HomeMy WebLinkAbout4C - Firefighters Pension Benefits
STAFF AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
AUGUST 2, 1999
4C
RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF VOLUNTEER FIREFIGHTERS'
REQUEST FOR IMPROVED PENSION, DISABILITY & DEATH
BENEFITS
DISCUSSION:
Attached is a memorandum from the Prior Lake Volunteer Fire
Dept. and Relief Association which requests that pension benefits be
improved as of January 1, 2000 from $2,600 to $2,900 per year of
service and a change to the same amount for disability and death
benefits. This agenda item provides information with regard to this
request.
Current Circumstances:
Volunteer firefighters have requested a $300 per year increase in
pension benefit amount effective January 1, 2000 from $2,600 to
$2,900 per year of service. They are asking the City Council to
authorize an amendment to the Association Bylaws which provides
that a firefighter who has served in the Prior Lake Fire Department
for 20 years or more prior to resignation and has reached the age of
50 years old or more and been a member of the association for at
least 10 years shall receive $2,900 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 $58,000 rather
than the existing $52,000. 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.
Also requested is to change the disability and death benefits to an
amount equal to the pension benefit. Presently the bylaws provide a
disability and death benefit of $100 and $500 per year of service
respectively i.e., if a volunteer firefighter would be permanently
disabled after 4 years of service the volunteer would receive a one
time payment of $400.00 (4 yrs. x $100) or if death would occur a
payment of $2,000.00 (4 yrs. x $500). Under the relief association
proposal the dollar amount would be calculated by multiplying the
years of service by the same amount ($2900) that the individual
would be eligible for a pension payment. There are no vesting
requirements to be eligible for disability and death benefits. All the
cities in the attached survey that pay lump sum pension benefits
have this identical disability and death benefit bylaw provision.
16200 Eagle Creek Ave. S,E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUf\:ITY EMPLOYER
H:IFIREIPENAGEN.DOC
ALTERNATIVES:
RECOMMENDED
MOTION:
Issues:
The current $2,600 per year pension benefit amount has been in
effect for the past year while the disability and death benefit
amounts have remained unchanged for as long as anyone can
remember. The City's 1999 contribution to support the pension fund
is zero and will require no tax levy payable 2000. The firefighters'
pension plan is funded by the annual state aid received by the City,
derived from 2% of the homeowners insurance premium, which is
dedicated by law for pension contribution purposes.
Attached for Council information is a copy of a Fire Relief Pension
Survey. This data was obtained from the most recent State of
Minnesota relief association filings. Prior Lake's pension amount
including the proposed increases compares favorably with other
communities. Also, for reference purposes the maximum allowable
lump sum pension payment per year of service credit under MN
Statutes 424A.02 is $5,500.
Financial Impact:
Based upon actuarial projections and current investment
assumptions, certified by the relief association officers as required
by Minn. Statute 69.771. subd. 3, the new pension benefit amount of
$2,900 per year of service will not require any city contribution
presently or in the future. The 2% insurance money will fully fund
their pension program.
Conclusion:
Staff would recommend approval of the proposed pension benefit
increase to $2,900 per month as requested and to incorporate this
amount into their disability and death benefits as well. The pension
amount requested is reasonable when compared to other
departments. From the City's perspective it is important that the
pension remain competitive in order for the City to continue to
recruit and retain qualified volunteer firefighters.
1. A motion and second as part of the Consent Agenda to approve
an amendment to the Prior Lake Volunteer Firefighter Bylaws which
provides for a $2,900 per year of service credit for pension,
disability and death benefit purposes, effective January 1,2000.
2. Take no action at this time and direct the staff to provide
additional information.
Adopt as part of the Consent Agenda a motion and a second to
authorize a revision in Article VII, Section 1 and Article VIII,
Sections 1 & 2 of the Prior Lake Fire Relief Association Bylaws
increasing disability, death and pension benefits from $2,600 per
year of service to $2,900 per year of service effective January 1,
2000.
F:\USERSIRALPHlFlREIPENAGEN.DOC
REVIEWED BY:
Attachments:
1. Prior La ire Department Relief Association minutes approving
change in bylaws.
2. Prior Lake Volunteer Fire Department memorandums requesting
approval of increase in pension and disability and death benefits.
3. Fire Relief Pension Survey.
4. "Schedule I-II for Lump Sum Pension Plans State Fire Aid Year
2000".
Prior Lake Volunteer Fire Department
PRIOR LAKE VOLUNTEER FIRE DEPARTMENT
PRIOR LAKE, MINNESOTA 55372
At a regular meeting of the Prior Lake Fire Department Relief Association, a motion was made and
seconded to increase our pension benefits as of January 1st, 2000 from $2600.00 to $2900.00 per
year of service,
Therefore, Article VIII, Section 2 should read: The association shall pay to each member who shall
have served as an active firefighter in the Prior Lake Fire Department for a period of 20 years or
more prior to hislher resignation from said Fire Department, and who has reached the age of 50
years or more and who has been a member of the association for at least 10 years, the sum of
$2900.00 for each year that helshe served as an active member of said Fire Department.
7!-~:
Stacy Peterson
16200 Eagle Creek Ave. S.E., Prior Lake, MN 553721 Ph. (612) 447-42301 Fax (612) 447-4245
Prior Lake Volunteer Fire Department
TO:
PRIOR LAKE CITY COUNCIL
FROM:
PRIOR LAKE VOLUNTEER FIRE DEPARTMENT
SUBJECT: APPROVE INCREASE IN PENSION BENEFITS
DATE:
JULY 8m 1999
At this time we ask the city council to approve an increase in pension benefits as of January 1,
2000 from $2600.00 to $2900.00 per year of service.
Therefore article VIII, Section 2 will read:
The association shall pay to each member who shall have served as an active firefighter in the Prior
Lake Fire Department for a period of 20 years or more prior to his/her resignation from said Fire
Department, and who has reached the age of 50 years or more and who has been a member of the
association for at least 10 years, the sum of $2900.00 for each year that he/she served as an active
member of said Fire Department.
Thank You.
t3~~
Fire Chief, Bruce Sames
President, Doug Nelson
Treasurer, Joe Zieska
16200 Eagle Creek Ave. S.E., Prior Lake, MN 55372/ Ph. (612) 447-4230/ Fax (612) 447-4245
Prior Lake Volunteer Fire Department
TO:
PRIOR LAKE CITY COUNCIL
FROM:
PRIOR LAKE VOLUNTEER FIRE DEPARTMENT
SUBJECT: APPROVE INCREASE IN DISABILITY AND DEATH BENEFITS
DATE:
JULY 8, 1999
At this time we ask the city council to approve an increase in disability and death benefits to an amount
equal to our pension benefit. Therefore Article VII section 1 and Article VIII section 1 should read as
follows:
ARTICLE VII
DISABILITY BENEFITS
SECTION 1 : If a member of this association shall become permanently disabled, to the extent that
a physician or surgeon acceptable to the board of trustees shall certify that such disability will
permanently prevent said member from performing hislher duties in the Prior Lake Fire Department.
The association shall pay such member a sum equal the the pension benefit in Article VIII Section 3
of these bylaws for each year of active service in the Prior Lake Fire Department. If a member who has
recieved such a disability pension should subsequently recover and return to active duty on the Prior lake
Fire Department, any amount paid to him/her as a disability pension shall be deducted from hislher
service pension.
ARTICLE VIII
SECTION l: Upon the death of any member of the association who is in good standing at the time of
hislher death, the association shall pay to the surviving spouse, if any, and if there is no surviving
spouse, to surviving children, if any, and if no child or chidren survive, to the estate of such deceased
member the a sum equal to the pension benefit in Article VIII Section 3 of these bylaws for each year that
hel she served as an active member of the Prior Lake
Fire Department.
Thank You,
~y
Fire Chief, Bruce Sames
President, Doug Nelson
Treasurer, Joe Zieska
16200 Eagle Creek Ave. S.E., Prior Lake, MN 55372 I Ph. (612) 447-4230 I Fax (612) 447-4245
FIRE RELIEF PENSION SURVEY
City of Prior Lake
(August 1, 1999)
Number of Yearly Pension 20 Year
.c.itr Volunteers Credit Amount Lump Sum
Lakeville 68 $4000/per yr. of service $80,000
Apple Valley 71 $3500/per yr. of service $70,000
Stillwater 36 $3500/per yr. of service $70,000
Lino Lakes 49 $3400/per yr. of service $68,000
Northfie1d 28 $3300/per yr. of service $66,000
Shakopee 44 $3062/per yr. of service $61,240
Savage 36 $3050/per yr. of service $61,000
Hastings 39 $3000/per yr. of service $60,000
Prior Lake 44 $2600/per yr. of service $52,000
Rosemount 35 $2600/per yr. of service $52,000
Chanhassen 45 $2550/per yr. of service $51,000
Inver Grove Heights 44 $2500/per yr. of service $50,000
16200 ~1&uQ~g~rlWe. S,E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
"
t-!." m SC.. 99
SCHEDULES 1-11 FOR LUMP SUM PENSION PLANS
REPORTING FORM YEAR 1999
DETERMINATION OF PLAN LIABILITIES & REQUIRED MUNICIPAL CONTRIBUTION IN 2000
Firefighters' Relief Association of Prior Lake
SCHEDULE I
County of Scott
Estimation of relief association Special Fund pension liabilities for all members based on years of active service with the fire
department, with the regular per-year-of-service pension at $ 2900
..__...__._......._..m._........~........_._._.........__........_ __~_. ...._...._._..,~_......_._.._._m.. ..__._~_.._.... .m_..?..............___..........__......~.....__.m_._.... .._..J......__........_._..........m._..~.._.._...._...
1999 2000
To End of This Year To End of Next Year
Years Active Accrued Years Active Accrued
Service Liability Service Liability
31 89,900 32 92,800
~ ~o ~ ~~
24 69,0 25 72,~
22 63,800 23 _ 66,700
18 49,242 19 53,476
18 49,242 19 53,476
12 27,898 13 31,030
12 27,898 13 31,030
10 22,040 11 24,882
10 22,040 11 24,882
1022,040 11 24,882
9 19,314 10 22,040
9 19,314 10 22,040
8 16,704 9 19,314
8 16,704 9 19,314
7 14,268 8 16,704
7 14,268 8 16,704
7 14,268 8 16,704
7 14,268 8 16,704
6 11,890 7 14,268
6 11,890 7 14,268
5 9,686 6 11,890
5 9,686 6 11,890
5 9,686 6 11,890
3 5,510 4 7,540
":':":' :':':':: :: 700,756 ::} :\:// 769,428
Name
Age
F.D. Leave of
Entry Date Absence
Month Year I (in years)
5 1969
1. JAMES WEBER
2. KENNY KLINGBERG
3. WEEMER WEBER
4. DALE RADANKE
5. BRUCE SAMES
6. BRENT JOHNSON
6
1976
1976
6
4
1978
5
5
1982
1982
7. LARRY SCHOMMER
1988
1988
8. DAVE CHROMY
9. MARK FRIEDRICH
10. JAMES LARSON
7 1989
7LH 1989
7F\J 1989
7LJ 1990
71:/1 1990
8[:] 1991
8F::! 1991
10[:::1 1992
5Ed 1993
5[:'1 1993
5LH 1993
5[:il 1993
3[U 1994
5[[J 1995
5F:'I 1995
skU 1995
25. BRIAN DAVIS 9F:'I 1996
: :$U ~to.t.il: ~f :R.eg:U1~r.: p:etl$i~n: tl~b~itY::::::::::::::::::::::::::::::::::::::::::::::::::::::
11, CHRIS JOHNSON
12. DOUG HARTMAN
13. VICTOR ORESKOVICH
14. JOE BUSS
15. BRAD PATCHIN
16. RICK STEINHAUS
17. CARTER ANDERSON
18, STACY PETERSON
19. KURT CHELGREN
20. FIONA KEEL
21. JAMES KLINE
22, JOE ZIESKA
23. TONY HENNEN
24. DOUG NELSON
* Fractional Years of service must be calculated to nearest full year.
* Do not enter liability in Columns 6 or 8 for any person who will receive entire pension during this year. Enter this pension
amount on Schedule II, Section 1, Line g.
* For installment liability, enter amount which will be payable after end of this year in both column 6 and column 8.
* If interest is to be paid on unpaid pensions, add interest for 1 year in column 8.
* A copy of these schedules must be presented to the City Council before August 1 each year.
Page 1
SCHEDULE I - ADDITIONAL ACTIVE MEMBERS
.'
1 2 3 4 5 6 7 8
.............,.............-.....-..........................................-..... ................................................-.. .........,........-... .............-.......................-.......f999..---..... ......-.................--................20'0.0............--
F.D. Leave of To End of This Year To End of Next Year
Name Age Entrv Date Absence Years Active Accrued Years Active Accrued
Month... Year (in years' Service Liabilitv Service Liability
26, BRANDEN JOHNSON 9 1996 3 5,510 4 7,540
27. MICHAEL KLlMERS 9.:.:-: 1996 3 5,510 4 7,540
28. JON NIEMANN 91CJ 1996 3 5,510 4 7,540
29. TERRY BARTA 4 1997 3 5,510 4 7,540
30. SCOTT BURFEIND 4 ...... 1997 3 5,510 4 7,540
31. RICK KATHAN 4 ... 1997 3 5,510 4 7,540
32. CHRIS KORKOWSKI 4..... 1997 3 5,510 4 7,540
33. JOHN RIEGERT 4 ..... 1997 3 5,510 4 7,540
34, JIM RUZICKA 4 ... 1997 3 5,510 4 7,540
35. DALE CHARD 5.... 1998 2 3,596 3 5,510
36. JEANNE HANISH 5 1998 2 3,596 3 5,510
37. KEVIN KLEIST 5 1998 2 3,596 3 5,510
38. BRIAN ZOPOY 5 1998 2 3,596 3.' 5,510
39. JEFF MORRIS 10 1998 1 1,740 2 3,596
40, JIM MUELKEN 10 1998 1 1,740 2 3,596
41. LARRY STIER 2 1999 1 1,740 2 3,596
42. 0 0 0 0
43, I 0 0 0 0
44. . . . 0 0 0 0
45. 0 0 0 0
46. _ 0 0 0 0
47. kJ 0 0 0 0
48. . . . 0 0 0 0
49. Ld 0 0 0 0
50. 0 .. 0 0 0
51, 0 0 0 0
52. 0 0 0 0
53. 0 0 0 0
54, 0 0 0 0
55. 0 0 0 0
56. 0 0 0 0
57. 0 0 0 0
58. : : : 0 0 0 0
59. 0 0 0 0
. .
60. LJ 0 0 0 0
61. LJ 0 0 0 0
62. LJ 0 0 0 0
63, I 0 0 0 0
64, 0 0 0 0
65. 0 0 0 0
:::S~~~':~f:~g~'~~:Pe~~~~:l;jiiibir.tY.::::::::i:::::::::!=:::::::!:=i;:::::::::;:::;:::::::::::i':::::::::::::::::::::::::::::::: 69,194 !::::::::::::!!!:::::!:!:::: 100,688
SCHEDULE I - ADDITIONAL MEMBERS & TOTAL LIABILITIES
1 2 3 3a 4 4a 4b 4c 6 8
.......................................--.........--........-.........---...... .-......-.. ...---................... .......-...--..-.... -......................... .................... ...--.................-.- .,-..-..,........-...-- ...-..-........................--.. .......-..........--.--....---
Benefit Deferred Deferred
Name Leave Level at Non- Pension to pension to
Entry Separation of Total time of Forfeitable the end of the end of
Ace Date Date Absence Years seoaration % this year next year
Deferred Pensions
1. DAVE ERNEWIN 3/1 rrs 15,288 16,(1)2
2, CURT SCHMIDT 511/82 16,854 17,007
3, JOHN CLEMENS 511/82 19,787 '2SJ, n6
4. JOE MULKEN 12/1/78 31 ,117 32,673
5. JIM O'KEEFE 3/1 rT9 34,636 36,368
6. ALLEN BORCHART 611n6 50,936 53,483
7. JERRY MOHONEY 511/82 29,100 ~,561
8,
9.
10.
::Su~t~~i:i;ii. :~fer.rett: :~ilS'~~::::::::: 197,724 '2SJ7,61 0
..
-
Unpaid Installments
1.
2.
3.
. ::~U~to~j:~i:~~~i~:ll1~~i~~n~::: .0 0
Early Vested Pensions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
::~l!~~~(~f:;~~r.~y:y~~:~~i~~~:::;:;:::::::;:::::;:;:::;:;:::::;:::::;:::;:::::;:;:;:;:::::::::::;:::::::::::;:::::::::::;:;:::::;:;:::::::;:::;:;:::;:;:;:::::::;:::::;: 0 0
Use the columns provided to show calculations. Example, 4a x4b x4c= deferred pension amount
1999 2000
Total of Regular Pension Liabilities
From pages 1 and 2a 700,950 870,116
Total of Deferred, Unpaid, and Early Vested Pensions
If Any, from page 2b (above) 197,724 '2SJ7,61 0
A. Accrued Liability Through Next Ii:::: n::::::::: ~:::<: ~: ~: H
Year 2000 (total, columr , r::,,:::::::: ~: ~:~::: ~:, ~ ~ U l,on,726
B. Accrued Liability Through This : ~ : ~ : : : : : :
Year 1999 (total, columr ;- -' nHH
c. Subtract Line B from
Line A (normal cost) 110,CE2
Schedule II
Section 1
Determination of Projected Net Assets for the year ending December 31,
Special Fund Assets at December 31, 1998 1 $ 1,003,281
(See Ending Assets in Reporting Form - 1998)
Projected Income to December 31, 1999
a. Minnesota State Aid $ 65,746
(Use 1998 amount, exclude supplemental)
b. Municipal (independent fire) Contributions $ 0
c. Donations (List $ 0
d. Interest and Dividends $ 0
e. Net appreciation (depreciation) in fair
value of investments $ 40,000
f. Other income (Includes Supplemental) $ 0
(List - )
Total 2$ 105,746
Projected Assets plus Income December 31, 1999 (line 1 + line 2) 3$ 1,10.9,Q27
Projected Disbursements through end of year
g. Pensions (If listed here, don't include on Schedule I) $ 68,560
h. Other benefits $ 0
i. Administrative $ 200
Total 4$ 68,760
Projected Assets at end of year (line 3 minus line 4) 5$ 1,040,267
Section 2
Determination of Projected Surplus (Deficit) as of December 31, 1:
Projected Assets (line 5)
6$ 1,040,267
1999 Accrued Liability (Schedule I, Page 2b, Line B)
7 $ 967,674
8 $ 72,593
Surplus or (Deficit) (Subtract line 7 from line 6)
., Go to Section 3 if Surplus
., Go to Section 4 if Deficit
Section 3
Determination of Municipal Contribution (if Surplus;
Normal Cost (Schedule I, Page 2b, Line C)
9$
110,052
Calculated Administrative Expense (1998 Reporting Form Adm. Exp. $
Less:
j. Minnesota State Aid
k. 5% of line 5
I. 10% of line 8
Total Subtractions
174 x 1 .035) 10 $
180
$
$
$
65,746
52,013
7,259
11 $
125,018
Municipal Contribution (line 9, plus 10 minus 11)
If $1.00 or greater, certify to municipality before August 1, 1999,
If negative number, no contribution is due.
12 $
(14,786)
Section 4
Detennination of Municipal Contribution (if Deficit)
Amortization of Deficits.
Year Incurred
Column 1
Column 2
Amt Retired 12/31,
1999
Column 3
Left to Retire 1/1,
2000
Ori inal Amount
m.
::CHHH:C::$ij~~Ui<}:: n.
o.
o (section 2, line 8)
. 0 (Column 3 Subtotal)
o (m. minus n.)
Step # 1 If line 0 is positive, enter line 0 in columns 1 and 3 of New additional Deficit (1999) line.
(This is your New additional Deficit for 1999.)
Step # 2 If line 0 is negative, reduce columns 2 and 3 according to Deficit Reduction in the instructions.
Amortization of Deficit (Total from Column 1 x,10)
Total from Schedule I, Page 2b, line C - Normal Cost
Calculated Administrative Expense (1998 Reporting Form Adm. Exp.
x 1.035)
.13 $
14 $
15 $
o
o
o
Subtotal Lines 13+14+15
16 $
o
Less:
p. Minnesota State Aid
q. 5% of line 5
$
$
o
o
Total Subtractions (subtotal of Lines p and q)
Municipal Contribution (line 16 minus line 17)
(If 0 or negative, there is no municipal contribution)
17 $
18 $
O'
o
You must certify to municipality before August 1, 1999, even If no contribution Is due.
Section 5 - Test for Maximum Benefit Allowed
Ca/cula
F.
tion of A verage special fund income per member A+B+C
* Received or Receivable D
A B C D E
State Municipal 10% of Adive
Aid"' Support Surplus Members Average
last year 1998 65,746 o SC.98 10,893 41 1,869.24
2 years ago 1997 61,847 244 SC-97 4,212 39 1,700.08
3 years ago 1996 61 ,238 4,111 SC-g(5 41 1,593.88
Total column E divided by 3
$ r 1,721 I
Maximum Pension Benefit Under Statute
$ I 3,100 I
G.
^ To obtain G, look up the result of F on page 11 of the instructions, Table III, "Maximum Benefit Under Law"
^ This is your maximum benefit this year. You may not increase benefits beyond this amount.
OFFICER'S CERTIFICATION
(Form must be provided to municipal clerk on or before August 1,1999)
We, the officers of the Prior Lake Firefighters' Relief Association, state that the
accompanying schedules have been prepared in accordance with the provisions of Minn. Stat. S 69.772, subd. 4.
Further, benefit levels have been established in accordance with the average amount of available financing, as
required by Minnesota law.
We certify that based on the financial requirements of the Relief Association's Special Fund for the calendar year
2000 ,the required municipal contribution $0 . In the event that the bylaws of the Relief Association
have changed in the most recent year, we have attached a copy of the amendment. If municipal approval of said
amendment is required under Minn. Stat. S 69.772, subd. 6, we have also enclosed a copy of the municipal ratification.
7~14- 9~
Date
Signatu of Secretary
Signatur~r.~
r zLf ..-0/;
Date
},. z (1- 7 '7
Date
CLERK'S CERTIFICATION
( For Municipal Fire Departments Only)
I am the clerk of _PR\O Q.. LP..-.t.E- . I received on ----1-/~/.-n..(date), the completed OffiCE
of the State Auditor Schedules I & II from t Prior Lake Firefighters' Relief Association. I have
reviewed Section 2, line 8, Section 3, line 12, and Section 4, line 18 of Schedule II. If line 12 or line 18 reflect a required
municipal contribution, I ce that I will advise the governing municipal body at its next regularly scheduled meeting.
~rj99
( (.,\1. )
Business Phone
WARNING: This document must be fully completed, certffied by the relief association officers, forwarded to the municips
clerk, and filed with the Office of the State Auditor as required by Minn. Stat. 969.771, subd. 3. Failure to file this docum
whether or not a municipal contribution is due, will result in ineligibility for state fire aid, as required by Minnesota state la
Office of the State Auditor
Pension Oversight
525 Park Street
Suite 400
St. Paul, MN 55103