INFORMATION #1 08-23-1993
RUG 23 '93 09:47RM GMI TRX PEPRRTMENT 612 540 3250
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. STATE OF MINNESOTA
OFFICE OF THE STATE AUDITOR
SUITE 400
525 PARK STREET
SAINT PAUL 55103
(612) 296-2551
August 17, 1993
The Honorable Hank.Duitsman
City of Elk River
12354 Ridgewood Dr
Elk River,. MN SS330
Dear Mayor Duitsman:
We annually review the reporting forms and Schedule I, n &, IU's for all relie!
associations. We are currently unable to certify the Elk River Relicf Association for State fire
aid.
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In this process of this review I rea4 minutes of the meetings for the past 'several years
which contained the approval for the benefit in~r~. The error:s contained in the Schedule I,
II & III move the city from a voluntary contribution by the city in the amount of $19,000 to a
mandatory contribution of $6,101 which must be paid prior to year end.
While I am cOnfident based upon your minutes that $19,000 will be contributed, it appears
that the city has not had mandatory contributions in the past. On July 26, 1993, the city
approved a further increase to 52,200. The minutes indicate that no mandatory city contribution
will be due in 1994. We believe this may be false assumption. '
The errors on the Schedule I, II & In for the 1993 contribution probably are recurring for
the 1994 contribution. Please furnish our Office a copy of the 1993 certification for the 1994
contribution. This was fued with your council at the time of the benefit increase request. Given
the currently lower interest rates and the average e.mlings yield of 4% on funds in 1992 several
conclusions are warranted. ' .
111e Schedule I &, II filed in 1993 for 1994 should be reviewed 'for accuracy. In addition,
the actuarial assumptions include a 5 % earnings yield. In 1991 the funds earned 18 %, in 1992
the funds earned 4 %.
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The auditQrs for the. Relief Association have not included the suggested GASB footnote
related to historical information. We are therefore unable to assess prior years. You may wish
to examine the earnings yield over ten years to determine if the fund is earning at least the
actuarial assumed rate. You may also wish to recommend that the Relief Association request the
@ Prln[ed on Recy<:lccl Paper
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An Equal Opportunity Employer
AUG 23 '93 09:47AM GMI TAX DEPARTMENT 612 540 3250
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The Honorable Hank Duitsman
August 18, 1993
Page 2
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historical information footnote disclosure as part of its audit.
Without the benefit increase the city has moved into a required contribution position until
the deficit of $38,676 has been retired. The deficit increases due to the increase in benefits by
$100 for each member for each fully vested year of service.
We will be writing to the relief association regarding the errors related to 1993' s calculated
required contribution. We will advise them to re-certify the correct numbers to you for payment
by December 31, 1993. Your assistance in sending the Schedule I, &. II filed in 1993 for 1994
is appreciated.
With best regards.
Sincerely,
IU~~
General Counsel
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1M]: tp
cc: Lawrence Martin, Legislative Commission on Pensions & Retirement
Randy Sykes, Elk River Firemen's Association
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