HomeMy WebLinkAbout9A Amend PLFRA Bylaws Report
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: NOVEMBER 20, 2017
AGENDA #: 9A
PREPARED BY: FRANK BOYLES, CITY MANAGER
PRESENTED BY: FRANK BOYLES
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING A LUMP
SUM PENSION INCREASE FOR THE PRIOR LAKE PAID ON-CALL
FIRE DEPARTMENT RELIEF AND PENSION ASSOCIATION
DISCUSSION: Introduction
The purpose of this agenda item is to consider a request by the Prior Lake
Paid On-Call Fire Department and Relief Association to increase the
pension benefits as of January 1, 2018 from $7,200/year of service to
$8000/year of service.
History
Prior Lake (and Spring Lake and Credit River Townships) are served by a
paid on-call fire department of 45 paid per call firefighters and a full-time
Fire Chief. Firefighter compensation is provided through a payment of
$12.20/hour for fire call responses and training and a lump sum pension
benefit paid at retirement. Fire officers also receive an additional annual
stipend in recognition of additional duties.
Unlike other City employees whose pension is through Public Employees
Retirement Association (PERA), paid per call paid on-call firefighters
receive their pension through an established Fire Relief and Pension
Association. The Prior Lake Fire Relief and Pension Association is
overseen by a Pension Board comprised of six members appointed from
the Fire Department membership, the Prior Lake Fire Chief, the Prior Lake
Mayor and the City Manager.
The Board is responsible for investment of pension funds, annual audit,
preparing an annual status report to the membership and recommending
any adjustments to the investment policy, bylaws or pension terms. To
maximize assets, the Board and membership have retained an investment
firm to manage their funds in accordance with state statute.
The City Council must approve any compensation adjustments which
means an amendment to the bylaws of the organization.
State statute also imposes limitations on the maximum allowable pension
of $10,000 per year of service.
Current Circumstances
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To qualify for a pension benefit, a firefighter must have served the Prior
Lake Fire Department for 10 years or more meeting certain participation
requirements, reached the age of 50 years and been a member of the
Relief Association for at least 10 years.
With 10 years of service credit, a member is 60% vested. The vesting
schedule increases incrementally until a member is fully vested at 20 years
of service.
Current 2017 Rate
Years of Service % Vested Lump Sum Pension
10 60 $43,200
20 100 $144,000
Proposed 2018 Rate
Years of Service % Vested Lump Sum Pension
10 60 $48,000
20 100 $160,000
The fire department pension benefit is funded through a combination of
resources:
• Investment earnings of the Relief Association Pension Fund
• State Aid (received by the City and passed-through to the Relief
Association)
• Annual City Pension contribution ($20,000/year since 2003)
• City deficit contribution (when required)
Pension increases are not proposed by the membership or recommended
by the Pension Board unless the pension Fund and its investment
performance are expected to support the increase. The same is true for the
increase proposed by this agenda item.
Conclusion
The Fire Department membership has voted in support of an annual
pension increase from $7200 to $8000/year of service. Likewise, the
Pension Board also voted to recommend the increase to the City Council.
ISSUES: As part of its consideration of the proposed pension increase, the Pension
Board prepared an overview of firefighter compensation structure, funding
sources and comparison data/metrics (if data was available). Staff met with
a fire department subcommittee to discuss and update the report. This
report is attached for Councilor information and provides an overview of the
department structure, estimated time commitment by firefighters,
compensation history, funding history, cost per household and some
comparison data.
Also included for council information are the bylaws including the proposed
amendment as well as a two page analysis of the fund performance under
the current and proposed pension levels. We have redacted the private
data from those reports.
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Many firefighters will tell you that they join the fire service because of the
camaraderie and their desire to give back to the community. This is true,
but as we all lead busier lives, it becomes more and more difficult for
people to make the time commitments required of firefighters for training,
business meetings, fire calls and community events, in addition to their
work and family responsibilities. It is critical that the City remain competitive
with our neighbors in wages and pension so that we can address recruiting
needs and are appropriately rewarding dedicated service. Like all
employers, the City will continue to face recruitment and retention issues
within the Fire Department because of retirements, but the fire Department
has the added challenge of the time commitment demands.
FINANCIAL
IMPACT:
For the first time in its history, the City was required to make deficit
contributions in the cumulative amount of $227,372 to the Pension Fund
over a four-year period (2010-2013). These deficit contributions were
triggered by the investment losses in the Pension Fund during the
economic downturn. State statute requires that the City step in to assure
the pension liability is appropriately funded.
The Pension Fund has now recovered to exceed its projected liability. At
the present pension level, $7200/year of service the fund is at 116% of the
calculated liability. At the proposed new pension level of $8000/year of
service the fund is at 107% ($307,095 surplus). No contribution in addition
to the $20,000 is necessary from the City in 2017, and the Pension Fund
can support the proposed increase.
The City’s annual contribution to support the firefighter lump sum benefit is
among the lowest of the communities we compare with and has been so
since 2003. The biggest contributor (in addition to the funds which have
been amassed over the years by wise investing) come from the 2%
homeowners insurance premiums we receive in the form of fire state aid
each year.
The services provided by the Fire Department continue to be one of the
City’s best values for the property taxpayer dollar in my opinion.
ALTERNATIVES: 1. Motion and second to adopt a Resolution Authorizing a bylaw revision
providing for a Pension Increase to $8000/year of service credit for the
Prior Lake Fire Department Firefighters Relief and Pension Association
effective 1/01/2018.
2. Motion and second to deny the pension increase.
3. Take no action and provide staff with additional direction.
RECOMMENDED
MOTION:
Alternative 1.
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 17-___
A RESOLUTION AUTHORIZING REVISIONS TO THE BYLAWS AND A PENSION
INCREASE FOR THE PRIOR LAKE FIRE DEPARTMENT FIREFIGHTERS RELIEF AND
PENSION ASSOCIATION
Motion By: Second By:
WHEREAS,
WHEREAS,
The bylaws of the Prior Lake Paid On-Call Firefighters Relief and Pension
Association provides for a defined contribution benefit; and,
The city attorney has reviewed the bylaws and made certain revisions to assure
compliance with Minnesota Statutes; and,
WHEREAS, The present annual benefit in effect is $7,200 in 2017 for paid on-call firefighters
that are eligible under the vesting schedule; and,
WHEREAS, The Relief and Pension Association Pension Fund is over 100% funded and the
investment earnings of the fund can support a benefit increase to $8000 per year of
service now and in the future without the need for additional city contribution; and,
WHEREAS, It is in the best interest of the City of Prior Lake to provide a pension level that is
comparable with other paid on-call fire departments in order for the City to continue
to recruit, retain and reward paid on-call fire service.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The Prior Lake Paid On-Call Firefighter Relief Association Bylaws dated November 14, 2017
are hereby approved.
3. A $8000 per year of service credit for pension, disability and death benefit purposes within
the Bylaws of the Prior Lake Fire Department Firefighter Relief and Pension Association is
hereby approved effective 1/1/2018.
PASSED AND ADOPTED THIS 20TH DAY OF NOVEMBER 2017
VOTE Briggs McGuire Braid Burkart Thompson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager
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BYLAWS OF THE PRIOR LAKE FIRE RELIEF
ASSOCIATION
ARTICLE I
MEMBERSHIP
SECTION I : Any paid on call member of the Prior Lake Fire Department (“Fire Department”) shall be eligible to
apply for membership in the Prior Lake Fire Relief Association (“Association”).
SECTION 2 : Written application accompanied by an application fee of $5.00 may be made at any regular or special
meeting of the Board of Trustees (“Board”). The Board shall conduct an investigation of the applicant to determine if
the applicant, due to some medically determined physical or mental impairment or condition, would constitute for the
Association a predictable and unwarranted risk of liability for benefits or if the applicant is otherwise ineligible
pursuant to Federal or State laws, rules or regulations. If no such impairment, condition or ineligibility exists, the
Board shall appoint the applicant to membership in the Association. If the applicant is not approved, the application
fee shall be returned to the applicant.
SECTION 3 : Any member who ceases to be a paid on call member of the Fire Department shall cease to be a member
of the Association. However a member who has served for at least the minimum number of years required by
ARTICLE VIII of these bylaws for vesting pension rights as an active member of the Fire Department shall retain
membership in this Association, regardless of resignation, expulsion, or removal from the Fire Departme nt, subject to
payment of dues and such other regulations which may be imposed from time to time.
SECTION 4 : Any member who shall, in the opinion of a majority of the Board : (i) fraudulently claim benefits from,
or defraud or attempt to defraud the Association in any way; (ii) fail to comply with these bylaws or the rules and
regulations of the Association; or (iii) otherwise act in any manner that constitutes good cause for removal, shall be
suspended from membership by the Board, and shall forfeit all further rights to benefits from this Association.
SECTION 5 : Any suspended member can only be reinstated upon his/her application therefore in writing, presented
at a regular or special meeting of the Association, plus a reinstatement fee of $10.00, upon the favorable vote of 2/3
members present and voting at such meeting. If the application for reinstatement is rejected, the money accompanying
the same shall be returned to the applicant.
SECTION 6 : Each member shall be entitled to one vote on any matter voted upon by the Association. Voting by
proxy is not permitted. All votes, unless specified prior to the vote, shall be conducted by voice vote. If a majority
cannot be determined by voice vote, the President shall ask for a show of hands.
ARTICLE II
BOARD OF TRUSTEES
SECTION 1 : The Board shall be composed of the following
President
Vice President
Secretary
Treasurer
Two (2) General Trustees
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each of whom shall be elected and qualified, at the Annual Meeting of the Association from its members. The Board
shall also include three statutory ex officio trustees: the Chief of the Fire Department, the Mayor of Prior Lake, and
the City Manager of Prior Lake.
SECTION 2 : At the first election following the adoption of these bylaws, the two (2) general trustees shall be elected
for terms of one (1) year; the President and Treasurer shall be elected for terms of two (2) years; and the Vice President
and Secretary shall be elected for terms of three (3) years. Thereafter, as their respective terms of office expire, two
2) officers or general trustees shall be elected for three (3) year terms at each Annual Meeting. If a vacancy occurs
during the term of office of any officer or general trustee, the members of the Association shall elect a member to
serve for the unexpired term of the vacated position.
SECTION 3 : A general trustee or officer may be removed for cause. Causes for removal shall include, but shall not
be limited to, the breach of duties as set forth in ARTICLE II and III of these bylaws. One or more of the trustees or
officers may be removed by a 2/3 vote of those present and voting at a meeting of the membership which is called for
that purpose. Notice of the meeting at which removal is to be considered shall be given to each member and shall
include the purpose of the meeting. The general trustee or officer shall be furnished with a statement of the particular
charges at least five (5) days before the meeting is to be held. At the meeting, the general trustee or officer shall be
given an opportunity to be fully heard on each charge. If a general trustee or officer is removed, his/her replacement
shall be elected at the same meeting, and such replacement shall serve out the unexpired term of the removed general
trustee or officer.
SECTION 4 : It shall be the duty of the Board to prepare modes and plans for the safe and profitable investment of
the funds of the Association, and whenever loans or investments are made, to investigate and pass upon the securities
offered and to attend to the drawing and execution of the necessary papers. The Board shall order an audit of the books
and accounts of the Secretary and Treasurer annually, according to law, and shall submit a written report of the
condition of the Association to the members at the Annual Meeting.
SECTION 5 : The investment of the funds of the Association shall be in the exclusive control of the Board, in
conformance with State Statutes.
SECTION 6 : The members of the Board shall act as trustees with a fiduciary obligation to the members of the
Association, to the City of Prior Lake, and to the State of Minnesota.
ARTICLE III
DUTIES OF OFFICERS
SECTION 1 : It shall be the duty of the President to attend and to preside at all meetings of the Association and of the
Board. He/she shall enforce the due observance of the Articles of Incorporation and the bylaws, and see that the
officers properly perform the duties assigned to them. The President shall be a member of all committees and shall
exercise careful supervision over the affairs of the Association. He/she shall receive such salary as may be fixed from
time to time by the Board, subject to approval of the Association, and payable from the Special Fund of the
Association.
SECTION 2 : It shall be the duty of the Vice President to perform the duties of the President in his/her absence. In
the event of the absences of both the President and the Vice President, it shall be the duty of the Association to elect
a President pro tem, who shall perform the duties incident to the office. The Vice President shall receive such salary
as may be fixed by the Board from time to time, subject to approval of the Association, and payable from the Special
Fund of the Association.
SECTION 3 : It shall be the duty of the Secretary to keep a true and accurate record of the proceedings of all meetings
of the Association and the Board. He/she shall keep correct record of all amendments, alterations, and additions to the
Articles of Incorporation or the bylaws in a separate book from the minute books of the Association. He/she shall sign
all checks issued by the Treasurer and all other papers which require his/her signature. The Secretary shall cause due
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notice of all special meetings of the Association and of the Board to be given. He/she shall receive all moneys due the
Association and pay the same over to the Treasurer, and in failing to do so, he/she may be impeached and expelled
from the association. The Secretary shall keep a roll of membership, with the date of joining, resignation, discharge,
leaves of absence, suspension, dues and assessments paid, and relief or pensions furnished. His/her books shall at all
times be open to inspection by the Board. Prior to entering upon the duties of this office, he/she shall be given a bond
in such amount and with such sureties as may be required and approved by the Board, conditioned upon the faithful
discharge of his/her trusts and full performance of the duties of this office. Such bond will be paid for from the Special
Fund of the Association. He/she shall sign all orders for payments issued to the Treasurer, and jointly with the
Treasurer, prepare and file all reports and statements required by law. He/she shall receive such salary as may be fixed
from time to time by the Board, subject to approval of the Association, and payable from the Special Fund of the
Association.
SECTION 4 : It shall be the duty of the Treasurer to receive from the Secretary all funds belonging to the Association
and hold them subject to the order of the President countersigned by the Secretary. He/she shall keep separate and
distinct accounts of the Special and General funds, and shall prepare and present to the Board a full and detailed
statement of the assets and liabilities of each fund at each meeting of the Board, and prior to the Annual Meeting of
the Association. Failing in his/her obligations, he/she may be impeached and expelled from the Association. He/she
shall deliver to his/her successor in office or to any committee appointed by the Board to receive the same, all moneys,
books, papers, and other items pertaining to the office immediately upon the expiration of his/her term of office. Prior
to entering upon the duties of this office, he/she shall give a bond in such an amount and with such sureties as may be
required and approved by the Board, conditioned upon the faithful discharge of his/her office, to be paid for from the
Special Fund of the Association. Jointly with the Secretary, the Treasurer shall prepare and file all reports and
statements required by law. He/she shall receive such salary as may be fixed by the Board from time to time, subject
to approval of the Association, and payable from the Special Fund of the Association.
ARTICLE IV
MEETINGS
SECTION 1 : The Annual Meeting of the Association, for the election of officers and trustees and for other business,
shall be held on the last Thursday of January of each year. If such a day falls on a holiday, the Annual Meeting shall
be held on the following Thursday.
SECTION 2 : The Board shall meet at least quarterly during each year.
SECTION 3 : Special meetings of the Association, or of the Board may be called by the President, or by two (2)
members of the Board, and shall also be called upon written request of six (6) or more members of the Association.
Members of the Association shall be notified by the Secretary of such special meetings, and the object of the meeting
shall be contained in such notice.
SECTION 4 : A majority of the Board then in office, and 40 % of the members of the Association shall constitute
quorums for the transaction of business at their respective meetings. Less than a quorum may adjourn a meeting to a
future time, which the Secretary shall make known to the affected members.
SECTION 5 : All reports and resolutions shall be submitted in writing and no report shall be accepted unless it is the
report of a majority of a committee, provided, however, that a minority shall be permitted to present its view in writing.
SECTION 6 : All meetings shall be conducted according to Robert's Rules of Order, as revised from time to time.
SECTION 7 : The order of business shall be :
1. Call to order
2. Roll call
3. Reading of minutes of previous meeting
4. Reading of reports and minutes of Board meetings
5. Reports of officers
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6. Propositions for membership
7. Reports of special committees
8. Unfinished business
9. Election of officers or trustees (annual meeting)
10. New business
11. Adjournment
ARTICLE V
FUNDS
SECTION 1: The funds received by the Association from dues, fines, application fees, entertainment, and other
miscellaneous sources shall be recorded in the books of the Secretary and the Treasurer and placed in the General
Fund of the Association. These funds may be disbursed for any purpose reasonably related to the welfare of the
Association or its members, as authorized by a majority of the members present and voting at any meeting.
SECTION 2 : All funds received by the Association: (i) from any tax sources; (ii) as state aid; (iii) from the City; (iv)
all funds or property donated or granted to the Association for the benefit of the Special Fund; and (v) any interest or
investment return upon the assets of the Special Fund shall be kept in the Special Fund and recorded in the books of
the Association by the Secretary and the Treasurer. Monies in the Special Fund shall not be disbursed for any purpose
except those specifically authorized by Minn. Stat. § 424A.05 , subd.2.
SECTION 3 : No disbursements of funds of the Association shall be made except by checks drawn by the Treasurer
and countersigned by the Secretary. Except when issued for salaries, pensions, and other fixed charges, the exact
amount of which has previously been determined and authorized by the Board (or members, in the case of
disbursements from the General Fund), no check shall be issued until the claim to which it relates has been approved
by the Board.
SECTION 4 : All money belonging to the Association shall be deposited to the credit of this Association in such
banks, trust companies, savings and loan associations, or other depositories as the Board may designate.
SECTION 5 : The Board shall comply with Minnesota Statutes 356A.06, Subd. 8b that requires the Association to
provide annually to any brokers, a written statement of investment restrictions pursuant to State Statute or the
Investment Policy that apply to the Special Fund. Upon receipt of the written statement of investment restrictions,
each broker handling investments of the Association shall acknowledge, in writing annually, the receipt of the
investment restrictions. The acknowledgment shall contain a statement of the brokers' agreement to handle the
Association's investments pursuant to the written restrictions.
ARTICLE VI
APPLICATION FOR BENEFITS
SECTION 1 : All applications for relief or pension benefits shall be made on forms furnished by the Secretary.
SECTION 2 : All applications for disability benefits shall be submitted to the Board at a regular or special meeting of
the Board. The application shall be accompanied by a certificate from the attending physician or surgeon setting forth
the nature of the illness or injury, the cause and duration thereof, the length of time the applicant has been unable to
perform any of the duties connected with his/her regular occupation and those of a firefighter, and an estimate of the
time at which the applicant will be able to return to his/her regular occupation and to perform the duties of a firefighter.
SECTION 3 : All applications for pensions shall be submitted to the Board at a regular or special meeting of the
Board. Applications shall be verified by an oath of the applicant and shall state the age of the applicant, the period (or
periods) of service in and the date of retirement from active duty in the Fire Department, the length of time he/she has
been a member of the Association, and such other information as the Board may require.
SECTION 4 : All applications for death benefits shall be submitted to the Board at a regular or special meeting of the
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Board. Applications shall be verified by an oath of the applicant and shall state the date and cause of death, a certified
marriage certificate for a surviving spouse and a certified birth certificate for a surviving child, and such other
information as the Board may require.
SECTION 5 : No benefits or pensions shall be paid until the application therefore has been approved by a majority
vote of the entire Board. Decisions of the Board shall be final as to the payment of such benefit or pensions. No other
benefits shall be paid to or on behalf of any member who has received a service pension.
SECTION 6 : For purposes of computing benefits or pensions under ARTICLES VII and VIII, a "year of service"
shall be defined as the number of full months of active duty in the Fire Department, beginning on the date when the
member became a paid on-call member of the Fire Department, divided by twelve, rounded to the nearest tenth.
Section 7 : RETURN TO SERVICE. Any member who has ceased to perform or supervise fire suppression and fire
prevention duties for at least 60 days, including former members who have received payment of a service pension or
disability benefit, will be eligible to resume active membership in the Association should the firefighter resume active
firefighting duties with the Fire Department.
If the member has previously received payment of a service pension or disability benefit, the member may be eligible
for a second pension or benefit for the resumption period of service if the member meets the vesting requirements
defined in these bylaws based on the resumption years of service. No member may be paid a service pension twice
for the same period of service.
If the member has not received payment of a service pension or disability benefit, the member must complete at least
five years of active service with the Fire Department upon a resumption of active service. If the member completes
the minimum period of resumption service specified in this Section prior to a subsequent cessation of firefighting
duties, the member will receive a service pension, if vested, for all years of active service calculated at the benefit
level in effect on the date of the member’s final cessation of duties. If the member does not complete the minimum
period of resumption service specified in this Section prior to a subsequent cessation of duties, the member will receive
a service pension, if vested, for all years of active service calculated at the benefit level in effect at the time of the
member’s original cessation of duties. A member who has been granted an approved leave of absence not exceeding
one year by the Fire Department or by the Association is exempt from the minimum period of resumption service
requirement under this Article. A member who has a break in service not exceeding one year but who has not been
granted an approved leave of absence and who has not received a service pension or disability benefit from the
Association is subject to the minimum period of resumption service requirement under this Article.
Section 8 : UNIFORMED SERVICES.1 A volunteer firefighter who is absent from firefighting service because of
service in the uniformed services may obtain service credit for the period of the uniformed service, not to exceed five
years, unless a longer period is required by Federal law, if the volunteer firefighter returns within the time frame
required by Federal law to firefighting service with coverage by this same Association or its successor upon discharge
from service in the uniformed service. Service credit will not be given if the firefighter separates from uniformed
service with a dishonorable or bad conduct discharge or under other than honorable conditions.
ARTICLE VII
DISABILITY BENEFITS
SECTION 1: If an active member of the Association shall become totally and permanently disabled, to the extent that
a physician or surgeon acceptable to the Board shall certify that such disability will permanently prevent said member
from performing his/her duties in the Fire Department, the Association shall pay to such member a sum equal to the
pension benefit in Article VIII Section 3 of these bylaws for each year that he/she has served as an active member of
the Fire Department. If a member who has received such a disability pension should subsequently recover and return
as a paid on-call member of the Fire Department, any amount paid to him/her as a disability pension shall be repaid
to the Association before he/she can become an active member of the Association.
1 Minn. Stat. § 424A.021. In some instances service other than service with the Armed Forces may qualify. See 38
U.S.C. § 4303(13) (“service in the uniformed services”).
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SECTION 2 : In addition to any disability benefit payable by the Association the member shall also receive a
supplemental benefit from the State of Minnesota equal to 10% of the benefit , up to a maximum of $1,000.
This benefit shall be paid by the Association. The Association will apply to be reimbursed by the State for the payment
of the supplement benefit in accordance with Minn. Stat.§ 424A.10.
ARTICLE VIII
DEATH BENEFITS AND PENSION
SECTION 1 : Upon the death of any active member of the Association who is in good standing at the time of his/her
death, the Association shall pay to the surviving spouse, if any and if there is no surviving spouse, to surviving child
or children, if any, and if no child or children survive, to the designated beneficiary, if any, and if none to the estate
of such deceased member a sum equal to the pension benefit in Article VIII Section 3 of these bylaws for each year
that he/she served as an active member of the Prior Lake Fire Department. For a member who is on the deferred
pension roll at the time of their death the death benefit shall be an amount equal to their deferred pension as of their
date of death.
SECTION 2 : Any member of the Association who becomes a full time employee of the Fire Department shall be
eligible to receive their service pension if they have met all eligibility requirements as stated in Article VIII, Section
3.
SECTION 3 : The Association shall pay to each member who has served as a paid on-call member of the Fire
Department for a period of twenty (20) years or more prior to his/her separation of service from the Fire Department,
and who has reached the age of fifty (50) years or more, and who has been a member of the Association in good
standing for at least ten (10) years, the sum of $ 7,200.00 $8,000.00 for each year that he/she served as an active
member of the Prior Lake Fire Department.
SECTION 4 : A member of the Association who has served as a paid on-call member of the Fire Department for at
least twenty (20) years, but has not reached the age of fifty (50) years may retire from the Fire Department and be
placed on the deferred pension roll. When he/she reaches the age of 50 years, and provided that at that time he/she has
been a member of the Association in good standing for at least ten (10) years, upon application therefore he/she shall
be paid a sum equal to the pension benefit in Article VIII Section 3 of these bylaws for each year that he/she served
as aa paid on call member of the Fire Department. During the time that a member is on the deferred pension roll he/she
will not be eligible to receive any of the benefits provided for in ARTICLE VII.
SECTION 5: During the time that a member is on the deferred pension roll or early vested pension roll, the Association
shall add to the amount payable to such member interest of 5% on December 31st of each full year that the member
was on the deferred pension roll.
SECTION 6: No less than thirty (30) days before becoming eligible to receive a lump sum pension, a member of the
Association may make an irrevocable election that such pension shall be rolled over to a named IRA. If the member
who has made such an election dies before all of his/her pension has been paid to him/her, any amo unt thereof
remaining unpaid at the time of his/her death shall be paid to his/her named beneficiary, and if no beneficiary has been
named, to his/her surviving spouse, child or children, or estate , in that order.
SECTION 7: If a member shall have served for more than ten (10) years, but less than twenty (20) years, as a paid
on-call member of the Fire Department, he/she may retire from the Fire Department and be placed on the early vested
pension roll. When he/she reaches the age of fifty (50) years, and provided that at that time he/she has been a member
of the Association in good standing for at least ten (10) years, he/she shall upon application therefore, be paid in the
following manner as designated by Minnesota Statute:
a) For active duty of more than ten (10) years, but less than eleven (11) years, 60% of the
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pension amount per year of service as stated in Article VIII Section 3 of these bylaws.
b) For active duty of more than eleven (11) years, but less than twenty (20) years, an
additional 4% of the amount per year of service shall be added for each additional year of
service between 11 and 20 years.
c) During the time that any member is on the early vested pension roll, he/she will not be
eligible to receive any of the benefits provided for in ARTICLE VII. Pensions payable to
members on the early vested pension roll shall be based on the amount payable per year
of service in effect at the time of such early retirement.
SECTION 8 : In addition to any death or pension benefit payable by the Association the member shall also receive a
Supplemental Benefit from the State of Minnesota equal to 10% of the benefit up to a maximum of $1 ,000. This
benefit shall be paid by the Association which will be reimbursed by the State in accordance with Minn. Stat.§
424A.1002. subd 10. Any death benefit paid due to the death of an active member of the Association shall include an
additional amount of $1,000 for a total of $2,000 to be paid by the Association and reimbursed by the State in
accordance with Minn. Stat. § 424A.10
ARTICLE IX
AMENDMENTS
SECTION 1 : The bylaws of the Association may be amended at any regular or special meeting of the Association by
a favorable vote of 2/3 of the members present and voting, provided that a quorum is present, and provided furth er
that notice of any proposed amendment or amendments shall be given by reading the same at a regular or special
meeting not less than thirty one (31) days preceding that date upon which such amendment or amendments are to be
acted upon, and provided further that if such amendment or amendments change the amount of benefits or pensions,
approval of the City Council of Prior Lake must be obtained before such change may take effect.
ARTICLE X
STATE LAW
In the case of a conflict between these bylaws and Minn. Stat. Chap. 424A, as may be amended from time to time,
Minn. Stat. Chap. 424A shall govern.
8/25/16
PRIOR LAKE FIRE DEPARTMENT
COMPENSATION REPORT
October 2017
2
OVERVIEW
Mission. The mission of the Prior Lake Fire Department is to minimize the loss of life and
property from fires, natural disasters, and life threatening situations. The Department performs
these services with a paid, on-call volunteers through education, prevention, and training. When
called upon, the Fire Department assists other emergency agencies.
History. In 1916, the City purchased its first chemical wagon and fought fires with a baking
soda mixture that was pumped onto fires. The Prior Lake Fire Department was officially founded
in 1929 and the first motorized fire truck was purchased in 1937. The first modern Fire Station
was built in 1994-95 and continues to serve as the main office for the Department. To improve
response times on the northwest side of Prior Lake, Fire Station No. 2 was constructed in
2007/2008. Prior Lake hired its first full-time Fire Chief in January 2010.
Services. The Fire Department serves the 16 square miles corporate limits of the City of Prior
Lake. The Department also provides service for Spring Lake Township and for Credit River
Township through contracts with each entity. Together the service area reaches approximately
74 square miles, serving a combined population nearing 40,000.
Though safer, modern construction techniques and stricter building codes have made building
fires less common, firefighters work has grown to include motor vehicle accidents, calls for
medical help, natural disasters and other emergencies. The department responds to a variety of
emergency calls including:
Fire suppression on structure, wildland and vehicle fires including mutual aid to
neighboring communities;
Hazardous material response including chemical, natural gas leaks and carbon
monoxide events;
Rescue response for motor vehicle accidents, off road recreational vehicle accidents,
water rescue, horseback riding accidents, vulnerable or lost person searches, life
threatening medical response;
Good intent calls and fire, smoke, carbon monoxide alarms.
Service Demand. Historically, the department experienced increases in call volume over
several years peaking at 1,100 annually. Changes in response criteria (we are no longer the
primary ambulance provider), improvements in building codes/inspections, enhanced alarm
systems and fire prevention education have reduced and stabilized call numbers. The
anticipated population growth of the area suggests a steady increase in call volume of 3-5%
totaling approximately 500 calls annually.
YEAR 2006 2007 2008* 2009 2010 2011 2012 2013 2014 2015 2016
of
Calls 1034 1116 804 406 432 443 478 450 404 454 440
In 2008, the Department transitioned away from medical call response when Allina became the primary agent for life-threatening
medicals.
3
Below is a breakdown of the major areas of response by call number and type:
ORGANIZATIONAL STRUCTURE
The Fire Department reports to the City Manager. The Fire Chief is supported by three assistant
chiefs, five captains and 37 fire fighters. All personnel, except for the Fire Chief, are paid, on-call
positions. Administrative support is provided by the receptionist based in City Hall.
Firefighters. Members of the Prior Lake Fire Department are selected through an application
process. Applicants must be at least 18 years of age, a high school graduate, hold a valid driver
license, and reside within a reasonable response time of a Prior Lake Fire Station. All applicants
must pass a basic skills test, a physical agility test, and a pre-employment drug test and
physical. Firefighters respond to calls 24 hours/7 days a week with little notice, often at night.
Calls can range from 1 hour to 12 hours and have a significant impact on their personal lives.
The average age of a Prior Lake
firefighter is 43. More than half the
staff is under the age of 45.
The average tenure of a Prior Lake
firefighter is 10.8 years of service.
0
20
40
60
80
100
120
Fire Calls by Type
Series2 Series3
42 53
61
89 84 87
43 44 40
91 97
119
25-34
35-4445-54
55+
Firefighter Age Composition
20%26%
26%
28%
Fire Medical Accidents Hazmat False Alarms
2016 2015 2014
50 50
32
4
Requirements. Members of the Fire Department are required to meet a minimum of 35% of all
fire calls bi-annually. In addition, members are required to participate in 75% of maintenance
and training exercises biannually and attend mandatory quarterly business meetings. First-year
firefighters are required to complete 140 hours of training and complete Firefighter II
certification. In 2015, the average response rate of all firefighters was 42%.
Prior Lake Fire Relief Association. Prior Lake firefighters are members of the Prior Lake Fire
Relief Association. The Association is the administrator of the single-employer defined benefit
pension plan, which was established November 1, 1957 and operates under the provisions of
Minnesota Laws 1965, chapter 446. It is governed by a Board of Trustees made up of six
members elected by the members of the Association for three-year terms, and the Mayor, City
Manager and Fire Chief. Although not part of the operational structure, the Board of the Fire
Relief Association Board provides oversight of the fire fighter pension fund. The Board is
responsible for investment of the Association funds, annual audits, and annual report to the
membership.
BUDGET
The annual Fire Department budget is funded by the City’s general fund, cost-sharing contracts
with the surrounding townships, and state aid. General fund expenditures can be categorized
into four primary areas, which are explained below:
Personnel. The largest expenditure for the Department is personnel, accounting for almost half
of the annual budget. Personnel costs include volunteer firefighter wages, pension contributions,
workers compensation and the compensation package for the full-time Fire Chief.
SUMMARY
21%
0-7 years
11%
8-14 years
9%
15-21 years
4%
22+
Average Tenure of POC Firefighters
Almost a quarter of the
POC firefighters have
been with the department
for less than 7 years. Of
those, 70% have been
with the City for less than
5 years.
5
Operations. Operational
expenses include
expenditures for small
equipment, fuel, materials
and supplies, utilities and
facilities expenses for the
two fire stations, and minor
capital costs.
Pension. The City
contributes $20,000 annually
toward the Fire Relief
Pension Fund. The City
passes through the
expenditure budget the state
pension contribution. The Pension Fund details are explained in depth below.
Training and Education. Training and employee development, memberships and
subscriptions, public education and uniform expenses are included in this category.
NOTE: The replacement of capital equipment, such as fire trucks and tankers, is tracked in the
Equipment Replacement Plan and reviewed annually as part of the Capital Improvement Plan.
Cost per Household. Chart below reflects the annual cost for fire services in per household.
Revenues
Year
Total Fire
Operating
Budget
Township
Service
Contracts State Aid
City Pension
Deficit
Contribution
Net General
Fund Cost
of
Households
General
Fund Cost
per
Household
2009
780,878 311,207 122,953 0 346,718 8,385 41.3
2010
862,159 348,331 127,482 82,372 468,718 8,447 55.5
2011
851,139 357,923 141,411 80,175 431,980 8,541 50.6
2012
807,684 343,017 143,938 55,925 376,654 8,647 43.6
2013
857,539 362,106 206,356 58,990 348,067 8,821 39.5
2014
904,430 325,976 195,194 0 383,260 9,009 42.5
2015
880,919 279,094 208,087 0 393,738 9,180 42.9
2016
902,031 311,068 214,891 0 376,072 9,300 est. 40.4
49%
23%
20%
8%
Personnel
State Pension
Contribution
pass-through)
Operations
Training/Uniforms
2017 GENERAL FUND BUDGET -$905,149
49%
23%
20%
8%
6
COMPENSATION
Compensation for firefighters is a combination of an hourly wage paid for call response and
training activities and a pension benefit. Firefighters do not receive additional PERA, health,
dental or life insurance benefits from the City.
Wages. Members of the Fire Department are compensated on a monthly basis for call response
and for training at the rate of $12.20/hour in 2016.The Assistant Chief of Training receives an
additional $6,000 annual payment and the remaining two Assistant Chiefs $5,000. Five
Captains earn a $2,000 stipend each per year in consideration of additional duties. Rate
increases are assessed annually as part of the budget process and evaluated against market
comparisons. Most recent wage adjustments:
Year Hourly Rate
2014
2015
2016
2017
11.50
11.85
12.20
12.20
Peer Cities. Below is a table that outlines the hourly rate and pension contributions of other
Minnesota cities with volunteer fire departments:
Pension. The pension is established through the Prior Lake Fire Relief Association. Firefighters
are eligible for participation upon hire and begin to earn service credit immediately. Members
are “vested” and eligible for a partial or full pension based upon years of service. To achieve full
pension, a member must have reached the age of 50 and have 20 years of service credit. A
member who has reached the age of 50 and retires with 10 years of service is eligible for a
partial benefit (60%).
City
2015
Hourly
2016
Hourly
2017
Hourly 2015 Pension 2016 Pension 2017 Pension
Apple Valley $14.65 $15.00 $15.35 $6,700 $6,700 $6,700
Chanhassen $10.00 $10.00 $12.00 $5,050 $6,000 $6,000
Cottage Grove $13.26 $13.53 $13.53 $4,700 $4,700 $6,000
Farmington $10.75 $10.97 $11.24 $4,575 $4,575 $5,500
Golden Valley $15.44 $15.83 $16.23 $7,500 $7,750 $8,000
Inver Grove Heights $12.50 $12.50 $13.00 $6,800 $6,800 $7,900
Lakeville $12.00 $12.00 $12.00 $6,742 $6,877 $7,225
Rosemount $10.00 $10.00 $10.00 $7,000 $7,000 $7,200
Savage $13.36 $13.69 $14.07 $5,537 $5,572 $5,725
monthly option)
Shakopee $14.00 $14.00 $14.00 $7,700 $7,700 $8,025
Woodbury $15.32 $15.84 $16.32 $6,720 $6,720 $6,720
Prior Lake $12.20 $12.20 $12.20 $7,100 $7,100 $7,200
AVERAGE $12.79 $12.96 $13.29 $6,344 $6,458 $6,850
7
Year Annual Pension Sum at Retirement
1-9 $7,200 $0
10 (60% vested) $7,200 $43,200
20 (100% vested) $7,200 $144,000
The statutory maximum pension contribution is $10,000 annually. The contribution amount
remained flat at $6,500 during the Great Recession. Since then, there have been two pension
increases.
PENSION
The Prior Lake Fire Department pension benefit is funded through a combination of resources:
Fund Investment Earnings
State Aid
City Pension Contribution
City Deficit Contribution (if necessary)
5,900
6,500 $6,500 $6,500 $6,500 $6,500 $6,500
6,800
7,100 $7,100 $7,200
5,000
6,000
7,000
8,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Pe
r
n
s
i
o
n
C
o
n
t
r
i
b
u
t
io
n
Year
Pension Benefit History
0
50,000
100,000
150,000
200,000
250,000
300,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Pension Contribution History
state aid city annual city deficit
During the great recession,
the city contributed an
additional $277,462 to keep the
fund balance at 100%.
The city’s $20,000 annual
contribution has not been
adjusted in 10 years.
8
Pension Increase. Fire State Aid amount is determined by the State of Minnesota. At the
monthly Relief Association meeting in October, the membership reviews the investment
performance of the pension fund. Historically, pension increases have been considered based
upon the pension fund balance. If the membership votes to recommend an increase, the
recommendation is presented to the Relief Association Board for consideration and then to the
City Council for approval.
Pension Increase Criteria. The goal of the Relief Association is to be self-funded without any
contribution from the City. The Relief Association is committed to providing the best possible
pension to its members while minimizing the risk to the City of a required contribution. The
following criteria is used when considering a pension increase:
Fund balance: The fund should have a positive balance with assets being greater than
liabilities.
Investment Performance: Projected investment returns should be stated by using the
projected annual income as stated in the most recent Combined Snapshot Report.
Peer Department Pension Level: It can be difficult to compare peer department pension
levels due to many factors that influence benefit level. The desire of the Relief
Association is to maintain the benefit at a level comparable to our peer group.
Effect on Recruiting and Retention: The pension is important for the recruitment and
retention of volunteer firefighters. The positive effect a pension increase can have on
these areas contributes to the consideration of increases.
118.5%
110.0%
69.2%
79.6%
87.7%89.7%
99.4%
113.7%115.4%
102.6%107.3%
0%
20%
40%
60%
80%
100%
120%
140%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Pe
r
c
e
n
t
F
u
n
d
e
d
Year
Pension Fund Balance History
9
FUTURE CHALLENGES
The Prior Lake Fire Department faces several challenges in the future:
Equipment. Over the next 5 years, important and expensive pieces of equipment will
need to be replaced include Self-Contained Breathing Apparatus, and two new fire
engines.
Recruitment and Retention. Nationally, the number of volunteer firefighters has dropped
by around 11 percent since the mid-1980s, according to the National Fire Protection
Association. As the population ages, fewer young people are available or inclined to
assume this responsibility. Compensation and benefits will need to be assessed
continually to encourage volunteers to come forward and to keep existing volunteers
engaged.
Time Commitment. The time commitment for volunteer firefighters is significant. Calls
occur 24 hours a day, 7 days a week, often at inconvenient times, which is especially
difficult on families. In addition, training requirements are significant and demand more
time away from home and work. As firefighters’ lives get busier, the incentive to commit
such intense volunteer hours weakens.
Cost. The cost of running a Fire Department is significant. Equipment, vehicle
replacement, training, and emerging and mobile technology costs are high and continue
to grow.
Staffing. In the next five years, the City will need to consider a second full-time staff
member to assist the Fire Chief with expanding duties and responsibilities, including
training, administration and inspections.
Fire Inspections. Proactive life safety inspections of high-density housing, elderly living
facilities and other City-licensed facilities are not currently happening as regularly nor as
often as necessary.
Current benefit of $7,200/year of service. There is a
surplus of $649,191 and is funded at 116% as of
September 30, 2017 PLFRA pension fund report
and inclusive of the 2017 State Fire Aid deposit.
2018 proposed benefit of $8,000/year of service. There is a
surplus of $307,095 and is funded at 107% as of the
September 30, 2017 PLFRA pension fund report and
inclusive of the 2017 State Fire Aid deposit.