HomeMy WebLinkAboutItem 06.d
Date: Item No.
RESOLUTION AMENDING THE LAKEVILLE FIRE RELIEF ASSOCIATION BYLAWS RELATING
TO PENSION BENEFIT LEVELS
Proposed Action
Staff recommends adoption of the following motion: Move to approve Resolution Amending
the Lakeville Fire Relief Association Bylaws relating to Pension Benefit Levels.
Overview
The Lakeville Fire Relief Association submitted a request for pension benefit increases of $348
and $370 for calendar years 2017 and 2018, respectively, which would result in pension
benefit levels of $7,225 effective January 1, 2017 and $7,595 effective January 1, 2018. The
Lakeville Fire Relief Association’s request was reviewed and discussed at the September 26,
2016 council workshop and the City Council concurred with the increases.
Per the Office of the State Auditor, the City Council is required to ratify each incremental
benefit level before it becomes effective. Therefore, the attached resolution only addresses
the pension benefit level for 2017.
Based on the support by the City Council for the 2018 pension benefit level increase, City staff
will bring forth a resolution in February, 2017 for ratification by the City.
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
• September 26, 2016 Council Workshop Memo which includes a memo from the
Lakeville Fire Relief Association.
• Resolution amending Lakeville Fire Relief Association Bylaws
Financial Impact: $ Budgeted: Y☐ N☒ Source:
Related Documents: (CIP, ERP, etc.):
Envision Lakeville Community Values: Safety Throughout the Community
Report Completed by: Michael Meyer, Fire Chief; Jerilyn Erickson, Finance Director
October 17, 2016
0 LFRA Special Fund
City of Lakeville
Finance Department
Memorandum
To: Mayor and Council
From: Jerilyn Erickson, Finance Director
Date: September 26, 2016
Subject: Fire Relief Pension Benefit
The Lakeville Fire Department is comprised primarily by volunteers. These volunteers are
paid a nominal amount for the actual fire calls but are eligible for a lump sum pension benefit
(subject to vesting requirements and years of service).
A memo from the Lakeville Fire Relief Association Board is attached to this report which
articulates their request for an increase in the pension benefit increase along with some
supporting information.
City staff has reviewed the historical pension benefit levels, funding sources, funding ratio of
the Special Pension Fund, and the impact of the proposed pension benefit levels using
conservative estimates for investment earnings, etc. The following table shows the projected
impact of the proposed increases in pension benefit levels for 2017 and 2018:
Actual Projected Projected Projected Projected Projected
2015 2016 2017 2018 2019 2020
Pension Benefit Level 6,877.00$ 6,877.00$ 7,225.00$ 7,595.00$ 7,595.00$ 7,595.00$
Projected Net Assets 7,478,959 7,390,695 7,262,822 7,504,108 8,108,005 8,733,661
Accrued Liability 4,829,007 5,906,450 6,020,005 6,525,395 7,208,698 7,945,268
Surplus or (Deficit)2,649,952 1,484,245 1,242,817 978,712 899,308 788,393
Ratio 154.88% 125.13% 120.64% 115.00% 112.48% 109.92%
The projections do reflect a municipal contribution being phased back in as a funding source
starting in 2018 at $25,000. This amount is significantly lower than the historical contribution.
Another relevant point that should be considered is the financial commitment that would be
necessary if the community had a full-time fire department. For comparative purposes, the
City of Burnsville has full-time firefighters/paramedics with a 2016 operating budget of $6.40
million in its General Fund. The City of Lakeville’s operating budget for the fire department is
$1.75 million in its General Fund.
Council Direction
Staff is seeking direction regarding the 2017 and 2018 fire pension benefit levels.
Attachment: Lakeville Fire Department Memo
Memorandum
To: Mr. Justin Miller, City Administrator
From: Lakeville Fire Relief Association
Copy: Mike Meyer, Fire Chief
Jerilyn Erickson, Finance Director
Date: September 22, 2016
Subject: Fire Relief Pension Benefit Increase Proposal
The Lakeville Fire Relief Association is respectfully proposing pension benefit increases of
$348 and $370 for calendar years 2017 and 2018, respectively.
In 2014, the Lakeville Fire Relief Association and the City of Lakeville had approved $132 and
$135 pension benefit increases for 2015 and 2016.
The Relief Board has strived to use sound strategies and Envision Lakeville Community Values
in decisions that relate to the management of the Special Pension Fund. Listed are key factors
that are considered with the Special Fund:
Community Values: Good Value for Public Services
Community Values: Sense of Community and Belonging
Community Values: Cultivate a Sense of Community
1. Community Values: Good Value for Public Services – Public Safety
The Special Fund investment account is managed by the Lakeville Fire Relief Association and
has consistently been fully funded over the past eight years, providing a substantial value to
our community with minimal financial impact. For the years of 2015, 2016 and 2017 the
Municipal contribution has been and will be $0. The Association’s members would like the
City to consider reinstating a municipal contribution beginning in 2018 toward the ongoing
health of the Special Pension Fund.
2. Community Values: Good Value for Public Services – Public Safety
The Balance of the Special Fund, unlike many Pension funds in the State and around the
country, is fully funded, as sound financial management has positioned the Fund in a positive
position to support Firefighters. A primary goal for the Lakeville Fire Relief Association and the
Lakeville Fire Department is to use the Special Pension Fund as a key component in retaining
and motivating firefighters who give a considerable time commitment and personal sacrifice
to the community. Maintaining a fund balance of 110% provides a good value for public
safety and minimal commitment of the City.
3. Community Values: A Sense of Community and Belonging
The Lakeville Fire Relief Association believes there is a value in consistent community support.
Of all of the services that the City of Lakeville provides to its residents, only one requires that
you live within the community. The Lakeville Fire Department requires that you live within 2
miles of your respective station. Being a Fire Fighter within the community comes with a
significant amount of pride & ownership in everything we do. And it takes someone special
to be that person.
4. Community Values: Cultivate a Sense of Community
We are your neighbor, local business owners and friends. Nationally and locally, recruitment
of Volunteer Fire Fighters has seen a steady decline to our ranks, putting greater pressure on
those that the City relies on to provide Fire/Rescue services. By continuing to grow a strong
benefit level and maintain a stable fund balance allows the Lakeville Fire Department to
maintain its position as a highly respected department within the community.
The following pages have been submitted for further historical and statistical information,
analysis and impact.
Pension Funding Sources
The primary revenue sources for financing the fire relief pensions are investment earnings,
State Fire Aid and municipal contributions (tax levies). The following table is a historic
overview of the revenue sources:
Year Investment
Earnings
State Fire
Aid
Municipal
Contribution Total
2017 TBD Due Oct
2017 $0 TBD
2016 TBD Due Oct
2016 $0 TBD
2015 $39,629 $335,889 $0 $375,518
2014 $490,870 $312,542 $60,000 $863,412
2013 $1,156,305 $309,365 $60,000 $1,525,670
2012 $420,119 $217,958 $44,804 $682,881
2011 ($93,663) $213,067 $44,804 $164,208
2010 $560,847 $196,224 $178,331 $935,451
2009 $976,119 $191,073 $0 $1,167,192
2008 ($1,264,827) $224,674 $92,071 ($945,320)
2007 $375,096 $264,923 $85,933 $732,090
2006 $383,941 $304,523 $83,511 $774,397
2005 $181,458 $284,395 $81,000 $549,364
2004 $274,403 $291,147 $125,140 $646,550
2003 $395,012 $220,209 $48,467 $741,361
Totals
2003-2015 $3,895,309 $3,365,989 $904,110 $8,165,408
The following sources represent the Lakeville Fire Relief Associations annual revenue streams
historically over the last 12 years:
Investment Earnings: 48%
State Aid: 41%
Municipal Contribution: 11%
Pension Benefit Levels
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 table is a historical overview of Lakeville
benefit levels:
Between 2010 – 2016, the average annual pension increase has been $92.
Between 2003 – 2016, the average annual pension increase has been $127.
Year
Pension
Benefit
Amount
Increase
2018 $7,595 $370
2017 $7,225 $348
2016 $6,877 $135
2015 $6,742 $132
2014 $6,610 $97
2013 $6,513 $96
2012 $6,417 $187
2011 $6,230 $0
2010 $6,230 $0
2009 $6,230 $230
2008 $6,000 $180
2007 $5,820 $95
2006 $5,725 $225
2005 $5,500 $100
2004 $5,400 $100
2003 $5,300 $200
Lump Sum Benefit Comparison
The following table is a list of the Metro Area fire relief associations with lump sum benefits
compared to Lakeville:
Relief Association Population
(2016)
Benefit
Level
(2013)
Benefit
Level
(2014)
Benefit
Level
(2015)
Benefit
Level
(2016)
Maplewood*39,742 6,200 9,000 9,500 9,500
Northfield**20,380 7,500 7,500 7,500 8,500
Inver Grove Heights 35,071 5,800 5,900 6,800 7,900
S hakopee 40,254 7,500 7,600 7,700 7,800
Golden Valley*21,571 7,000 7,300 7,300 7,750
Rosemount 23,042 6,900 6,900 7,000 7,100
Prior Lake*25,049 6,500 6,800 7,100 7,100
Lakeville 59,991 6,513 6,610 6,742 6,877
Woodbury 66,974 6,720 6,720 6,720 6,720
New Brighton 22,170 5,700 6,300 6,300 6,500
Farmington 22,451 4,575 4,575 4,575 5,500
*Italicized amounts reflect the prior year benefit level due to the information not being available.
**Northfield is not in the 7-county metro area.
Population estimates are from the Metropolitan Council or city website.
CITY OF LAKEVILLE
RESOLUTION NO._________
RESOLUTION AMENDING LAKEVILLE FIRE RELIEF ASSOCIATION BYLAWS RELATING TO
PENSION BENEFIT LEVELS
WHEREAS, The bylaws of the Lakeville Fire Relief Association provide for a defined
contribution benefit for volunteer firefighters that are eligible under the vesting schedule.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lakeville,
Minnesota that the Lakeville Fire Relief Association's bylaws are hereby amended as per
Appendix A attached hereto.
ADOPTED by the Lakeville City Council this 17th day of October 2016
CITY OF LAKEVILLE
___________________________
Matt Little, Mayor
ATTEST:
_____________________________
Charlene Friedges, City Clerk
APPENDIX A
LAKEVILLE FIRE RELIEF ASSOCIATION
Benefit Levels
Benefit Level
Effective Date
Benefit Level per
Year of Active
Service
Interest Rate for
Deferred Pension
Benefit
Date Benefit
Approved by
Municipality
January 1, 2017 $7,225.00 Separate Account October 17, 2016
January 1, 2016 $6,877.00 Separate Account November 3, 2014
January 1, 2015 $6,742.00 Separate Account November 3, 2014
January 1, 2014 $6,610.00 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 5.000% December 1, 2008
January 1, 2008 $6,000.00 5.000% November 5, 2007
January 1, 2007 $5,820.00 5.000% December 18, 2006
January 1, 2006 $5,725.00 5.000% January 1, 2006
January 1, 2005 $5,550.00 5.000% January 1, 2005
January 1, 2004 $5,400.00 5.000% January 1, 2004
January 1, 2003 $5,300.00 5.000% January 1, 2003
January 1, 2002 $5,100.00 5.000% January 1, 2002
January 1, 2001 $4,750.00 5.000% January 1, 2001
January 1, 2000 $4,500.00 5.000% January 1, 2000
January 1, 1999 $4,000.00 5.000% January 1, 1999
January 1, 1998 $3,850.00 5.000% January 1, 1998
January 1, 1997 $3,750.00 5.000% January 1, 1997
NA means not applicable.
NR means not required.
TBD means to be determined