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Home My WebLink About2.c. Fire Relief Fund Benefit Proposal EXECUTIVE SUMMARY City Council Work Session: May 9, 2016 AGENDA ITEM: Fire Relief Fund Benefit Proposal AGENDA SECTION: Discussion PREPARED BY: Dwight Johnson, City Administrator AGENDA NO. 2.c. ATTACHMENTS: Spreadsheet on Total Compensation; April 11th Packet Information APPROVED BY: ddj RECOMMENDED ACTION: Review New Information and Direct Staff on Further Actions BACKGROUND The Fire Relief Association, which manages the pension funds for our firefighters, has recommended a $100 increase in the retirement benefit from $7,000 to $7,100 per year of service. They submitted updated five year financial projections with the request which showed that the retirement funds continue to have a surplus and no additional taxes are anticipated to be needed for the increased benefit. The Fire Relief Association has had a long term goal to reach $7,500 in pension benefit and voluntarily reduced their pay in the early 2000’s to try to help reach that goal. During the last few years, staff has recommended and the Council has approved increases in the pay schedule for the firefighters to help with recruiting and retention of our paid-on-call firefighter force. At the April 11th work session, staff was asked to provide updated information on the total compensation of our firefighters as compared with other cities. Staff conducted a new survey and combined the results with other surveys less than a year old to arrive at the attached spreadsheet. The spreadsheet is divided into two categories: Dakota County cities and Other cities. The results are similar in both cases and show that Rosemount’s total compensation is currently 4.7 to 5.0% below the average of other cities. Further, the results show that we would still be very slightly below the other cities even if we implemented the $7,500 benefit immediately. The proposed increase to $7,100 per year of service would put us at about 96% of the average total compensation of other cities. RECOMMENDATION The Council is requested to look at the new information as well as the information submitted last month and direct staff on any further actions related to the request. TOTAL FIRE COMPENSATION COMPARISON DAKOTA COUNTY CITIES Pay/hr hours/yr pension/yr pension/hr total comp/hour Rosemount 10.00$ 400 7,000$ 17.50$ 27.50$ Apple Valley 15.00$ 400 6,700$ 16.75$ 31.75$ Farmington 10.75$ 400 4,575$ 11.44$ 22.19$ IGH 12.50$ 400 6,800$ 17.00$ 29.50$ Hastings 13.53$ 400 5,100$ 12.75$ 26.28$ Eagan 16.00$ 400 7,500$ 18.75$ 34.75$ Lakeville 12.00$ 400 6877 17.19$ 29.19$ Average 28.94$ Rosemount to Mean at $7000 pension/year 95.0% Rosemount to Mean at $7100 penson/year 95.9% Rosemount to Mean at $7500 penson/year 99.3% OTHER CITIES Savage 13.36 400 5500 13.75$ 27.11$ Andover 14.55 400 5000 12.50$ 27.05$ Cottage Grove 13.53 400 4700 11.75$ 25.28$ Golden Valley 15.83 400 7750 19.38$ 35.21$ Maple Grove 15.02 400 7504 18.76$ 33.78$ Red Wing 11.00 400 4000 10.00$ 21.00$ White Bear Lake 12.25 400 6600 16.50$ 28.75$ Woodbury 15.92 400 6720 16.80$ 32.72$ Average 28.86$ Rosemount to Mean at $7000 pension/year 95.3% Rosemount to Mean at $7100 pension/year 96.1% Rosemount to Mean at $7500 pension/year 99.6% EXECUTIVE SUMMARY City Council Work Session: April 11, 2016 AGENDA ITEM: Fire Relief Association benefit request AGENDA SECTION: Updates PREPARED BY: Dwight Johnson, City Administrator AGENDA NO. 3.b. ATTACHMENTS: Memo from Fire Relief Association APPROVED BY: ddj RECOMMENDED ACTION: Consider Fire Relief Association benefit request and next steps. BACKGROUND Last year, a five year plan was established with the Fire Relief Association which led to major changes in the funding of the retirement benefits for the Fire Relief Association. The plan showed that a surplus in the Fire Relief fund had been established which led to a large reduction in the need for City property tax levy dollars. The levy has been reduced from a high of $171,000 in 2014 to $30,000 in 2016. An increase in the benefit was approved in 2015 from $6900 per year of service to $7,000. A minimum of 20 years of service is required to be fully vested. The five year plan showed $100 increases over the next several years until the benefit reaches $7,500; a goal that has been discussed for more than a decade. The attached memo requests that the Council approve the next $100 increase to bring the benefit up to $7,100 this year. Staff review indicates that the five year plan appears to be within the estimated parameters established last year. As such, we believe that the Council can approve the request without an increase in taxes for the pension levy. RECOMMENDATION Council should consider whether or not a meeting with the Fire Pension Relief Committee is desired or any other next steps needed to consider the request. Rosemount Relief Association Benefit Increase Request of $100 per year of service The Rosemount Relief Association would like to submit a request to the city council for a $100 per year of service increase to the retirement benefit level. The past year we worked with the city to complete a five year plan to aid in reducing the city contribution amount to the relief association funds as well as implement a better target goal for the funds funding ratio. In the five year plan that was created, the goal was set at a 120% funding ratio. This means that the assets over liabilities ratio will be maintained above 120%. With the updated numbers shown below in the plan for the 2015 actual numbers, the projections for 2016 and beyond are being maintained above the 120% ratio with the proposed $100 increase to the benefit level each year. Also in the 5 year plan, the contribution amount by the city will be down to the targeted amount of $30,000 and will remain there for the future without any increase unless required by the actual year end schedule. By increasing the benefit level $100 and continuing to work with the city each year to review the 5 year projections and maintaining the funding ratio over the 120% target, we feel we are working towards the goal of trying to provide incentive to retain firefighters through their 20 year mark and beyond along with keeping the city’s contribution to a minimum. If there are any questions or if more information is needed please reach out to Ryan Slipka and he will gather the required information. Thanks Updated 5 Year projection (Bold numbers are actual reported numbers). Following Year Year Proposed Increase Proposed Benefit Beginning Balance Est. State Aid Municipal Contribution Est. Inter est Est. Net Appreciati on % Appreciat ion Est Expens es Benefits Paid Projected Assests Accrued Liability Surplus Required Municipal Contribution Normal Cost # Active FF Funding Ratio 2 2013 0 6900 2,504,979 124,632 171,000 ##287,784 11.49%13,101 214,900 2,874,130 2,468,808 381,903 0 262,753 41 116% 3 2014 0 6900 2,874,130 125,595 171,000 178,051 6.19%13,763 - 3,348,776 2,626,681 722,095 0 260,585 40 127% 4 2015 100 7000 3,348,776 128,627 109,100 (45,543) -1.36%15,525 93,712 3,447,248 2,813,154 634,094 0 289,930 45 123% 5 2016 100 7100 3,447,248 107,806 30,000 172,362 5.00%16,309 482,800 3,274,615 2,525,786 748,829 0 300,011 45 130% 6 2017 100 7200 3,274,615 111,579 30,000 163,731 5.00%17,133 566,705 3,013,220 2,294,856 718,364 0 286,272 45 131% 7 2018 100 7300 3,013,220 115,484 30,000 150,661 5.00%17,999 197,100 3,112,265 2,421,888 690,377 0 300,906 45 129% 8 2019 100 7400 3,112,265 119,526 30,000 155,613 5.00%18,908 177,600 3,239,804 2,584,596 655,208 0 311,984 45 125% 9 2020 100 7500 3,239,804 123,709 30,000 161,990 5.00%19,863 286,764 3,268,739 2,651,154 617,585 903 329,250 45 123%