HomeMy WebLinkAbout6.h. 2021 Fire Relief Fund Benefit Proposal
EXECUTIVE SUMMARY
City Council Regular Meeting: July 20, 2021
AGENDA ITEM: Fire Relief Fund Benefit Proposal AGENDA SECTION:
Consent
PREPARED BY: Logan Martin, City Administrator
Teah Malecha, Finance Director AGENDA NO.: 6.h.
ATTACHMENTS: 2020 Annual Report presentation, Yearly
Benefit Increase Process agreement APPROVED BY: LJM
RECOMMENDED ACTION: Motion authorizing a $400 increase up to $8,200 for the
Rosemount Fire Relief Association’s annual retirement benefit
BACKGROUND
The Fire Relief Association, which manages the pension funds for our firefighters, has recommended a $400
increase in the retirement benefit from $7,800 to $8,200 per year of service. Representatives from the Relief
Association provided staff with updated financial projections reflecting this proposal, which indicate that
the Relief Fund will be 152% funded after accounting for the proposed increase. This funding ratio is
reflective of the positive results of the Relief Association’s investments. The presentation from their annual
report is attached.
As the Council will recall, the Relief Association worked with the Council in the Fall of 2019 to establish a
procedure for adjusting the annual benefit based on the status of their financial investments. The final
agreement between by both parties is attached, and indicates increases to their yearly benefit based on their
funding ratio as follows:
Funding Ratio Increase
Less than 122% $0
<122% - 128% $150
<128% - 136% $275
136% or greater $400
RECOMMENDATION
Staff recommends the City Council approve a motion authorizing a $400 increase up to $8,200 for the
Rosemount Fire Relief Association’s annual retirement benefit, effective June 30, 2021.
Parr McKnight
State Board of Investments
2019
Ending Balance
2020
Ending Balance % Change
$ 1,539,827.27
$ 3,003,409.96
$1,598,357.88
$3,532,062.92
8.40%
15.57%
Fire State Aid Supplemental State Aid$131,206.67 $28,962.40
# Separated Not Vested
# Separated Added to Deferred
# Separated Benefit Paid
# Deferred Paid
# Added 7
7
1
0
3
Beginning of Year
# Active # Deferred
End of Year
43 5
42 3
Accrued Liabilities
Assets
Funding Ratio
2020 Year End Funding Ratio
$5,131,221
$3,204,840
160%
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
Accrued Liabilities
Assets
Funding Ratio
Funding Ratio after Increase
$5,131,221
$3,360,152
152%
Benefit Increase of $400
Parr McKnight
State Board of Investments
2020
Ending Balance
2021
Balance as of 4-30 % Change
$1,598,357.88
$3,532,062.92
$1,657,424.43
$3,792,329.92
3.70%
7.37%
Accrued Liabilities
Assets
Funding Ratio
2020 Funding Ratio with Increase
$5,131,221
$3,360,152
152%
Accrued Liabilities
Assets
Funding Ratio
Funding Ratio as of 4-30
$5,453,246
$3,360,152
162%
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