5.1. SR 07-19-2004City ~
Paver
TO:
FROM:
DATE:
SUBJECT:
Item # 5. I.
MEMORANDUM
Mayor and Council
Lori Johnson, Finance Director
July 19, 2004
Consider 2005 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 m~ increase in the per year
of serwqce pension amount for the next year, that request must be presented to the Council
for consideration prior to August 1. The Relief Association is requesting m~ increase in the
benefit level for 2005. Attached is a letter from Relief Association President Robert Dreissig
regarding the requested increase along with background data m~d the schedules that will be
submitted to the State Pension Division.
As the attached memo states, the requested increase is from $3,575 per year of serwqce to
$4,000 per year of serwqce. The $3,575 per year benefit has not increased since 2001. Prior
to that, the anaount typically increased mmually. However, low interest rates m~d a decrease
in the value of the Association's portfolio in recent years have made it difficult to justify m~
increase. Recently the investments have rebounded m~d it is now possible to increase the
benefit level. The attached schedule (form SC 04) prepared by the Relief Association states
that no City contribution is required in 2005 based on a benefit level of $4,000. The
calculation includes three percent interest income on the investments.
Second, the 2004 budget included a voluntary payment to the Relief Association of $24,800.
The voluntary payment is reviewed mmually during budget discussions m~d m~ inflationary
increase is usually applied so the contribution increases each year. Authorization to make
this payment is also requested at this time.
Finally, as we have discussed in previous years, by ratifying m~ increase in the benefit
anaount, the City must provide the funds needed to support those benefits. With this
increase, the Association estimates that it will be beiwveen 93 m~d 95 percent funded so the
possibility of additional City contributions is extremely remote, but possible under the worst
case scenario. Both Mayor I4Jinizing m~d I serw-e as trustees of the Association m~d we will
be available to answer questions you may have on this request. Also, Relief Association
President Rob Dreissig and Secreta~y Bob Pearson will be present at the meeting to answer
questions.
Action Requested
lt~e City Council is asked to consider increasing the Elk River Fire Relief Association per
year of se~-v-ice benefit level to $4,000 per year for 2005. T}~e Council is ~urther requested to
authorize payment of the budgeted 2004 pension contribution to the Association in the
amount of $24,800.
Relief Growth
Year Amount Increase
1981 $3O0
1982 $400 $100
1983 $500 $100
1984 $675 $175
1985 $800 $125
1986 $1,000 $200
1987 $1,200 $200
1988 $1,400 $200
1989 $1,500 $100
1990 $1,550 $50
1991 $1,850 $300
1992 $1,900 $50
1993 $2,200 $300
1994 $2,240 $40
1995 $2,350 $110
1996 $2,350 $0
1997 $2,500 $150
1998 $2,674 $174
1999 $2,900 $226
2000 $3,370 $470
2001 $3,575 $205
2002 $3,575 $0
2003 $3,575 $0
2004 $3,575 $0
2005 $4,000 $425
Total Increase $3,700
Years $24
Average Increase $154
Data Entry
Data entered here will populate the 2004 Schedule £orm. Please use only Special Fund data.
Choose your relief association name:
Annual benefit level (effective 12/31/2004):
2003 Reporting Form (RF-03) Data
Ending Assets (12/31/03)
State Aid Received or Receivable
Administrative Expense
ELK RIVER
4,ooo i
1,354,326
112,146
2,934
2004 Actual and/or Projections
Revenues
Municipal / Independent Fire Dept. Contributions
(must be at least the Required Contribution shown on the SC-03)
Interest / Dividends
Appreciation / (Depreciation)
Member Dues
Other Revenues
Expenses
Service Pensions
Other Benefits
Administrative Expenses
24,800
2,200
49,146
39
0
0
0
3,392
Deficit Section - If there was deficit information on the SC-03, enter that information here.
Original Amount
[ Year Incurred I (from SC-OS)
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
(1)
101,322
57,137
158,459
I Amount Retired I [ Amount Left
(from SC-03 + 10%) Before Adiusting
(3)
Totals
(2)
33,595
33,595
0
0
0
0
o
0
0
0
67,727
57,137
124,864
Surplus or Deficit
(page4) a[ 124,864 1
Sum of Column 3
bt 67,727 1
New Deficit
(a-b) c[ 57,137 I
ELK RIVER / Page 1
Fire Dept. Leaves To end of 2004 To end of 2005
Date of Age Entry Of Years Years
Birth on Date Absence Of Accrued of Accrued
Name mm.:d.d.-~y... _1_2/3__1/04 mm-dd-yy (months) Service Liability Service Liability
1 10/I/1976 28 112,000 29 116,000
2 9/1/1978 26 104,000 27 108,000
3 11/1/1978 26 104,000 27 108,000
4 11/1/1980 24 96,000 25 100,000
5 5/1/1982 23 92,000 24 96,000
6 8/I/1983 21 84,000 22 88,000
7 1/1/1985 20 80,000 21 84,000
8 1/1/1985 20 80,000 21 84,000
9 6/1/1988 17 62,400 18 67,920
10 6/1/1988 17 62,400 18 67,920
11 6/t/1988 17 62,400 18 67,920
12 9/t/1989 15 52,160 16 57,120
13 9/1/1989 15 52,160 16 57,120
14 9/I/1989 15 52,160 16 57,120
15 6/4/1992 13 42,800 14 47,360
16 6/4/1992 13 42,800 14 47,360
17 6/4/1992 13 42,800 14 47,360
18 4/6/1995 10 30,400 11 34,320
19 4/6/1995 10 30,400 11 34,320
20 2/11/1997 8 23,040 9 26,640
21 3/30/1999 6 l 6,400 7 19,680
22 4/5/1999 6 16,400 7 19,680
23 4/7/1999 6 16,400 7 19,680
24 3/3/2000 5 13,360 6 16,400
25 _ _ 3/8/2000 5 13,360 6 16,400
Subtotal of Page 1 Liability - Active Members 1,383,840 1,488,320
Schedule Form for Lump Sum Pension Plans
Reporting Year 2004
Determination of Plan Liabilities and Required Municipal Contribution for 2005
Relief Association [Elk River Fire Relief Association [ County [Sherbume ]
Annual benefit level in effect for 2004 [ 4,000 l
(If you change your benefit level before 12/31/04, the SC must be recalculated at the new level.)
Active Member Information
Form SC-04 ELK RIVER / Page la
Relief Association [Elk River Fire Relief Association I County [Sherburne I
benefit level in effect for 2004 ] 4,000 [
Annual
(If you change your benefit level before 12/31/04, the SC must be recalculated at the new level.)
Active Member Information - continued
Fire Dept. Leaves To end of 2004 To end of 2005
Date of Age Entry of Years Years
Birth on Date Absence Of Accrued of Accrued
Name mm-dd-yy 12/31/04 mm-dd-yy (months) Service Liability Service Liability
26 3/8/2000 5 13,360 6 16,400
27 3/8/2000 5 13,360 6 16,400
28 3/8/2000 5 13,360 6 16,400
29 8/31/2001 3 7,600 4 10,400
30 9/9/2001 3 7,600 4 10,400
31 112/28/2002 2 4,960 3 7,600
32 12/28/2002 2 4,960 3 7,600
33 12/29/2002 2 4,960 3 7,600
34 3/1/2004 1 2,400 2 4,960
35 3/1/2004 1 2,400 2 4,960
36 3/1/2004 1 2,400 2 4,960
37 ~ 3/1/2004 1 2,400 2 4,960
38 3/1/2004 I 2,400 2 4,960
39 3/1/2004 1 2,400 2 4,960
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
Subtotal of Page la Liability - Active Members Continued 84,560 122,560
Form SC-04
Deferred Member Information (fully or partially vested)
See separate instructions regarding completion of the fields below.
ELK RIVER
/ Page 2
Total Service:
2004 Estimated Liability:
2005 Estimated Liability:
Enter all information as it pertains to this member.
Member Name:
Vesting: Minimum Years Required: 5
Deferred Interest (if offered): Calendar Year
Service Dates: Entry: 2/1/1981 Separation:
LOAs (in months): 0
Years: 20 Months (if paid): 0
77,920
81,816
Benefit Level
at Separation:
DOB:
X OR FullPeriod
2/1/2001
Vesting
Percent: 100 %
(overwrite, if necessary)
Are Months of
3,575 Service Paid? Yes
Interest Option in Bylaws at Separation *
(Choose one option) D
A - No Interest
B - Straight 5%
C - Separate Account/Vehicle
D - Actual interest, up to 5%
* Since interest option D was chosen, enter the rates of return used for each year below.
1980: % 1985: % 1990: % 1995:
1981: % 1986: % 1991: % 1996:
1982: % 1987: % 1992: % 1997:
1983: % 1988: % 1993: % 1998:
1984: % 1989: % 1994: % 1999:
+This rate of return is calculated using
the earnings projected on Page 3 of the Schedule.
% 2000: %
% 2001: o.oo%
% 2002: o.oo %
% 2003: 5.oo%
% 2004: 3.79 % +
Enter all information as it pertains to
Member Name:
Vesting: Minimum Years Required:
this member.
Benefit Level
at Separation:
5 DOB: 11/27/1958
Deferred Interest (if offered):
Service Dates: Entry:
Total Service:
2004 Estimated Liability:
2005 Estimated Liability:
Calendar Year X OR FullPeriod
10/1/1981 Separation: 1/31/2004
LOAs (in months): 12
Vesting
Years: 21 Months (if paid): 4 Percent: 100 %
76,267 (overwrite, if necessary)
80,080
Are Months of
Service Paid? Yes
Interest Option in Bylaws at Separation *
(Choose one option) D
A - No Interest
B - Straight 5%
C - Separate Account/Vehicle
D - Actual interest, up to 5%
* Since interest option D was chosen, enter the rates of return used for each year below.
1980: % 1985: % 1990: % 1995:
1981: % 1986: % 1991: % 1996:
1982: % 1987: % 1992: % 1997:
1983: % 1988: % 1993: % 1998:
1984: % 1989: % 1994: % 1999:
+This rate of return is calculated using the earnings projected on Page 3 of the Schedule.
% 2000: %
% 2001: %
% 2002: %
% 2003: %
% 2004: 3.79%+
Form SC-04
Deferred Member Information (fully or partially vested)
See separate instructions regarding completion of the fields below.
ELK RIVER / Page 2a
Total Service:
2004 Estimated Liability:
2005 Estimated Liability:
Enter all information as it pertains to this member.
Member Name:
Vesting: Minimum Years Required: 5 DOB:
Deferred Interest (if offered): Calendar Year X OR
Service Dates: Entry: 8/1/1983 Separation:
LOAs (in months): 6
Years: 15 Months (if paid):
34,993
34,993
Benefit Level
at Separation:
Full Period
3/3/1999
Vesting
1 Percent: 80 %
(overwrite, if necessary)
Are Months of
2,900 Service Paid? Yes
Interest Option in Bylaws at Separation
(Choose one option) A
A - No Interest
B - Straight 5%
C - Separate Account/Vehicle
D - Actual interest, up to 5%
1980: % 1985: % 1990: % 1995:
1981: % 1986: % 1991: % 1996:
1982: % 1987: % 1992: % 1997:
1983: % 1988: % 1993: % 1998:
1984: % 1989: % 1994: % 1999:
% 2000: 0.00%
% 2001: 0.00%
% 2002: 0.00%
% 2003: 0.00%
0.00% 2004: %+
+This rate of return is calculated using the earnings projected on Page 3 of the Schedule.
Total Service:
2004 Estimated Liability:
2005 Estimated Liability:
Enter all information as it pertains to this member.
Member Name:
Vesting: Minimum Years Required: 5
Deferred Interest (if offered): Calendar Year
Service Dates: Entry: 9/1/1989
LOAs (in months):
Years: 6 Months (if paid):
6,549
6,549
Benefit Level
at Separation: 2,350
DOB:
X OR FullPeriod
Separation: 1/1/1996
Vesting
4 Percent: 44 %
(overwrite, if necessary)
Are Months of
Service Paid? Yes
Interest Option in Bylaws at Separation
(Choose one option) A
A - No Interest
B - Straight 5%
C - Separate Account/Vehicle
D - Actual interest, up to 5%
1980: % 1985: % 1990: % 1995:
1981: % 1986: % 1991: % 1996:
1982: % 1987: % 1992: % 1997:
1983:' % 1988: % 1993: % 1998:
1984: % 1989: % 1994: % 1999:
% 2000: 0.00%
0.00% 2001: 0.00%
o.00% 2002: 0.00%
o.oo% 2003: o.oo %
0.oo% 2004: %+
+This rate of return is calculated using the earnings projected on Page 3 of the Schedule.
Form SC-04
Unpaid Installments
qame
Entry Separation 2004 Estimated
Date Date Liability
ELK RIVER / Page 3
2005 Estimated
Liability
Calculation of Normal Cost
2004 2005
Total Active Member Liabilities 1,468,400 1,610,880
Total Deferred Member Liabilities and Unpaid Instalhnents 195,729i 203,438
Grand Total Special Fund Liability '4 1,664,129!B 1,814,318
Normal Cost (Cell B minus Cell A) lC 150,189
Projection of Net Assets for Year Ending December 31, 2004
Special Fund Assets at December 31, 2003 (RF-03 ending assets)
Projected Income for 2004
State Fire Aid D
Municipal / Independent Fire Dept. Contributions E
Interest / Dividends F
Appreciation / (Depreciation) G
Member Dues H
Other Revenues I
Total Projected Income for 2004 (Add Lines D through I)
Projected Expenses for 2004
Service Pensions J
Other Benefits K
Administrative Expenses L
Total Projected Expenses for 2004 (Add Lines J through L)
112,146
24,800
2,200
49,146
39
0
I I 1,354,326[
2 [ 188,331 ]
3,39![
3,3921
Projected Net Assets at December 31, 2004 (Add Lines l and 2, subtract Line 3) 4 [ 1,539,2651
Form SC-04 ELK RIVER / Page 4
Projection of Surplus or (Deficit) as of December 31, 2004
Projected Assets (Line 4)
2004 Accrued Liability (Page 3, cell A)
Surplus or (Deficit) (Line 5 minus Line 6)
Complete Section II below.
Calculation of Municipal Contribution
A.
1,539,265
1,664,129
(124,864)
If Line 7 is positive, complete this section:
Normal Cost (Page 3, cell C)
Projected Administrative Expense (2003 Adrnin. Exp. x 1.035)
State Fire Aid
Member Dues
5% of Projected Assets at December 31, 2004 (Line 4 x 0.05)
10% of Surplus (Line 7 x 0.10)
Municipal Contribution (Add Lines 8 and 9, subtract Lines 10, 1 I, 12 and 13)
8
9
10
11
12
13
14
Bo
If Line 7 is negative, complete this section:
Deficit Table
Yearlncu~ed
1995
1996
1997
1998
1999
2000'
2001
2002
2003
2004
Totals
Original Amount
0
0
0
0
0
0
0
0
101,322
57,137
158,459
Amt Retired 12/31/04
0
0
0
0
0
0
0
0
33,595
33,595
Left to Retire 1/1/05
0
0
0
0
0
0
0
0
67,727
57,137
124,864
Deficit (Line 7)
A [ 124,864I
Left to Retire Total
B [ 67,727I
A minus B
If line C is positive, this is the new additional deficit for 2004. Enter the amount in Original Amount and Left
to Retire Columns. If line C is negative, reduce prior deficits according to the separate Schedule instructions.
15
16
17
18
19
20
21
Amortization of Deficit (Total of Original Amount column x 0.10)
Normal Cost (Page 3, cell C)
Projected Administrative Expense (2003 Admin. Exp. x 1.035)
State Fire Aid
Member Dues
5% of Projected Assets at December 31, 2004 (Line 4 x 0.05)
Municipal Contribution (Add Lines 15, 16 and 17, subtract Lines 18, 19 and 20)
No municipal contribution due in 2005.
15,846
150,189
3,037
112,146
39
76,9631
(20,076)i
Form SC-04 ELK RIVER / Page 5
This Schedule must be fully completed, certified by the relief association officers, forwarded to
the municipal clerk on or before August 1, 2004 and submitted to the State Auditor's Office to
be eligible for state fire aid.
OFFICER CERTIFICATION
We, the officers of the Elk River Relief Association, certify that this
Schedule was prepared under Minn. Stat. § 69.772 and that the annual benefit level was established
according to the average amount of available financing.
We further certify that based on the financial requirements of the Relief Association's Special Fund for
the 2004 calendar year, the required 2005 municipal contribution is $ 0. If the bylaws of the
Relief Association changed in 2004, we have attached a copy of the amendment or updated bylaws.
We have also enclosed a copy of the municipal ratification of this amendment if required under
Minn. Stat. § 69.772, subd. 6.
Signature of President
Print Name Date
Signature of Secretary
Print Name Date
Signature of Treasurer
Print Name Date
MUNICIPAL CLERK CERTIFICATION
(For relief associations affiliated with municipal fire departments only.)
I am the municipal clerk of I received on , the
completed Schedule from the Elk River Relief Association. I have reviewed
Lines 14 and 21 of the Schedule. If either Line 14 or Line 21 show a required municipal contribution,
I certify that I will advise the governing municipal body of any required municipal contribution at its
next regularly scheduled meeting.
Signature of Municipal Clerk
Print Name Date
( )
Business Telephone
Please retain a copy of the Schedule for your records and submit the signed original to: State Auditor's Office, Pension Division,
525 Park Street, Suite 500, Saint Paul, MN 55103. Fax: 651-282-5298. Telephone: 651-282-6110.