter — at what % do you feel it gets what does it take to maek you feel uncomfortable?
Actuary — hard to give 1 number, direction of the unfunded ratio, 2 separate investments you can have issues with ... avg
funded ratio is low 80s high 70s, these plans are way above the avg, is the plan composed mostly of retirees, you need
cash on hand to help with the investments, if you had mostly retirees and only 75% funded then we'd suggest increases in
the contribution.
Page 3 of 6
Scott you are not assuming a huge investment return and you have a very high funded %, makes your plan even better. '
Watford, want to ask OUA a question or two?
Hayford — I could yes.
Watford — I noticed this is the draft Oct 28 memo to the Pension Board, in the memo it says in light of the language .....the
city and oua respectfully request
Nov 10, 2015 minutes ??? to OUA board agenda item 15, Director employers required to designate, the OUA has
determined the cost sharing multi employment
Hayford don't know that exact wording, was a long time ago.
Watford do you know, it didn't come up from the Pension Board, this request basically came from the OUA Board since the
have the ultimate authority. How didn it come about.
Hayford it came about because the requirement of designating the plan to meet the new requirements. The pension
would be an agent employer designation. t
Ritter —just heard you say the OUA board would prefer the agent multiple employer plan, you all have gone through great,
details to have other options for your employees, based on presentations it almost sounds like the board wants to get out W
their own.
Hayford — wouldn't say that, the speakers gave information, give what other agencies have, more of a fact finding, not
necessarily to make a concensus, process should be there. Secondary issue that's come up identified and who is financially
responsible as the plan sponsor.
Noel — scenerior the city to have to pay out a default of the OUA? If the OUA could not pay their % of the contribution due
to whatever reason. The same thing with the City. But the state has other things that theythe-plan _could do to you as
sponsor to make you pay, I don't' know if they could do the same thing to them if they didn't pay. Its never been an issue
before, they've always paid it.
----------
Cook = if we say tiat trend we could amend the plan and break them off.
Littef_—u_n_d6`ratscernior, as an agent plan OUA would have to exhaust all funds first?t — no, just 1 year of not paying the contribution is a violation.
Janet McKinle OUA, under agent employer, 2 pools, oua didn't' make contribuyion, could we opt to freeze ours?
Scott — if the city is willing to amend the plan that allows that then yes.
Ritter — on the general pension board fund within the group OUA has 3 representatives, that situation, we're the spon sor to
me under any, we should have more members.
MDO — pension board members ....
Jamie Mul —
Jackie Dunham — new pension board members, if we separate the funds out, each oua pays their retirements from each,
then are we investments pooled?
Scott — you would not have as much to investments, but same rate of return.
Watford — then the city's contribution would have to ensure the fund ratio that keeps it at the level required.
Kirk — think its up here with us.
Watford — so if we don't make the name change then we have to consider letting them opt out.
Don't understand, if they don't like the way the pension plan is, I would have liked to have seen them just come out and ask
to leave the plan instead of giving ultimatum. Nothing_heard here has changed my mind, don't see benefit either way, want
to know if there is a detriment, if someone knows something I wish they would speak.
MDO it relieves us if they were not funded for that year.
Watford — we're still on the hook for either plan, city view better for us to let them go on their own, better off not to have that
liability.
Mike —
Cook — we have to amend the ordinance and give them the option of leaving the plan
Mike — if going to give it up don't want any liability to them, shouldn't have done what we did in 1995.
Cook — we needed to protect the city employees, which they all were at that point.
Kirk — basically
Cook —
Page 4 of 6
Ritter — you didn't have the same concern as the OUA board..
Scott — puzzled by the ???? its new, now which do, assuming each makes their contribution there will be no problem.
Watford — FRS is a ?
Scott — cost sharing, just like your current plan.
Jay and Actuary agreed.
Kirk — someone retired today with the plan like it is, where does the retirement come from?
Scott — from the fund, cc mingled funds.
Noel — and if split, city pays out to retiree.
Scott — if agent there shall be 2 funds, benefits for OUA are paid by the OUA fund, then City benefits paid by City fund.
Noel — even stay cost sharing, city still responsible.
Scott — generally yes.
Jay — three funds, fire assets, police assets, general assets. The invesement manager will continue to do the same with the
investments, they all do the same investments.
India — agent plan the city is the sponsor, would OUA be responsible of any deficient fo the city?
Currently in cost sharing either funds pays the benefits. If agent would the OUA be ....
S�Qo- plan sponsor is responsible,
No difference for the OUA if agent?
Scott — contribution states different.
Noel — move to have the City split from the OUA pension .
Section 18, direct scott to prepare an ordiance repealing the existing ordinance. Scott, not that section due to IRS code.
OUA do a resolution/ordinance create a plan subject to the city creating a new plan, let them come up with what they want
j' to do first, then you adopt a plan amendment to delete reference to the; add specifridc all assets and liabilities attributable to
the OUA would transfer to the OUA, and for all active and retired OUA employees. 2nd by O'Connor. (by U-)Cur j_C,
Mullis — simple desigion, we're happy where we're at, prefer you talk with the OUA board, because I'm not sure that is what
they want, its not what we want as the Pension Board.
Watford nto going to support motion, agree with the principal of it. Now we're forcing OUA to create their own, that needs to
biTt eir ddecision, they sort of did -`by fheirletter, if don't agent name will ask for amendment to allow them to separate from
the plan. I was surprised by their board with more discussion. Just my opnion. Basically if we don't do anything stays just as
it is or motion to deny their request, then the ball is in there court for use to pull out. Don't want to force them for them to say
we kicked them out of the plan. Think we worked together great. Had discussions with Mullis on this subject disclose for the
record.
Hayford — help concern OUA did have to create a pension plan as part of the motion.
Scott don't want to push your folks out before there is another plan in place.
Hayford — if the OUA didn't create a plan then there would be ....
Watford -"its not our p lace to tell yall what to do, we're forcing you to do something, you have to create something, if this
motion passes. If it doesn't pass then its your ball, if you want to pull out, you have to come back to us and specifically
request it. Your employees are your business not mine.
Kirk — hour and a half of confusing. Chandler motion good, agree with Watford we do not need to force them. If they want
out they need to come and ask us, somethin oes,haywire, its not going to be our fault.
Mike — do you think your board understood then any better than us? Yes. I'll take back to them whatever you said.
Mike — in the spirit of working together I'll resind my second.
r rre�e J . p . ,. , . • _.. �41(tlif1'tt ° tff r �1't ,
Noel/Watford send back to them the name of the Ian will reamin the same.
tt2t.�`ct�G41t�a8 if
VOTE: '' WC,CC t'PPYcz c �t
KIRK — YEA
CHANDLER — YEA
O'CONNOR — YEA
Page 5 of 6
f) V3A -
RITTER — YEA WATFORD — YEA MOTION CARRIED.
A. Discuss political signage at the main intersection — Councilman Watford
Approached by citizens, new alignment with the intersection and number of candidates, concern about how that would work. BOCC
discussed campaign signs at last meeting, more about the time allowed to have out.
Can we limit the number of people each candidate will have with free speech. Could be an issue.
Cook looked into that a few weeks ago. 106.1435 F.S. no campaign sign "display' can be construed.
Kirk — never been down there, it's a tradition, youre fighting tradition, weve been down there forever, not sure it is worth it.
MDO — Chief has authority to use common sense to handle issues.
IX. ADJOURN meeting @ 4:37p.m.
Page 6 of 6
Effective January 1, 2016, the mortality tables used in either of the two most recently
published actuarial valuation reports of the Florida Retirement System, including the
projection scale for mortality improvement. Appropriate risk and collar adjustments must
be made based on plan demographics. The tables must be used for assumptions for
preretirement and postretirement mortality.
Pension & Investments Article:
http://www.pionline.com/article/20151209/ONLINE/151209884/new-mortality-tables-
8211-again
In October, the Society of Actuaries published an update to the mortality tables that
were released in the fall of 2014. The update consists of a new mortality improvement
projection scale (MP-2015). Unlike the mortality table and projection scale from 2014,
this new improvement scale will actually result in a decrease to pension liabilities! This
pronouncement was a bit of a surprise, so we are asking ourselves a bunch of
questions.
Society of Actuaries: Updated mortality data could reduce pension liabilities
Moody's: Older IRS mortality tables could save sponsors $18 billion next year
Why are we getting new tables so soon?
When the 2014 tables were published, the SOA indicated it would update the projection
no later than every three years as new data become available. In our opinion, an update
one year later was definitely unexpected. It turns out that the mortality improvement
over the past two years, based on data released by the Social Security Administration,
was not as strong as expected. Thus, an adjustment to the improvement scale was
needed sooner rather than later.
What is the impact on pension financial disclosures for 2015?
Plan sponsors that adopted the RP-2014/MP-2014 tables for last year's disclosure and
adopt MP-2015 this year will see decreases to their accounting liabilities from what they
would have been without this change. The impact of this change, though, is highly
dependent on demographics. The impact is bigger for older participants and for female
participants. The range could be as low as a 0.5% decrease to more than a 2%
decrease in liabilities depending on your plan's demographics.
How will this affect minimum funding liabilities?
Not at all for 2016, and we don't know the answer beyond 2016 right now. The IRS
already has specified that in 2017 new mortality tables will be incorporated for use in
minimum funding, Pension Benefit Guarantee Corp., and lump -sum calculations. It is
unclear how these expected annual updates will be factored in.
What is next?
The SOA's MP-2015 report indicates there will be annual updates to the projection
scales as new data are released from the Social Security Administration and other
agencies. This could mean that plan sponsors will update the mortality assumption for
accounting valuations annually. If so, there will be annual fluctuations, but these annual
updates should have a much less significant impact than what sponsors saw when they
adopted the RP-2014/MP-2014 tables.
What should we do now?
For now, plan sponsors should start to take a look at the impact of incorporating the
new MP-2015 projection scale into their accounting liability valuations. How and if these
tables are adopted are questions still to be studied and answered by plan executives
and their actuaries. While we do expect many plan sponsors to incorporate the new
projection scale, there is a sound actuarial argument for sticking with the 2014 tables
and scales until the next full-blown mortality table is published, which would avoid
annual fluctuations (good this year but who knows what the future holds). We already
have seen some audit firms draw attention to the new scale and we would expect them
to want sponsors to consider the new information by the sponsor's next fiscal year-end.
Dan Atkinson is a director and chief technical actuary in P-Solve's Boston office and
Michael Clark is a director in P-Solve's Denver office.
City of Okeechobee, May 2, 2016 meeting Minutes taken during the meeting b ea 0. ice's
CALL TO ORDER: Mayor Kirk called the Regular City Council Meeting to order on May 2, 2016, at Q�- P.M. in the
Council Chambers, Room 200 located at City Hall, 55 SE 3rd Avenue, Okeechobee, Florida 34974.
II. OPENING CEREMONIES: The invocation was given by Reverend Jim Shevlin, Church of Our Saviour; the Pledge of
Allegiance led by Mayor Kirk.
III. MAYOR, COUNCIL MEMBERS AND STAFF
Mayor James E. Kirk
Council Member Noel Chandler
Council Member Mike O'Connor
Council Member Gary Ritter
Council Member Dowling R. Watford, Jr.
City Attorney John R. Cook
City Administrator Marcos MontesDeOca
City Clerk Lane Gamiotea
Deputy City Clerk Bobbie Jenkins
Police Chief Denny Davis
Fire Chief Herb Smith
Public Works Director David Allen
ATTENDANCE - City Clerk
Present
Present
Present
Present
Present
Present
Present
Present
Present
Present
Present
Present
IV. PRESENTATIONS AND PROCLAMATIONS — Mayor
A. Proclaim the week of May 1-7, 2016 "Municipal Clerks Week."
Mayor Kirk read and presented a certificate of proclamation to Lane Gamiotea, City Clerk, which read: "Whereas, the
Office of the Municipal Clerk, a time honored and vital part of local government exists throughout the world; and
Whereas, the Office of the Municipal Clerk is the oldest among public servants; and Whereas, the Office of the
Municipal Clerk provides the professional link between the citizens, the local governing bodies and agencies of
government at other levels; and Whereas, Municipal Clerks have pledged to be ever mindful of their neutrality and
impartiality, rendering equal service to all; and Whereas, the Municipal Clerk serves as the information center on
functions of local government and community; and Whereas, Municipal Clerks continually strive to improve the
administration of the affairs of the Office of the Municipal Clerk through participation in education programs,
seminars, workshops and the annual meetings of their state, province, county and international professional
organizations; and Whereas, it is most appropriate that we recognize the accomplishments of the Office of the
Municipal Clerk. Now, Therefore, I, James E. Kirk, Mayor of the City of Okeechobee, do recognize the week of May 1
through May 7, 2016, as "MUNICIPAL CLERKS WEEK," and further extend appreciation to our Municipal Clerk,
Lane Gamiotea, and to all Municipal Clerks for the vital services they perform and their exemplary dedication to the
communities they represent."
B. Proclaim the month of May 2016 as "Mental Health Awareness Month."
5oi(cX3� ! 9
Mayor Kirk read and presented a certificate of proclamation to Art Ciiasca, CEO, Cathy Cordeiro, Director of Operations,
Deb Pizzimenti, Director of Outreach, Amanda; Sackett, Lead Case Manager, of Suncoast Mental Health Center, which
read: "Whereas, mental health is essential to everyone's overall health and well-being; and Whereas, mental health
helps to sustain an individual's thought processes, relationships, productivity and ability to adapt to change or
face adversity; and Whereas, mental illness adversely affects those abilities and often is life -threatening in nature;
and Whereas, one in four adults experiences mental health problems in any given year and such problems can
contribute to onset of mental illness; and Whereas, 12 youth under the age of 24 commits suicide every day in the
United States; and Whereas, in 2014 there were 8 suicides in Okeechobee County; and Whereas, one in 17 adults
lives with mental illness such as major depression, bipolar disorder or schizophrenia; and Whereas, approximately
Page 1 of 4
DeCr�c� dISC1�7fls i of s �uxidesl (A i akiat }!Wut ml�
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one half of chronic mental illness begins by the age of 14 and three-quarters by age 24; and Whereas, every citizen
and community can make a difference in helping end the silence and stigma that for too long has surrounded
mental illness and discouraged people from getting help; and Whereas, public education and civic activities can
encourage mental health and help improve the lives of individuals and families affected by mental illness. Now,
Therefore, 1, James E. Kirk, by virtue of the authority vested in me as Mayor of the City of Okeechobee, Florida, do
hereby proclaim the month of May 2016 as "Mental Health Awareness Month."
V. AGENDA —Mayor
A. Requests for the addition, deferral or withdrawal of items on today's agenda. There were none.
VI. MINUTES —City Clerk
A. Motion and second by Council Members O'Connor and Choler to dispense with the reading and approve the
summary of Council Action for the April 19, 2016, Regular Meeting.
KIRK — YEA
RITTER — YEA
VOTE:
CHANDLER — YEA O'CONNOR — YEA
WATFORD — YEA MOTION CARRIED.
VII. UNFINISHED BUSINESS
A. Discuss Okeechobee Utility Authority's request for the current pension plan to be amended to add language that
would allow the OUA to split from the plan and allow for the transfer of assets and liabilities attributable to CILIA
employees to an CILIA retirement program — City Administrator (Exhibit 1).
Motion and second by Council Members and to approve or deny the amendment to
Ordinance No.
VOTE:
KIRK — YEA CHANDLER — YEA O'CONNOR — YEA
RITTER — YEA WATFORD — YEA MOTION CARRIED.
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VIII. NEW BUSINESS
A. Discuss political signage at the main intersection — Councilman Watford
KIRK — YEA
RITTER — YEA
VOTE:
CHANDLER — YEA O'CONNOR — YEA
WATFORD — YEA MOTION CARRIED.
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Page 3 of 4
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IX. ADJOURN meeting @ p.m.
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Page 4 of 4
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1
WHEREAS, the Office of the Municipal Clerk, a time honored and vital part of local government exists
throughout the world, and
WHEREAS, the Office of the Municipal Clerk is the oldest among public servants; and
WHEREAS, the Office of the Municipal Clerk provides the professional link between the citizens, the local
governing bodies and agencies of government at other levels; and
WHEREAS, Municipal Clerks have pledged to be ever mindful of their neutrality and impartiality,
rendering equal service to all; and
WHEREAS, the Municipal Clerk serves as the information center on functions of local government and
community; and
WHEREAS, Municipal Clerks continually strive to improve the administration of the affairs of the Office
of the Municipal Clerk through participation in education programs, seminars, workshops and the
annual meetings of their state, province, county and international professional organizations, and
WHEREAS, it is most appropriate that we recognize the accomplishments of the Office of the Municipal
Clerk.
NOW THEREFORE, I, James E. Kirk, Mayor of the City of Okeechobee, do recognize the week of May 1
through May 7, 2016, as "MUNICIPAL CLERKS WEEK," and further extend appreciation to
our Municipal Clerk, Lane Gamiotea, and to all Municipal Clerks for the vital services they
perform and their exemplary dedication to the communities they represent. )"'"
whereof, on May 2, 2016, I have set
d and cause4jhi�/seal to be affixed
E. Kirk, Mayor
CMC, City Clerk
•
office of tf e Mallov
Okeec ogee, Floriba
WHRdtEAs, mental heaf th is essential to eve-ryone's overall health and wef f-being; and
WHEREAS, mental health helps to sustain an individuaf's thought processes, refationships, productivit-,r and abifitq to adapt to
change or face adversity; and
WHEREAS, mental illness adverse(N affects those abilities and often is li f e-threatening in nature; and
WHEREAS, one in four adults experiences mental health problems in anN given Near and such problems can contribute to onset
of mental iffness; and
WHEREAS, z2 ,youth under the age Of 24 commits suicide everN daN in the United States; and 'x
WHEREAS, in 2014 there were 8 suicides in Okeechobee CountN; and
WHEREAS, one in 17 adults lives with mental illness such as major depression, bipolar disorder or schizophrenia; and
WHEREAS, approximate(N one haf f of chronic mental illness begins b� the age Of 14 and three-quarters 60 age 24; and
WHEREAS, everN citizen and community can make a difference in hefping end the silence and stigma that for too long has
surrounded mental illness and discouraged people from getting hefp; and
WHEREAS; pubfic education and civic activities can encourage mental health and help improve the fives of individuals and
families affected bN mental illness.
r THEREFORE, I, James E. IZirk, b� virtue of the authoritN vested in me as mgor of the Citr of Okeechobee, Fforida, do
fjeref, proclaim the month of MaN 2o16 as ,mentaf Heafth Awareness Month."
In winless wlereof on MaJr 2, 2oz6, ilave set
MYland and cau ed seal to be of fixed
' y i
James E. KM4 Manor
r".
Attest
Lane Gambtea CMC City Clem
Exhibit 1
May 2, 2016
City of Okeechobee
Memo
TO: Mayor and City council Members
From: Marcos Montes De Oca, City Administrator
India Riedel, Finance Director
Subject: Pension and its sustainability
Based on GASB 67 the asset and liability calculations need to be performed. The plan does
indicate that we each should be funding the benefits for our specific employees. Hence, Gabriel
Roeder Smith & Company provided calculations based on each employer's employees, their
respective contributions, investments, etc. to determine the required contribution for each
employer and the separation of assets and liabilities.
Excerpt from the GRS letter dated December 2"d, 2015:
Required Contribution:
City S44,690 5.39% of payroll
Utility Authority S361, 639 15. 68% of payroll
Accrued Liability
City S3,462,570
Utility A uthority S7,018,=172
Valuation Assets
$3, 8.54, 813 (=10. 35 %)
S5,698,626 (5 9.6.5 %)
E_vpenses
S 6, 726 (40%)
$10, 090 (60%)
If the Utility Authority separates from the plan the City will be provided and will provide the
employer contribution based solely on its employees and retirees going forward.
Other items for consideration when determining the effects of a separation
Pns,itives-
• True employees of the City going forward
• City employees and board members govern only our employees, our investments and our
benefits
• Possible consolidation of plans for cost savings of administrative &/or investment fees
Neutrals:
• Funding percentages and liability exposure should be minimal as the GASB67
requirement has identified each employer funding percentage, assets, and liabilities and
will continue same.
Negatives:
0 100% of Administrative/investment cost will be paid by the City.
r 100 SW 5th Avenue
Okeechobee, Florida 3491 -4221
r�
(863) 763-9460
FAX(863) 467-4335
April 6, 2016
City of Okeechobee
Attn: Mr, Marcos Montes De Oca
City Administrator
55 SE 3rd Avenue
Okeechobee, Florida 34974
Dear Mr. Montes De Oca:
In the past year, OUA staff has had several meetings and/or discussions with City staff,
pension plan attorney, pension Board, pension auditors and actuary.
Although the initial purpose for the discussions was related to the implementation of
certain financial disclosure provisions required by GASB 68, as we reviewed the
underlying pension plan document, another issue arose which suggested, in our
opinion, that the pension plan was not being administered as initially intended.
On each occasion, we expressed our belief that language contained in the City
Ordinances establishing and/or amending the pension plan intended that the plan be
administered in the manner consistent with an agent multiple -employer type plan to wit:
... a pension plan in which plan assets are pooled for investment purposes but
separate accounts are maintained for each individual employer so that each
employer's share of the pooled assets is legally available to pay the benefits of
on1V its emploVees.
However, since the OUA joined the plan, the required annual plan contribution rate that
was implemented has been the same for each employer rather than a separate rate for
each employer as would be expected in order to follow the intent of the following
language in the plan;
...the Total cost for any year shall be apportioned equitably and consistently
between the City of Okeechobee and the Okeechobee Utility Authority based upon
the cost associated with each entity's emploVees."
(City Ordinance No. 714, dated June 9, 1998; section 5, paragraph 2)
OUA Pension Letter
April 6, 2016
Page 2 of 2
As a result of this departure, the plan is structured as a cost sharing multiple -employer
type plan, which the OUA believes is in error with respect to the City Ordinances, A
definition of a cost sharing plan is as follows. -
.A cost sharing multiple -employer pension plan is a plan in which the pension
contributions of the employees of more than one employer are pooled and these
pooled plan assets can then be used to pay the retirement benefits of any
employee of any employer that participates in the pension
Additionally it was discovered, that under current state law, the City, as plan sponsor,
could ultimately be responsible for ensuring proper funding of the City/OUA retirement
plan — including the benefits earned by OUA employees.
During the City/OUA meetings, an action plan was created in which specific employer
annual contributions to the pension plan were to be implemented in order to cover the
expenses of their employees. The first step in the action plan was to distribute the
pooled assets in to separate City and OUA accounts based upon contributions made to
the pension plan. While the assets were being analyzed, the plan liabilities related to
employee retirement benefits were calculated. Once the process of employer assets
and liabilities were calculated, an employer specific annual contribution rate per each
employer was calculated by the pension plan actuary.
What the OUA requests be done next by the City is to amend the City Ordinance
designate the pension plan as an agent multi -employer type plan.
If the City, as the plan sponsor, did not want the plan financial responsibility or exposure
related to pension plan liabilities for all participants, in lieu of amending the City
Ordinance with language as an agent multi -employer type plan, the ordinance should be
amended to allow for dissolution of the plan by either party and the method to facilitate
this separation.
I hope this letters conveys all aspects of the joint City/OUA staff meetings held
previously. If so, then please schedule an agenda item at the first available City Council
meeting to discuss these options and direction.
Sincerely,
John F. Hajifd�d,
Executive Director
Okeechobee Utility Authority
Additional Pension background information:
Comparable information regarding the funding ratios and unfunded liabilities
of the three pension plans pension plans, General, Police, and Fire.
One of the major factors in determining how stable a pension plan is, is obtaining
and analyzing current and past trends of any unfunded actuarial liability. A plan
target and the funding level of each plan is 100%. If all assumptions come to
fruition each year, and all employees stayed the same in the plan then the funding
of the plan would be consistently funded at 100%. Since there are always
variables, the ratio of assets and liabilities will fluctuate, and the contribution rate
of the employer is required to make up the difference. Hence the change in
Employer contribution amounts.
The current ratio of Assets versus Liabilities of each of three plans is better than
FRS and more than 70% of local pension plans within the State of Florida.
Per the 2014 State captured data, the Funded Ratio - Current Valuation for each
plan is as follows:
General 95.85%
Police
106.58%
Fire
108.2 %
State Average
79.21 %
Excluding FRS
FRS
86.57%
The attached chart is data of the three plans from 2006 through 2014 based on the
more conservative ratios of assets, liabilities and unfunded liability.
O
N
When the FRS is less
A funding ratio is an actuarial comparison of a pension's assets to its liabilities. Most
than 100 percent
experts recommend that a public pension operate at or above an 80% funding ratio, and
funded, the legislature
suggest those below 80% are in danger of experiencing near -term liquidity issues.
may reduce future
benefits to lessen plan
The FRS Pension Plan Trust Fund is not immune to short-term market volatility, but over
liabilities, or may raise
the long-term, the fund has produced steady positive results. The chart below shows the
employee contributions
funding ratio of the Florida Retirement System Trust Fund.
to increase funding. The
legislature may make
The FRS Pension Plan funding valuation takes place annually and was 85.9 percent
changes to FRS at any
funded, as of July 1, 2013.
time.
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-C Gabriel Roeder Smith & Company
J Consultants & Actuaries
CITY OF OKEECHOBEE GENERAL EMPLOYEES'RETIREMENT SYSTEM (CITY)
ACTUARIAL VALUATION REPORTAS OF OCTOBER 1, 2015
ANNUAL EMPLOYER CONTRIBUTION FOR THE YEAR ENDING SEPTEMBER 30, 2017
G16
0i1
April 25, 2016
Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone
Consultants & Actuaries Suite 505 954.525.0083 fax
Ft. Lauderdale, FL 33301-1804 www.gabrielroedercom
Board of Trustees,
City of Okeechobee General Employees' Retirement System
Okeechobee, FL
Dear Board Members:
The results of the October 1, 2015 Annual Actuarial Valuation of the City of Okeechobee General
Employees' Retirement System are presented in this report.
The contribution rate shown on page 1 may be considered as a minimum City contribution rate that
complies with the Board's funding policy. Users of this report should be aware that contributions made at
that rate do not guarantee benefit security. Given the importance of benefit security to any retirement
system, we suggest that contributions to the System in excess of those presented in this report be
considered.
This report was prepared at the request of the Board and is intended for use by the Retirement System and
those designated or approved by the Board. This report may be provided to parties other than the System
only in its entirety and only with the permission of the Board. GRS is not responsible for unauthorized
use of this report.
The purpose of the valuation is to measure the System's funding progress and to determine the employer
contribution rate for the fiscal year ending September 30, 2017. This report should not be relied on for any
purpose other than the purposes described herein. Determinations of financial results associated with the
benefits described in this report, for purposes other than those identified above may be significantly
different.
The findings in this report are based on data or other information through September 30, 2015. Future
actuarial measurements may differ significantly from the current measurements presented in this report
due to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; changes in economic or demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements (such as the
end of an amortization period or additional cost or contribution requirements based on the plan's funded
status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not
include an analysis of the potential range of such future measurements.
This valuation assumed the continuing ability of the plan sponsor to make the contributions necessary to
fund this plan. A determination regarding whether or not the plan sponsor is actually able to do so is outside
our scope of expertise and was not performed.
The valuation was based upon information furnished by the Plan Administrator concerning Retirement
Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees
and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the
data. We are not responsible for the accuracy or completeness of the information provided by the Plan
Administrator.
In addition, this report was prepared using assumptions approved by the Board as described in the section of
this report entitled Actuarial Assumptions and Methods.
This report has been prepared by actuaries who have substantial experience valuing public employee
retirement systems. To the best of our knowledge the information contained in this report is accurate and
fairly presents the actuarial position of the Retirement System as of the valuation date. All calculations have
been made in conformity with generally accepted actuarial principles and practices, with the Actuarial
Standards of Practice issued by the Actuarial Standards Board, and with applicable statutes.
Theora P. Braccialarghe and Melissa R. Moskovitz are members of the American Academy of Actuaries.
These actuaries meet the Academy's Qualification Standards to render the actuarial opinions contained
herein.
The signing actuaries are independent of the plan sponsor.
This actuarial valuation and/or cost determination was prepared and completed by me or under my direct
supervision, and I acknowledge responsibility for the results. To the best of our knowledge, the results are
complete and accurate. In our opinion, the techniques and assumptions used are reasonable, meet the
requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted
actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid
from the plan's assets for which liabilities or current costs have not been established or otherwise taken into
account in the valuation. All known events or trends which may require a material increase in plan costs or
required contribution rates have been taken into account in the valuation.
Gabriel, Roeder, Smith & Company will be pleased to review this valuation report with the Board of
Trustees and to answer any questions pertaining to the valuation.
Respectfully submitted,
GABRIEL, ROEDER, SMITH & COMPANY
By.
Theora P. Braccialarghe, FSA, MAAA, FCA
Enrolled Actuary No. 14-2826
By���� .'J61'l c r�irt
Melissa R. Moskovitz, MAAA
Enrolled Actuary No. 14-6467
Gabriel Roeder Smith Br- Company
I. Discussion of Valuation Results ..................................................... l
II. Financial Position of the Plan ......................................................... 4
III. Valuation Results
a. Comparative Summary ..................................................... 8
b. Derivation of Normal Cost ...............................................
9
C. Actuarial Gains and Losses.............................................10
d. Actual & Expected Contributions...................................12
e. Schedule of Funding Progress........................................13
f. FASB Information...........................................................14
g. Actuarial Assumptions and Cost Methods.....................15
h. Glossary of Terms...........................................................17
IV. Trust Funds and Valuation Assets
a. Statement of Assets......................................................... 20
b. Receipts and Disbursements ........................................... 21
C. DROP Reconciliation......................................................22
d. Valuation Assets..............................................................23
e. Investment Rate of Return .............................................. 24
V. Member Statistics
a. Statistical Data.............:...................................................25
b. Reconciliation of Membership Data...............................26
C. Age and Service Distribution..........................................27
VI. Summary of Plan Provisions.........................................................28
State Requirements
GRS
SECTION I
DISCUSSION OF VALUATION RESULTS
GRS
DISCUSSION
PRELIMINARY NOTE
Prior to the October 1, 2014 Actuarial Valuation, the Okeechobee General Employees' Retirement
System's assets, liabilities, and contribution rates were calculated in total for both City and Okeechobee
Utility Authority (OUA) members. For the 2015/2016 fiscal year, assets and liabilities were allocated to
each group, and separate contributions were determined for the City and OUA. Please see our December 2,
2015 report for further details. Accordingly, we have prepared separate valuation reports for each group.
Except as otherwise indicated, the calculations in this report are for the City.
REQUIRED EMPLOYER CONTRIBUTIONS
The required City contribution is shown as a dollar amount and as a percent of payroll:
Required City Contribution
For Fiscal Year
2016/2017
2015/2016
2014/2015
Total Required City Contribution
$ 41,442
$ 44,690
$ 106,136
As % of Payroll
4.55 %
5.39 %
12.91 %
*The City has a $10,685 prepaid contribution as of October 1, 2015 (40.35% of the total
prepaid contributions of $26,480) which can be used to offset the required City contribution.
The required contribution has been adjusted for interest assuming payments would be made at the
end of each quarter during the fiscal year. The City is making contributions based on the required percent of
payroll. The actual employer contribution was $106,136 (12.91% of City payroll of $822,133) for the fiscal
year ending September 30, 2015, which was equal to the required contribution.
GRS
R)
EXPERIENCE
The experience was more favorable than that anticipated by the actuarial assumptions due to. the
smoothing of actual investment returns over four years. There was also a liability gain, primarily due to
fewer than expected retirements and the death of a retiree.
The investment return on a net market value basis for the most recent year was (0.6) %. This
loss is being spread over four years, while portions of gains from the previous three years are being
recognized this year. The net result was an investment return on an actuarial value basis of 7.9%,
contributing to the overall experience gain.
FUNDED RATIO
The funded ratio, one measure of the Plan's financial health, is equal to the actuarial value of assets
divided by the actuarial accrued (past service) liability. The funded ratio is 114.5% this year compared to
111.3% last year.
CHANGES IN BENEFITS
There were no changes in benefit provisions in connection with this valuation.
CHANGES IN ASSUMPTIONS AND METHODS
There were no changes in actuarial assumptions and methods since our December 2, 2015 report.
VARIABILITY OF FUTURE CONTRIBUTION RATES
The Actuarial Cost Method used to determine the contribution rate is intended to produce
contribution rates which are generally level as a percent of payroll. Even so, when experience differs from
the assumptions, as it often does, the employer's contribution rate can vary significantly from year-to-year.
Over time, if the year-to-year gains and losses offset each other, the contribution rate would be
expected to return to the current level, but this does not always happen.
GRS
The Actuarial Value of Assets exceeded the Market Value of Assets by $155,791 as of the valuation
date (see Section III). This difference will be recognized over the next few years in the absence of offsetting
gains. In turn, the computed employer contribution rate will gradually increase by about 2.1% of covered
payroll.
RELATIONSHIP TO MARKET VALUE
If Market Value had been the basis for the valuation, the City contribution rate would have been
6.6%. In the absence of other gains and losses, the City contribution rate should increase to that level over
the next few years.
RECOMMENDATIONS
We recommend that an experience study be prepared, with particular attention to assumed rates of
withdrawal and retirement, as well as to the salary scale.
CONCLUSION
The remainder of this Report covers detailed actuarial valuation results, financial information, other
information and statistics, a summary of plan provisions, and annual filings required by law.
GRS
SECTION II
FINANCIAL SOUNDNESS OF THE PLAN
GRS
4
FINANCIAL SOUNDNESS OF THE PLAN
The purpose of this Section of the Report is to provide certain measures which indicate the financial
soundness of the program. These measures relate to short term solvency, long term solvency and level
funding.
The various percentages listed in this Section as of a single valuation date are not overly significant
standing alone. What is more significant is the trend of the rates over a period of years. It is also important
to keep in mind that each time there's a change in benefits or assumptions, actuarial liabilities are created or
diminished. Any newly created liabilities are financed systematically over a period of future years. All
actuarially computed values in this analysis are based on the actuarial assumptions utilized in the respective
years' actuarial valuations.
SHORT TERM SOLVENCY
The ultimate test of financial soundness is the program's ability to pay all promised benefits when
due. The program's progress in accumulating assets to pay all promised benefits can be measured by
comparing the market value of assets with:
1. Accumulated contributions of active members of the program.
2. The actuarial present value (APV) of projected benefits payable to those already receiving
benefits and to vested terminations, and
3. The employer -financed portion of the actuarial present value of accrued benefits payable to
active participants. This amount is based on benefits earned to date without future credited
service or salary increases.
The total of the first two items should generally be fully covered by assets. The portion of the third
item covered by assets should increase over time. Increases in benefits will, of course, adversely affect the
trend in the years when such increases are first reflected in the actuarial values.
Although different actuarial assumptions might be used in the event of a termination of the
program, this test shows how much of the benefits accrued to date might be covered by assets in the event of
a plan termination using the valuation assumptions.
GRS
10/1/2015 10/1/2014
1. Accumulated Contributions of
Active Members
$ 478,968
$ 1,961,077
2. APV of Projected Benefits in Pay
Status and for Vested Terminations
1,828,623
3,407,217
3. APV of Accrued Benefits for
Active Participants (Employer Portion)
679,818
2,213,927
2,987,409
7,582,221
4. Total
5. Market Value of Assets
3,951,701
10,043,170
6. Assets as % of Total
132 %
132 %
*Results for the combined Plan are shown for 101112014.
LONG TERM SOLVENCY
Over the longer term, the solvency of an ongoing plan can be measured by comparing the actuarial
value of assets to an amount known as the Actuarial Accrued Liability (AAL) under the Entry Age Actuarial
Cost Method. This item has often been called the "past service liability". Its derivation differs from the
short term solvency value derivation in several ways, but mainly due to the fact that future salary increases
are included in the AAL. As in the case of the short term solvency values, the AAL is affected immediately
by any revisions in benefits or assumptions. The accumulation of assets to equal the AAL can be considered
a long range funding goal. Largely because of periodic benefit increases, very few retirement programs
have attained this goal.
Valuation
Date
Actuarial Value
of Assets
Actuarial Accrued
Liability
% of AAL
Covered by Assets
10/1/15
$ 4,107,492
$ 3,585,988
114.5 %
10/1/14
9,553,439
10,481,042
91.1
10/1/13
8,644,814
9,549,034
90.5
10/1/12
7,944,172
9,058,179
87.7
10/1/11
7,247,383
8,630,615
84.0
Note: Results for the combined Plan are shown for all years prior to 2015.
GRS
1.1
LEVEL CONTRIBUTION RATES
The actuarial assumptions and cost methods have been chosen with the intent of producing required
employer contributions which remain fairly level as a percentage of covered payroll. If this goal is attained,
future employer contribution rates will not have to be raised materially in order to make up for the past. For
many employers, this measure of the program's soundness is the most important of all.
Fiscal Required Employer
Valuation Year Contribution
Date Beginning As % of Payroll
10/1/15
10/1/16
4.55 %
10/1/14
10/1/15
5.39
10/1/13
10/1/14
12.91
10/1/12
10/1/13
12.88
10/1/11
10/1/12
12.81
10/1/10
10/1/11
12.64
10/1/09
10/1/10
13.00
10/1/08
10/1/09
12.24
10/1/07
10/1/08
11.43
10/1/06
10/1/07
11.15
Note: Resultsfor the combined Plan are shown for all years prior to fiscal year beginning 2015.
A major factor affecting the stability of the percentages just shown is how well the actual plan
experience is faring compared to the actuarial assumptions. The value of the difference between what
actually occurred as compared to what was assumed to occur is called the actuarial gain or loss. Gains tend
to lower the subsequent cost of the program while losses tend to cause subsequent costs to rise. A summary
of the actuarial gains and losses of the Plan is the next Section.
Analysis of all the benchmarks listed above over a period of years will provide an indication of
whether the program is becoming financially stronger or weaker.
GRS
7
RECENT CHANGES IN PLAN, ASSUMPTIONS AND METHODS
1. Effective 10/1/91 the fund earnings assumption was changed to 8% and the mortality table was
changed to the 1983 Group Annuity Mortality Table.
2. Effective 4/20/93, the benefit formula was changed to 1.75%.
3. Effective 9/28/95, the following changes were made:
a. the benefit formula was changed to 2.0%
b. employee contributions were changed to 6.0%
c. the early retirement was changed to age 55 with 10 years of service.
4. Effective 10/1/97, the assumed administrative expenses were increased from $9,000 to $11,000.
5. Effective 10/1/98, the following changes were made:
a. the benefit formula changed to 2.1 %.
b. the early retirement reduction was changed to 2% per year preceding age 65.
6. Effective 10/1/99, the valuation asset method was changed from the average of market value and cost
value to a method which recognizes actual investment return in excess of the assumed return evenly
over a four year period.
Effective 10/1/99, the fund earnings assumption was changed from 8.0% to 7.0%, net investment
expenses.
8. Effective 10/1/03, the assumed administrative expenses were changed from a fixed amount of $11,000
to actual administrative expenses for the previous year.
9. Effective 10/1/03, employer contributions are determined for the fiscal year beginning one year after
the valuation date.
10. Effective 10/1/07, the mortality assumption was updated from the 1983 Group Annuity Tables for
Males and Females to the 1994 Group Annuity Table for Males and Females.
11. Effective 10/1/12, the mortality rates were updated from the 1994 Group Annuity Tables for Males
and Females to the RP-2000 Combined Healthy Participant Mortality Table for Males and Females,
using projection scale AA to anticipate mortality improvements.
As approved by the Board, the change in the mortality table was phased in over three years. The
updated table was used with ages set ahead two years for the October 1, 2012 actuarial valuation,
and with ages set ahead one year for the October 1, 2013 actuarial valuation. The age adjustment
was eliminated for the actuarial valuation as of October 1, 2014.
12. Effective 10/1/2014, the liabilities and assets were allocated and separate contribution rates were
calculated for the City and OUA. Please see our December 2, 2015 report for further details.
Effective 10/1/2015, separate actuarial valuations were prepared for each group.
GRS
00 a.+ lt�a� 2l 20ito
Meefin9
GRGabriel
SConsultants
Roeder Smith & Company
& Actuaries
CITY OF OKEECHOBEE GENERAL EMPLOYEES'RETIREMENT SYSTEM
(UTILITY AUTHORITY)
ACTUARIAL VALUATION REPORTAS OF OCTOBER 1, 2015
ANNUAL EMPLOYER CONTRIBUTION FOR THE YEAR ENDING SEPTEMBER 30, 2017
GRS
Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone
GRS Consultants & Actuaries Suite 505 954.525.0083 fax
Ft. Lauderdale, FL 33301-1804 www.gabrielroeder.com
April 26, 2016
Board of Trustees,
City of Okeechobee General Employees' Retirement System (OUA)
Okeechobee, FL
Dear Board Members:
The results of the October 1, 2015 Annual Actuarial Valuation of the City of Okeechobee General
Employees' Retirement System (OUA) are presented in this report.
The contribution rate shown on page 1 may be considered as a minimum OUA contribution rate that
complies with the Board's funding policy. Users of this report should be aware that contributions made at
that rate do not guarantee benefit security. Given the importance of benefit security to any retirement
system, we suggest that contributions to the System in excess of those presented in this report be
considered.
This report was prepared at the request of the Board and is intended for use by the Retirement System and
those designated or approved by the Board. This report may be provided to parties other than the System
only in its entirety and only with the permission of the Board. GRS is not responsible for unauthorized
use of this report.
The purpose of the valuation is to measure the System's funding progress, to determine the employer
contribution rate for the fiscal year ending September 30, 2017. This report should not be relied on for any
purpose other than the purposes described herein. Determinations of financial results associated with the
benefits described in this report, for purposes other than those identified above may be significantly
different.
The findings in this report are based on data or other information through September 30, 2015. Future
actuarial measurements may differ significantly from the current measurements presented in this report
due to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; changes in economic or demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements (such as the
end of an amortization period or additional cost or contribution requirements based on the plan's funded
status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not
include an analysis of the potential range of such future measurements.
This valuation assumed the continuing ability of the plan sponsor to make the contributions necessary to
fund this plan. A determination regarding whether or not the plan sponsor is actually able to do so is outside
our scope of expertise and was not performed.
The valuation was based upon information furnished by the Plan Administrator concerning Retirement
Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees
and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the
data. We are not responsible for the accuracy or completeness of the information provided by the Plan
Administrator.
In addition, this report was prepared using assumptions approved by the Board as described in the section of
this report entitled Actuarial Assumptions and Methods.
This report has been prepared by actuaries who have substantial experience valuing public employee
retirement systems. To the best of our knowledge the information contained in this report is accurate and
fairly presents the actuarial position of the Retirement System as of the valuation date. All calculations have
been made in conformity with generally accepted actuarial principles and practices, with the Actuarial
Standards of Practice issued by the Actuarial Standards Board, and with applicable statutes.
Theora P. Braccialarghe and Melissa R. Moskovitz are members of the American Academy of Actuaries.
These actuaries meet the Academy's Qualification Standards to render the actuarial opinions contained
herein.
The signing actuaries are independent of the plan sponsor.
This actuarial valuation and/or cost determination was prepared and completed by me or under my direct
supervision, and I acknowledge responsibility for the results. To the best of our knowledge, the results are
complete and accurate. In our opinion, the techniques and assumptions used are reasonable, meet the
requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted
actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid
from the plan's assets for which liabilities or current costs have not been established or otherwise taken into
account in the valuation. All known events or trends which may require a material increase in plan costs or
required contribution rates have been taken into account in the valuation.
Gabriel, Roeder, Smith & Company will be pleased to review this valuation report with the Board of
Trustees and to answer any questions pertaining to the valuation.
Respectfully submitted,
GABRIEL, ROEDER, SMITH & COMPANY
B,--� 11=4�11 1� &Atllnef
Theora P. Braccialarghe, FSA, MAAA, FCA
Enrolled Actuary No. 14-2826
Bye 1
Melissa R. Moskovitz, MAAA
Enrolled Actuary No. 14-6467
Gabriel Roeder Smith & Company
TABLE OF CONTENTS
I. Discussion of Valuation Results ..................................................... I
II. Financial Position of the Plan ......................................................... 4
III. Valuation Results
a. Comparative Summary ..................................................... 8
b. Derivation of Normal Cost ...............................................
9
C. Actuarial Gains and Losses.............................................10
d. Actual & Expected Contributions...................................12
e. Schedule of Funding Progress........................................13
f. FASB Information...........................................................14
g. Actuarial Assumptions and Cost Methods .....................15
h. Glossary of Terms...........................................................17
IV. Trust Funds and Valuation Assets
a. Statement of Assets.........................................................20
b. Receipts and Disbursements ........................................... 21
C. Valuation Assets..............................................................22
d. Investment Rate of Return .............................................. 23
V. Member Statistics
a. Statistical Data.................................................................24
b. Reconciliation of Membership Data ............................... 25
C. Age and Service Distribution..........................................26
VI. Summary of Plan Provisions......................................................... 27
State Requirements
GRS
SECTION I
DISCUSSION OF VALUATION RESULTS
GRS
I
DISCUSSION
PRELIMINARY NOTE
Prior to the October 1, 2014 Actuarial Valuation, the Okeechobee General Employees' Retirement
System's assets, liabilities, and contribution rates were calculated in total for both City and Okeechobee
Utility Authority (OUA) members. For the 2015/2016 fiscal year, assets and liabilities were allocated to
each group, and separate contribution rates were determined for the City and OUA. Please see our
December 2, 2015 report for further details. Accordingly, we have prepared separate valuation reports for
each group. Except as otherwise indicated, the calculations in this report are for Okeechobee Utility
Authority.
REQUIRED EMPLOYER CONTRIBUTIONS
The required OUA contribution is shown as a dollar amount and as a percent of payroll:
Required OUA Contribution
For Fiscal Year
2016/2017
2015/2016
2014/2015
Total Required OUA Contribution
$ 302,834
$ 361,639
$ 272,975
As % of Payroll
13.91 %
15.68 %
12.91 %
*The Utility Authority has a $15,795 prepaid contribution as of October 1, 2015 (59.65% of
the total prepaid contributions of $26,480) which can be used to offset the required OUA
contribution.
The required contribution has been adjusted for interest assuming payments would be made at the
end of each quarter during the fiscal year. OUA is making contributions based on the required percent of
payroll. The actual employer contribution was $272,975 (12.91% of OUA payroll of $2,114,450) for the
fiscal year ending September 30, 2015, which was equal to the required contribution.
GRS
0)
EXPERIENCE
The experience was more favorable than that anticipated by the actuarial assumptions due to the
smoothing of actual investment returns over four years. There was also a liability gain, primarily due to
lower than expected salary increases and more than expected terminations.
The investment return on a net market value basis for the most recent year was (1.0)%. This loss
is being spread over four years, while portions of gains from the previous three years are being recognized
this year. The net result was an investment return on an actuarial value basis of 7.9%, contributing to the
overall experience gain.
FUNDED RATIO
The funded ratio, one measure of the Plan's financial health, is equal to the actuarial value of assets
divided by the actuarial accrued (past service) liability. The funded ratio is 88.9% this year compared to
81.2% last year.
CHANGES IN BENEFITS
There were no changes in benefit provisions in connection with this valuation.
CHANGES IN ASSUMPTIONS AND METHODS
There were no changes in actuarial assumptions and methods from our December 2, 2015 report.
VARIABILITY OF FUTURE CONTRIBUTION RATES
The Actuarial Cost Method used to determine the contribution rate is intended to produce
contribution rates which are generally level as a percent of payroll. Even so, when experience differs from
the assumptions, as it often does, the employer's contribution rate can vary significantly from year-to-year.
Over time, if the year-to-year gains and losses offset each other, the contribution rate would be
expected to return to the current level, but this does not always happen.
The Actuarial Value of Assets exceeded the Market Value of Assets by $232,109 as of the valuation
date (see Section III). This difference will be recognized over the next few years in the absence of offsetting
gains. In turn, the computed employer contribution rate will gradually increase by about 1.4% of covered
payroll.
RELATIONSHIP TO MARKET VALUE
If Market Value had been the basis for the valuation, the OUA contribution rate would have been
15.3%. In the absence of other gains and losses, the OUA contribution rate should increase to that level
over the next few years.
RECOMMENDATIONS
We recommend that an experience study be prepared, with particular attention to assumed rates of
withdrawal and retirement, as well as to the salary scale.
CONCLUSION
The remainder of this Report covers detailed actuarial valuation results, financial information, other
information and statistics, a summary of plan provisions, and annual filings required by law.
GRS
SECTION II
FINANCIAL SOUNDNESS OF THE PLAN
4
FINANCIAL SOUNDNESS OF THE PLAN
The purpose of this Section of the Report is to provide certain measures which indicate the financial
soundness of the program. These measures relate to short term solvency, long term solvency and level
funding.
The various percentages listed in this Section as of a single valuation date are not overly significant
standing alone. What is more significant is the trend of the rates over a period of years. It is also important
to keep in mind that each time there's a change in benefits or assumptions, actuarial liabilities are created or
diminished. Any newly created liabilities are financed systematically over a period of future years. All
actuarially computed values in this analysis are based on the actuarial assumptions utilized in the respective
years' actuarial valuations.
SHORT TERM SOLVENCY
The ultimate test of financial soundness is the program's ability to pay all promised benefits when
due. The program's progress in accumulating assets to pay all promised benefits can be measured by
comparing the market value of assets with:
1. Accumulated contributions of active members of the program.
2. The actuarial present value (APV) of projected benefits payable to those already receiving
benefits and to vested terminations, and
3. The employer -financed portion of the actuarial present value of accrued benefits payable to
active participants. This amount is based on benefits earned to date without future credited
service or salary increases.
The total of the first two items should generally be fully covered by assets. The portion of the third
item covered by assets should increase over time. Increases in benefits will, of course, adversely affect the
trend in the years when such increases are first reflected in the actuarial values.
Although different actuarial assumptions might be used in the event of a termination of the
program, this test shows how much of the benefits accrued to date might be covered by assets in the event of
a plan termination using the valuation assumptions.
GRS
10/l/2015 10/1/2014
1. Accumulated Contributions of
Active Members
$ 1,544,350
$ 1,961,077
2. APV of Projected Benefits in Pay
Status and for Vested Terminations
1,839,927
3,407,217
3. APV of Accrued Benefits for
Active Participants (Employer Portion)
1,696,831
2,213,927
5,081,108
4. Total
7,582,221
5. Market Value of Assets
6,128,745
10,043,170
6. Assets as % of Total
121 %
132 %
*Results for the combined Plan are shoivn for 101112014.
LONG TERM SOLVENCY
Over the longer term, the solvency of an ongoing plan can be measured by comparing the actuarial
value of assets to an amount known as the Actuarial Accrued Liability (AAL) under the Entry Age Actuarial
Cost Method. This item has often been called the "past service liability". Its derivation differs from the
short term solvency value derivation in several ways, but mainly due to the fact that future salary increases
are included in the AAL. As in the case of the short term solvency values, the AAL is affected immediately
by any revisions in benefits or assumptions. The accumulation of assets to equal the AAL can be considered
a long range funding goal. Largely because of periodic benefit increases, very few retirement programs
have attained this goal.
Valuation
Date
Actuarial Value
of Assets
Actuarial Accrued
Liability
% of AAL
Covered by Assets
10/1/15
$ 6,360,854
$ 7,157,209
88.9 %
10/1/14
9,553,439
10,481,042
91.1
10/ 1 / 13
8,644,814
9,549,034
90.5
10/ 1/12
7,944,172
9,058,179
87.7
10/1/11
7,247,383
8,630,615
84.0
Note: Results for the combined Plan are shown for all years prior to 2015.
GRS
2
LEVEL CONTRIBUTION RATES
The actuarial assumptions and cost methods have been chosen with the intent of producing required
employer contributions which remain fairly level as a percentage of covered payroll. If this goal is attained,
future employer contribution rates will not have to be raised materially in order to make up for the past. For
many employers, this measure of the program's soundness is the most important of all.
Fiscal Required Employer
Valuation Year Contribution
Date Beginning As % of Payroll
10/1/15
10/1/16
13.91 %
10/1/14
10/1/15
15.68
10/1/13
10/1/14
12.91
10/1/12
10/1/13
12.88
10/1/11
10/1/12
12.81
10/1/10
10/1/11
12.64
10/1/09
10/1/10
13.00
10/1/08
10/1/09
12.24
10/1/07
10/1/08
11.43
10/1/06
10/1/07
11.15
Note: Resultsfor the combined Plan are shown for all years prior to fiscal year beginning 2015.
A major factor affecting the stability of the percentages just shown is how well the actual plan
experience is faring compared to the actuarial assumptions. The value of the difference between what
actually occurred as compared to what was assumed to occur is called the actuarial gain or loss. Gains tend
to lower the subsequent cost of the program while losses tend to cause subsequent costs to rise. A summary
of the actuarial gains and losses of the Plan is the next Section.
Analysis of all the benchmarks listed above over a period of years will provide an indication of
whether the program is becoming financially stronger or weaker.
GRS
RECENT CHANGES IN PLAN, ASSUMPTIONS AND METHODS
Effective 10/1/91 the fund earnings assumption was changed to 8% and the mortality table was
changed to the 1983 Group Annuity Mortality Table.
2. Effective 4/20/93, the benefit formula was changed to 1.75%.
3. Effective 9/28/95, the following changes were made:
a. the benefit formula was changed to 2.0%
b. employee contributions were changed to 6.0%
c. the early retirement was changed to age 55 with 10 years of service.
4. Effective 10/1/97, the assumed administrative expenses were increased from $9,000 to $11,000.
5. Effective 10/1/98, the following changes were made:
a. the benefit formula changed to 2.1%.
b. the early retirement reduction was changed to 2% per year preceding age 65.
6. Effective 10/1/99, the valuation asset method was changed from the average of market value and cost
value to a method which recognizes actual investment return in excess of the assumed return evenly
over a four year period.
7. Effective 10/1/99, the fund earnings assumption was changed from 8.0% to 7.0%, net investment
expenses.
8. Effective 10/1/03, the assumed administrative expenses were changed from a fixed amount of $11,000
to actual administrative expenses for the previous year.
Effective 10/l/03, employer contributions are determined for the fiscal year beginning one year after
the valuation date.
10. Effective 10/1/07, the mortality assumption was updated from the 1983 Group Annuity Tables for
Males and Females to the 1994 Group Annuity Table for Males and Females.
11. Effective 10/1/12, the mortality rates were updated from the 1994 Group Annuity Tables for Males
and Females to the RP-2000 Combined Healthy Participant Mortality Table for Males and Females,
using projection scale AA to anticipate mortality improvements.
As approved by the Board, the change in the mortality table was phased in over three years. The
updated table was used with ages set ahead two years for the October 1, 2012 actuarial valuation,
and with ages set ahead one year for the October 1, 2013 actuarial valuation. The age adjustment
was eliminated for the actuarial valuation as of October 1, 2014.
12. Effective 10/1/2014, the liabilities and assets were allocated and separate contribution rates were
calculated for the City and OUA. Please see our December 2, 2015 report for further details.
Effective 10/1/2015, separate actuarial valuations were prepared for each group.
GRS
ACTION LIST - April 28, 2016
from the City Administrator's Desk
SS SE 3rd Ave., Okeechobee, FL 34974
- Centennial Park — Proposed sidewalk locations and layout to park have been updated.
Permitting and prelim construction plans underway for project and shoreline.
- Sidewalk Bid— Sidewalk maps have been revised and being prepared forbidding
pending approval of areas.
- Administration /Public Works HRTPO Grants Applications —Grant application are
being evaluated and scored currently. (May assist in FDOT item below)
- FDOT meeting on signalization — FDOT meeting was unfavorable on North 9`" and
441, additional information and documentation as well as county assistance.
Development projections, traffic counts and another meeting will be held to further this
discussion. Signalization of South 61" is pending additional information; however FDOT
is unwilling to add a signal with current information.
Building Department — As of mid -April, the building department has received enough
fees to fulfill the annual contract of the building official (Jeff Newell) for the year. The
remaining portion of the year the department will be operating on a positive cash flow
status.
City Hall Municipal Sign — Currently under construction. Coordination with Chamber
and Leadership class for collaborative effort. Sign for City Hall will be similar to signs
at City Limits however tentatively with an LCD screen to display public messages, event
information etc. Poject to be completed in cooperation with Okeechobee Chamber,
Leadership Okeechobee and City.
- PSAP Dispatch to County — Equipment and quotes for server and communication items
are being obtained. Goal for all departments is to reduce costs. County has been very
helpful and working with staff for the shift.
SCOP Project — S W 81" St & SW 2nd Ave — UNDER CONSTRUCTION!!
- Canal Cleaning — Current funding areas are complete.
- Business Tax Receipts — Recent posting of businesses have been responsive and well
received. Total of 1150 are within the City of Okeechobee
Page 1