Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Approving And Authorizing The Appropriate City Officials To Execute A Settlement Agreement Implementing A Settlement With The Board Of Trustees Of The Employees' Retirement Fund.
Body
Staff Recommends: Approval of the Resolution.
Explanation:
Each of the three pension plans sponsored by the City includes a benefit formally referred to as a supplemental pension distribution or supplemental pension benefit and informally referred to as a 13th check ("13th check benefit"). The 13th check benefit is an extra payment made to eligible retirees for any year for which the actual investment return realized by a pension fund exceeds a threshold specified in the pension plan.
In 2015, the City filed a civil action naming the three pension boards as defendants and alleging that the boards were making 13th check benefit payments in excess of the amounts prescribed by law. The City and the Employees Pension Board ("Employees Board") filed a joint motion to sever the City's claims against the Employees Board from the City's claims against the other two boards, and without objection from the other two boards, the Court entered an Order of Severance.
City staff and the Employees Board have negotiated a settlement of the claims against the Employees Board, subject to the approval of the City Commission. The proposed settlement resolves several issues as follows:
1) Because the City contended that the boards were overpaying the 13th check benefit, the City withheld from the annual required contribution ("ARCs") each year the amount attributable to the 13th check benefit. At about the same time, the state began to require that the ARCs include an amount to pre-fund the 13th check benefit. The City objected to that requirement.
City staff now believes that resolving this matter before the shortfall becomes unmanageable is the best course of action. As of July 31, 2019, there was a required ...
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