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Home My WebLink About10D - Fire Dept. Pension 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: ISSUES: CITY COUNCIL AGENDA REPORT DECEMBER 5, 2005 10 D Ralph Teschner, Finance Director CONSIDER APPROVAL OF A RESOLUTION APPROVING A PENSION INCREASE FOR THE PRIOR LAKE FIRE DEPARTMENT FIREFIGHTERS RELIEF AND PENSION ASSOCIATION Introduction The Prior Lake Volunteer Fire Dept. and Relief Association requests that pension benefits be increased as of January 1, 2006 from $4,400 to $5,000 per year of service. Prior Lake is served by a paid on-call volunteer fire department. Recruitment and retention occurs by providing a payment of $9.50/hr. for fire call responses, an annual amount for officers and a pension for firefighters who serve at least ten years on the department. Current Circumstances Over time, the hourly pay and pension level has been increased in response to retaining comparability with other volunteer departments. The Prior Lake Fire Department Fire Firefighters Relief and Pension Association is 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 $5,000 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 $100,000 rather than the existing $88,000. 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 years of service. The current $4,400 per year pension benefit amount has been in effect for the past year. The City's 2005 contribution to support the pension fund is $20,000 and is proposed to remain the same for 2006. No tax increase is required to support this level of pension benefits. The firefighters' pension plan is primarily 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. 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. Prior Lake's pension amount including the proposed increase is generally lower than that of other fire departments with similar number of volunteers. www.cityofpriorlake.com Phone 952.447.4230 / Fax 952.447.4245 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 $5,000 per year of service will not require any increase in city contribution presently or in the future. The existing tax levy and the 2% insurance money will fully fund their pension program. Also, for reference purposes the maximum allowable lump sum pension payment per year of service credit under MN Statutes 424A.02 is $7,500. ALTERNATIVES: The following alternatives are available to the City Council: 1. A motion and second to adopt a Resolution Approving A Pension Increase For The Prior Lake Fire Department Firefighters Relief And Pension Association that provides for a $5,000 per year of service credit for pension, disability and death benefit purposes within the Bylaws of the Prior Lake Fire Department Firefighters Relief and Pension Association effective January 1, 2006. 2. Take no action at this time and direct the staff to provide additional information. RECOMMENDED MOTION: Alternative #1. Staff would recommend approval of the proposed pension benefit increase to $5,000 per month as requested and to incorporate this amount into their disability and death benefits as well. 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 RESOLUTION OS-xx RESOLUTION APPROVING A PENSION INCREASE FOR THE PRIOR LAKE FIRE DEPARTMENT FIREFIGHTERS RELIEF AND PENSION ASSOCIATION Motion By: Second By: WHEREAS, The bylaws of the Prior Lake Volunteer Firefighters relief and Pension Association provides for a defined contribution benefit; and WHEREAS, The present annual benefit level in effect is $4,400.00 in 2005 for volunteer fire fighters that are eligible under the existing vesting schedule; and WHEREAS, The City Council understands that the insurance premium tax payment increase received from the State of Minnesota is sufficient to fund a benefit increase to $5,000 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 volunteer fire departments in order for the City to continue to recruit and retain qualified volunteer firefighters. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that: 1.) The recitals set forth above are incorporated herein. 2.) A $5,000 per year of service credit for pension, disability and death benefit purposes within the Bylaws of the Prior Lake Fire Department Firefighters Relief and Pension Association is hereby approved effective January 1, 2006. PASSED AND ADOPTED THIS 5TH DAY OF DECEMBER, 2005. YES NO Haugen Haugen Fleming Fleming LeMair LeMair Petersen Petersen Zieska Zieska Frank Boyles, City Manager www.cityofpriorlake.com Phone 952.447.4230 / Fax 952.447.4245 PRIOR LAKE / Page 1 Schedule Form for Lump Sum Pension Plans Reporting Year 2005 Determination of Plan Liabilities and Required Municipal Contribution for 2006 Relief Association IPrior Lake Fire Relief Association I County I Scott Annual benefit level in effect for 2005 I 5,000 I (If you change your benefit level before 12/31/05, the SC must be recalculated at the new level.) Active Member Information Fire Dept. Leaves To end of 2005 To end of 2006 Date of Age Entry of Years Years Birth on Date Absence of Accrued of Accrued Name JJIIIl-dd-vv 12131/05 mm-dd-vv (months) Service Liabilitv Service Liabilitv 1 Weber, James 10/14/42 63 05/01/69 37 185,000 38 190,000 2 Sames, Bruce 06/19/59 46 OS/27/82 24 120,000 25 125,000 3 Johnson, Brent 04/18/54 51 OS/27/82 24 120,000 25 125,000 4 Schommer, Larry 01/12/55 50 01/01/88 18 84,900 19 92,200 5 Freidrich, Mark 11/23/67 38 07/27/89 16 71,400 17 78,000 6 Larson, James Jr 01/28/68 37 07/27/89 16 71,400 17 78,000 7 Hartman, Dou~ 09/04/58 47 07/25/90 15 65,200 16 71,400 8 Oreskovich, Victor 03/12/58 47 07/25/90 15 65,200 16 71,400 9 Steinhaus, Rick 10/22/72 33 10/29/92 21 11 42,900 12 48,100 10 Kline, James 02/17/05 0 03/01/94 12 48,100 13 53,500 11 Zieska, Joseph Sr 05/14/58 47 OS/25/95 11 42,900 12 48,100 12 Hennen, Tony 02/09/67 38 02/25/95 11 42,900 12 48,100 13 Nelson, Dou~ 10/22/61 44 02/25/95 11 42.900 12 48,100 14 Davis, Brian 10/26/72 33 09/26/96 9 33,300 10 38,000 15 Klimers, Mike 05/19/61 44 09/26/96 9 33,300 10 38,000 16 Barta, Terry 04/07/71 34 04/24/97 9 33,300 10 38,000 17 Burfeind, Scott 11/26/61 44 04/24/97 9 33.300 10 38,000 18 Kathan, Rick 11/23/57 48 04/24/97 9 33,300 10 38.000 19 Rei~ert, John 11/29/61 44 04/24/97 3 8 28,800 9 33,300 20 Ruzika,Jim 04/08/63 42 04/24/97 3 8 28,800 9 33,300 21 Chard, Dale 03/01/69 36 OS/28/98 8 28,800 9 33,300 22 Kleist, Kevin 08/26/69 36 OS/28/98 8 28,800 9 33,300 23 Zipoy, Brvan 06/05/56 49 OS/28/98 8 28,800 9 33,300 24 Prekker, Randy 07/20/71 34 10/21/99 6 20,500 7 24,600 25 Radanke, Malissa 09/02/77 28 10/21/99 6 20,500 7 24,600 Subtotal of Pa2e 1 Liability - Active Members 1,354,300 1,482,600 Form SC-05 PRIORLAKE / Page la Relief Association IPrior Lake Fire Relief Association I County I Scott Annual benefit level in effect for 2005 I 5,000 I (If you change your benefit level before 12/31/05, the SC must be recalculated at the new level.) Active Member Information - continued Fire Dept. Leaves To end of 2005 To end of 2006 Date of Age Entry of Years Years Birth on Date Absence of Accrued of Accrued Name mm-dd-vv 12131/05 mm-dd-vv (months) Service LiabiIitv Service LiabiIitv 26 Kruse, Jarod 08/16/73 32 08/29/02 3 9,500 4 13,000 27 Zimmerman, Eric 07/14/74 31 08/29/02 3 9,500 4 13,000 28 Wei~el, Gre~ 09/12/71 34 09/26/02 3 9,500 4 13,000 29 Yttreness, Paul 09/27/68 37 03/27/03 3 9,500 4 13.000 30 Bradford, Justin 09/02/69 36 04/03/03 3 9,500 4 13,000 31 Blade, Chris 08/15/70 35 01129/04 2 6,200 3 9,500 32 Tmso, Neal 03/22/73 32 01129/04 2 6,200 3 9,500 33 Winter, Eric 10/29/72 33 01/29/04 2 6,200 3 9,500 34 Zettler, Todd 07/25/69 36 01129/04 2 6,200 3 9,500 35 Kilanowski, Mike 02/19/69 36 09/30/04 1 3,000 2 6,200 36 Yurko, Robert 08/30/78 27 09/30/04 1 3,000 2 6,200 37 Schommer, Katherine 08/10/79 26 08/06/05 0 0 1 3,000 38 Wolfram. Andrew 12/07/76 29 08/06/05 0 0 1 3,000 39 Zuspann, Greg 12/13/65 40 08106/05 0 0 1 3,000 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 78,300 124,400 Form SC-OS Deferred Member Information (fully or partially vested) See separate instructions regarding completion of the fields below. Enter all information as it pertains to this member. Member Name: Clemens, John Benefit Level at Separation: Vesting: Minimum Years Required: 10 DOB: 02/27/61 Interest (if offered) Full Months Full Years X Full Period Service Dates: Entry: 05/01/82 Separation: 03/01/94 Age to Pay: 2L LOAs (in months): Total Service: Years: 11 Months (if paid): Vesting Percent: 64 % 2005 Estimated Liability: 2006 Estimated Liability: 13,276 (overwrite, ifnecessary) 13,940 PRIOR LAKE / Page 2 1,800 Are Months of Service Paid? No Interest Option in Bylaws at Separation * (Choose one option) A - No Interest D B - Straight 5% C - Separate Account/Vehicle D - Up to 5% ---> Type: * Since interest option D was chosen, enter the rates of return used for each year below. 1981: % 1986: % 1991: % 1996: % 2001: % - - - - - 1982: % 1987: % 1992: % 1997: % 2002: % - - - - - 1983: % 1988: % 1993: % 1998: % 2003: % - - - - - 1984: % 1989: % 1994: % 1999: % 2004: % - - - - - 1985: % 1990: % 1995: % 2000: % 2005: 4.n%+ - - - - + This rate of return is calculated usim~ the earnings projected on Page 3 of the Schedule. Enter all information as it pertains to this member. Member Name: Chromy, Dave Benefit Level at Separation: Vesting: Minimum Years Required: 10 DOB: 06/07/58 Interest (if offered) Full Months Full Years X Full Period Service Dates: Entry: 01/01/88 Separation: 02/03/02 Age to Pay: ~ LOAs (in months): Total Service: Years: 14 Months (if paid): Vesting Percent: 76 % 2005 Estimated Liability: 2006 Estimated Liability: 34,557 (overwrite, if necessary) 36,285 3,100 Are Months of Service Paid? No Interest Option in Bylaws at Separation * (Choose one option) A - No Interest D B - Straight 5% C - Separate Account/Vehicle D - Up to 5% -----> Type: * Since interest option D was chosen, enter the rates of return used for each year below. 1981: % 1986: % 1991: % 1996: % 2001: % 1982: % 1987: % 1992: % 1997: % 2002: % 1983: % 1988: % 1993: % 1998: % 2003: % 1984: % 1989: % 1994: % 1999: % 2004: % 1985: % 1990: % 1995: % 2000: % 2005: 4.n%+ Form SC-05 Deferred Member Information (fully or partially vested) See separate instructions regarding completion of the fields below. Enter all information as it pertains to this member. Member Name: Stier, Larry Benefit Level at Separation: Vesting: Minimum Years Required: 10 DOB: 11/19/64 Interest (if offered) Full Months Full Years X Full Period Setvice Dates: 07/27/89 Separation: 07/27/03 Entry: Age to Pay: 50 LOAs (in months): 38 Total Setvice: Years: 10 Months (if paid): Vesting Percent: 60 % 2005 Estimated Liability: 2006 Estimated Liability: 19,487 (overwrite, if necessary) 20,461 PRIOR LAKE I Page 2a 3,100 Are Months of Setvice Paid? No Interest Option in Bylaws at Separation * (Choose one option) A - No Interest B - Straight 5% C - Separate AccountlVehicle D - Up to 5% ----> Type: D * Since interest option D was chosen, enter the rates of return used for each year below. 1981: % 1986: % 1991: % 1996: % 2001: % - - - - - 1982: % 1987: % 1992: % 1997: % 2002: % - - - - - 1983: % 1988: % 1993: % 1998: % 2003: % - - - - - 1984: % 1989: % 1994: % 1999: % 2004: % - - - - - 1985: % 1990: % 1995: % 2000: % 2005: 4.n%+ - - - - +This rate of return is calculated using the earnin2S proiected on Pa~e 3 of the Schedule. Enter all information as it pertains to this member. Member Name: Chelgren, Kurt Vesting: Minimum Years Required: 10 Benefit Level at Separation: OOB: 05/19/65 Interest (if offered) Full Months Full Years X Full Period Setvice Dates: OS/27/93 06/27/03 Separation: Entry: Age to Pay: ~ LOAs (in months): Total Setvice: Years: 10 Months (ifpaid): 1 Vesting Percent: 60 % 2005 Estimated Liability: 2006 Estimated Liability: 20,678 (overwrite, ifnecessary) 21,712 3,100 Are Months of Setvice Paid? Yes Interest Option in Bylaws at Separation (Choose one option) A - No Interest B B - Straight 5% C - Separate AccountlVehicle D - Up to 5% -----> Type: 1981: % 1986: % 1991: % 1996: % 2001: % 1982: % 1987: % 1992: % 1997: % 2002: % 1983: % 1988: % 1993: % 1998: % 2003: % 1984: % 1989: % 1994: % 1999: % 2004: % 1985: % 1990: % 1995: % 2000: % 2005: %+ Form SC-05 Deferred Member Information (fully or partially vested) See separate instructions regarding completion of the fields below. Enter all information as it pertains to this member. Member Name: Peterson, Stacy Benefit Level at Separation: Vesting: Minimum Years Required: 10 DOB: 11/24/65 Interest (if offered) Full Months Full Years X Full Period Service Dates: Separation: 09/01/03 Entry: OS/27/93 Age to Pay: 50 LOAs (in months): 3 Total Service: Years: 10 Months (ifpaid): o Vesting Percent: 60 % 2005 Estimated Liability: 2006 Estimated Liability: 20,507 (overwrite, ifnecessary) 21,532 PRIOR LAKE / Page 2b 3,100 Are Months of Service Paid? Yes Interest Option in Bylaws at Separation (Choose one option) A - No Interest B B - Straight 5% C - Separate AccountlVehicle D - Up to 5% ---> Type: 1981: % 1986: % 1991: % 1996: % 2001: % - - - - - 1982: % 1987: % 1992: % 1997: % 2002: % - - - - - 1983: % 1988: % 1993: % 1998: % 2003: % - - - - - 1984: % 1989: % 1994: % 1999: % 2004: % - - - - - 1985: % 1990: % 1995: % 2000: % 2005: %+ - - - - - +This rate of return is calculated usin~ the earnings projected on Page 3 of the Schedule. Enter all information as it pertains to this member. Member Name: Buss, Joe Benefit Level at Separation: Vesting: Minimum Years Required: 10 ooB: 02/21/60 Interest (if offered) Full Months Full Years X Full Period Service Dates: 08/29/91 Separation: 02/27/05 Entry: Age to Pay: 50 LOAs (in months): - Total Service: Years: 13 Months (if paid): 2005 Estimated Liability: 42,504 2006 Estimated Liability: 44,629 1981: % 1986: % 1991: 1982: % 1987: % 1992: 1983: % 1988: % 1993: 1984: % 1989: % 1994: 1985: % 1990: % 1995: Vesting 5 Percent: 72 % (overwrite, if necessary) 4,400 Are Months of Service Paid? Yes Interest Option in Bylaws at Separation (Choose one option) A - No Interest B B - Straight 5% C - Separate AccountlVehicle D - Up to 5% ----> Type: % 1996: % 2001: % % 1997: % 2002: % % 1998: % 2003: % % 1999: % 2004: % % 2000: % 2005: %+ Form SC-05 PRIOR LAKE / Page 3 Unpaid InstaUments Name Entry Date Separation Date 2005 Estimated Liability 2006 Estimated Liability Calculation of Normal Cost Total Active Member Liabilities 1,432,600 1,607,000 Total Deferred Member Liabilities and Unpaid Instalhnents 151,009 158,559 Grand Total Special Fund Liability Ai 1,583,609 BI 1,765,559 Normal Cost (Cell B minus CellA) Ic 181,950 I 2005 2006 Projection of Net Assets for Year Ending December 31,2005 Special Fund Assets at December 31,2004 (RF -04 ending assets) 1 I 1,362,1321 Projected Income for 2005 State Fire Aid ( 2004 aid may be increased by up to 3.5% ) D 169,893 Municipal/ Independent Fire Dept. Contributions E 20,000 Interest / Dividends F 10,000 Appreciation / (Depreciation) G 55,000 Member Dues H Other Revenues I Total Projected Income for 2005 (Add Lines D through I) 2 I 254,893 I Projected Expenses for 2005 Service Pensions J Other Benefits K Administrative Expenses L 200 Total Projected Expenses for 2005 (Add Lines J through L) 3 200 I Projected Net Assets at December 31,2005 (Add Lines 1 and 2, subtract Line 3) 4 1,616,825 I Form SC-05 Projection of Surplus or (Deficit) as of December 31, 2005 Projected Assets (Line 4) 2005 Accrued Liability (page 3, cell A) Surplus or (Deficit) (Line 5 minus Line 6) Complete Section I below. Calculation of Municipal Contribution A. If Line 7 is positive, complete this section: Normal Cost (page 3, cell C) Projected Administrative Expense ( 0 x 1.035 ) State Fire Aid ( 2004 aid may be increased by up to 3.5% ) Member Dues 5% of Projected Assets at December 31, 2005 (Line 4 x 0.05) 10% of Surplus (Line 7 x 0.10) Municipal Contribution (Add Lines 8 and 9, subtract Lines 10, 11, 12 and 13) No municipal contribution due in 2005. 5 6 1,616,825 1,583,609 33,216 7 B. If Line 7 is negative, complete this section: 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 PRIOR LAKE / Page 4 8 9 10 11 12 13 14 181,950 0 169,893 0 80,841 3,322 (72,106) Totals Ifline C is positive, this is the new additional deficit for 2005. Enter the amount in Original Amount and Left to Retire Columns. If line C is negative, reduce prior deficits according to the separate Schedule instructions. Amortization of Deficit (Total of Original Amount column x 0.10) Normal Cost (page 3, cell C) Projected Administrative Expense ( 0 x 1.035 ) State Fire Aid ( 2004 aid may be increased by up to 3.5% ) Member Dues 5% of Projected Assets at December 31, 2005 (Line 4 x 0.05) Municipal Contribution (Add Lines 15,16 and 17, subtract Lines 18,19 and 20) 15 16 17 18 19 20 21 Form SC-05 PRIOR LAKE / Page 5 This Schedule must be fuUy completed, certified by the relief association officers, forwarded to the municipal clerk on or before August 1, 2005 and submitted to the State Auditor's Office to be eligible for state fire aid. OFFICER CERTIFICATION We, the officers of the Prior Lake Relief Association, certifY that this Schedule was prepared under Minn. Stat. ~ 69.772 and that the annual benefit level was established according to the average amount of available financing. We further certify that based on the financial requirements of the Relief Association's Special Fund for the 2005 calendar year, the required 2006 municipal contribution is $ O. If the bylaws of the Relief Association changed in 2005, we have attached a copy of the amendment or updated bylaws. We have also enclosed a copy of the municipal ratification of this amendment if required under Minn. Stat. ~ 69.772, subd. 6. ~ -i ~1,"", Signature 0 sident \)0\.7 &l-A~ I l/) ~l-:Sor~ Print Name n -- 1./~- (} s' Date r? -<~9~ Signature of Secretary Q4~ Signa of reasttrer ~o._~~~ ?'fJZ.~~ Print Name J'-1-3-~ Date -Le Print Name Zte'JM I /~ z ~ -0 S- Date MUNICIPAL CLERK CERTIFICATION (For relief associations affiliated with municipal fire departments only.) I am the municipal clerk of ~'\. e:-\~ cs-. -Pt,=\()'r La.~eived on \ 1 Z' DC:, the completed Schedule from the Prior Lake Relief Associ ion. I have reviewed Lines 14 and 21 of the Schedule. If either Line 14 or Line 21 show a required municipal contribution, I certify that I will advise the governing municipal body of any required municipal contribution at its next regularly sched ,ed meeting. I ./ /' . J"'-~t&k Print Name IdZ'i)Df te I I (0<;z) lfY1-ryO/ Business Telephone Please retain a copy of the Schedule for your records and submit the signed original to: State Auditor's Office, Pension