08-09-1995 FSTFSR MIN MEETING OF THE ELK RIVER FIRE DEPARTMENT
COMPENSATION TASK FORCE
HELD AT THE ELK RIVER FIRE STATION
WEDNESDAY,AUGUST 9, 1995
Members Present: Bob Pearson, Randy Sykes, Tom Dillon, Hank Duitsman, Lori
Johnson
Members Absent: Cliff Skogstad
The meeting of the Elk River Fire Department Compensation Task Force was called to
order at 6:35 p.m. by Randy Sykes.
Randy indicated that there were several changes in the minutes of the July 11, 1995,
meeting. He indicated that the vote was stated incorrectly at the meeting and it
should have been 25 against, one in favor. This and other changes to the minutes will
be entered in the record.
Randy opened the meeting stating that no vote had been taken on the Mayor's April
27, 1995, proposal. Randy further indicated that at the last Fire Department meeting,
the fire membership gave the Task Force a directive which was to not continue pursing
the change to a defined contribution plan.
• Hank stated that he would like an opportunity to discuss this directive as a change to
the defined contribution plan was the basis for all other changes in the fire
compensation. He further indicated that he would like an opportunity to present his
proposal to the Fire Department. He stated that last year's contribution to the Relief
Association was given based on the fact that the plan would move towards changing
to a defined contribution plan. If that is not the case, the Council may need to
consider contributing only the legally required amount.
Hank asked what the membership felt was wrong with the proposal that he had
presented. He indicated that the hours each firefighter puts in are climbing and he
does not believe that they are going to go down, even with a possible change to
company alarms. Tom expressed concern that there are no guarantees with a defined
contribution plan. Hank reiterated that he would not expect a future Council to
change or reduce a per hour rate which was what had been proposed previously.
Tom expressed concern that he does not know one fire department under the defined
contribution plan that gets a city contribution. Hank indicated that it would be the
Relief Association's decision as to whether or not the pension fund received a
contribution because the total hourly amount would be split between base pay and a
pension contribution as the membership requested. Hank also stated that under the
method proposed whereby firefighters would receive a set amount per hour which
would include their base pay plus the retirement contribution, the city would pick up
any decrease in state aid. Bob and Tom indicated that they do not feel that state aid is
going to be decreased or eliminated and therefore the firefighters would take on the
liability for any change in state aid.
Hank explained that he would expect that as other employees got increases, firefighters
would also get an increase in pay.
Fire Department Task Force Meeting Page 2
August 9, 1995
• Bob felt that maybe the 2 percent state aid should be excluded from the per hour
calculation. Hank indicated that a new rate could be determined excluding state aid.
Tom requested an explanation from the Mayor on what the city sees as its liability. Hank
indicated that there are many unknowns which cause concern. He questioned why
the city should take on the liability of a pension fund over which it has no control
including the fact that it does not have control over investments. He also stated that in
1981, the per year benefit amount was$400. It is now$2,350. He felt that that was a
very substantial increase. He indicated that the City Council was in error in raising the
contribution level to$2,350 for 1995 because the fund does not have assets to support
it. Bob felt that the defined benefit plan was a system of checks and balances. Hank
stated that in order for an increase in the defined benefit plan to be approved by the
City Council, a larger balance will need to be in place. Tom expressed concern that
there is no guarantee that the city will contribute in the future under the defined benefit
plan. Hank stated that he will suggest that the City Council contribute only the
minimum contribution if the plan remains a defined benefit plan.
Bob was concerned that the Council was treating the firefighters unfairly for staying with
the defined benefit plan. He felt that it hasn't been demonstrated to the firefighters
that it is in their best interest to change. He further stated that he does not know why
this is such a big concern to the city.
Hank addressed those issues stating that there currently is no compensation plan for the
firefighters and the Council felt that there should be. Second, under the proposed plan,
• the City Council would have no future liability after making annual payments to the
plan. Third, the annual request from the firefighters to increase the pension amount
could be eliminated. He felt the firefighters should get the benefit of increased assets
without the City Council having to second guess the firefighter requests. Finally, he
stated that if the City Council is required to reevaluate and approve the Relief
Association's request, the Council must be conservative in the amount it approves in
order to eliminate future liability.
Bob suggested that the Relief Association be funded at 110 percent of the per year
pension amount. If this is the case, the City Council does not need to approve the
pension amount and the only liability to the Council is for the amount previously
approved by the Council. The Mayor did not indicate that the City Council would
approve an increase in the future even if the pension was 110 percent funded.
Randy requested a further explanation of the city's view of the liability. Hank stated
that we need an actuarial study which projects out ten to fifteen years versus the one
year snapshot that the state schedules provide. Randy stated that the main problem
with defined contribution is the unknown such as is there going to be a city
contribution. The Mayor stated that he cannot see that the contribution would
decrease. Tom stated that until the per year benefit reaches the maximum allowed by
law, he doesn't see a need to change. Hank again expressed his desire to present his
proposal directly to the firefighters. Tom again stated that the direction from the
membership was that the Task Force continue to work on this issue and that the
presentation should not be made directly to the fire membership, but should go
through the Task Force. He stated that the membership plans to stay with the defined
benefit plan and work to negotiate a pay raise and contribution level.
Fire Department Task Force Meeting Page 3
August 9, 1995
• The next meeting of the Task Force was scheduled for Tuesday, September 12, 1995, at
6:30 p.m.
The meeting of the Elk River Fire Compensation Task Force adjourned at 7:37 p.m.
Respectful) submitted,
Lori Jo nson
Assistant City Administrator
•