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March 27, 2009

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

Michael C. Wiggins, Mayor
Jewel Cannada-Wynn, Deputy Mayor
Maren DeWeese
Sam Hall
John Jerralds
Larry B. Johnson
Diane Mack
Megan B. Pratt
Ronald P. Townsend
P. C. Wu

1)

Alvin G. Coby, City Manager

2)

William D. Wells, City Attorney

*3)

Richard Barker Jr., Director of
Finance

*4)

Employee Executive Committee –
Brenda Kahalley, Committee
Representative

*5)

Firefighters’ Union – Larry Porto,
Union Representative

*Presentation
*6)

Police Union – Robert Bell, Jr.,
Union Representative

If any person decides to appeal any decision made with respect to any matter considered at such meeting, he will
need a record of the proceedings, and that for such purpose he may need to ensure that a verbatim record of the
proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based.
The City of Pensacola adheres to the Americans with Disabilities Act and will make reasonable accommodations
for access to city services, programs, and activities. Please call 435-1606 for further information. Requests must
be made at least 48 hours in advance of the event in order to allow the city time to provide the requested
services.

CITY OF
PENSACOLA
DEFINED BENEFIT
RETIREMENT PLANS
COUNCIL WORKSHOP
APRIL 2, 2009

Pension Plan History
• General Pension – effective April 21, 1932



Special Act of the State Legislature
Six (6) trustees
Included General, Fire and Police
Closed October 1, 1979, new employees were in
deferred compensation plans
– Reopened October 6, 1997, participants in the Police
Plan were not allowed to join the General Plan
– Plan adopted as an ordinance in 2007
– Closed again June 18, 2007, new employees are now
in Florida Retirement System (FRS)

Pension Plan History
• Fire Pension – effective 1939
– Special Act of the Florida Legislature
– Five (5) Trustees
– Withdrew from the General Pension Plan and created it’s own plan

• Police Pension – effective October 22, 1959




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

• Florida Retirement System – joined effective June 18,
2007
– General employees

Basic Retirement Funding Equation
C+I=B+E
C = Contributions
I = Investment Income
B = Benefits Paid
E = Expenses

Issues
• General Pension Plan
– Irrevocable Election to not go to FRS before July 2007
– Now may change Plan?
– Employee Contributions 5.5%

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

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

Pension Cost
• Pensions – Funding Difference between
beginning FY03 to Projected Budget FY10

– City-Wide Increase - $11,014,500
– General Fund Increase – $6,175,200

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

Pr o ject ed

A ct ual

A ct ual

A ct ual

A ct ual

A ct ual

A ct ual

F Y 0 9 B ud g et

F Y 10 B ud g et

FY 2 0 0 3

FY 2004

FY 2 0 0 5

FY 2 0 0 6

FY 2 0 0 7

FY 2 0 0 8

T o t al

T o t al

Gener al Pensio n

76 7,4 0 0

1,9 51,12 3

2 ,3 3 6 ,9 72

2 ,58 6 ,3 70

2 ,4 75,10 2

2 ,2 73 ,714

2 ,2 8 9 ,2 0 0

2 ,3 50 , 10 0

F ir e Pensio n

719 ,3 0 0

1,712 ,56 8

2 ,0 8 5,0 6 2

2 ,6 6 2 ,6 19

2 ,79 5,8 3 9

2 ,6 8 9 ,516

2 , 73 1,10 0

2 ,8 6 5,8 0 0

4 0 2 ,4 0 0

1,18 8 ,58 6

1,4 4 4 ,50 1

2 ,0 53 ,9 9 2

2 ,19 6 ,9 2 9

2 ,4 6 8 ,6 4 1

2 ,4 14 ,8 0 0

2 ,3 9 8 ,6 0 0

116 ,73 7

4 3 3 ,76 3

4 15,2 0 0

3 9 0 ,50 0

7,58 4 ,6 0 7

7,8 6 5,6 3 4

7,8 50 ,3 0 0

8 ,0 0 5,0 0 0

Po lice Pensio n
F lo r i d a R et . Sys.
T o t al

1,8 8 9 ,10 0

4 ,8 52 ,2 77

5,8 6 6 ,53 5

7,3 0 2 ,9 8 1

Ot her F und s
B eg inning

Pr o ject ed

A ct ual

A ct ual

A ct ual

A ct ual

A ct ual

A ct ual

F Y 0 9 B ud g et

F Y 10 B ud g et

FY 2 0 0 3

FY 2004

FY 2 0 0 5

FY 2 0 0 6

FY 2 0 0 7

FY 2 0 0 8

T o t al

T o t al

1,0 0 6 ,4 0 0

2 ,76 8 ,0 0 0

3 ,4 0 2 ,9 9 8

3 ,8 6 2 ,53 9

3 ,73 1,8 2 3

3 ,9 9 5,0 3 6

5,0 6 6 ,4 0 0

4 ,8 6 1,10 0

F ir e Pensio n

52 ,3 0 0

18 9 ,4 2 0

2 4 4 ,4 8 8

2 75,8 9 2

2 2 9 ,58 6

2 70 ,4 6 6

2 9 1,0 0 0

3 2 0 ,4 0 0

Po lice Pensio n

3 3 ,0 0 0

18 6 ,3 9 5

2 0 3 ,4 8 6

2 10 ,50 8

2 6 9 ,3 70

2 9 2 ,6 6 0

2 58 ,70 0

2 3 9 ,2 0 0

1,0 9 1,70 0

3 ,14 3 ,8 15

3 ,8 50 ,9 72

4 ,3 4 8 ,9 3 9

115,3 6 6
4 ,3 4 6 ,14 5

4 8 8 ,0 75
5,0 4 6 ,2 3 7

4 6 5,6 0 0
6 ,0 8 1,70 0

515,2 0 0
5,9 3 5,9 0 0

Gener al Pensio n

F lo r i d a R et . Sys.
T o t al

A ll F und s

Gener al Pensio n
F ir e Pensio n
Po lice Pensio n

Pr o ject ed

A ct ual

A ct ual

A ct ual

A ct ual

A ct ual

A ct ual

F Y 0 9 B ud g et

F Y 10 B ud g et

FY 2 0 0 3

FY 2004

FY 2 0 0 5

FY 2 0 0 6

FY 2 0 0 7

FY 2 0 0 8

T o t al

T o t al

6 ,4 4 8 ,9 0 9

6 ,2 0 6 ,9 2 5

6 ,2 6 8 ,750

7,3 55,6 0 0

7,2 11,2 0 0

3 ,0 2 5,4 2 5

2 ,9 59 ,9 8 2

3 ,0 2 2 ,10 0

3 ,18 6 ,2 0 0

1,773 ,8 0 0

4 ,719 ,12 3

5,73 9 ,9 70

771,6 0 0

1,9 0 1,9 8 8

2 ,3 2 9 ,550

4 3 5,4 0 0

1,3 74 ,9 8 1

1,6 4 7,9 8 7

2 ,9 3 8 ,511
2 ,2 6 4 ,50 0

F lo r i d a R et . Sys.
T o t al

B eg inning

2 ,9 8 0 ,8 0 0

7,9 9 6 ,0 9 2

9 ,717,50 7

11,6 51,9 2 0

2 ,4 6 6 ,2 9 9

2 ,76 1,3 0 1

2 ,6 73 ,50 0

2 ,6 3 7,8 0 0

2 3 2 ,10 3

9 2 1,8 3 8

8 8 0 ,8 0 0

9 0 5,70 0

13 ,9 3 2 ,0 0 0

13 ,9 4 0 ,9 0 0

11,9 3 0 ,752

12 ,9 11,8 71

Combined Annual Pensions
Paid As of 9/30/08
100%
75%
General
Fire
Police

50%
25%
0%
$2,746$20,000

$20,000$40,000

$40,000$60,000

$60,000$125,000

General Pension Annual Pensions
Paid As of 9/30/08
$40,000-$60,000 (16)
3%

$60,000-$100,000 (8)
2%

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

$2,746-$20,000 (348)
69%

Fire Pension Annual Pensions Paid
As of 9/30/08
$60,000-$100,000
(6)
3%
$40,000-$60,000
(48)
28%

$5,718-$20,000 (19)
11%

$20,000-$40,000
(100)
58%

Police Pension Annual Pensions
Paid As of 9/30/08
$60,000-$125,000
(36)
29%

$40,000-$60,000
(22)
18%

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

$20,000-$40,000
(29)
24%

Retiree and Beneficiary Annual
Pensions Paid As of 9/30/08
Annual Pension

General

Firefighters

Police Officers

Total

Number Percentage

Number Percentage

Number Percentage

Number Percentage

<$10,000

152

30.04%

4

2.33%

7

5.74%

163

20.38%

$10,000-$20,000

196

38.73%

15

8.72%

28

22.93%

239

29.85%

$20,000-$30,000

88

17.39%

44

25.58%

22

18.03%

154

19.25%

$30,000-$40,000
$40,000-$50,000

46
12

9.09%
2.37%

56
24

32.56%
13.95%

7
12

5.74%
9.84%

109
48

13.63%
6.00%

$50,000-$60,000

4

0.79%

24

13.95%

10

8.20%

38

4.75%

$60,000-$70,000

5

0.99%

4

2.33%

11

9.02%

20

2.50%

$70,000-$80,000

2

0.40%

1

0.58%

14

11.48%

17

2.13%

7

5.74%

7

0.88%

1

0.82%

2

0.25%

3

2.46%

3

0.38%

122

100.00%

800

100.00%

$80,000-$90,000
$90,000-$100,000

1

0.20%

>$100,000
506

100.00%

172

100.00%

HMO Non Medicare

PPO Non Medicare

Medicare

Family

Family

Family

$13,904.40

$11,679.12

$5,721.60

Annual Insurance
Permiums (Paid by Pensioner)

Defined Benefit Plans
Active and Retired Participants
As of September 2008
General
Pension*

Fire
Pension

Police
Pension

FRS

Num ber of Active Participants

345

108

157

293

Num ber of Retired and DROP Participants

608

172

122

N/A

$10,955,365

$5,466,527

$2,534,905

N/A

Average Annual Pension

$18,019

$31,782

$38,432

**

Annual Pension Highest to Low est
Highest
Low est

$96,690
$2,746

$79,186
$5,718

$125,771
$2,145

**

2.1%
Max 63%

3.0%
Max 75%

3.0%
Max 100%

Total FY 2008 Pensions Benefits Paid

Current Annual Retirem ent Benefit
Percentage Based On Years Of Service
* General Pension closed effective June 18, 2007.
** Police and General Benefits

N/A

1.60-3.0%
Max 100%

City Contribution Percentage
Fiscal Year 2009
• General Pension
• Fire Pension
• Police Pension
• FRS
– Regular Class
– Senior Mgmt Class
– Elected Official Class
– Special Risk Class

Employee
5.5%
11.0%
0.5%

City
49.58%
58.00%
35.68%

Total
55.08%
83.72%
45.03%

0.00%
0.00%
0.00%
0.00%

9.85%
13.12%
16.53%
20.92%

9.85%
13.12%
16.53%
20.92%

General Pension
Cost As A Percentage Of Salaries
History

ANNUAL CITY
CONTRIBUTIONS
FY
FY
FY
FY
FY
FY
FY
FY

03
04
05
06
07
08
09 Budgeted
10 Projected

11.30%
28.60%
33.77%
37.63%
35.74%
43.42%
49.58%
53.23%

PREPAYMENT
RESERVE
USED
9.88%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

STATE
INSURANCE
PROCEEDS
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

EMPLOYEE
CONTRIBUTIONS
5.50%
5.50%
5.50%
5.50%
5.50%
5.50%
5.50%
5.50%

TOTAL ACTUAL
CONTRIBUTIONS
26.68%
34.10%
39.27%
43.13%
41.24%
48.92%
55.08%
58.73%

General Pension Contribution
History

FY
FY
FY
FY
FY
FY
FY
FY

03
04
05
06
07
08
09 Budgeted
10 Projected

City
Contributions

Pre-Payment
Reserve Used

State
Insurance
Proceeds

1,760,559
4,611,350
5,860,702
6,477,705
6,247,958
6,268,750
7,359,900
7,211,000

1,444,925
-

-

Employee
Contributions
858,380
886,797
953,417
946,730
961,556
794,006
816,500
745,100

Total
Contributions
4,063,864
5,498,147
6,814,119
7,424,435
7,209,514
7,062,756
8,176,400
7,956,100

Pensacola General Employees
Pension Fund
Total Market Value

Cash & Equivalents,
2,086,853, 2.6%

$79,373,573 (02/28/09)

Fixed Income,
37,173,321, 46.8%

Equities,
40,113,399, 50.5%

Total Market Value

Total Market Value

$100, 202,547 (9/30/08)

$119,690,414 (9/30/07)

Fire Pension
Cost As A Percentage Of Salaries
History
ANNUAL CITY
CONTRIBUTIONS
FY
FY
FY
FY
FY
FY
FY
FY

03
04
05
06
07
08
09 Budgeted
10 Projected

18.20%
40.60%
46.83%
53.80%
58.33%
56.10%
58.00%
57.80%

STATE
INSURANCE
PROCEEDS
9.09%
13.20%
11.71%
12.34%
14.79%
15.15%
14.72%
14.50%

EMPLOYEE
CONTRIBUTIONS
11.00%
11.00%
11.00%
11.00%
11.00%
11.00%
11.00%
11.00%

TOTAL ACTUAL
CONTRIBUTIONS
38.29%
64.80%
69.54%
77.14%
84.12%
82.25%
83.72%
83.30%

Fire Pension Contribution
History

City
Contributions
FY
FY
FY
FY
FY
FY
FY
FY

03
04
05
06
07
08
09 Budgeted
10 Projected

771,210
1,807,624
2,424,270
2,938,511
3,025,425
2,959,982
3,022,100
3,186,178

Pre-Payment
Reserve Used
-

State
Insurance
Proceeds
507,383
587,799
579,686
674,181
766,923
799,135
766,923
799,135

Employee
Contributions
441,869
489,752
568,735
600,810
570,531
580,431
573,200
606,418

Total
Contributions
1,720,462
2,885,175
3,572,691
4,213,502
4,362,879
4,339,548
4,362,223
4,591,731

Pensacola Firefighters’ Relief
and Pension Fund
Total Market Value

Cash &
Equivalents,
1,130,799, 1.8%

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

Fixed Income,
29,722,120, 46.8%

Equities,
32,707,570, 51.5%

Total Market Value

Total Market Value

$78,805,728 (9/30/08)

$92,553,922 (9/30/07)

Police Pension
Cost As A Percentage Of Salaries
History
ANNUAL CITY
CONTRIBUTIONS
FY 03
FY 04
FY 05
FY 06
FY 07
FY08
FY09 Budgeted
FY10 Projected

7.10%
19.00%
19.00%
28.59%
31.26%
35.60%
35.68%
36.78%

PREPAYMENT
RESERVE
USED
1.05%
3.43%
9.70%
0.10%
0.00%
0.00%
0.00%
0.00%

STATE
INSURANCE
PROCEEDS
9.66%
10.44%
10.62%
10.25%
8.40%
8.54%
8.85%
7.81%

EMPLOYEE
CONTRIBUTIONS
8.50%
5.50%
2.50%
0.50%
0.50%
0.50%
0.50%
0.50%

TOTAL ACTUAL
CONTRIBUTIONS
26.31%
38.37%
41.82%
39.44%
40.16%
44.64%
45.03%
45.09%

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

Police Pension Contribution
History
City
Contributions
FY
FY
FY
FY
FY
FY
FY
FY

03
04
05
06
07
08
09 Budgeted
10 Projected

432,241
1,285,399
1,759,486
2,264,514
2,466,299
2,761,301
2,673,500
2,637,800

Pre-Payment
Reserve Used
61,122
231,940
676,096
7,438
-

State
Insurance
Proceeds*
717,421
706,380
662,759
662,759
662,759
662,759
662,759
662,759

Employee
Contributions
589,016
375,764
192,508
36,327
39,445
38,793
37,500
35,900

Total
Contributions
1,799,800
2,599,483
3,290,849
2,971,038
3,168,503
3,462,853
3,373,759
3,336,459

* Can only apply $619,399 for contributions each year.
Note: Actuarial Report not approved by the Police Pension Board for FY10 contributions. Will use FY09 contribution rates.

Pensacola Police
Pension Fund
Total Market Value

Cash &
Equivalents,
1,223,163, 3.0%

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

Equities,
18,662,448, 45.8%

Fixed Income,
20,833,464, 51.2%

Total Market Value

Total Market Value

$51,605,517 (9/30/08)

$57,273,509 (9/30/07)

Reconciliation of Contribution
Increases
Reason

General Pension

Due to Net Negative Investement Returns

$1,446,348

Due to Losses

$2,550,140

Due to Plan Amendments

$125,060

Due to Actual Experience Different From Assumptions

$233,808

Due to Method Changes

$1,772,594

Fire Pension
$1,914,778

Police Pension
$1,255,369

$1,292,809
$296,996
($731,624)

Due to Payroll Different Than Assumed

($891,734)

Due to Demographic Changes

$201,184

$934,450

Total Increase in Contributions

$5,437,400

$2,414,600

$50,655
($515,362)
$292,919
($173,990)
$2,202,400

Schedule of Funding Progress All
Pension Plans Combined
Actuarial
Valuation
Date
9/30/1996
9/30/1997
9/30/1998
9/30/1999
9/30/2000
9/30/2001
9/30/2002
9/30/2003
9/30/2004
9/30/2005
9/30/2006
9/30/2007
9/30/2008

Market Value of
Assets (In
Millions)

Actuarial
Value of
Assets (In
Millions)

Actuarial
Accrued
Liability
(AAL)

150,365
183,885
193,079
212,846
218,485
201,000
182,189
198,604
213,850
228,941
239,103
269,518
231,023

137,985
160,673
178,871
195,938
212,436
219,296
215,402
218,376
220,312
225,817
235,791
254,956
261,441

153,906
202,892
215,707
245,823
263,454
269,514
265,855
289,820
300,882
308,689
306,766
332,464
355,032

Unfunded
AAL
(UAAL)
15,921
42,219
43,144
49,885
51,018
50,218
50,353
71,444
80,570
82,872
80,975
77,508
93,091

Funded
Ratio
89.66%
79.19%
82.92%
79.71%
80.63%
81.37%
81.02%
75.35%
73.22%
73.15%
76.86%
76.69%
73.64%

Covered
Payroll
16,180
21,613
23,491
25,492
23,994
24,810
25,650
25,873
27,059
29,864
30,372
27,449
26,572

Schedule of Funding Progress
General Pension
Actuarial
Valuation
Date
9/30/1996
9/30/1997
9/30/1998
9/30/1999
9/30/2000
9/30/2001
9/30/2002
9/30/2003
9/30/2004
9/30/2005
9/30/2006
9/30/2007
9/30/2008

Actuarial
Market Value of Value of
Assets (In
Assets (In
Millions)
Millions)
74,086
81,634
89,237
103,000
105,501
95,993
86,264
91,598
97,324
103,608
107,866
119,690
100,490

68,668
81,634
89,287
97,992
104,738
106,476
104,817
105,000
104,027
104,435
106,662
113,372
115,679

Actuarial
Accrued
Liability
(AAL)
71,524
110,292
118,515
131,148
140,905
141,680
140,310
155,855
160,845
157,913
157,417
163,684
166,311

Unfunded
AAL
(UAAL)
2,856
28,658
26,228
33,156
36,167
35,204
35,493
50,855
56,818
53,478
50,755
50,312
50,632

Funded Ratio
96.00%
74.00%
75.30%
74.70%
74.30%
75.20%
74.70%
67.40%
64.70%
66.10%
67.76%
69.26%
69.56%

Covered
Payroll
6,937
11,889
13,932
15,465
14,030
14,480
15,445
15,286
15,708
16,904
17,598
14,807
13,546

Schedule of Funding Progress
Fire Pension
Actuarial
Valuation
Date
9/30/1996
9/30/1997
9/30/1998
9/30/1999
9/30/2000
9/30/2001
9/30/2002
9/30/2003
9/30/2004
9/30/2005
9/30/2006
9/30/2007
9/30/2008

Market Value of
Assets (In
Millions)

Actuarial
Value of
Assets (In
Millions)

51,744
63,055
65,803
72,288
73,950
66,082
60,355
67,208
72,892
78,536
84,440
92,554
78,885

46,524
51,924
57,390
63,803
70,000
73,385
71,441
72,891
73,263
74,679
78,872
85,956
88,835

Actuarial
Accrued
Liability
(AAL)
56,321
60,774
65,082
76,345
82,307
85,681
83,645
85,334
85,214
92,165
97,021
100,973
107,803

Unfunded
AAL
(UAAL)
9,797
8,850
7,692
12,542
12,307
12,296
12,104
12,443
11,951
17,486
18,149
15,017
18,968

Funded
Ratio
82.60%
85.40%
88.20%
83.60%
85.00%
85.60%
85.50%
85.40%
86.00%
81.00%
81.30%
85.10%
82.40%

Covered
Payroll
3,971
4,038
3,754
4,189
4,321
4,427
3,887
4,103
4,468
5,025
4,840
5,041
5,513

Schedule of Funding Progress
Police Pension
Actuarial
Valuation
Date

Market Value of
Assets (In
Millions)

Actuarial
Value of
Assets (In
Millions)

24,535
31,095
33,631
37,558
39,034
38,925
35,570
39,798
43,634
46,797
50,135
57,273
51,698

22,793
27,115
30,194
34,143
37,698
39,435
39,144
40,485
43,022
46,703
50,257
55,628
57,427

9/30/1996
9/30/1997
9/30/1998
9/30/1999
9/30/2000
9/30/2001
9/30/2002
9/30/2003
9/30/2004
9/30/2005
9/30/2006
9/30/2007
9/30/2008 **

Actuarial
Accrued
Liability
(AAL)
26,061
31,826
36,418
38,330 *
40,242 *
42,153
41,900
48,631
54,823
58,611
62,328
67,807
80,918

Unfunded
AAL
(UAAL)
3,268
4,711
6,224
4,187
2,544
2,718
2,756
8,146
11,801
11,908
12,071
12,179
23,491

Funded
Ratio
87.46%
85.20%
83.39%
89.08%
93.68%
93.60%
93.40%
83.20%
78.50%
79.68%
80.60%
82.04%
70.97%

Covered
Payroll
5,272
5,686
5,805
5,838
5,643
5,859
6,318
6,484
6,883
7,934
7,153
7,601
7,513

* Estimated Numbers
** Actuarial Report not approved by the Police Pension Board as of 9/30/08 contributions. Will use prior year contribution rates.

General Pension Phased-In
Recognition of Investment Income
P e n s i o n Ye a r

20 0 7

2 00 8

20 0 9

2 01 0

20 1 1

2 0 12

2 01 3

2 0 14

Fi s c a l Ye a r

20 0 5

2 00 6

20 0 7

2 00 8

20 0 9

2 0 10

2 01 1

2 0 12

GE NE RAL

C u r r e n t Ye a r In v e s t me n t In c ome

2 47 , 1 91

7 9, 66 1

1 , 3 6 4, 2 9 1

Fi r s t P r i o r Ye a r

1 43 , 7 25

2 4 7, 19 1

7 9, 6 6 1

1 , 36 4 , 29 1

Se c o nd P r i or Ye a r

3 27 , 3 29

1 4 3, 72 5

2 4 7, 1 9 1

7 9 , 66 1

1 , 3 64 , 2 91

3 2 7, 32 9

1 4 3, 7 2 5

24 7 , 19 1

79 , 6 61

1 , 3 64 , 2 91

14 3 , 72 5

2 47 , 1 91

79 , 6 61

T h i r d P r i o r Ye a r

(2 , 9 01 , 6 07 )

Fou r t h P r i o r Ye a r

(2 , 8 82 , 1 86 )

(2, 9 0 1, 60 7 )

3 2 7, 3 2 9

T o t a l R e c o gn i z e d Inv e s t me n t Ga i n(Lo s s )

(5 , 0 65 , 5 48 )

(2, 1 0 3, 70 1 )

2 , 1 6 2, 1 9 7

(4, 92 2 , 39 4 )

(3, 08 7 , 52 6 )

(4 , 9 22 , 3 94 )

(3 , 2 31 , 2 51 )

(4 , 9 22 , 3 94 )

(3 , 4 78 , 4 42 )

-

-

-

-

(4, 9 2 2, 3 9 4)

-

1, 3 6 4, 2 9 1

(4 , 92 2 , 39 4 )

(3, 5 5 8, 1 0 3)

(4 , 92 2 , 39 4 )

Fire Pension Phased-In
Recognition of Investment Income
Pension Year

2006

2007

2008

2009

2010

Fiscal Year

2004

2005

2006

2007

2008

2011
2009

2012

2013

2014

2010

2011

2012

FIRE
Current Year Investment Income
First Prior Year
Second Prion Year
Third Prior Year
Fourth Prior Year
Total Recognized Investment Gain(Loss)

172,338

314,925

205,125

1,122,345

(3,822,672)

626,288

172,338

314,925

205,125

1,122,345

(1,892,186)

626,288

172,338

314,925

205,125

1,122,345

(3,822,672)

(2,203,903)

(1,892,186)

626,288

172,338

314,925

205,125

1,122,345

(143,102)

(2,203,903)

(1,892,188)

626,289

172,336

314,924

205,125

(3,440,565)

(2,982,538)

(573,512)

2,441,022

(2,007,941)

(3,822,672)

(2,180,278)

(2,495,202)

(3,822,672)

-

1,122,343

(3,822,672)

(2,700,329)

(3,822,672)

SUMMARY




The cumulative funding of all 3 plans is 73.64% funded
9/30/07 - $270 million in assets
9/30/08 - $231 million in assets
2/28/09 - $183 million in assets
Pension Plan Investments are market sensitive

• Earnings need to be looked at as long range – 30 to 40
years
• General Pension is closed to new members. New
general employees hired are placed in FRS.

Future Issues
• Litigation
– Fire
– General

• Actuarially no cost amendments to the Fire Pension Plan
- approved when collective bargaining agreement
ratified
- Need to send to legislature
• Pension Obligation Bonds

Cost Reduction Options

General Pension Possible Benefit Changes
Employer Contribution Rate

ITEM
Valuation Results - Baseline

Unfunded
Accrued
Liability (UAL)

Normal

UAL

Total

Total
Employer
Contribution

50,631,882

14.31%

38.92%

53.23%

7,210,946

1. 1.6% Accrual Rate
Reduction from Baseline

48,201,033
2,430,849

12.30%
2.01%

37.05%
1.87%

49.35%
3.88%

6,685,298
525,648

2. 1.05% Accrual Rate
Reduction from Baseline

44,833,165
5,798,717

10.20%
4.11%

34.46%
4.46%

44.66%
8.57%

6,050,305
1,160,641

3. Life Annuity Normal Form
Reduction from Baseline

47,155,105
3,476,777

12.50%
1.81%

36.25%
2.67%

48.75%
4.48%

6,603,187
607,759

4. Benefit Freeze
Reduction from Baseline

46,260,420
4,371,462

2.53%
11.78%

35.56%
3.36%

38.09%
15.14%

5,160,136
2,050,810

5. 5 Year Final Average Salary
Reduction from Baseline

48,656,388
1,975,494

13.60%
0.71%

37.40%
1.52%

51.00%
2.23%

6,908,537
302,409

6. Eliminate COLA
Reduction from Baseline

45,829,543
4,802,339

12.11%
2.20%

35.23%
3.69%

47.34%
5.89%

6,412,210
798,736

*Administrative expenses and adjustment for timing of contributions only
Note: The sum of any 2 benefits added together will not be the exact amount if combined.

Fire Pension Possible Benefit Changes
Employer Contribution Rate

ITEM

Unfunded
Accrued
Liability
(UAL)

Valuation Results - Baseline

18,968,619

1. 2.5% Accrual Rate (max 75%)
Reduction from Baseline

Normal

Total
Employer
Contribution

UAL

Total

29.72%

28.08%

57.80%

3,186,178

16,114,404
2,854,215

26.84%
2.88%

25.26%
2.82%

52.10%
5.70%

2,871,930
314,248

2. 2.0% Accrual Rate (max 75%)
Reduction from Baseline

14,749,263
4,219,356

20.48%
9.24%

23.24%
4.84%

43.72%
14.08%

2,410,050
776,128

3. 10 Year Certain Life Annuity Normal Form
Reduction from Baseline

15,657,536
3,311,083

24.00%
5.72%

24.57%
3.51%

48.57%
9.23%

2,699,546
486,632

4. Benefit Freeze
Reduction from Baseline

14,181,790
4,786,829

6.90%
22.82%

36.01%
-7.93%

42.91%
14.89%

2,365,815
820,363

5. 5 Year Final Average Salary
Reduction from Baseline

16,289,469
2,679,150

26.14%
3.58%

25.33%
2.75%

51.47%
6.33%

2,837,039
349,139

6. Eliminate COLA
Reduction from Baseline

9,973,547
8,995,072

17.91%
11.81%

18.79%
9.29%

36.70%
21.10%

2,022,647
1,163,531

Note: The sum of any 2 benefits added together will not be the exact amount if combined.

Police Pension Possible Benefit Changes
Employer Contribution Rate

ITEM

Unfunded
Accrued
Liability (UAL)

Normal

UAL

Total

Total Employer
Contribution

Valuation Results - Baseline

23,491,042

22.55%

20.87%

43.42%

2,637,749

1. 2.5% Accrual Rate (max 75%)
Reduction from Baseline

16,932,118
6,558,924

18.94%
3.61%

15.04%
5.83%

33.98%
9.44%

1,928,540
709,209

2. 2.0% Accrual Rate (max 75%)
Reduction from Baseline

11,291,444
12,199,598

15.56%
6.99%

10.03%
10.84%

25.59%
17.83%

1,298,220
1,339,529

3. 10 Year Certain Life Annuity Normal Form
Reduction from Baseline

17,824,132
5,666,910

19.39%
3.16%

15.84%
5.03%

35.23%
8.19%

2,022,458
615,291

4. Benefit Freeze
Reduction from Baseline

7,292,693
16,198,349

4.00%
18.55%

6.48%
14.39%

10.48%
32.94%

200,593
2,437,156

5. 5 Year Final Average Salary
Reduction from Baseline

20,244,375
3,246,667

20.69%
1.86%

17.99%
2.88%

38.68%
4.74%

2,281,651
356,098

6. Eliminate COLA
Reduction from Baseline

13,652,657
9,838,385

16.91%
5.64%

12.13%
8.74%

29.04%
14.38%

1,557,413
1,080,336

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

Note: The sum of any 2 benefits added together will not be the exact amount if combined.

Where Do We Go From Here?
Savings Combinations

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

Plan
General Pension $

7,210,946

Fire Pension
Police Pension
Total Savings

$

Changes
(607,759) $

7,818,705

3,186,178

(486,632)

3,672,810

2,637,749

(615,291)

3,253,040

13,034,873

$

City
Contribution
Before
Changes

$ (1,709,682) $

14,744,555

General, Fire & Police Combined
5 Year Average Final Salary
Fiscal Year 2010
City
Contribution
Before
Changes

Plan
General Pension $

7,210,946

Fire Pension
Police Pension
Total Savings

$

Changes
(302,409) $

7,513,355

3,186,178

(349,139)

3,535,317

2,637,749

(356,098)

2,993,847

$ (1,007,646) $

14,042,519

13,034,873

$

City
Contribution
After
Changes

General, Fire & Police Combined
0.5% Reduction in Accrual Rate
City
Contribution
Before
Changes

Plan
General Pension

$

7,210,946

Changes
$

City
Contribution
After
Changes

(525,648) $

6,908,537

Fire Pension

3,186,178

(314,248)

2,837,039

Police Pension

2,637,749

(709,209)

2,281,651

Total Savings

$

13,034,873

$ (1,549,105) $

12,027,227

General, Fire & Police Combined
Freezing Plan Benefits
Fiscal Year 2010
City
Contribution
Before
Changes

Pla n
Gene ra l Pension

$

7,210,946

City Contribution
After Cha nge s

Changes
$

(2,050,810)

$

5,160,136

Fire Pension

3,186,178

(820,363)

2,365,815

Police Pension

2,637,749

(2,437,156)

200,593

Subtotal

$

13,034,873

$

(5,308,329)

Loss of Contribution from State Insurance
Proceeds Fire and Police
$
1,418,435
Ne t Savings*
Ne t City Obligation

$

$

$

7,726,544

1,418,435

(3,889,894)
$

9,144,979

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

Issues
Boards will determine how the plan will continue
if the plans are frozen
• Purchase annuities – immediate cost to city to purchase
annuities
• Payout all participants, retired and active, in a lump-sum –
immediate cost to city to fund lump-sums
• Continue as they are currently – city’s annual cost will be
determined by actuary each year

What do you provide employees
– Defined Contribution Plan – General, Fire &
Police
– FRS for Fire and Police
• Employees would have choice which plan current
or FRS
• Close plans would lose the state insurance
premium tax money

– Provide No Retirement Plan

QUESTIONS

City of Pensacola
Employee’s Executive
Committee
City Council Workshop
April 2, 2009

Employee’s Executive Committee
Represents and Protects The Interest Of All
Members of the Civil Service
 Created By Laws of Florida

Ch 84-510 Section 17

Employee’s Executive Committee
Chairperson

Brenda Kahalley

Group 5

Police, Fire, MIS

Vice-Chairperson

Anthony Bosso

Group 6

Energy Services of Pensacola

Secretary

Yvette McLellan

Group 1

Finance, Community
Development, Housing,
Employee Services, Engineering

Treasurer

Michael Laven

Group 4

Airport, Library Port

Gene Ryder

Group 2

Parks & Recreation

Toney McCreary

Group 3

Public Works, Sanitation
Services & Fleet Management

Cheryl Jackson
Eric Ervin
Darryl Singleton

Group 1
Group 2
Group 6

Alternates

City of Pensacola General Pension Plan
Change is Necessary
 Allow For Thorough Research And
Comparisons

Independent Party

Informed Decision
 Consensus

“Cadillac Pensions”

Average Civil Service Worker

608 Current General Pension Retirees


Average Pension - $18,019
68.77% Receive Less Than $20,000 Per Year
Family Health Insurance - $14,000 Per Year

Civil Service Employees
Position

Yearly Salary
Starting Salary
Maximum Salary

30 Years (63%)
Maximum Pension

Clerk I
Clerk II
Clerk III

19,115
20,092
21,091

29,702
31,220
32,760

18,712.26
19,668.60
20,638.80

Customer Service Representative I
Customer Service Representative II

23,171
24,545

35,214
38,188

22,184.82
24,058.44

Maintenance Worker I
Maintenance Worker II
Maintenance Worker III

20,092
21,091
23,171

31,220
32,760
35,214

19,668.60
20,638.80
22,184.82

Public Safety Telecommunicator I
Public Safety Telecommunicator II

24,585
27,040

38,188
41,558

24,058.44
26,181.54

Equipment Operator II
Equipment Operator III

23,171
24,545

35,214
38,188

22,184.82
24,058.44

Teamwork

Budgets and Personnel Reduction

73 Full Time Positions Since FY 2008
No Pay Increases

FY 2009 - $1,122,000
FY 2010 – $2,244,000

Personal Budgets Being Tightened


Health Insurance
Groceries
Gasoline

Pension Structure Changes

Three Changes In Past 30 Years

1979 – Closed General Pension To New
Employees. New Employees Put In Deferred
Compensation Plans
1997 – Reopened General Pension

Employees Allowed To Buy In Years of Service
One-Time Chance

2007 – Closed General Pension to New
Employees

New Employees Put In Florida Retirement System
Existing Employees Allowed To Remain In Current Plan
Or Join Florida Retirement System
Irrevocable Decision

Civil Service Employees Affected
Customer Service Employees
 Equipment Operators


Library Workers & Recreation Aids

Picks Up Garbage
Mows Parks
After School
Computer Labs

Hurricane/Disaster Recovery

Independent Study

Support Hiring Outside Consultant

Evaluate and Compare


Similar Cities
Neighboring Governmental Agencies
State and Federal Governments

Will Provide Clearer Picture

Thank You

Pensacola Firefighters Relief
and Pension Fund

Good News, Bad News

Brief History

In 1939 the state establishes Chapter
19112 Section 175.041 Laws of Florida
allowing collection of excise tax on
casualty insurance for the purpose of
funding dedicated firefighter pension
plans.

Where it Went Wrong !

1957- revealed no portfolio
1961- $2,962,000 (original unfunded) loss
over the 18 years
1971- (14 year delay)-”stair-step funding”
assumes 64.6% of payroll 1991-2011
Paid $4,000 of recommended $135,000 initial
payment
2008-required payment $1,462,359 (original
unfunded-grown now to $9,166,787)

THE GOOD NEWS!
Paid off in 7 years:
 2008 - $1,936,150
 2015 - $613,946
 *Don’t give up now, almost there!*
 2038 - $0!

A Well Managed Plan

Return on investment:
2004 - 15.1%
2005 - 10.2%
2006 - 10.6%
2007 - 14.5%
2008 - (13.3%) - Rank in top 30%

PENSACOLA POLICE PENSION
ROB BELL
PRESIDENT
FRATERNAL ORDER OF POLICE,
LODGE 71
CHAIRMAN
POLICE PENSION BOARD

Pension Plan History
– Police Pension – effective October 22, 1959
– City ordinance
– Five (5) Trustees
– Police Officers continued in the General
Pension Plan
• – Police Plan was a supplemental plan
• – No longer in General Pension Plan as of
October 1, 1979



“CADILLAC PENSION”
• OFFICERS HIRED PRIOR TO 1979
– PARTICIPATED IN BOTH THE GENERAL AND
POLICE PENSIONS
– THIS PROVIDED THESE OFFICERS WITH A
COMBINED 4% BENEFIT
– ONLY 4 REMAIN

CURRENT PENSION
• DEFINED BENEFIT
– 3% MULTIPLIER
– MINIMUM 25 YEARS OF SERVICE
– VESTED IN 10 YEARS
– AVERAGE PENSION $38,432.00

PENSION HISTORY
• PRIOR TO 1997
– 2% MULTIPLIER
– MINIMUM 30 YEARS OF SERVICE
– 10 YEARS VESTED
1997 GENERAL PENSION WAS RE-OPENED
POLICE AND FIRE WERE EXCLUDED

PENSION HISTORY
(CONT.)
• IN LIEU OF THE GENERAL PENSION
PARTICIPATION:
– CITY STAFF ENHANCED THE POLICE PENSION.
• FROM 2% TO A 3% MULTIPLIER
• DECREASED MINIMUIM YEARS OF SERVICE FROM 30
TO 25 YEARS
• THESE INCREASES BROUGHT US IN LINE WITH OTHER
LAW ENFORCEMENT PENSIONS

PENSION HISTORY
(CONT.)
• FURTHER PLAN ENHANCEMENTS
– 2003 CONTRACT NEGOITATIONS
• IN LIEU OF PAY RAISES CITY STAFF PROPOSED A
REDUCTION IN THE OFFICER’S CONTRIBUTION TO THE
PENSION PLAN TO .5% FROM 8.5%
THIS REDUCTION WAS SPREAD OUT OVER A 3 YEAR
PERIOD

COMPARISONS
POLICE PLAN

FRS (SPECIAL RISK CLASS)
3%
25 YEARS
6 YEARS VEST.
0
100% MAX

• OUR PENSION IS COMPARABLE IN BENEFITS
TO THE MAJORITY OF OTHER 185 PLANS
ACROSS THE STATE
• DUE TO INVESTMENTS OUR PENSION HAS
OUT PERFORMED MANY PLANS IN FLORIDA
• IN TOP 30TH PERCENTILE FOR THE QUARTER

WHY PUBLIC SERVICE
PRIVATE/PUBLIC
BETTER SALARY
PAY FOR EDUCATION
LESS OR NO BENEFITS/LITTLE OR NO PENSION
OFFICERS WANT TO MAKE A DIFFERENCE
OFFICERS HAVE A SENCE OF COMMUNITY PRIDE
OFFICERS ACCEPT LESS PAY FOR BETTER
BENEFITS AND PENSIONS

• PENSIONS AND BENEFITS ARE RECRUITING TOOLS
• LAW ENFORCEMENT IS A HIGH LIABILITY AREA

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

A DEFINED BENEFIT PENSION HELPS IN RETAINING EXPERIENCED
POLICE OFFICERS

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