North Miami Beach council members voted Tuesday to sue one of the city’s pension boards after the board refused to implement cuts to employee pension benefits.
The council recently decided to cut the rate at which employees accumulate pension benefits. For instance, non-uniformed employees will accumulate 2.5 percent of working salary per year of service, down from 3 percent. That means a worker who started now and stayed with the city for 20 years would get an annual pension benefit equal to 50 percent of working salary, down from 60 percent.
Benefits already accumulated would not be lost, however. So an employee who worked 10 years for the city before the change and 10 years after would retire on 55 percent of working pay.
The city anticipates savings of $736,000 the first year and $1 million per year after that.
The council also eliminated a rule requiring a two-thirds majority of workers to approve reductions to pension benefits.
City Attorney Darcee Siegel assured council members these steps were legal, but a majority of the pension board and their lawyer disagreed.
Pension board attorney Robert A. Sugarman told the board in a letter that the board should disregard the City Council’s instructions because the plan changes did not receive the required two-thirds vote of participating employees.
So earlier this month, trustees of the General Employees Retirement Board voted 3-2 not to implement the new plan.
The result is a stalemate.
“Basically a line has been drawn in the sand, and until the pension board are ordered to impose or implement that ordinance ... that you all approved, we’re at a standstill, ” Siegel told the council on Tuesday.
The council unanimously agreed to sue the trustees for breaching their fiduciary duty and refusing to administer the pension plan as enacted by the city. The trustees include two City Council members selected by the mayor, two city employees chosen by the employees, and a fifth person chosen by the other four.
Councilwoman Barbara Kramer and Councilman Frantz Pierre are the two council members who sit on the pension board. They cast the two votes in favor of implementing the changes.
“This was not something I thought would occur. I felt really out of place, but at that point, I wasn’t doing what I normally do, which is the fiduciary duty of a trustee to watch over the pension plan and make sure its sound,” said Kramer.
Mayor George Vallejo was incredulous that the pension board, which was created by an ordinance of the City Council had three un-elected members take action that will cost the city extensive legal bills. Although Siegel is a city employee, the council agreed to hire outside lawyers to work on the lawsuit.
“Now we have to spend the city’s money to sue a board that refuses to enforce changes that have been duly passed on two readings, after two years of study and after a collective bargaining process, a special magistrate’s independent review,” Vallejo said. “The pension board says to the residents of this town, ‘too bad.’ ”
Also on Tuesday, state Rep. Barbara Watson, D-Miami Gardens, told the council about a free workshop for families facing home foreclosure or having difficulty paying their mortgages.
“We will not be sending you somewhere else to take information to another location,” said Watson. “ There will be HUD certified housing counselors, bank representatives and other foreclosure assistance program representatives on site.”
The workshop will be from 10 a.m. to 7 p.m. on Oct 24 at the McDonald’s Center, 17011 NE 19th Ave.
Homeowners should bring these documents:
• The most recent correspondence from your mortgage company.
• The most recent mortgage statement,
• The homeowners’ pay stubs from the preceding 30 days.
• The homeowners’ last 60-day bank statements.
• A recent tax return, including W2 forms.
• A current electric bill.
For more information, call Watson’s office at 305-654-7100.