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HomeMy WebLinkAbout9B - Firefighters Pension J.rINNESO<t~ MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: STAFF AGENDA REPORT DECEMBER 4, 2000 9B RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF VOLUNTEER FIREFIGHTERS' REQUEST FOR IMPROVED PENSION BENEFITS Attached is a memorandum from the Prior Lake Volunteer Fire Dept. and Relief Association which requests that pension benefits be increased as of January 1, 2001 from $2,900 to $3,100 per year of service and a change to the same amount for disability and death benefits. This agenda item provides information with regard to this request. Current Circumstances: Volunteer firefighters have requested a $200 per year increase in pension benefit amount effective January 1, 2001 from $2,900 to $3,100 per year of service. They are asking the City Council to authorize an amendment to the Association Bylaws which provides that a firefighter who has served in the Prior Lake Fire Department for 20 years or more prior to resignation and has reached the age of 50 years old or more and been a member of the Association for at least 10 years shall receive $3,100 for each year of active service on the department. This means that a volunteer retiring with twenty years of service would receive a lump sum pension of $62,000 rather than the existing $58,000. All fire department members serving between 10 and nineteen years receive service credit at 60% and graduate upwards in 4% increments until becoming fully vested after twenty yea.rs of service. Issues: The current $2,900 per year pension benefit amount has been in effect for the past year. The City's 2000 contribution to support the pension fund is zero and will require no tax levy payable 2001. The firefighters' pension plan is funded by the annual state aid received by the City, derived from 2% of the homeowners insurance premium, which is dedicated by law for pension contribution purposes. Attached for Council information is a copy of a Fire Relief Pension Survey. This data was obtained from the most recent State of Minnesota relief association filings. Prior Lake's pension amount including the proposed increases is generally less than that of other fire departments with similar number of volunteers. Also, for reference purposes the maximum allowable lump sum pension 16200 Eagle Creek Ave. S.E" Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER .~ H:lFlREIPENAGEN,DQC ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: payment per year of service credit under MN Statutes 424A.02 is $5,500. Financial Impact: Based upon actuarial projections and current investment assumptions, certified by the relief association officers as required by Minn. Statute 69.771. subd. 3, the new pension benefit amount of $3,100 per year of service will not require any city contribution presently or in the future. The 2% insurance money will fully fund their pension program. Conclusion: Staff would recommend approval of the proposed pension benefit increase to $3,100 per month as requested and to incorporate this amount into their disability and death benefits as well. The pension amount requested is reasonable when compared to other departments. From the City's perspective it is important that the pension remain competitive in order for the City to continue to recruit and retain qualified volunteer firefighters. 1. A motion and second to approve an amendment to the Prior Lake Volunteer Firefighter Bylaws which provides for a $3,100 per year of service credit for pension, disability and death benefit purposes, effective January 1,2001. 2. Take no action at this time and direct the staff to provide additional information. Adopt a motion and a second to authorize a revision in Article VIII, Sections 1, 2 & 3 of the Prior Lake Fire Relief Association Bylaws increasing the pens' n benefit from $2,900 per year of service to $3,100 per y of ice effective January 1,2001. 1. Prior Lake Volunteer Fire Department memorandums requesting approval of increase in pension and disability and death benefits. 2. Prior Lake Fire Department Relief Association minutes approving change in bylaws. 3. Fire Relief Pension Survey. 4. "Schedule I-II for Lump Sum Pension Plans Reporting Form Year 2000" . Prior Lake Volunteer Fire Department TO: RALPH TESCHNER FROM: JOE ZIESKA RE: FIRE DEPARTMENT RELIEF ASSOCIATION PENSION INCREASE I have enclosed a letter from Bruce Sames formally asking for an increase in pension benefits and a new copy of the Schedule I & II computed at the requested benefit level. On Schedule II section I the net appreciation of investments for 2000 is based on our current position. At this level of return we shall have a surplus of $41 ,541 as stated on Schedule II section 2. This puts our assets at 104% of liabilities. A surplus of this size should protect us from any downturns in the market and keep our assets to liabilities ratio at better than 100% Since we are in a surplus situation once again there would be no need of any city monies at this benefit level. 16200 Eagle Creek Ave. S.E., Prior Lake, MN 55372 / Ph. (612) 447-4230/ Fax (612) 447-4245 -'''..----------''-..----''-,-.'-''"""""''-.-.----'.-''',,'.-- ,,""- h.-".--."'--"""."~.'''--''_r_-''--.,, Prior Lake Volunteer Fire Department TO: PRIOR LAKE CITY COUNCIL FROM: PRIOR LAKE FIRE DEPARTMENT RELIEF ASSOCIA nON SUBJECT: APPROVE INCREASE IN PENSION BENEFITS DATE: NOVEMBER 20, 2000 At this time we ask the City Council to approve an increase in pension benefits As of January 1,2001 from $2900.00 to $3100.00 per year of service. Therefore the pension dollar amount in Article VIII section 1, section 2, and section 3 of our bylaws will be changed from $2900.00 per year of service to $3100.00 p" year of service. At this level a member who retires after 20 years would receive a lump sum of $62,000.00 Thank You &wtt ~. Bruce Sames Fire Chief 16200 Eagle Creek Ave. S.E., Prior Lake, MN 55372/ Ph. (612) 447-4230/ Fax (612) 447-4245 Prior Lake Volunteer Fire Department PRIOR LAKE VOLUNTEER FIRE DEPARTMENT PRIOR LAKE, MINNESOTA 55372 At a regular meeting of the Prior Lake Fire Department Relief Association, on October 12,2000 a motion was made and seconded to increase our benefits as of January 1 st, 2001 from $2900.00 to $3100.00 per year of service. Therefore, Article VIII, Section 2 should read : The association shall pay to each member who shall have served as an active firefighter in the Prior Lake Fire Department for a period of20 years or more prior to h.1slher resignation from said Fire Department, and who has reached the age of 50 years or more and who has been a member of the association for at least 10 years, the sum of $31 00.00 for each year that he/she served as an active member of said Fire Department. President ~ ~~ 1l Doug Nelson 16200 Eagle Creek Ave. S.E., Prior Lake, MN 55372 / Ph. (612) 447-4230/ Fax (612) 447-4245 - -----------,-- ......-,---,.-----,.",-- -." - .._-- -," -""--------------.---------- - --"---~~-----'-"---______r_"'-" FIRE RELIEF PENSION SURVEY City of Prior Lake (December 1,2000) N umber of Yearly Pension 20 Year City Volunteers Credit Amount Lump Sum Lakeville 68 $4200/per yr. of service $84,000 Stillwater 36 $3700/per yr. of service $74,000 Savage 42 $3610/per yr. of service $72,200 Apple Valley 71 $3600/per yr. of service $72,000 Lino Lakes 49 $3600/per yr. of service $72,000 Shakopee 45 $3462/per yr. of service $69,240 Northfield 28 $3400/per yr. of service $68,000 Hastings 39 $3300/per yr. of service $66,000 Prior Lake 44 $2900/per yr. of service $58,000 Rosemount 35 $2700/per yr. of service $54,000 Chanhassen 45 $2700/per yr. of service $54,000 Inver Grove Heights 55 $2500/per yr. of service $50,000 16200 ~\{;~I~;~e. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER Form' SC - 00 SCHEDULES I-II FOR LUMP SUM PENSION PLANS REPORTING FORM YEAR 2000 :TERMINATION OF PLAN LIABILITIES & REQUIRED MUNICIPAL CONTRIBUTION IN 2( Firefighters' Relief Association of PRIOR LAKE County of SCOTT SCHEDULE I Estimation of relief association Special Fund pension liabilities for all members based on years of active service with the :ire department, with the regular per-year-of-service pension at $ 3100 1 _~_...oo. 3 4 5 6 7 8 __.._.__._____.__0__.._._" .......-.---- .._- -____._00_____....-----.- . -.- 2000 2001 F.D. Leave of To End of This Year To End of Next Yes Name Age Entry Date Absence Years Active Accrued Years Active Accroe.: Month HHH Year (in years) Service Liabilitv Service Liabilil:i- 1. JAMES WEBER 58 5j:> 1969 32 99,200 33 F- ;;.: 2. KENNY KLINGBERG 48 6::::;: 1976 25 77,500 26 g' :;.)~ 3, WEEMER WEBER 59 6n> 1976 2 23 71,300 24 ~..!_~:( 4. DALE RADANKE 47 4"> 1978 23 71,300 24 '7~_~:( 5, BRUCE SAMES 41 5 :::U 1982 19 57,164 20 6:-:0: 6. BRENT JOHNSON 46 5jYj 1982 19 57,164 20 6: :0: ...... 7. LARRY SCHOMMER 45 1 ;~W; 1988 13 33.170 14 3~ I.;A 8. DAVE CHROMY 42 1 >n 1988 13 33.170 14 3~ -r;!. .,. 9. CHRIS JOHNSON 42 1 :::::: 1988 1 12 29,822 13 -::~ -,' :.;.:. 10. MARK FRIEDRICH 33 7H? 1989 11 26,598 12 ~.r: 11. JAMES LARSON 32 7,(; 1989 11 26,598 12 3-C 12. LARRY STIER 36 7Y,: 1989 3 8 17,856 9 ~~..!.~ 13. DOUG HARTMAN 42 7UH 1990 10 23,560 11 :"'<:':$ 14, VICTOR ORESKOVICH 42 7}U 1990 10 23,560 11 :"::;;;~ 15. JOE BUSS 40 8Hn 1991 9 20,646 10 "'-: :..;.: 16. BRAD PATCHIN 40 8n( 1991 9 20,646 10 ....-:, :ry: 17. RICK STEINHA YS 28 10 ...... 1992 8 17,856 9 ~:~j..k 18. DAVE JENSEN 40 5:(: 1993 1 7 15,252 8 r 1<"15 19. STACY PETERSON 35 5(n 1993 8 17,856 9 .,.. :;!..-': 20. KURT CHELGREN 35 5,:< 1993 8 17,856 9 ~:_~ 21. JAMES KLINE 46 3Yjj 1994 7 15,252 8 ri:<5 22. JOE ZIESKA 42 5UH 1995 6 12,710 7 15-:: ... 23. TONY HENNEN 33 5 ,., 1995 6 12,710 -7 15-';- ,. 24. DOUG NELSON 39 5jiH 1995 6 12,710 7 15-..... 25, B~ DAVIS 28 9::U 1996 4 8,060 5 1 C:.::.! ::$~~t~~l:~.i;I~l~t:~~~j~:ti.~UtY.::: ::::::::::::: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: . . . . . . ..... . . . . . .. ......... 819,516 ...... ....... ~~ ~ ~ ~ ~ ~ ~; ~ ~ ~ ~ ~ ~ ~ ~ ~ ~; ~; ~;;;; 1 * Fractional Years of service must be calculated to nearest full year. * Do not enter liability in Columns 6 or 8 for any person who will receive entire pension during this year. Enter this pension amount on Schedule II, Section 1, Line g. * For installment liability, enter amount which will be payable after end of this year in both column 6 and column 8. * If interest is to be paid on unpaid pensions, add interest for 1 year in column 8. * A copy of these schedules must be presented to the City Council before August 1 each year. Page 1 -I- SCHEDULE I - ADDITIONAL ACTIVE MEMBERS 1 2 3 4 5 6 7 S ........-................,......-.................-......,..........'............... .................. .,..-............-................................ ..--.......-... ,........................................,..........2~O(r.."............. ................-........................ ::!OO 1 F.D. Leave of To End of This Year To End of Next Year Entrv Date Absence Years Active Accrued Years Active ~ Month H~ Year (in vears) Service Liabilitv Service LiaCilm- 9::: 1996 4 8,060 5 F'~~ 9 ,. 1996 4 8,060 5 lQ.:s! 9 1996 4 8,060 5 It: ~~ 4 1997 4 8,060 5 F';~ 4., 1997 4 8,060 5 E;:~ 4 ' , , 1997 4 8,060 5 l':~~ 4", 1997 4 8,060 5 l"i;~ 4 1997 4 8,060 5 E';~ 4 1997 4 8,060 5 )'l.:5-! 5 , ' , 1998 3 5,890 4 i.):'" 5 .., 1998 3 5,890 4 !.:i.. 5 '.... 1998 3 5,890 4 ~.;.: 5 1998 3 5,890 4 !.:i.. 10 1998 2 3,844 3 5s;.: 10 .. 1998 2 3,844 3 5F 10 1999 1 1,860 2 3~ 10 ' . . 1999 1 1,860 2 3~ 10.... 1999 1 1,860 2 3.J..!.' o 0 . Name Age 26, BRANDEN JOHNSON. .. 27. MICHAEL KLIMERS 28. JON NIEMANN 29. TERRY BARTA 30. SCOTI' BURFEIND 31. RICKKATHAN 32. CHRIS KORKOWSKI 33. JOHN RIEGERT 34. JIM RUZICKA 35. DALECHARD 36. JEANNE HANISH 37. KEVIN KLEIST 38. BRIAN ZIPOY 39. JEFF MORRIS 40. JIM MUELKEN 41. JASON MELBY 42, RANDY PREKKER 43. MALISSA RADANKE 44, 45. 28 39 34 29 39 43 35 39 37 31 28 31 44 32 35 26 29 27 0 0 0 0 0 : : 0 0 0 : : : 0 : : 0 0 : : 0 0 0 ..... 0 0 0 o o 46. 47. 48. 49, 50. 51. 52, 53, 54. 55. 56. 57. 58. 59. 60. 61. ,,' 0 n ". 0 n 0 M ,.. 0 65. .:.:. 0 ::$.~~a~f:~~ij,~i~f"~~~~~)4~ij@.iHHHHCCCCC\\\~\mHmm:mmm~~m~:~~~m~C~\\\~~CC~mc o 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 . o 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 o 0 109,368 :m!Hmmmmm~:c - " - J : r : , l 1~~ Page 2a SCHEDULE I - ADDITIONAL MEMBERS & TOTAL LIABILITIES I 2 3 3a 4 4a 4b 4c 6 8 ~----_. - -..- ---..- .__.._0___._____.. ....--..- Benefit Deferred Deferred Name Leave Level at Non- Pension to pension to Entry Separation of Total time of Forfeitable the end of the end of Age Date Date Absence Years separation % this year next year Deferred Pensions \. ALLEN BORCHART 47 6/1n6 6/1/97 21 2200 100% 53,483 56.157 2. 3. 4. 5. 6. 7. 8. 9. 10, :: ~~~~~:~(~~~~:~:t~:~~~~~~:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 53,483 56,157 Unpaid Installments 1. 2. 3. .: ~~~~i~~ ~f::~~~~!~ :,~~~~~~~~i~:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::: 0 0 Earlv Vested Pensions 1. DAVE EREWIN 46 311m 3/1190 11 1650 64% 18.921 19.867 2. CURT SCHMIDT 48 5/1/82 6/1/93 11 1750 64% 17,336 18,203 3. JOHN CLEMENS 38 5/1/82 3/1/94 II 1800 64% 16,982 17.831 4. JOE MUELKEN 40 12/1ns 111/96 17 2000 88% 36,368 38,186 5. JIM O'KEEFE 46 311m 3/1/96 17 2000 88% 36,368 38,186 6. JERRY MOHONEY 48 511/82 6/1/97 IS 2200 80% 30,561 32,089 7, 8, 9. 10. :~~~~~~:~~~:Y~~~f~~~~~::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 156,536 164,362 Use the columns provided to show calculations. Example,4a x 4b x 4c = deferred pension amount. 2000 2001 Total of Regular Pension Liabilities From pages 1 and 2a 928,884 1,045,382 Total of Deferred, Unpaid, and Early Vested Pensions If Any, from page 2b (above) 210,019 220,519 A. Accrued Liability Through Next . \ 1\ j I j \ i 111.111'\\'1'1\ j 1'.1 ~ ~ . Year 2001 (total, column 8) > 1,265,901 B. Accrued Liability Through This I~I i !11.111~11:.III~II!~11~':I~i Year 2000 (total, column 6) > 1,138,903 C. Subtract Line B from j [: II j I: I : I : I ~ I : i 1III j j 1111 j I ~ I : Line A (normal cost) 126,998 Page 2b ..-.....,....-...-..-,.--,--.."'., ........__..."_.__.~..,,.._....,.........._._.._""-_._-_..,.,... Schedule II Section 1 Determination of Projected Net Assets for the year ending December 31, 1000 Special Fund Assets at December 31,1999 1 $ 1,077,073 (See Endina Assets in Reporting Form - 1999) Projected Income to December 31, 2000 a. Minnesota State Aid $ 70,810 (Use 1999 amount, exclude supplemental) b. Municipal (independent fire) Contributions $ 0 c. Donations (List $ 0 d. Interest and Dividends $ 15,600 e. Net appreciation (depreciation) in fair value of investments $ 48,000 f. Other income (Includes Supplemental) $ 1,000 (List - ) Total 2$ 135,410 Projected Assets plus Income December 31, 2000 (line 1 + line 2) 3$ 1,212,483 Projected Disbursements through end of year g. Pensions (If listed here, don't include on Schedule I) $ 31,856 h. Other benefits $ 0 i. Administrative $ 183 Total 4$ 32,039 Projected Assets at end of year (line 3 minus line 4) 5$ 1,180,444 Section 2 Determination of Projected Surplus (Deficit) as of December 31,1000 Projected Assets (line 5) 2000 Accrued Liability (Schedule I, Page 2b, Line B) Surplus or (Deficit) (Subtract line 7 from line 6) 6$ 7$ 1,180,444 1,138,903 8$ 41,541 * Go to Section 3 if Surplus * Go to Section 4 if Deficit Section 3 Determination of Municipal Contribution (if Surplus) Normal Cost (Schedule I, Page 2b, Line C) 9$ 126,998 177 x 1.035) 10 $ 183 Calculated Administrative Expense (1999 Reporting Form Adm. Exp. $ Less: j. Minnesota State Aid k. 5% of line 5 I. 10% of line 8 Total Subtractions $ $ $ 70,810 59,022 4,154 11 $ 133,986 Municipal Contribution (line 9, plus 10 minus 11) If $1.00 or greater, certify to municipality before August 1, 2000, If negative number, no contribution is due. :lml:m:m9~Iq:~~~~9~!~~~F~!mmWimmW: 12 $ (6,805) Section 4 Determination of Municipal Contribution (if Deficit) Amortization of Deficits, Year Incurred Column 1 Column 2 Column 3 Amt Retired 12/3 I Left to Retire III Original Amount 2000 2001 ~ ~~ ~~ ~~~~~~~ ~ ~~ ~~ ~~~~~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~~ ~ ~ ~ ~~~ ~ ~ ~ ~ ~~~~~~~~~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~ ~~~~~~~~~~ ~~~~ ~~~ ~ ~ ~~~~~ ~ ~ ~ ~~~~~ ............. ..... :::::::!::!~mc:ij~~~~ ........... ....... .................................... .................................... :::::::::::::::::::::::::::::::::::: ............ :.;.:.:.:.:.:.:.:.;.:.:.:.:.:.:.:.: New add'l Deficit 2000 ~ l n ~j ~ ~ ~ ~ ~ ~ ~ j ~~ ~ 1 ~ 1 ~ 1 ~ j ~; ~ ~ 11~ n j~ Totals m. 0 (section 2, line 8) n. 0 (Column 3 Subtotal) o. 0 (m. minus n.) Step # 1 If line 0 is positive, enter line 0 in columns 1 and 3 of New additional Deficit (2000) line. ([his is your New additional Deficit for 2000.) Step # 2 If line 0 is negative, reduce columns 2 and 3 according to Deficit Reduction in the instructions. Amortization of Deficit (Total from Column I x.lO) Total from Schedule I, Page 2b, Line C - Normal Cost Calculated Administrative Expense (1999 Reporting Form Adm. Exp. x 1.035) 13 $ 14 $ 15 $ o o o Subtotal Lines 13+14+15 16 $ o Less: p. Minnesota State Aid q. 5% of line 5 $ $ o o Total Subtractions (subtotal of Lines p and q) Municipal Contribution (line 16 minus line 17) (If 0 or negative. there is no municipal contribution) 17$ 18$ o o You must certify to mnnicipality before AU2ust 1. 2000. even if no contribution is due. Section 5 - Test for Maximum Benefit Allowed Calculat F. ion of Average special fund income per member A+B+C * Received or Receivable 0 A B C 0 E State Municipal 10010 of Active Aid- Support Surplus Members Average last year 1999 65,746 sc-w 10,893 41 1,869.24 2 years ago 1998 61,847 244 SC-98 6,689 41 1,677.56 3 years ago 1997 55,000 SC-97 5,100 41 1,465.85 Total column E divided by 3 S I 1,671 I Maximum Pension Benefit Under Statute S I 3.000 I G. ^ To obtain G, look up the result of F on page 11 of the instructions, Table III, "Maximum Benefit Under Law" ^ This is your maximum benefit this year. You may not increase benefits beyond this amount. Page 4 , ,. -, ~-- '--r----- OFFICER'S CERTIFICATION (Form must be provided to municipal clerk on or before August 1, 2000) We, the officers of the PRIOR LAKE Firefighters' Relief Association, state that the accompanying schedules have been prepared in accordance with the provisions of Minn. Stat. ~ 69.772, subd. 4. Further, benefit levels have been established in accordance with the average amount of available financing, as required by Minnesota law. We certify that based on the financial requirements of the Relief Association's Special Fund for the calendar year 2001 , the required municipal contribution is $0 . In the event that the bylaws of the. Relief Association have changed in the most recent year, we have attached a copy of the amendment. Ifmunicipal approval of said amendment is required under Minn. Stat. ~ 69.772, subd. 6, We have also enclosed a copy of the municipal ratification. //,Ib-oo Date 1[/ zalOCJ -- Signature of Secretary SiP=!ik1.~~ Date /1- z.. c) - (.J v Date CLERK'S CERTIFICATION ( For Municipal Fire Departments Only) I am the clerk of ~ t ~ 0 ~ '? ~,.y l...k, f.\",.. I received on JJ~,L.~1.L_~"Q'<date), the completed Office of the State Auditor Schedules I & II from the PRIOR LAKE Firefighters' Relief Association. I have reviewed Section 2,line 8, Section 3,line 12, and Section 4, line 18 of Schedule II. Ifline 12 or line 18 reflect a required municipal contribution, I ce that I will advise the governing municipal body at its next regularly scheduled meeting. ~ Date WARNING: This document must be fully completed, certified by the relief association officers, forwarded to the municipal clerk, andfiledwith the Office of the State Auditor as required by Minn. Stat. 969.771, subd. 3. Failure tofile this document, whether or not a municipal contribution is due, will result in ineligibility for state fire aid, as required by Minnesota state law. Office of the State Auditor Pension Oversight 525 Park Street Suite 400 St. Paul, MN 55103 Fax number: (651)282-2391