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HomeMy WebLinkAbout09(A) - Resolution Recognizing the Relief Pension Plan's Termination on February 28, 2026, and Supporting PLFRA’s Dissolution and Transition to PERA Coordinated Plan Report ITEM: 9A CITY COUNCIL AGENDA REPORT MEETING DATE: January 13, 2026 PREPARED BY: Jason Wedel, City Manager PRESENTED BY: Jason Wedel AGENDA ITEM: Resolution Recognizing the Relief Pension Plan's Termination on February 28, 2026, and Supporting PLFRA’s Dissolution and Transition to PERA Coordinated Plan STRATEGIC PUBLIC SAFETY PRIORITY: RECOMMENDED ACTION: Adopt a resolution recognizing the relief pension plan's termination on February 28, 2026, and supporting PLFRA's dissolution and transition to PERA Coordinated Plan. BACKGROUND: The Prior Lake Fire Relief Association (PLFRA) currently administers retirement benefits for the City's paid-on-call firefighters. The City transitioned to a full-time fire department model in 2023, reducing the reliance on paid-on-call fire fighters. The paid-on-call staff now primarily function as shift firefighters and are scheduled for specific shifts rather than being called in when needed. Currently, the PLFRA is responsible for managing retirement benefits for active, deferred, and retired members, with funding sourced from annual State Fire Aid and from past City contributions. If the Board of Trustees votes to voluntarily dissolve the relief association, the Board can establish the date of termination. The PLFRA Board has voted to initiate the voluntary dissolution of the Prior Lake Fire Relief Association (PLFRA) with the termination of the current relief retirement pension plan on February 28, 2026. On March 1, 2026, Prior Lake paid-on-call firefighters will transition to regular part-time employees and move to the Minnesota Public Employees Retirement Association (PERA) Coordinated Plan. Because they work less than 20 hours on average per week, the part-time firefighters are ineligible for other City paid benefits; however, they will be entitled to accruing and using Earned Sick and Safe Time (ESST) per state statute. The PLFRA will remain in place until the complete liquidation of the special fund and assets. A formal dissolution date will be determined and communicated in the future. A transition to PERA will streamline benefit management, ensure financial stability, and align the City's firefighter retirement plan with industry standards. The PERA plan is administered and backed financially by the State of Minnesota. It offers full vesting after three years of service. Members and the City are each required to contribute to the plan at a rate of 6.5% of wages for the employee and 7.5% of wages for the City. The plan is transferable between cities and other City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372 Item 9A Page | 2 PERA organizations. Transitioning to the PERA plan results in the City being able to use State Fire Aid to directly offset firefighter wages and retirement benefits. The next steps for the PLFRA Board of Trustees includes overseeing the liquidation of the special fund, ensuring all retirement benefits and expenses are paid within 210 days of the plan's termination. FINANCIAL IMPACT: The PLFRA held a meeting on November 11, 2025 and voted to amend Article VIII, Section 3 of their Bylaws to increase the pension benefits from $10,500/year of service to $16,125/year of service. The maximum allowed per state statute is $20,000/year. The current year-over-year actuarial reports indicate that the PLFRA is fully funded and will not require any funds from the City to complete the dissolution of the relief association. With the transition of the firefighters to part-time employees the City will now receive the annual Fire State Aid payment from the State. In 2025, the Fire State Aid payment was $450,000. It is anticipated that the Fire State Aid payment in 2026 will be similar or slightly higher than 2025. This new revenue stream for the Fire Department budget will be split per our existing contract with the City of Credit River and Spring Lake Township. ALTERNATIVES: 1. Motion and second to adopt a resolution recognizing the relief pension plan's termination on February 28, 2026, supporting the PLFRA's dissolution and transition to PERA, and approve PLFRA’s benefit increase so long as it does not require any contribution from the City . 2. Motion and second to table action and continue discussion at a future meeting ATTACHMENTS: 1. PLFRA Meeting Minutes from November 19, 2025 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 26-XX Adopt a Resolution Supporting the Dissolution of the Prior Lake Fire Relief Association (PLFRA) and Transitioning Firefighter Benefits to the Minnesota Public Employees Retirement Association Coordinated Plan Motion By: Second By: WHEREAS, the City of Prior Lake has transitioned to a full-time firefighter model to provide a higher level of emergency response services; and WHEREAS, the Prior Lake Relief Association (PLFRA) currently administers retirement benefits for paid-on-call firefighters and the City may be financially responsible for any funding shortfalls; and WHEREAS, the PLFRA Board has commissioned a termination report to assess financial obligations upon dissolution; and WHEREAS, the City recognizes the Minnesota Public Employees Retirement Association (PERA) Coordinated Plan as a financially sustainable and transferable retirement system that aligns with industry standards; and WHEREAS, transitioning to PERA on March 1, 2026, will provide a stable, fully funded retirement system for the City’s firefighters and allow for the use of State Fire Aid for firefighter wages and benefits; and WHEREAS, the current relief retirement pension plan will terminate on February 28, 2026, facilitating the transition of Prior Lake part-time firefighters to PERA; and WHEREAS, current paid-on-call firefighters will transition to regular, part-time City of Prior Lake employees on March 1, 2026. 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 City of Prior Lake hereby supports the dissolution of the Prior Lake Fire Relief Association (PLFRA) and the transition of firefighter benefites to the Minnesota Public Employees Retirement Association – Coordinated Plan (PERA), effective upon the completion of the PLFRA termination process. th Passed and adopted by the Prior Lake City Council this 13 day of January 2026. VOTE Briggs Braid Churchill Lake Hellier Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ ______________________________ Jason Wedel, City Manager C:\\Users\\hsimon\\AppData\\Local\\Temp\\26-XX Supporting the Dissolution of the Prior Lake Fire Relief Association_675480\\26-XX Supporting the Dissolution of the Prior Lake Fire Relief Asso.docx 2 November 19th PLFRA meeting held at Prior Lake Fire station #1 -Call to order Time: 1932 -Roll call Quorum confirmed with 13 of the 29 members present(>40%). -Reading of the previous minutes Nov 11th minutes read and approved at 1936 -Reading of reports and minutes of the board meeting No Treasurer's report was read - no update in last week. -Reports of officers President Wolfram - Vice President VanCurler Treasurer Bischoff - Secretary Lofald -Propositions for membership None -Reports of special committees -Unfinished business Motion was made by Justin Bishoff and seconded by Tyler Gould to proposed bylaw change to amend Article VIII, Section 3(Appendix A) as read at the last meeting - motion passed unanimously. -Election of officers or trustees (Annual meeting) -New business Motion made by Chris Blade seconded by Brandon Grapper to use the assets in the general fund to pay the administrative costs of the dissolution motion carried unanimously. Motion to dissolve(Appendix B) was read to the membership and a motion was made by Andy Wolfram seconded by Tom Joachim - motion carried unanimously. -Adjournment @ 2021 Read and approved _________________________________ Secretary Appendix A The Association’s membership previously directed the Officers to investigate termination of the retirement plan. The professionals retained by the Association have advised that the special fund balance is likely to significantly exceed the Association’s current liabilities. As a result, it has been recommended that the retirement plan benefit amount be increased. The Association has been advised that there are two options to increase the retirement plan benefit amount: (1) amendment of the Bylaws by the Members, or (2) increase by the Board of Trustees as part of the process of terminating the retirement plan. The first option requires approval by the City. The second option does not. In recognition of the Association’s partnership with the City of Prior Lake and to continue working as a good partner, the following motion to increase the retirement benefit and terminate the retirement plan are recommended: Bylaw amendment to Article VIII, 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 up to $16,150, but not to a sum that would cause the liabilities of the retirement plan to exceed the value of the assets, after taking into account full vesting required when terminating the retirement plan and any administrative expenses, for each year that he/she served as an active member of the Prior Lake Fire Department. Appendix B Motion to Dissolve Background - Based upon a lack of interest by the members in continuing operation of the Association, the following motion to dissolve is recommended for action: Following termination of the retirement plan, the Officers of the Association shall develop and implement a plan for dissolution of the Association. As part of dissolving the Association, the assets in the general fund shall be used to pay administrative expenses. Any unused general funds shall be transferred to the City of Prior Lake for use in support of the Prior Lake Fire Department and its firefighters.