City of Spring Hill Board of Mayor and Aldermen Special Budget Meeting Packet April 23, 2019 06:00 Pm
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CITY OF SPRING HILL BOARD OF MAYOR AND ALDERMEN SPECIAL BUDGET MEETING PACKET APRIL 23, 2019 06:00 PM Board of Mayor and Aldermen: Rick Graham, Mayor Bruce Hull, Jr., Vice-Mayor Kevin Gavigan Jeff Graves Matt Fitterer Vincent Fuqua Clint McCain Amy Wurth Susan Zemek City of Spring Hill Phone 931.486.2252 P.O. Box 789 Fax 931.486.0516 Spring Hill, TN 37174 www.springhilltn.org CITY OF SPRING HILL BOARD OF MAYOR AND ALDERMEN SPECIAL BUDGET MEETING AGENDA APRIL 23, 2019 06:00 PM Call Meeting to Order Stipulation of Aldermen present Concerned Citizens The procedural rules for public comment will be as follows: Items will be taken in order of the agenda. Audience members wishing to speak must be recognized by the Mayor and will have five minutes to address the Board of Mayor and Aldermen. No rebuttal remarks are permitted. 1. Maury Alliance Presentation Will Evans, Maury County Chamber and Economic Alliance 2. Public Safety Bridge Progarm Michael Guyton, Findley, Inc. Attachment: 2-Public Safety Bridge Program.pdf 3. Rippavilla/Tourism Budget Discussion (Fund-140) Attachment: 1-Rippavilla budget req final.pdf Attachment: 1a-Barge design email communication.pdf Attachment: 1b-Chandler Proposal 12-13-18.pdf Attachment: 1c-KDV email.pdf Attachment: 1d-Encore.pdf Attachment: 2-RippavillaScopeofWork.pdf Attachment: 3a-20190423093554226.pdf Attachment: 4-ShutterBids.pdf Attachment: 5-Rippavilla 18-19 projections.pdf 4. Finish Remaining Items not yet discussed in Funds 210, 416, 611, 619 5. Capital Expenditure Discussion (including Funds 124, 125) Impact Fees and Adequate Facilities Tax 6. Brief Dialogue Regarding New Water Service/Call Outs 7. Other Issues/Discussion Concerned Citizens Adjourn City of Spring Hill - BOMA Special Budget Meeting - 04/23/19 Page 1 of 1 ^ Back to Agenda ^ General Attachment: 2-Public Safety Bridge Program.pdf City of Spring Hill, Tennessee Retirement Plan Study A Study of the Costs and Benefits Anticipated of Adding Enhanced Public Safety Officer Benefits within the Tennessee Consolidated Retirement System Valuation Date July 1, 2018 Special Budget Meeting - PACKET - (Page 3 of 63) General Attachment: 2-Public Safety Bridge Program.pdf (Page 1 of 15) General Attachment: 2-Public Safety Bridge Program.pdf City of Spring Hill, Tennessee Retirement Plan Study July 1, 2018 Contents Summary of Results ........................................................................................................................................... 3 Funding Components ....................................................................................................................................... 5 Plan Provisions - Legacy Plan ........................................................................................................................... 5 Comparison of Plan Provisions - Legacy Plan vs Enhanced Public Safety Officer Benefits ............... 10 Summary of Actuarial Assumptions .............................................................................................................. 13 Certification ...................................................................................................................................................... 14 Special Budget Meeting - PACKET - (Page 4 of 63) General Attachment: 2-Public Safety Bridge Program.pdf (Page 2 of 15) General Attachment: 2-Public Safety Bridge Program.pdf City of Spring Hill, Tennessee Retirement Plan Study July 1, 2018 Summary of Results The City of Spring Hill currently participates in the Tennessee Consolidated Retirement System (“TCRS”) under the Legacy Plan. This study is only reviewing the impact on the City’s Actuarially Determined Contribution (ADC) rate of adding the enhanced Public Safety Officer Benefits for the Legacy Plan (PSO Enhanced Benefits). An actuarial valuation was performed as of July 1, 2018 to determine the expected increase in the City’s ADC rates due to the PSO Enhanced Benefits. This study was based on data provided by TCRS as of June 30, 2018, and the City of Spring Hill provided a list of participants to be treated as Public Safety Officers. The asset information was provided by TCRS. The data provided was not audited, but was reviewed for reasonableness. This report contains the results of an actuarial valuation performed by Findley, Inc. Actuarial valuations are based on the integrity of employee data, plan asset data, plan provisions and an extensive set of assumptions regarding future events. There is necessary uncertainty with any actuarial calculation based on the accuracy of the data provided, the correct interpretation of plan provisions and the realization of the assumptions made. It should be noted that the results were based on the assumptions and funding method utilized by TCRS as of July 1, 2018. The ADC rate requirement at the time the PSO Enhanced Benefits becomes effective and is reflected in the TCRS results will differ from the results in this report. This report will provide the City the magnitude of the increase in the City’s contributions by adding the PSO Enhanced Benefits. The current plan benefits in the Legacy Plan are described in the plan provision section of this report. The description of the difference between the current plan benefits and the PSO Enhanced Benefits are described in the benefit comparison section of this report. Recently the Tennessee legislators passed a law which requires that any increase in retirement plan benefits must be funded immediately. There is some uncertainty on how this law applies to a political subdivision of the TCRS. This report presents the current approach used in determining the ADC rate when a political subdivision adds the PSO Enhanced Benefits feature to their plan. In addition, the report provides the cost if the entire increase in liability is required to be funded in the first year. The ADC rate is made of three components: Normal Cost Unfunded Accrued Liability Amortization Administrative Cost In the Appendix is the report from TCRS which shows the “Employer Actuarially Determined Contribution (ADC) Rate”. The ADC rate is applicable for the period beginning July 1, 2019 through June 30, 2020. The report shows that the ADC rate is 6.41%. The Funding Component Section which follows shows the impact of adding the PSO Enhanced Benefits. The increase in the Unfunded Accrued Liability due to the addition of PSO Enhanced Benefits is $1,437,229. This increase in the Unfunded Accrued Liability amortized over 20 years would increase the City’s annual amortization amount by $128,962. The unfunded accrued liability amortization component of the ADC rate would increase from 2.64% to 3.89%. In addition the normal cost component rate would increase from 3.55% to 4.48%. The total ADC rate increases from 6.41% to 8.59% which is a 34% increase in the rate. Historically, TCRS has presented the contribution rate as follows, which is equivalent to the 8.59% aggregate rate: General Employee Rate: 6.89% Public Safety Officer Rate: 10.39% Findley.com 3 Special Budget Meeting - PACKET - (Page 5 of 63) General Attachment: 2-Public Safety Bridge Program.pdf (Page 3 of 15) General Attachment: 2-Public Safety Bridge Program.pdf City of Spring Hill, Tennessee Retirement Plan Study July 1, 2018 The ADC rate is applied to the actual compensation during the funding period. Using the Annualized Salary of $10,916,779 shown on the TCRS report in the Appendix as an approximation for the upcoming year’s actual compensation, the annual cash contribution comparison is shown below. Current Plan - $700,000 Current Plan with PSO Enhanced Benefits - $938,000 Please note if it is determined that the City will have to pay the entire liability at the adoption of the PSO Enhanced Benefits, the cost would be approximately $2,239,000 for the first year. In the subsequent years, the ADC rate would be approximately 7.34% ($801,000 annual contribution based on current compensation. Although there is an increase in the ADC rate, the City needs to realize that there might be savings associated with adding the PSO Enhanced Benefits. Such savings might include: reduced workers compensation claims, lower medical costs, and lower wages. PSO Enhanced Benefits allows PSOs to retire at an earlier age than under the current provisions of the plan. Findley.com 4 Special Budget Meeting - PACKET - (Page 6 of 63) General Attachment: 2-Public Safety Bridge Program.pdf (Page 4 of 15) General Attachment: 2-Public Safety Bridge Program.pdf City of Spring Hill, Tennessee Retirement Plan Study July 1, 2018 Funding Components Valuation Results as of June 30, 2018 With PSO Current Enhancements Change Unfunded Accrued Liability Entry Age Accrued Liability 16,190,010 17,627,239 1,437,229 Actuarial Value of Assets 14,364,154 14,364,154 - Unfunded Accrued Liability 1,825,856 3,263,085 1,437,229 Breakdown of PVB Actuarial Value of Assets 14,364,154 14,364,154 - Expected Employee Contributions 5,270,925 4,952,368 (318,557) Expected Employer Normal Cost 3,613,845 4,452,717 838,872 Unfunded Accrued Liability 1,825,856 3,263,085 1,437,229 Total PVB 25,074,780 27,032,324 1,957,544 Employer ADC Rate (if allowed to fund prior service through future contributions) Normal Cost 3.55% 4.48% 0.93% Unfunded Accrued Liability Amortization 2.64% 3.89% 1.25% Administrative Cost 0.22% 0.22% 0.00% Total Rate 6.41% 8.59% 2.18% General Employee Rate 6.41% 6.89% 0.48% Public Safety Officer Rate 6.41% 10.39% 3.98% Findley.com 5 Special Budget Meeting - PACKET - (Page 7 of 63) General Attachment: 2-Public Safety Bridge Program.pdf (Page 5 of 15) General Attachment: 2-Public Safety Bridge Program.pdf City of Spring Hill, Tennessee Retirement Plan Study July 1, 2018 Plan Provisions - Legacy Plan This is a brief summary of the plan provisions. For complete details, see the Plan Document. Eligibility All employees included on the census form were considered to be eligible. Credited Service Credited Service means the period of a member's continuous service on or after the valuation date since his last date of employment with the employer, and may also include service prior thereto. Retirement credit for part-time service is granted on a pro-rata basis in direct proportion to the schedule of a full-time employee.