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The Retirement Plan for City of Atlanta employees was initially adopted in
1927. The Pension Act for the employees of the Fulton County Board of
Education first was passed in 1937. Since both plans were originally adopted
they have undergone several changes, the most recent major revision
occurwing in 1962 for both Plans. The Plans have been contributory since
their inception with the policy that the respective Boards match the amounts
contributed by the employees. Historically, each increase in benefits has
generated a corresponding increase in the rate of employee contributions.
Further, in order to receive the higher benefits active employees have had the
option of ''repaying'' contributions they would have paid had the current contri-
bution level existed since the employee was hired,
Since active employees do not have to accept increased benefits (and ''make up'!
back contributions), the present Retirement Plan covers employees at several
different benefit levels with different rates of employee contributions, However,
since the majority of employees who were active in 1962 have opted to take the
increased benefits and all employees hired since 1962 automatically are covered
for those benefits, we will discuss the provisions of the Retirement Plan as
they currently exist.
TOWERS, PERRIN, FORSTER & CROSBY
Comparison of Plans
The provisions of the Retirement Plans of both Fulton County and the
City of Atlanta are almost identical. The following description will point
out where differences exist in Plan provisions.
Date: Employees are eligible to retire on full
unreduced pension after completing 25 years of
service and attaining age 60. Employees
may work to age 65 at their option.
Date: Employees are eligible to retire early ona
reduced pension at any time after completing
25 years of service and attaining age 55.
Pension is reduced 1/12th of 2% for each month
the employee is less than 60.
Benefit: 2% of first $300 of monthly Earnings, plus
1 1/2% of monthly Earnings in excess of $300
times years of ''creditable'' service. Earnings
equal average of highest five years of earnings
TOWERS, PERRIN, FORSTER & CROSBY
In no event will normal benefit plus
Primary Social Security exceed 75% of
Earnings on which benefit is determined.
After 10 years service benefit accrued to
date is payable.
If employee is killed in the line of duty during
first five years of employment, his beneficiary
receives 1/5th of full 25 year service pension;
after five years, pro-rata portion of full service
pension. (Fulton County's Plan apparently
does not contain this provision. )
Certain eligible dependents are entitled to 50%
of the benefit being received by the pensioner.
If the beneficiary is more than five years younger
than the pensioner, such beneficiary's pension
is reduced 1/12th of 2% for each month that she
is more than five years younger than the pensioner.
No reduction if beneficiary is age 60 or over.
TOWERS, PERRIN, PORSTER & CROSBY =
Employe e Contributions:
Make-up of ''Back"!
5% of Earnings; 6% of Earnings if desire
post-retirement death benefits.
Return of all employee contributions.
If a pensioner (or pensioner and beneficiary)
dies prior to receiving at least the total amount
of his contributions, the balance will be payable
to the pensioner's estate.
All active employees during 1962 could elect
the increased benefits by paying ''back'' contri- .
butions. Once determined, such amounts could
be paid in a lump sum or in 60 monthly install-
ments. If not elected within six months from
Effective Date, 4% interest is charged from
Effective Date to the date the employee elects
to be covered under the increased benefits.
In addition, both Boards match the amounts of employee current and ''back''!
contributions. The matching of ''back'' contributions may be amortized
over a 20 year period,
TOWERS, PERRIN, FORSTER & CROSBY - -
An examination of the above provisions demonstrates that both Plans are
identical with one minor exception. We do recommend that a combined
Plan contain the provision to allow for the payment of benefits if an
employee is killed in the line of duty. (The Fulton County Plan apparently
does not have this provision. )
We suggest that no changes of a major nature be considered during the
period the merger is taken under consideration,
Comments on Suggested Plan
This paragraph will discuss that area where both present Plans do not
have complete identical provisions, We suggest that the provision for pay-
ment of benefits in the event an employee is killed in the line of duty be
maintained. The probability of such an event is remote, but does exist
for school bus drivers and teachers who must travel between employment
Method of Financing
The Retirement Plan for the Fulton County School personnel is maintained
and accounted for separately from the retirement plan for other Fulton
County employees. The City of Atlanta maintains one overall Retirement
Plan which covers both Board of Education employees and other City
TOWERS, PERRIN, FORSTER & CROSBY
personnel. (Policemen and Firemen are not included.) No separate
accounting policy is followed solely for employees of the Board of
Education. The financial information and numbers of employees we
‘will be referring to in this subsection were taken from interviews with
Miss Lula Carson of Fulton County and Mr. Gus Langford of the City of
Atlanta. In addition, the most recently available audit reports of both
Funds were used, i.e., December 31, 1967 as certified by H. G. Jackson
& Company for the City of Atlanta and June 30, 1968 as certified by
Respess and Respess for Fulton County. It is important to note at this
point that the City of Atlanta follows a cash accounting system, whereas
Fulton County follows an accrual accounting system.
The following financial information is pertinent to this study.
$$$ TOWERS, PERRIN, FORSTER & CROSBY —
Monthly Employe e
CITY OF ATLANTA
$337, 070 (School)
99, 390 (Non - school)
2001 (No breakdown
available between school
$292, 000 (School)
73, 000 (Non-school)
$12,591, 328 (Cash and
investments at cost)
279 (plus 54 pre-1952
retirees who receive
benefits directly from
$68,592 (plus $7, 306
from County for
$10, 104,979 (Includes
$738,485 due as
An examination of the above information clearly shows that the City of Atlanta
Retirement Plan is substantially larger than that of Fulton County. Further,
the majority of the City of Atlanta Plan's members, contributions and, there-
fore, liabilities and fund assets are attributedto Board of Education personnel
For this reason, we feel that a combined Board of Education Plan should
include the non-school employees of the City of Atlanta.
Failure to do so
may bring serious financial disadvantage to a plan maintained solely for the
City of Atlanta non-school personnel.
- TOWERS, PERRIN, FORSTER & CROSBY
Should the Plans merge, the surviving political entity would inherit the
responsibility of paying all existing pensioners! benefits and making matching
contributions on all future employee contributions. (The obligation for
payment of benefits to the 54 pre-1952 retirees in the present Fulton County
Plan would in all likelihood remain an obligation of the County.) Further, the
contributions from the Teachers' Retirement System of Georgia would continue
to be paid to the combined Fund,
As the nature of this report is preliminary, it was deemed inadvisable at this
time to perform cost projections or determinations of assets and liabilities of
the two present plans. However, should the merger come to fruition, it will
be necessary to perform a detailed audit of both plans and, we suggest, an
actuarial valuation to determine the relative financial strength of both present
plans and the surviving plan. In addition, the exact amount of matching con-
tributions due (both current and ''make-up'') would have to be determined as of
the effective date of the combined plan, and arrangements made with the
existing sponsoring political bodies for future payment to the combined fund.
The current funds are invested in U.S. Government Treasury Notes, Bills and
Bonds and Certificates of Deposit at most local banks and savings and loan
associations. In addition, cash accounts are maintained, In all likelihood this
existing arrangement would not be altered.
TOWERS, PERRIN, FORSTER & CROSBY —
As stated previously, the actual establishment and installation of a combined
plan would prudently be done only after an analysis of the present financial
situation of both Plans and the necessary legislative requirements have been
completed. Once the new sponsoring political body accepts the financial
obligation and liabilities of a combined Plan, ‘the actual ''transfer'' and com-
bination of people and funds can be accomplished with relative ease through
It would be necessary to appoint a new combined Pension Board and to establish
an administrative team charged with the responsibilities of detailed record
keeping, payment of benefits and other administrative requirements.
Further, the combined Plan would require redrafting of the Pension Act and
sponsorship in the Legislature.
Should the merger be accomplished, it is vitally important to communicate
to employees (especially those nearing retirement) the purpose of the combined
arrangement and to assure them that benefits will not be affected.
——_—— TOWERS, PERRIN, PORSTER & CROSBY OO." SS
CONCLUSIONS AND SUMMARY
An analysis of all benefits currently provided by both Systems shows that
they are quite compatible. The medical plans are different from a conceptual
design standpoint, but the benefits provided-are similar. From this we con-
clude that the plans may be merged with relative ease.
The result of combining the plans should reduce the gross overall costs
from those of maintaining two separate systems. Assuming that the employee
contribution rates currently applicable to the City of Atlanta medical plan
(employee pay all except for $1.00 per month toward major medical) are
adopted, the present employees of Fulton County will pay less than they are
currently paying for employee coverage but slightly more for dependents
coverage. However, benefits will be increased.
The responsibility for a decision to continue further rests with the respective
School Systems. An ultimate decision will be contingent on many factors,
one of which should include an actuarial valuation of both present retirement
plans to determine their respective level of funding and financial condition,
TOWERS, PERRIN, FORSTER & CROSBY