Sebastian council approves first readings on new general-employee retirement plan, creates trustees board

The Sebastian City Council voted to approve first readings of two linked ordinances to establish a defined-benefit retirement plan and a board of trustees for the city’s general (non‑police) employees, with council members directing staff to use reserves to cover upfront funding if needed and adding changes to payout timing and trustee selection.

Council member Dodd moved approval of ordinance O‑25‑13, which would adopt a Florida League of Cities Florida Municipal Pension Trust Fund (FMPTF) defined‑benefit plan for general employees and set plan start date of Oct. 1, 2025; the motion, as amended, directs that any city contribution to 401(a) accounts for CWA employees with less than five years’ service who choose the 401(a) be deposited on the fifth‑anniversary date when they would vest in the dissolved CWA plan, and authorizes the city manager and chief financial officer to use reserve funds to fund the advance payment and makeup obligations. The motion passed on a roll call vote with Council member Dodd, Council member Nunn, Mayor McPartland and Vice Mayor Jones recorded in favor. The council set the second reading for Sept. 10, 2025.

The council then considered ordinance O‑25‑14 to create a five‑member Board of Trustees to administer the new plan. After discussion and amendments the council approved a revised board structure that will have three council‑appointed resident trustees and two trustees elected by plan participants; terms will be staggered with initial terms split to create continuity. The motion passed on a roll call vote with Council member Nunn, Mayor McPartland, Vice Mayor Jones and Council member Dodd recorded in favor.

Why it matters: The City moved away from continuing its relationship with a CWA‑negotiated pension plan that the city’s consultants and actuary described as underfunded and in “critical and declining status,” and toward a city‑sponsored plan using the FMPTF structure. City staff and the actuary told council the CWA plan withdrawal will carry a federal ERISA withdrawal liability estimated at about $279,000, payable over 20 years, and that choosing a new plan structure and initial funding approach will change the city’s ongoing pension contribution rate.

Details of the proposal and council direction - Plan mechanics: The proposed FMPTF plan would be a defined‑benefit plan for full‑time general employees, with an immediate participation start date and a five‑year vesting period. Normal retirement would be age 60 with five years of credited service or age 55 with 25 years. The plan includes a buyback option (up to five years) for prior public service or military service. - Employee contribution option: Employees may elect contribution levels from 0% to 10%; higher employee contributions raise the retirement “factor” and increase benefit levels. Staff presented examples showing how contribution choices affect future annual benefits. - Funding and costs: City staff presented an estimated employer contribution around 13.63% of payroll (actuary’s latest number), compared with the 9% the city has historically contributed under the CWA arrangement. Budgeted items already included the $279,000 estimated withdrawal liability. Staff said funding the gap between 9% and 13.63% for the coming year and any one‑time buyback payments would be covered from reserves unless the council directs otherwise. - Treatment of CWA unvested employees: The presentation identified 43 CWA plan members with less than five years of service who would lose accrued CWA benefits on automatic withdrawal. Staff presented two approaches: (1) apply a present‑value dollar credit from the CWA benefit into the new plan immediately, or (2) defer the city’s makeup contribution for those who choose a 401(a) until the date they would have vested under the CWA plan. Council directed the latter for those who opt to take the 401(a) option. - Governance: The approved version of O‑25‑14 creates a five‑member trustees board: three resident appointees by city council and two participant‑elected trustees. Terms were staggered initially to avoid a single simultaneous turnover; thereafter terms will be three years. Council and staff agreed elections for participant trustees will be held every two years for administrative purposes.

Public and staff engagement: City staff said they met several times with affected employees and received return forms from a majority (roughly 90%) indicating their preliminary choices; staff planned a subsequent firm election period to finalize employees’ contributions prior to the final actuarial valuation.

What the council decided now and next: The council approved first readings of both ordinances, with amendments described above, and set second readings for Sept. 10, 2025. Staff was authorized, by motion language, to use reserve funds to make the initial year’s contribution up to the actuarially required level and to fund the one‑time buyback if council proceeds as proposed. The city manager and pension counsel said they will advertise trustee openings and implement elections and appointments after second reading.

Ending: Council members and pension advisers said the change is driven by the CWA plan’s underfunded status, not by city mismanagement, and that the proposed structure is intended to preserve retirement benefits while containing future liability and promoting employee retention.