HomeMy WebLinkAbout6.j. Salary and Relief Benefit adjustments
EXECUTIVE SUMMARY
City Council Regular Meeting: December 17, 2019
AGENDA ITEM: Firefighter Compensation AGENDA SECTION:
Consent
PREPARED BY: Logan Martin, City Administrator
Jeff May, Finance Director AGENDA NO.: 6.j.
ATTACHMENTS: Fire Relief Proposal, 2019 Fire Department
Comparisons, Historic Fire Compensation APPROVED BY: LJM
RECOMMENDED ACTION: Motion to increase Firefighter compensation to $14/hr. in 2020, along
with the implementation of the modified Yearly Benefit Increase Process.
BACKGROUND
The City Council and staff have convened in multiple work sessions over the past few months to perform a
comprehensive review of the compensation offered to the City’s firefighters. As the Council is aware, the
City operates under a “paid on call” Fire Department, meaning that officers get an hourly rate for responding
to calls, attending training, and performing ancillary duties. Currently, Rosemount Firefighters are paid $12
per hour for calls, $10 per hour for training. The average shown on the attached list of comps is $14.04.
Based upon direction received at the December work session, an hourly increase to $14 per hour starting in
2020 is proposed.
Secondly, members of the Fire Department receive a retirement benefit based on their years of service. The
Fire Relief Association, which manages the pension funds for our firefighters, has worked closely with the
City to remain competitive in the pension compensation offered to our staff. In August, the Council agreed
to increase that annual rate to $7,400 per year of service. The average shown on the attached list of comps
is $7,344. Representatives from the Relief Association provided staff with updated financial projections
reflecting this proposal, which indicate that the Relief Fund will be over 136% funded in 2019, leading to a
$400 increase per the below plan (rather than the previously approved $100 increase).
As the Council will recall, the City worked with the Relief Association in 2015 to reduce the City’s annual
contribution to the Relief Fund from $171,000 annually to $30,000. This allowed the City to reduce its levy,
and also led to the development of a five-year plan whereby an annual retirement benefit increase of $100
per year would be considered, up to the Relief Association’s goal of $7,500 per year. A detailed history of
all funding into the Relief Association, along with historical compensation amounts, is attached.
Representatives from the Relief Association have presented a new proposal going forward, which would be
more directly tied to the performance of their investments and their State-mandated funding ratio. After
some discussion and modification to the original proposal, below is the final version for Council
consideration
Funding Ratio Increase
Less than 122% $0
122% or greater but lass than 128% $150
128% or greater but less than 136% $275
136% or greater $400
2
The structure of this arrangement allows for the membership to more directly experience the benefit of
positive performance by their investment portfolio. Several safeguards are built in to the Relief Association’s
proposal (attached), including a two-year freeze to any benefit increases in the event that a State-mandated
City contribution to the Relief Fund is required. Similarly, this structure does not allow for a benefit increase
when the fund is 122% funded, which is 2% over the point at which the State would mandate a City
contribution.
Council and staff will also be provided quarterly reporting & minutes from the Relief Association, along
with an annual report conveying the status of their funding ratio, prior to any increase decisions being made.
RECOMMENDATION
Staff recommends the Council approve a motion increasing Firefighter compensation to $14/hr. beginning
in 2020, along with the implementation of modified Yearly Benefit Increase Process, as presented.
Capital Markets
Review 2018 Year End.pdf
Yearly Benefit Increase Process
Annually, the process to determine a pension benefit increase shall involve the following steps:
1. The RFDRA Board will calculate the Plan Funding Ratio (PFR), defined as the ratio of investment portfolio
assets divided by pension fund liabilities, effective December 31st of the previous year utilizing the updated
year end information from the 4106_SC Schedule.
2. Any pension benefit increase request from above shall be contingent upon majority approval by the RFDRA
membership in February. This demonstrates the RFDRA Board's commitment to the new pension benefit
level.
3. The recommended effective date of the new pension benefit level once all contingencies are met would be
July 1st of the current year to ensure the completion of any discussions with the city, obtain the necessary
approvals from the RFDRA Board and membership, the City Council, and the updating of the bylaws.
4. The recommended PFR and corresponding per year of service pension benefit percentage increases are as
follows:
Plan Funding Ratio Increase
less than 122% $0
122% or greater but less than 128% $150
128% or greater but less than 136% $275
136% or greater $400
5. As a protection and control, there shall be no increases in the pension benefit for any year that there is
mandatory City contribution, and one year after the last mandatory City contribution.
6. This is designed to provide a buffer and additional safeguard for the volatility when large market corrections
occur.
7. All spreadsheets and financial models created by RFDRA Board members should be regularly updated with
current information and provided to the city for review in April as part of the increase process.
8. A year end recap should also be provided to the city in April containing the following:
a. Investment returns
b. State Aid received
c. # firefighters added
d. # firefighters declined
e. Plan Funding Ratio (Accrued Liabilities and Assets from Year End Schedule submitted to state)
f. Proposed benefit increase based on above tiers
g. Change in plan funding ratio after proposed increase
Rosemount Firefighter’s Relief Association
2875 145th Street West | Rosemount MN 55068
2019 Compensation Fire Relief Annual City
Total Operating Per Hour Beneft Amount Contribution
City Budget (If Paid-On-Call)(Per Year of Service)To Fire Relief
Apple Valley $1,963,642 $16.50 $7,000 $255,233
Burnsville *$7,551,808 n/a n/a n/a
Eagan **$4,288,100 $13.00 $8,261 $34,715
Farmington $1,267,885 $12.88 $7,500 $150,000
Hastings **$1,823,522 $13.60 - $15.65 $6,100 $0
Lakeville ***$2,034,937 $13.00 - $18.00 $8,395 $0
Rosemount $453,000 $12.00 $7,400 $30,000
South St. Paul ****$2,467,945 n/a n/a n/a
West St. Paul ****$2,467,945 n/a n/a n/a
Chanhassen $1,020,000 $13.39 $6,800 $60,000
Cottage Grove $1,183,485 $14.75 $6,000 $0
Prior Lake *****$933,000 $12.20 $8,500 $20,000
Savage $813,689 $14.92 $6,074 $184,514
Shakopee ******$2,272,100 $15.30 $8,750 $0
Avg= $14.04 Avg= $7,344 Avg= $66,769
* Burnsville has a Full-Time department so columns 2, 3 & 4 are not applicable
** Eagan & Hastings have part Full-Time and part Paid-On-Call
*** Lakeville's benefit for 2020 will go from $8,395 to $9,195
**** South St. Paul & West St. Paul shares a full-time department called the
South Metro Fire Department so columns 2, 3 & 4 are not applicable
***** Prior Lake's compensation for 2020 is proposed to go from $12.20/hr to $14.10/hr
****** Shakopee's budget reduced by State Aid pass through of $258,000
2019
Fire Department Comparisons
O:\taxation\TNT\2016\6.j. Salary and Releif Benefit (attach 2).xlsx
City of Rosemount Fire Department
Relief
Supplemental Benefit Training Training
State State City Amount Compensation Compensation Pay Pay
Year Aid Aid Contribution (Per Serv Yr)Per Hour Per Call Per Hour Per Call
2001 $54,303 $0 $26,000 $2,800 $8.25 n/a $6.00 n/a
2002 $63,378 $0 $135,000 $3,000 n/a $2.00 n/a $2.00
2003 $79,949 $0 $135,000 $3,900 n/a $2.00 n/a $2.00
2004 $106,192 $0 $135,000 $4,800 n/a $2.00 n/a $2.00
2005 $103,671 $0 $139,100 $5,300 n/a $2.00 n/a $2.00
2006 $112,929 $0 $143,300 $6,100 n/a $2.00 n/a $2.00
2007 $99,047 $0 $147,600 $6,100 n/a $2.00 n/a $2.00
2008 $85,086 $0 $152,000 $6,900 n/a $2.00 n/a $2.00
2009 $71,882 $0 $156,500 $6,900 n/a $2.00 n/a $2.00
2010 $73,399 $0 $161,200 $6,900 n/a $2.00 n/a $2.00
2011 $85,718 $0 $166,000 $6,900 n/a $2.00 n/a $2.00
2012 $86,845 $0 $171,000 $6,900 n/a $6.00 n/a $6.00
2013 $96,204 $28,428 $171,000 $6,900 n/a $10.00 n/a $10.00
2014 $101,128 $24,467 $171,000 $6,900 n/a $10.00 n/a $10.00
2015 $107,795 $26,375 $109,100 $7,000 n/a $10.00 $10.00 n/a
2016 $110,980 $26,921 $30,000 $7,100 $10.00 n/a $10.00 n/a
2017 $112,939 $27,328 $30,000 $7,200 $10.00 n/a $10.00 n/a
2018 $116,789 $27,789 $30,000 $7,300 $12.00 n/a $10.00 n/a
2019 $121,464 $28,119 $30,000 $7,400 $12.00 n/a $10.00 n/a
2020 TBD TBD $30,000 TBD $14.00 n/a $10.00 n/a