12-001475 City Of Belleair Bluffs vs. Department Of Management Services, Division Of Retirement Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Monday, October 7, 2013.

Summary: Board of Trustees for firefighter pension trust fund complied with section 175.361, concerning the termination and distribution of a pension trust fund

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CITY OF BELLEAIR BLUFFS , )

)

Petitioner , )

)

vs. ) Case No. 12 - 1475

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF )

RETIREMENT , )

)

Respondent, )

)

and )

)

BOARD OF TRUSTEES OF THE CITY )

OF BELLEAIR BLUFFS )

FIREFIGHTERSÓ PENSI ON TRUST )

FUND, )

)

Intervenor . )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held on

September 25, 2012 , by video teleconference at sites in

Tallahassee and St. Petersburg, Florida , before Thomas P.

Crapps, a designated Administrative Law Judge of the Division of

Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Jay Daigneault, Esquire

Brandon J. Huffman, Esquir e

Frazer, Hubbard, Brandt, Trask,

Yacavone, M etz & Daigneault, LLP

595 Main Street

Dunedin, Florida 34698

For Respondent: Thomas E. Wright, Esquire

Department of Management Services

Suite 160

4050 Esplande Way

Tallahassee, Florida 32399 - 0950

For Intervenor: Paul A. Donnelly, Esquire

Donnelly and Gross, P.A.

Suite A - 1

2421 Northwest 41st Street

Gainesville, Florida 32606

STATEMENT OF THE ISSUE

Whether the final agency action of the Department of

Management Services, Division of Retirement , dated February 22,

2012 , complied with section 175.361 , Florida Statutes (2012) , 1/

concerning the dissolution and distribution of the City of

Belleair Bluffs Firefighters' Pension Trust Fund.

PRELIMINARY STATEMENT

On April 19, 2012, the City of Belleair Bluffs, Florida

(City) , filed a Petition for Formal Admi nistrative Hearing

challenging the final agency decision by the Department of

Management Services, Division of Retirement (Department) ,

concerning the dissolution and method of distribution of the

Belleair Bluffs Firefighters' Pension Trust Fund (Pension T rust

Fund). 2/ The Department transmitted the City's request for an

administrative hearing to DOAH, and the undersigned was assigned

the case. Initially, the administrative hearing was set for

July 27, 2012, but was rescheduled for September 25, 2012.

O n May 10, 2012, the Board of Trustees of the City of

Belleair Bluffs Firefighters' Pension Trust Fund (Board of

Trustees or Board ) filed a petition seeking leave to intervene

in the instant case, which was granted.

The parties stipulated to the following e xhibits being

admitted into evidence: E xhibits A, B, C, D, E, H, I, Y, BB,

CC, DD, FF, GG, and II. The City offered E xhibits J and M ,

which were admitted into evidence. The Department offered

E xhibits Q, R, S , and T , which were admitted into evidence. The

Board of Trustees offered Exhibits KK, 5, 7 , and 16 , which were

admitted into evidence. Further, c hapters 112 and 175, Florida

Statutes , were officially recognized .

At the final hearing, the City presented the testimony of

two fact witnesses : D ebra Sullivan (Ms. Sullivan), c ity c lerk

for the City of Belleair Bluffs ; and Keith Brinkman

(Mr. Brinkman), the Department's bureau chief for local

retirement systems. The City also presented Philip Porter,

Ph.D. (Dr. Porter), an expert witness in publi c finance and

economics. The Department presented the testimony of

Mr. Brinkman, and the Board of Trustees presented the testimony

of Steve Langere (Mr. Langere), the c hair of the Board of

Trustees, and Dave Fynan (Mr. Fynan), a former firefighter and

fo rmer member of the Board of Trustees.

A two - volume T ranscript of the hearing was filed with DOAH,

and the parties submitted p roposed r ecommended o rders.

FINDINGS OF FACT

1. The Pension Trust Fund is a defined benefit pension

plan under chapter 175, Flo rida Statutes. The City participated

in the chapter 175 premium tax program with the creation of the

Pension Trust Fund.

2. The legislature expressly declared that the purpose of

chapter 175 was to establish "minimum standards for the

operation and fundi ng of such plans, hereinafter referred to as

firefighters' pension trust funds." § 175.021(2), Fla. Stat.

Further, the legislature directed that the firefighter pension

plans be "managed, administered, operated, and funded in such

manner as to maximize t he protection of the firefighters'

pension trust funds." § 175.021(1) , Fla. Stat .

3 . Section 175.061 creates a board of trustees for a

firefighters' pension trust fund as the legal entity empowered

to bring and defend lawsuits, and is "solely responsible for

administering the trust fund." § 175.061(1) and (4), Fla. Stat.

The board of trustees is directed by statute to act as a

fiduciary for the pension trust fund's beneficiaries and

participants. §§ 175.071(1) and 112.656, Fla. Stat. The law

is clear that a board of trustees is independent of a

municipality. §§ 175.071 and 175.311, Fla. Stat. Further, a

b oard of t rustees comprises two trustees elected by the

firefighters, two trustees who are residents of the municipality

appointed by the City Commi ssion, and a fifth member chosen by

the majority of the four members. § 175.061(1)(a). Finally, a

board of t rustees de rives its authority and fiduciary duties

from chapters 175 and 112. The Board of Trustees in this case

was created by and derived its a uthority under chapter 175.

4 . On September 1, 2009, the City Ós residents voted to

consolidate its fire services with City of Largo. As a result,

the Largo Fire Department has provided the City with fire

protection since September 30, 2009 . Moreover, it was

undisputed that the Pension Trust Fund closed as of

September 30, 2009.

5 . Following the consolidation of the two fire services,

City officials and the Board of Trustees began negotiations

concerning how to proceed with the Pension Trust Fund. T he

record shows that the discussions evolved from the Pension Trust

Fund being merged with the Largo Firefighters' Pension Fund to

discussions concerning the Pension Trust Fund's dissolution and

distribution .

6 . The negotiations between the City and the Board of

Trustees regarding the dissolution and distribution of the

Pension Trust Fund di scussed a number of alternatives. The

record shows that the City and Board of Trustees discussed

options s uch as payment of accrued benefits, a substituted trust

man aged by the City, and payment of lump sum cash payments in

conjunction with a s hare plan or s ervice distribution payment .

The share plan or service distribution plan would have paid a

firefighter's accrued benefits plus additional money based on

the numbe r of years a firefighter served the City. However, as

of early September 2011, the City and the Board of Trustees had

not reached an agreement on the dissolution and distribution of

th e Pension Trust Fund.

7 . The key meeting for resolution of this case is the

Board of Trustees' meeting on September 9, 2011. The Board of

Trustees' meeting minutes and transcript from the

September 9, 2011 , meeting , show the Board of Trustees ' intent

to make a decision in strict compliance with section 175.361.

Mr. Dehn er, the Board of Trustees' attorney, clearly advised the

Board that it take a final action in compliance with

section 175.361. The record shows that the Board of Trustees

voted to accept distribution of accrued benefits only, and voted

to have its actuar y provide the City with the information

showing the amount of additional funds necessary to fund the

Pension Trust Fund's distribution. Section 175.361(1) provides

that a board of trustees inform a municipality if additional

assets are required to fund di stribution of the nonforfeitable

benefits. The conclusion that the Board of Trustees took a

final action in compliance with section 175.361 is confirmed by

Mr. Langere's testimony.

8 . The record shows that the Board directed

Mr. Patrick Donlan of Foster and Foster, its actuary , to provide

the City with two options as to the costs for the distribution.

The first option concerned the cost of a proposal by the City to

dissolve the P ension Trust Fund . The City's proposal, as it was

characterized by the Boa rd, consisted of eight firefighters

receiving lump sum cash payments of their accrued benefits with

a share plan. The share plan would pay the eight firefighters

additional money based on each firefighter's years of service.

The remaining four firefighte rs in the Pension Trust Fund would

receive insured annuities.

9 . The Board of Trustee s also directed Mr. Donlan to

determine the cost of Board's action in selecting dissolution

and distribution of the Pension Trust Fund by purchasing eight

annuities and f our lump sum cash payments.

10 . The transcript for the Board of Trustees' meeting

shows the following:

SECRETARY WATERS: I make a motion that if

the City does not act favorably to the City

proposal, what we've been calling "City

Proposal - Proposal Nu mber One," then the

Board requests that the City pay in

accordance with the 9/9/11 letter from

Foster & Foster updated as of 9/16/11.

11 . The motion received a second, and was unanimously

approved by the Board of Trustees.

1 2 . The letter from Mr. Donlan , dated September 9, 2011 ,

set out the Pension Trust Fund's current value and the amount of

additional funds required from the City in order to fund the

distribution of the accrued benefits with the purchase of eight

insured annuities and four lump sum cas h payments. Moreover,

Mr. Donlan's letter determined the amount of funds required from

the City to finance the distribution. Finally, t he September 9,

2011, letter set out the costs of a "share plan" allocation .

1 3 . The Board of Trustees' action at th e September 9,

2011 , meeting , directed the actuary to update the distribution

costs using a September 16, 2011 , date. The reason for the

changed date is that the cost of purchasing annuities varie s

based on the prevailing interest rates on a particular da te .

The Board of Trustees chose September 16, 2011 , as the date for

determining the cost of purchasing the annuities , because the

date w as the closest date to the City Commission's next

scheduled meeting on September 19, 2011.

1 4 . On September 16, 2011, Mr. Donlan wrote Ms. Sullivan,

and provided the City with the market value of the Pension Trust

Fund on September 15, 2011 , and the costs to fund the

distribution of the Pension Trust Fund under two scenarios: 1)

the City's "Share Plan or Service Distribu tion Plan" ; and 2) the

accrued benefit plan approved by the Board of Trustees. The

letter shows that , at the time, the current value of the Pension

Trust Fund was insufficient to distribute the accrued benefits.

Consequently, under either option, the Cit y would be required to

pay additional funds in order to distribute the accrued

benefits.

15 . Mr. Donlan outlined the City's costs under the City's

proposed share plan or s ervice d istribution p lan. Under the

City's proposal, eight firefighters would rec eive lump sum cash

payments of their accrued benefits and "service distributions"

based on the years of service , and four firefighters would

receive insured annuities . Mr. Donlan's letter noted that if

th e City adopted thi s proposal , the decision would al low the

City to access additional state money to pay for the service

distributions . Under the Ð share plan or service distribution

plan, Ñ the City would be required to provide $1,024,786.00 to

fund the distribution.

1 6 . The second cost option outlined by Mr. Donlan detailed

the cost of funding the Board of Trustees' decision that eight

firefighters receiv e insured annuities, and four firefighters

receiv e lump sum cash payouts. Unlike the Ð share plan or

service distribution plan , Ñ s tate money would not be available

to pay for the accrued benefit plan . 3 / The actuary's letter

clearly states that under the accrued benefit plan, the City

would be required to provide $1,265,330.00 to fund the

distribution of the Pension Trust Fund.

17 . On September 19, 2011, M r. Daniel Waters, the Board of

Trustees' Secretary, i nformed the City Commission in writing

that the Board of Trustees had met and "accepted a motion

concerning the method of payout to the former Belleair Bluffs

Firefighters' Pension Members." Further, Mr . Waters informed

the City Commission about the costs of the Board's adopted

annuity plan, and provided a copy of the actuary's September 16,

2011 , letter.

18 . The record shows that on September 26, 2011, the City

Commission held a special meeting conce rning the Pension Trust

Fund. The City Commission's minutes show that the City had its

actuary prepare documentation showing the financial implications

for the City under four different scenarios. 4 / Further, the City

Commission minutes show that the City Commission failed to take

any action, other than to authorize Mayor Arbutine "to write a

letter requesting a 90 - day extension in order to keep the Share

Plan alive while continuing to come to an agreement."

Consequently, the City did not provide the addi tional funds of

$1,265,330.00 necessary to distribute the Pension Trust Fund as

determined by the Board.

19 . On September 29, 2011, Mayor Arbutine wrote the

Department seeking its assistance with resolving a problem with

the termination of the Pension T rust Fund. Mayor Arbutine's

letter outlined the City's liability to fund the options

presented by the Board of Trustees. Specifically, Mayor

Arbutine lamented that the Board of Trustees' decision would

harm the City financially, and that he did not accep t that "the

City's only option is to pay for whatever method the B oard

decides is best for the plan members." Consequently, the Mayor

asked the Department to take no action pursuant to

section 175.361 to effect the dissolution of the Pension Fund

for 90 days.

20. The Board did not distribute the Pension Trust Fund on

or before September 30, 2011.

21 . The Department received information from the City and

the Board of Trustees Ó decision concerning the Pension Trust

Fund's dis solution and dis tribution. The Department reviewed

materials and interviewed the parties. Based on its review, the

Department, on February 22, 2012, wrote the City that the

Department "has determined that the method of distribution of

the asset value as determined by the Board of T rustees is

required under section 175.361, Florida Statutes." Further, the

Department states the following:

In conjunction with this letter, the

Department is also corresponding with the

Board of Trustees, copy enclosed,

instructing them to have the plan actuary

prepare an updated financial analysis of the

City's required contribution, with a 30 - day

lock - in period price for the purchase of

annuities. This will allow the City of

Belleair Bluffs to secure the necessary

resources to make the required cash

co ntribution to the plan.

The Department provided the City with notice that the

February 22, 2012 , letter , constituted final agency action, and

set out the City's administrative hearing rights.

22 . On March 14, 2012, the City filed its Petition for

For mal Administrative Hearing with the Department.

CONCLUSIONS OF LAW

23 . DOAH has subject matter and personal jurisdiction over

the parties pursuant to sections 120.569 and 120.57(1), Florida

Statutes (2012).

24 . The City, as the party seeking the affirm ative relief,

carries the burdens of persuasion and proof. See Fla. Dep't of

Transp. v. J.W.C. Co. , 396 So. 2d 778 (Fla. 1st DCA 1981);

Balino v. Dep't of HRS , 348 So. 2d 349 (Fla. 1st DCA 1977). The

City must prove the facts supporting its affirmative r elief by a

preponderance of the evidence.

25 . The Pension Trust Fund's termination is controlled by

section 175.361. 5 / Specifically, section 175.361 requires a

board of trustees for firefighter pension plan to "determine the

date of distribution and th e asset value required to fund all

nonforfeitable benefits after taking into account the expenses

of such distribution." § 175.361(1) , Fla. Stat . A board of

trustees shall then inform the municipality "if additional

assets are required, in which event th e municipality . . . shall

continue to financially support the plan until all

nonforfeitable benefits have been funded." § 175.361(1).

Further, the statute requires that a board of trustees

"determine the method of distribution of the asset value,

whethe r distribution shall be by payment in cash, by the

maintenance of another or substituted trust fund, by the

purchase of insured annuities, or otherwise, for each

firefighter entitled to benefits under the plan as specified in

subsection (3)." S ection 175. 361(5) then directs t hat the

"board of trustees shall distribute, in accordance with

subsection (2), the amounts determined under subsection (3)."

26 . Finally, s ection 175.361 provides , importantly for

facts in this case, that :

If, after 24 months after t he date the plan

terminated or the date the board received

written notice that the contributions

thereunder were being permanently

discontinued, the municipality or special

fire control district or the board of

trustees of the firefightersÓ pension trust

f und affected has not complied with all the

provisions in this section, the Department

of Management Services shall effect the

termination of the fund in accordance with

this section.

27 . The factual issue presented and decided here is what

action the Boa rd of Trustees took on September 9, 2011 .

2 8 . Applying the facts to the law, the undersigned

concludes that the Board of Trustees complied with section

175.361 in dissolving and seeking to distribute the Pension

Trust Fund. First, it was not disputed b y the parties that the

Pension Trust Fund here closed or was terminated on

September 30, 2009. As a result , there was no dispute that

under section 175.361, the Board of Trustees had 24 months from

September 30, 2009 , to determine the method of distribut ion ,

determine the amount of money necessary to fund the

distribution , and to distribute the Pension Trust Fund . The

Board of Trustees' minutes , transcript of the September 9, 2011 ,

meeting , and Mr. Langere's testimony at the hearing show that

the Board v oted to dissolve and distribute the Pension Trust

Fund 's accrued benefits by requiring the purc hase of eight

insured annuities and a lump sum cash payout for four plan

members within that 24 - month window. The Board of Trustees'

action is consistent with t he method of distribution set out in

section 175.361(2) . Further, the actuary's calculation s

contained in the September 16, 2011 , letter , determined " the

a mount required to provide the given retirement income" for the

individual firefighter members, and t he purchase of the

annuities in compliance with section 175.361(3). Moreover, the

actuary's letter specifically informed the City of the amount of

additional funds required to fund the payment of the accrued

benefits in compliance with section 175.361(1). Although the

Board of Trustees did determine the method of distribution and

amount of funds necessary for the distribution, t he Board of

Trustees did not distribute the Pension Trust Fund's assets by

September 30, 2011 . The Board of Trustees did not dis tribute

the Pension Trust Fund assets because the City had not provided

the necessary funds . Consequently, the statutory provision

requiring the Department to "effect the termination of the fund

in accordance with th is section" became applicable to the fa cts.

29. T he record supports the Department's determination

that the Board of Trustees had complied with the requirements in

section 175.361 determining the method of distribution and

necessary amount of funds that the City was required to pay in

order to fund the distribution. Further, the record supports

the Department's reading of section 175.361 that the City is

required to fund the Pension Trust Fund's distribution, in the

manner determined by the Board of Trustees. See Gulf Coast

Elec. Coop. , Inc. v. Johnson , et al . , 727 So. 2d 259 , 262 (Fla.

1999)(holding that agency's interpretation of a statute it is

charged with enforcing is entitled to great deference). Here,

the Department is specifically charged by the section 175.361

with effectuating the d istribution of firefighter pension trust

funds, if the task is not accomplished within 24 months of the

pension plan's termination. Consequently, the Department's

interpretation of section 175.361 is given deference.

30 . The City's argument here is tha t the Board of Trustees

did not make a final decision because the Board of Trustees

offered the City with alternative options concerning the

distribution of the Pension Trust Fund. The City's argument

ignores the Board of Trustees' fiduciary relationship to the

Pension Fund members . 6 / The City is correct that section 175.361

does not require the Board of Trustees to provide the City

options or "request" funding for the purchase of the insured

annuities or lump sum payout. However, the law required the

Bo ard of Trustees as fiduciaries to obtain the best outcome for

the pension plan's members during the termination. §§ 112.656

and 175.071. Chapter 175 sets out the minimum benefits and

standards for firefighter pensions. § 175.021(2), Fla. Stat.

Conseque ntly, section 175.361 , which describes the methods of

distribution for pension plans and how to calculate the pension

members' accrued benefits , sets out the minimum or floor. Here,

the Board of Trustees had a fiduciary duty to pursue the City's

offered " share or service distribution plan" offer because the

City's offer would have provided benefits beyond the minimum

required by section 175.361. Absent the City's agreement to

adopt its "share or service distribution plan" offer, the record

is clear that t he Board of Trustees determined to distribute the

Pension Trust Fund's accrued benefits through the purchase of

insured annuities and a cash payout. 7 / The Board of Trustees'

action allowed it to fulfill its fiduciary duty to its members,

and comply with s ection 175.361.

31 . Next, the City's contention that it could provide the

firefighters with the same benefits through a City - administered

substituted trust fund as through insured annuities at a

fraction of the cost is not a legally relevant considerati on

here. Section 175.361( 2 ) provides that the Board of Trustees

with the sole authority to determine the method of distribution.

The record here shows that the Board of Trustees specifically

selected a combination of insured annuities and a cash payout

f or the plan members in compliance with the statute. Moreover,

the Board of Trustees , in its past considerations , had

specifically rejected the substituted trust administered by the

City. The law does not permit the City to supersede the Board

of Trustees ' decision here; even if a substituted trust would

provide the firefighters with same benefits at less cost to the

City.

RECOMMENDATION

Based on the foregoing Findings of Facts and Conclusions of

Law, it is RECOMMENDED that the Department of Management

S ervices, Division of Retirement , enter a final order finding

that the Board of Trustees complied with section 175.361 ,

Florida Statutes, and that the City be directed to comply with

the Department's determination to effectuate the distribution of

the Pensi on Trust Fund through the purchase of eight insured

annuities and four lump sum cash payouts for the specific plan

members.

The undersigned retains jurisdiction to award reasonable

attorneys' fees and costs pursuant to section 175.061(5),

Florida Statute s, upon the entry of a final order.

DONE AND ENT ERED this 7 th day of Dec ember , 2012 , in

Tallahassee, Leon County, Florida.

S

THOMAS P. CRAPPS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Buil ding

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7 th day of Dec ember , 2012 .

ENDNOTES

1/ References to Florid a Statutes shall be the 2012 version

unless otherwise specified in the Recommended Order.

2/ The City brought its administrative challenge pursuant to

sections 120.569 and 120.57(1)(b), Florida Statutes (2012).

3/ The State money could not be used to fund distributions of

accrued benefits because the money was allocated only for

additional or supplemental benefits. Consequently, if the City

did not approve the "Share Plan or Service Distribution Plan,"

then it had to return the money to the State.

4/ According to the City Commission's meeting minutes, the City

discussed the following four plans: 1) Baseline liability - Plan

Assets, No Substitute Trust, No Service Plan, No Share Pla n -

$237,0631.39; 2) Scenario # 1 - 8 lump sum, 4 annuities, Servic e

Plan and Share Plan - which would require adoption of the share

ordinance - $1,017,217.38; 3) Scenario #2 - 4 lump sum, 8

annuities, with Service Plan and No Share Plan - $1,281,443.82;

and 4) 10 annuities, 2 return contributions, No Service Plan, No

Share Plan - $1,314,059.00. The minutes show that Mayor Arbutine

asked for a motion to approve any of the plans, and that there

was no motion to approve any of the options. Consequently, the

options died for lack of a motion.

5/ Section 175.361, Florida Statu tes (2012), reads as follows:

175.361 Termination of plan and distribution

of fund. For any municipality, special fire

control district, chapter plan, local law

municipality, local law special fire control

district, or local law plan under this

chapter, the plan may be terminated by the

municipality or special fire control

district. Upon termination of the plan by

the municipality or special fire control

district for any reason or because of a

transfer, merger, or consolidation of

governmental units, ser vices, or functions

as provided in chapter 121, or upon written

notice by the municipality or special fire

control district to the board of trustees

that contributions under the plan are being

permanently discontinued, the rights of all

employees to benefi ts accrued to the date of

such termination and the amounts credited to

the employeesÓ accounts are nonforfeitable.

The fund shall be distributed in accordance

with the following procedures:

(1) The board of trustees shall determine

the date of distribut ion and the asset value

required to fund all the nonforfeitable

benefits after taking into account the

expenses of such distribution. The board

shall inform the municipality or special

fire control district if additional assets

are required, in which event the

municipality or special fire control

district shall continue to financially

support the plan until all nonforfeitable

benefits have been funded.

(2) The board of trustees shall determine

the method of distribution of the asset

value, whether distrib ution shall be by

payment in cash, by the maintenance of

another or substituted trust fund, by the

purchase of insured annuities, or otherwise,

for each firefighter entitled to benefits

under the plan as specified in

subsection (3).

(3) The board of tru stees shall distribute

the asset value as of the date of

termination in the manner set forth in this

subsection, on the basis that the amount

required to provide any given retirement

income is the actuarially computed single -

sum value of such retirement in come, except

that if the method of distribution

determined under subsection (2) involves the

purchase of an insured annuity, the amount

required to provide the given retirement

income is the single premium payable for

such annuity. The actuarial single - su m

value may not be less than the employeeÓs

accumulated contributions to the plan, with

interest if provided by the plan, less the

value of any plan benefits previously paid

to the employee.

(4) If there is asset value remaining after

the full distributi on specified in

subsection (3), and after the payment of any

expenses incurred with such distribution,

such excess shall be returned to the

municipality or special fire control

district, less return to the state of the

stateÓs contributions, provided that, if the

excess is less than the total contributions

made by the municipality or special fire

control district and the state to date of

termination of the plan, such excess shall

be divided proportionately to the total

contributions made by the municipality or

special fire control district and the state.

(5) The board of trustees shall distribute,

in accordance with subsection (2), the

amounts determined under subsection (3).

If, after 24 months after the date the plan

terminated or the date the board rec eived

written notice that the contributions

thereunder were being permanently

discontinued, the municipality or special

fire control district or the board of

trustees of the firefightersÓ pension trust

fund affected has not complied with all the

provisions in this section, the Department

of Management Services shall effect the

termination of the fund in accordance with

this section.

6/ The record here clearly shows that the City misapprehended

the Board of Trustees' fiduciary duty under chapter 175 to the

members of the firefighters' pension plan. This conclusion is

supported by Mayor Arbutine's e - mail to Ms. Sullivan dated

April 2, 2011 , expressing his displeasure with the Board of

Trustees' vote against the City's offer of a substituted trust,

the City 's removal of Mr. Fynan from the Board of Trustees after

the "unfavorable" vote, and the Mayor's statements after the

Board of Trustees' vote on September 9, 2011, accusing the Board

of "extortion" and "strong arm tactics."

7/ The City's argument also has the unintended effect of

reducing its involvement in negotiating a circumstance that

could have resulted in a "win - win" outcome for both parties. If

the Board of Trustees accepted the City's offer of a s ervice

d istribution plan , and that the City had acted on the

acceptance, then the City could have provided its firefighters

with greater benefits than required under section 175.361 and

could have saved the City approximately $240,544.00. The

savings is the difference the City would have to contribute for

the funding the Pension Trust Fund's distribution between the

"shared service distribution plan" and the accrued benefit plan,

which was selected by the Board. Mr. Langere credibly explained

that eight firefighters chose to receive lump sum cash paym ents

when their accrued benefits were supplemented with the City's

offered service distribution payments, and four firefighters

chose to receive annuities. Further, Mr. Langere credibly

explained the plan's members decided that if the City would not

provi de the service distribution payments, then eight

firefighters wanted insured annuities and four wanted lump sum

cash payments. The obvious result is that the City would be

required to purchase more insured annuities , which would add to

the expense . Under the City's theory here , the Board of

Trustees and the City should not have negotiated for a more

favorable outcome. Certainly, the law does not prohibit parties

from reaching an agreement that benefits both of them.

COPIES FURNISHED :

Thomas E. Wright, Esquire

Department of Management Services

Division of Retirement

Suite 160

4050 Esplanade Way

Tallahassee, Florida 32399

Jay Daigneault, Esquire

Frazer, Hubbard, Brandt, Trask,

Yacavone, Metz and Daigneault, LLP

595 Main Street

Dunedin, Florida 34698

Paul A. Donnelly, Esquire

Donnelly and Gross, P.A.

Suite A - 1

2421 Northwest 41st Street

Gainesville, Florida 32606

Sarabeth Snuggs, Director

Division of Retirement

Department of Management Services

Post Office Box 9000

Tallahassee, Florida 32315 - 9000

Jason Dimitris, General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.