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Home My WebLink About4E - Volungteer Fire Fighter Pension Benefit CONSENT #: PREPARED BY: SUBJECT: DATE: BACKGROUND: DISCUSSION: ISSUES: ALTERNATIVES: STAFF AGENDA REPORT ~e FRANK BOYLES, CITY MANAGER CONSIDER APPROVAL OF VOLUNTEER FIRE FIGHTER PENSION BENEFIT AMOUNT FROM $1750 PER YEAR OF ACTIVE SERVICE TO $1900 PER YEAR OF ACTIVE SERVICE DECEMBER 20, 1993 At the December 6 meeting Council deferred action on this request so that a question could be answered. The question was, "Does the anticipated 1994 City contribution of $16,950 provide sufficient funds to pay the City portion of any pensions for qualifying existing fire fighters at the new benefit level?" The staff was directed to research this information, and place this item on the Consent Agenda for this meeting. Finance Director Teschner has checked with the author of the pension analysis which was provided with the original agenda item. He confirms that analysis anticipates that any member of the fire department retiring after January 1, 1994, and meeting minimum pension vesting requirements would receive a lump sum pension based upon the $1900 per active year amount. The $16,950 City contribution combined with a contribution of approximately $40,000 from state aid derived from insurance premium rebates will provide the requisite funding for this benefit level. This amount has been incorporated into the 1994 proposed budget. The Council should determine whether it desires to increase the benefit amount to $1,900. It appears that based upon our survey, this benefit amount compares favorably with other similar communities. The Council has the following alternatives: 1. Adopt the revised benefit amount as part of the consent agenda. 2. Remove the item from the consent agenda for further discussion. RECOMMENDATION: Based upon the competitiveness of the proposed benefit level and the fact that it is budgeted for 1994, I recommend that the City Council authorize the benefit amount increase to $1900 per active year of service. ACTION REQUIRED: Motion and second to adopt as part of the consent agenda with this Item Incorporated therein. FBA3H.WRT -1- 4629 Dakota St. S.E., Prior Lake, Minnesota 55372 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER AGENDA #: PREPARED BY: SUBJECT: DATE: BACKGROUND: DISCUSSION: STAFF AGENDA REPORT 7A . 1\ FRANK BOYLES, CITY MANAGER CONSIDER FIRE DEPARTMENT RE ST TO INCREASE MONTHLY PENSION BENEFIT FROM $1750t>ER ACTIVE YEAR TO $1900 PER ACTIVE YEAR DECEMBER 6, 1993 The City's fire fighters receive two forms of remuneration from the City. The first is hourly pay received for fire, rescue and ambulance runs. The second is a lump sum pension benefit program funded by the City and reimbursements made from insurance premium returned to the City from the State. The Fire Department is seeking an increase in their pension benefit program from $1750 per active year of service to $1900 per active year of service. Attached is a survey completed by the Finance Department which shows the fire fighter and pension program compared to other metropolitan area communities. Prior Lake residents are getting a reasonable value for their tax dollar from our volunteer fire department members. Also attached is a financial statement which shows the actuarial impact of raising the benefit amount to $1900 as proposed. The Fire Department's last requested an increase in pension benefit amounts from the Council on January 6, 1992 from $1650 per active year of service to $1750 per active year of service. The current request is to increase the amount per active year of service to $1900 as proposed. By way of comparison, the table below shows the total pension amounts which a fire fighter receives if he/she worked for ten years (minimum vesting period), twenty years and thirty years. A fire fighter retiring after ten years service receives 60% of the pension benefit (i.e. $1750 x lOx .60). -1- 4629 Dakota St. S.E., Prior Lake, Minnesota 55372 I Ph. (612) 4474230 I Fax (612) 4474245 AN EQUAL OPPORTUNITY EMPLOYER Benefit Amount: Ten years. 20 years 30 years service service service Current ($1750) $10,500 $35,000 $52,500 Proposed ($1900) $11,400 $38.000 $57,000 ISSUES: In 1993. the cost to the City to fund a pension benefit program based upon $1750 per active year was $10,870. If the Council elects to increase the pension benefit amount, the City's contribution for 1994 would be $16,950. Part of this increase is due to the increased pension amount, and remainder attributable to five new departmental employees. The remainder of the financial support for the program is provided by an annual insurance reimbursement administered by the state in the approximate annual amount of $40,000. I believe that it is important for the City to maintain its pension benefit amounts at a level which will attract and retain members of the volunteer fire department. I believe our experience in both respects has been satisfactory. The proposed increase, while requiring an additional City contribution provides for a pension benefit level which compares positively to oth.er communities. ALTERNATIVES: 1. Adopt a motion which would authorize the increase in pension benefit levels effective January 1, 1994. Take no action which would continue the existing pension benefit level. 2. 3. Defer action pending additional information. RECOMMENDATION: I recommend Alternative #1 FINANCIAL IMPACT The City's 1994 budget contains the amount of $16,950 necessary to fund the pension program for 1994 at the levels requested by the fire fighters. ACTION REQUIRED: Motion and a second to authorize an Increase In the Prior Lake Volunteer Department Pension Benefit Program to $1900 per active year of service. FBAGN7.WRT -2- ] J J .l J 4. fJ':NSION . S ANNUAL, PER YEAR OR LUMP SUM City Anoka/Champlin.. · Apple Valley Chanhassen Chaska*** Eagan Eden Prairie Minnetonka Plymouth Savage Shakopee ~~~ *** DID NOT RESPOND I Minimum Years Vested 5 Yrs. 10 Yrs. 5 Yrs. 10 Y rs./50% 20 Yrs./1OO% 10 Yrs./l00% 10 Y rs. I I I I I I I I I I I -- ---- - _ 1__ I I I I Pension Level Per Year of SelVice $17.oo/mo/yr $3375.00 Lump Sum $ 13.oo/mo/yr 51950.00 Lump Sum 522.50/mo/yr 53375.00 Lump Sum $30.00/mo/yr 530.oo/mo/yr (lump sum also) Wi II be following new state guidelinesl I I 512.oo/mo/yr I I I 52263.00 Lump I Sum I ~ Sum I / ~ 10 Y rs. 8 Yrs. l_ __. -. --- -.--_.- I I I I PRIOR tAKE FIREfIGHTERS' RBLIEF ASSOCIATION Report of financial condition to end of 1993 and requirements for 1994 SCHEDULE I CALCULATION OF SPECIAL FUND LIABILITY FOR ALL MEMBERS AT PENSION LEVEL OF $1,900 PER YEAR OF ACTIVE SERVICE ENTRY TO END OF 1993 TO END OF 1994 NO NAME DATE YRS LIAB YRS LIAB i=====j=~=~SER========N~~=S9=======24====45:S00=========25======47=500============= 2 W SLIPHER Nov-69 24 45,600 25 47:500 3 G TANG Jan-74 20 38,000 21 39 900 4 K KLINGBERG Jun-76 18 32,262 19 35:036 5 W WEBER III Jun-76 18 32,262 19 35 036 6 A BORCHARDT Jun-76 18 32,262 19 35:036 7 0 RADANKE Apr-78 16 27,132 17 29,640 8 J MUELKEN Dec-78 15 24,776 16 27 132 9 J O'KEEFE Mar-79 15 24,776 16 27;132 10 J PERCAL Mar-79 15 24,776 16 27,132 11 T BOTHOF Mar-79 15 24,776 16 27,132 12 J MAHONEY Jun-82 12 18,278 13 20,330 13 M LYRENMANN Jun-82 12 18,278 13 20,330 14 B SAMES Jun-82 12 18,278 13 20 330 15 J CLEMENS Jun-82 12 18,278 13 20:330 16 B JOHNSON JUQ-82 12 18,278 13 20,330 17 J KLEIN ~-85 8 10,944 9 12,654 18 L SCHOMMER Jan-88 6 7,790 7 9,348 19 D CHROMY Jan-88 6 7,790 7 9 348 20 M FRIEDRICH Jul-89 4 4,940 5 6:346 21 J LARSON Jr Jul-89 4 4,940 5 6,346 22 GOLSON Jul-89 4 4,940 5 6 346 23 C JOHNSON Jul-89 4 4,940 5 6:346 24 L STIER Jul-89 4 4,940 5 6,346 25 D HARTMAN Jul-90 3 3,610 4 4,940 26 P HANSON Jul-90 3 3,610 4 4 940 27 V ORESKOVICH Jul-90 3 3,610 4 4:940 28 S JOHNSON Jul-90 3 3,610 4 4,940 29 J BUSS Oct-91 2 2,356 3 3,610 30 S MURPHY Oct-91 2 2,356 3 3 610 31 B PATCH Oct-91 2 2,356 3 3'610 32 M UNDERFERTH Apr-92 2 2,356 3 3'610 33 R STEINHAUS Sep-92 1 1,140 2 2:356 34 C ANDERSON May-93 1 1,140 2 2,356 35 D JENSEN May-93 1 1,140 2 2,356 36 S PETERSON May-93 1 1,140 2 2,356 37 P VINSAND May-93 1 1,140 2 2 356 38 K CHELGREN May-93 1 1,140 2 2:356 39 F KEEL May-93 1 1,140 2 2,356 40 41 42 43 44 45 46 47 48 49 50 ACCRUED LIAB FOR ACTIVE MEMBERS ACCRUED LIAB FOR DEFERRED MEMBERS ACCRUED LIAB FOR EARLY VESTED MBRS ACCRUED LIAB FOR UNPD INSTALLMENTS A} ACCRUED LIABILITY THROUGH 1994 B ACCRUED LIABILITY THROUGH 1993 575,115 C L.A - L.Bi NORMAL COST FOR 1994 DEF E.V. D ERNEWEIN .64 X 1400 X 11 E PETERSON .84 X 1650 X 16 C SCHMIDT .64 X 1750 X 11 11 ,409 24 449 12:577 11, 979 25,671 13,206 526,680 o 48,435 593,598 o 50,857 644 455 575: 115 69,340 SI~cL Lun 1. C;1 1 c U 18 t LOll 0 [ M 11lllD u;n ~1.....r 11 C I pill COli t rl b II t L v n PROJECTION Of SPECIAL fUND ASSeTS TO DECEMBER 31, 1993 ASSBTS AT JAmJARY 1, 1993 (12/31/92)------- EXPECTED INCOME TO DECEMBER 31, 1993 A Minn. State Aid $ 39,966 B City. Contribution 10,000 C Fun(ira isers, etc. 0 D Interest, rnv. Income 34,658 E Realized Gains (losses) 0 F Unr'ea li zed II ( losses) 0 G Other income 0 TOTAL OF LINES A THROUGH G----------------- BEGINNING ASSETS PLUS EXPECTED INCOME------ EXPECTED EXPENSE TO DECEMBER 311 1993 H~ Pens ions ~ 0 I Other benefits 0 J Administrative 650 TOTAL OF LINES H-I-J----------------------- PROJECTED ASSETS AT 12/31/93 (L.3 - L.4) 1. $ 407,747 2. $ 3. $ 84,624 ------------ 492,371 4. $ 5. $ 650 ------------ 491,721 ======s~~ti~~=2~=====D~t~~i~~ti~~=~f=~;~j~~t~d=SURPLus=~;=DEFICIT=@=12/31/93~====== Projected Assets (Line 5) 6. $ 491,721 Accrued Liability (Line B, Schedule 1) 7. $ 575,115 ----------------- If L.6 > L.7, enter difference: SURPLUS 8a. $ 0 If L.7 > L.6, enter difference: DEFICIT 8b. $ 83,394 **Go to Section 3 if SURPLUS *** To Section 4 if DEFICIT** ======s~~ti~~=3~==D~t~~i~~ti~~=~f=1994=M~i~i~~1=c~~t;ib~ti~~=(if=SURPLUS)========= Normal Cost {line C, Schedule 1)9. $ 0 Administrative Expense (1.035 X L. J) 10. $ 0 Less: K~ Minn. State Aid L 5' of Line 5 M 10' of Line 8a Total Subtractions 1994 City Contribution if SURPLUS exists (L. 8a) ~ $ o o o 11. $ 0 ------------------ 12. $ 0 ======s~~ti~~=4~=====D~t~~i~~ti~~=~f=M~i~i~~1=c~~t;ib~ti~~=(if=DEFICIT)=========== Normal Cost (Line C, Sch. 1) 13. $ 69,340 Amortization of deficit{s) incurred prior to end of 1993 YR ORIGIN. AMT RET AMT LEFT INCUR. AMOUNT PREY TO RETIRE 1989 ~~~212 3f~~19 27,~~~ 19 0 19 0 Totals 59,212 31,519 27,693 TOT ORIG DEF 59,212 ----------- X .10 =------14. Deduct col (3) total fro. L. Sb. If col 3 < 1.8b, difference is a NEW DEFICIT. $ 55,701 X .10 =---------15. Calculated Administrative Expense ------------------16. Total Costs LESS: H) Minn. State Aid -------$ 39,966 0) 5' of Line ~-----------$ 24,586 Total SubtractIons ---------------------------------17. 1994 City Contribution, if DEFICIT exists (L.8b) 18. $ 5,921 $ 5,570" $ 673 ------------ $ 81,504 $ 64 , 552 --------- $ 16,952 AVEJlAGE S/'ECIAL FUND INCOME bnon-inveslment) PEH ~1F.MBr:R FOR PREVIOUS THREE YEAR PERI O. ACTV S TATE LOCAL 1~10 ANNUAL 3YR FF AID TAXES SUR LUS TOT A L TOTAL 36 1992 39,966 0 39,966 36 1991 39,600 0 39,600 34 1990 29, 396 9,000 38,396 117 , 962 35 3YR TOT/3/IMBR 39,321 35 11,113 AVG PER MBR = Max pension (Avg. X 1.85) 2,059 =================================================================================~== CERTIFICATION OF SPECIAL FUND REQUIREMENTS This information must be certified to the clerk of the municipality or to the independent noo-profit firefighting corporation by 08/01/93. We, the officers of the Prior Lake Firefighters' Relief Association, state that th~ ~ccompanying ~chedules have been prepared in accordance with the prOVlSIons of the Mln. Stat. Ch. 69.772, subd 4. The average amount of available financing per active member for the past three years was 1,113 Further, benefit levels have been established in accordance with the average amount of available financing, as required by law. The mi city contribution for 1994 is: $16,952 , President oate__~~~~~______ Secretary Date I) - S' -9' J -: Treasurer Date~~~Jl~~~~===~= =================================================================== These Schedules were ~repared from information provIded by Officers of the Relief Association. Prepared by: Gus Welter, consultant 1901 Meadowview Road Bloomington, MN 55425 (612) 854-8856 Calculated as 12/31/93 ==================================================================================== CLERK'S CERTIFICATION I am the clerk (or other designated official) of the city of Prior Lake. I have received the completed OFFICE OF THE STATE AUDITOR SCHEDULES I & II from the Prior Lake firefigh~ers Relief Association o~ _ ____ _, 1993. I have reviewed Section 2, lInes 8, 12 and 18. If Ilne~2 or line 18 reflects a required municlpal contribution, I certify that I will so advise the municipal governing body at lts next regularly scheduled meeting. If the Certification of the Officers discloses that the Bylaws have been amended to provide a benefit increase, I certify that the municipal governing body has passed a resolution which approves the change in the bylaws. A copy of the resolution is attached (if required). Date________________,1993 Signature ____________________________ Phone' _________________ Title ---------------------------- (Note: Failure to file this document in a timely manner, whether or DOt a municipal contribution is required, will result in loss of state aid.)