HomeMy WebLinkAboutItem 06.kMarch 18, 2013 Item No.
Resolution Amending the Fire Relief by -laws relating to Pension Benefits
Proposed Action
Staff recommends adoption of the following motion: Move to approve Resolution Amending the
Fire Relief by -laws relating to Pension Benefits.
Passage of this motion will increase pension benefits to $6,513 effective April 1, 2013; and to
increase the benefit level to $6,610 effective January 1, 2014 per year of service for firefighters.
Overview
The Lakeville Fire Relief submitted a request for a 2 year agreement to increase the pension level
from $6,417 to $6,513 effective April 1, 2013; and to increase the benefit level to $6,610 effective
January 1, 2014 per year of service for firefighters. The personnel committee concurred with the
increase.
The Lakeville fire fighters voted unanimously on March 4, 2013 to approve the request. If
approved, the pension becomes effective April 1, 2013 and January 1, 2014.
Primary Issues to Consider
• What are the funding sources for Lakeville Fire Relief pensions
• What is the history of Lakeville Fire Relief pensions and how does it compare with other
metro area cities?
• What are the financial (tax levy) impacts to the City of Lakeville?
Supporting Information
• Lakeville Fire Relief Letter
Michael Meyer, Fire Chief
If more than a sentence or two needed to explain the financial impact, add to notes page.
Financial Impact: _Budgeted: Y/N _YES_ Source: General Fund -Tax Levy
Related Documents (CIP, ERP, etc.):
Notes:
Lakeville Fire Relief
2013
The Lakeville Fire Relief Association members have approved a 1.5% pension increase for
2013 and 2014. The Association is seeking City approval of the pension increase.
Pension Funding Sources
The primary revenue sources for financing the fire relief pensions are investment earnings;
State Aids and municipal contributions (tax levies). The following is a historic overview of the
revenue sources.
Pension Benefits
Benefit Provisions. Authority for payment of pension benefits is established in Minnesota
Statute § 69.77 and 424A and may be amended only by the Minnesota State Legislature. The
benefit provisions are delineated in the Lakeville Fire Relief Association bylaws and are
consistent with Minnesota statutes. The following is a historical perspective of Lakeville
benefit levels.
Pension
Ye ar Benefits
2014
$
Investment
2013
State
6,513
Municipal
$
6,417
Year
$
Earnings
2010
Aid
Contribution
2009
Total
2012
$
420,119
$
219,958
$
44,804
$
684,881
2011
$
(93,663)
$
217,067
$
44,804
$
168,208
2010
$
560,847
$
199,224
$
178,331
$
938,402
2uu9
$
976,119
$
191,073
$
-
$
1,167,192
2008
$
(1,264,827)
$
224,674
$
94,833
$
(945,320)
2007
$
375,096
$
264,923
$
92,071
$
732,090
2006
$
383,941
$
304,523
$
85,933
$
774,397
2005
$
181,458
$
284,395
$
83,511
$
549,364
2004
$
274,403
$
291,147
$
81,000
$
646,550
2003
$
395,012
$
221,209
$
125,140
$
741,361
Pension Benefits
Benefit Provisions. Authority for payment of pension benefits is established in Minnesota
Statute § 69.77 and 424A and may be amended only by the Minnesota State Legislature. The
benefit provisions are delineated in the Lakeville Fire Relief Association bylaws and are
consistent with Minnesota statutes. The following is a historical perspective of Lakeville
benefit levels.
Pension
Ye ar Benefits
2014
$
6,610
2013
$
6,513
2012
$
6,417
2011
$
6,230
2010
$
6,230
2009
$
6,230
2008
$
6,000
2007
$
5,820
Change
$ 97
1.5%
$ 96
1.5%
$ 187
3.0%
$ -
0.0%
$ -
0.0%
$ 230
3.8%
$ 180
3.1%
$ 95
1.7%
The following is a list of the 10 largest metro area fire relief associations with lump sum benefits
compared to Lakeville.
City financial impacts.
Pension levels adjustments in one year will affect the Municipal Contribution (tax levy) in the
subsequent year. The extent of the Municipal Contribution is also affected by the
Associations portfolio investment earnings as well as State Aid revenues. The following is an
overview of the Municipal Contribution (tax levy) in 2014 if the Council approves the
proposed pension level benefit for 2013.
Scenario's
Pension Benefit
Benefit per year of service
Investments
Rate of return - estimated
Investment earnings
A B_
2013
$ 6,513 $ 6,513
1.5% 3.0%
$ 85,950 $ 171,700
State Aid (estimated)
Municipal Contribution
Required Certification
Increase /(decrease) over
prior year
2014 Municipal Contribution
(tax levy) increase /(decrease)
as a % of total 2013 tax levy.
$ 213,067 $ 213,067
$ 66,627 $ 53,765
$ 6,627 $ (6,235)
0.03% -0.03%
Benefit levels
Relief
Per year of service
Association
2010
2013
Northfield
7,500
7,500
Shakopee
7,500
7,500
Rosemount
6,900
6,900
Woodbury
6,720
6,720
Golden Valley
6,700
6,700
Lakeville
6,230
6,513
Prior Lake
6,500
6,500
Excelsior
6,250
6,250
Maplewood
5,500
6,000
Hopkins
7,000
5,800
New Brighton
5,400
5,700
City financial impacts.
Pension levels adjustments in one year will affect the Municipal Contribution (tax levy) in the
subsequent year. The extent of the Municipal Contribution is also affected by the
Associations portfolio investment earnings as well as State Aid revenues. The following is an
overview of the Municipal Contribution (tax levy) in 2014 if the Council approves the
proposed pension level benefit for 2013.
Scenario's
Pension Benefit
Benefit per year of service
Investments
Rate of return - estimated
Investment earnings
A B_
2013
$ 6,513 $ 6,513
1.5% 3.0%
$ 85,950 $ 171,700
State Aid (estimated)
Municipal Contribution
Required Certification
Increase /(decrease) over
prior year
2014 Municipal Contribution
(tax levy) increase /(decrease)
as a % of total 2013 tax levy.
$ 213,067 $ 213,067
$ 66,627 $ 53,765
$ 6,627 $ (6,235)
0.03% -0.03%
CITY OF LAKEVILLE
RESOLUTION
RESOLUTION AMENDING FIRE RELIEF BY -LAWS
BE IT RESOLVED by the City Council of the City of Lakeville, Minnesota, that the Fire Relief
Association's by -laws are hereby amended as follows:
Benefit
Level per
Year of Interest Rate for Date Benefit
Benefit Level Active Deferred Pension Approved by
Effective Date service Benefit Municipality
Janary 1, 2014
$6,610.00
Separate Account
March 18, 2013
April 1, 2013
$6,513.00
Separate Account
March 18, 2013
January 1, 2012
$6,417.00
Separate Account
December 19, 2011
April 6, 2009
$6,230.00
Separate Account
April 6, 2009
January 1, 2009
$6,230.00
5.00%
December 1, 2008
January 1, 2008
$6,000.00
5.00%
November 5, 2007
January 1, 2007
$5,820.00
5.00%
December 18, 2006
January 1, 2006
$5,725.00
5.00%
January 1, 2006
January 1, 2005
$5,550.00
5.00%
January 1, 2005
January 1, 2004
$5,400.00
5.00%
January 1, 2004
January 1, 2003
$5,300.00
5.00%
January 1, 2003
January 1, 2002
$5,100.00
5.00%
January 1, 2002
January 1, 2001
$4,750.00
5.00%
January 1, 2001
January 1, 2000
$4,500.00
5.00%
January 1, 2000
January 1, 1999
$4,000.00
5.00%
January 1, 1999
January 1, 1998
$3,850.00
5.00%
January 1, 1998
January 1, 1997
$3,750.00
5.00%
January 1, 1997
DATED this 18 day of March, 2013
CITY OF LAKEVILLE
Matt Little, Mayor
ATTEST:
Charlene Friedges, City Clerk