3.5. SR 07-14-2003TO:
FROM:
DATE:
SUBJECT:
Item ~ 3.5.
MEMORANDUM
Mayor and Council
Lori Johnson, Finance Director
July 14, 2003
Consider 2004 Benefit Level for Elk River Fire Relief Association
By August 1 of each year the Elk River Fire Relief Association is required to certify to the
City the minimum required municipal contribution to the Relief Association for the
following year. In addition, if the Relief Association is requesting an increase in the per year
of service pension amount for the next year, that request must be presented to the Council
for consideration prior to August 1. Attached is a letter from Relief Association President
Robert Dreissig presenting the Relief Association's 2004 pension position. Also attached is
part of Schedule II that will be submitted to the State Pension Division.
The Relief Association's documentation states that no City contribution is required in 2004
based on a benefit level of $3,575. The Relief Association is not requesting an increase in
the per year of service pension amount; it has been $3,575 since 2001. No municipal
contribution is required in 2004 because the projected assets exceed the 2003 accrued
liability. In 2003 there was a required city contribution of $3,888, which was significantly
below the $24,200 budgeted voluntary contribution from the City.
Action Requested
The City Council is asked to authorize payment of the budgeted 2003 pension contribution
to the Elk River Fire Relief Association in the amount $24,100.
S: \COUNCIL\Lori\04FireReIie fContribution.doc
Elk River Fire Relief Association
415 Jackson Ave.
ELK River, MN. 55330
July 7, 2003
RE: Per year pension amount
Elk River City Council
13065 Orono Parkway
Elk River, MN. 55330
Dear Elk River City Council,
The Elk River Fire Relief Association communicates each year with the Elk River City Council on the
status of the Relief Association funds. Often are funds are doing well enough that we ask for the Council's
permission to increase the per year pension amount, wlfch is covered by our fund's performance.
The current pension mnount is $3575 per year of service. Because this year's performance was not as
rigorous as we had hoped, we will not be requesting an increase to the pension amount tiffs year. We are
hopeful that the economy and with it, our investments will soon rebound. The first six months of ttfs year
are looking quite well.
I ti~nk you for your time and attention
Respectfully
Robert Dreissig
President
Elk River Fire Relief Association
Form SC-03 ELK RIVER \ Page 3
Schedule II
Section 1
Special Fund Assets at December 31, 2002
(See Ending Assets on 2002 Reporting Form)
Projected Income to December 31, 2003:
a. Minnesota State Fire Aid i ............................... 88,790
(Use 2002 amount, excluding Supplemental Benefit Reimbursements)
b. Municipal / Independent Fire Dept. Contributions ............. 23,400
c. Donations (List ) .............. 250
d. Interest and Dividends .............. .................... 1,975
e. Net Appreciation (Depreciation) in Fair Market
Value of Investments ................................... 151,322
f. Other Income (Include Supplemental) ...................... 3,600
Total
Projected Assets plus Income at December 31, 2003
Projected Disbursements through End of Year:
g. Pensions (If listed here, don't include on Schedule I) ...........
h. Other Benefits .........................................
i. Administrative ........................................
Total
Projected Assets at End of Year
Projection of net assets for the year ending December 31, 2003
1 $ 1,037,180
= Line 1 plus Line 2
1,000
4,460
= Line 3 minus Line 4
25
35
45
55
269,337
1,306,517
5,460
1,301,057
Section 2
Projected Assets
2003 Accrued Liability
Surplus or (Deficit)
Deficit Projected for 2003.
Projection of Surplus (Defici0 as of December 31, 2003
= Line 5 6 $
= Schedule I, Page 2b, Line B 7 $
= Line 6 minus Line 7 8 $
Table on sheet labeled Entries 2 must be completed
1,301,057
1,382,670
-81,613
Section 3
Normal Cost = Schedule I, Page 2b, Line C
Calculated Administrative Expense = (RF-02 Admin. Exp. $
Less:
j. Mi~mesota State Fire Aid .................
k. 5 % of Line 5 ..........................
I. 10% of Surplus ........................
Total Subtractions
Municipal Contribution -- Line 9, plus Line 10 minus Line 11
Determination of Municipal Contribution (if Surplus)
95
xl.035) = 10 $
11 $
125
You must certify to the municipallY, before August 1, 2003, even if no contribution is due.
Form SC-03 ELK RIVER \ Page 4
Section 4
Amortization of Deficits
Determination of Munlclpal Contribution (~f Defici0
Colunm 1 Colunm 2 Colunm 3
Year Incm'red Amt Retired Le~ to Retire
Original Amount 12/31/2003 1/1/2004
1994
1995
1996
i997
1998
1999
2000
2001
2002 102,457 20,844 81,613
Totals 102,457 20,844 81,613
Step # 1
l~fline o is positive, enter line o in columns 1 and 3 of New additional Deficit (2003) line.
(This is your New additional Deficit for 2003.)
If line o is negative, reduce columns 2 and 3 according to Deficit Reduction in the instructions.
102457
4116
88790
65053
m. 81,613 (Sec. 2, line 8)
u. 81,613 (Col, 3 Subtotal)
o. 0 (m minus n.)
Step # 2
Amortization of Deficit (Total from Column I) ..................................
Total from Schedule I, Page 2b, Line C (Normal Cost)
Calculated Administrative Expense (2002 Reporting Form Admin Exp) ...............
Subtotal Lines 13 plus 14 plus 15
Less:
p. Minnesota State Fire Aid ................................................
q. 5% of Line5
Total Subtractions (Subtotal of Lines p and q)
Municipal Contribution (line 16 minus line 17)
You must certify to the municipality before August 1, 2003, even if no contribution is du~
x 0.10 13 $ 10,246
14 $ 123,877
x 1.035 15 $ 4~60
16 $ 138,383
17 $ 153,843
18 $ -15,460
Section 5
Calculation of average Special Fund income per member
Test for Maximum Benefit Allowed
Enter data in blue-shaded ceils. Use whole A B C D
dollar amounts. Referenoe prior year forms. ' ..............................................................................................................................
State Fire Municipal 10% of Active
Aid * Support Surplus Members
:::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::: <.::.::.:.:.:.:,:.57:-.-:.:-: :.:.:<.:.:.:.:-:-:-:-:+:.:.:-:.:.:.:.
::::::::::::::::::::::::::::::::::::::::::
(A+B+C) + D = E
Per Ye~
Average
112,190 / 33 = 3,400
98,597 / 32 : 3,081
88,591 / 34 = 2,606
* Received or Receivable
F. Average available financing per active member for fl~e most recent 3-year period (Sum ofCok g + 3) 9087 / 3 = I; 3,029
G. Maximum benefit level per statutory schedule effective through 12/30/03 ..................................... $ 5,600
H. Maximum benefit level per statutory schedule effective 12/31/03.
............................................. $ 5,600
Lines G and H reflect your maximum benefit level for the periods cited. You may not establish a hi~her benefit level These figures will be
identical m all cases except where average available financing yields a maximum at the statutoky cap.