5.1.E. SR 09-10-2007REQUEST FOR ACTION
To Item Number
Ci Council 5.1.E.
Agenda Section Meeting Date Prepared by
Worksession September 10, 2007 Tim Simon, Finance Director &
Bruce A. West, Fire Chief
Item Description Reviewed by
Elk River Fire Relief Association Pension Contribution Options Lori ohnson, Ci Administrator
Reviewed by
Action Requested
Council approval fox 2008 budget funding of voluntary contribution to Elk River Fire Relief Association
Background/Discussion
In previous budget work sessions the Council indicated that they would like to see a plan for determining
the voluntary contribution to the Elk River Fire Relief Association. Over the past couple of weeks the
Relief Association has been preparing some different options for the Council to consider for the 2008
budget. Bruce West, Fire Chief and Tim Simon, Finance Director will be in attendance at the work
session to go over in detail the various options. Below is a summary of the various options for the
Council to consider:
1) Use a percent of the State Fire Aid for the future contribution amount. Fire Aid is derived
primarily from two percent tax on insurance premiums and distributed based on market
values and population of the various fire districts.
2) Remain with the 3% increase.
3) Use a core group of cities and take the average of the core group to determine the amount
for the following year.
4) Keep an amount such as $30,000 as the voluntary contribution and it shall be reviewed by
the council on a periodic basis.
The Relief Association also considered linking amount to the funding ratio, but concerns existed that this
might create a situation where a lower funding ratio would require a higher City contribution when the
Relief Association strives to meet the 100% funding level.
As an additional item, the Relief Association would fund an actuarial study (independent third party) of
the defined benefit pension plan to address Council concerns referencing the long term ability to fund
future benefit levels. The cost of the study is approximately $2,500 and the findings will be presented to
the City Council prior to the 2009 benefit level approval. The Relief Association will also consider an
actuarial study on a periodic basis in future years.
S:\Council\Bruce\2007\Relief Association Contributions.doc
The Elk River Firefighters and the Relief Association would like to thank the Mayor and City Council for
their support and the voluntary contribution to the Elk River Fire Relief Association. If you have any
questions prior to the September 10, 2007 Council meeting, please call Tim Simon at 635-1029 or Bruce
West at 635-1105 and we will be happy to answer any questions.
Financial Impact
To be determined based on City Council direction on this item. 2008 budgeted amount is $30,694.00.
Attachments
^ Example of various options for voluntary Relief Association contributions.
Action Motion by Second by Vote
Follow Up
S:\Council\Bruce\2007\Relief Association Contributions.doc
1RlF®gMATION
ELK RIVER FIRE RELIEF ASSOCIATION
Option #1 Budget
Year State Fire Aid Percent Amount Year Actual
2000 $ 64,092 18% $ 11,536.56 $ 22,000
2001 75,947 18°k 13,670.46 22,650
2002 88,790 18% 15,982.20 23,400
2003 112,146 18% 20,186.28 24,100
2004 147,589 18% 26,566.02 24,800
2005 136,429 18% 24,557.22 28,100
2006 146,455 18% 26,361.90 2008 28,950
Estimated @ 7% increase in Fire Aid
2007 156,707 18% 28,207.23 2009 29,800
2008 167,676 18% 30,181.74 2010
2009 179,414 18% 32,294.46 2011
2010 191,973 18% 34,555.07 2012.
2011 205,411 18% 36,973.93 2013
2012 219,789 18% 39,562.10 2014
Note: This is a voluntary contribution to the Fire Relief Association.
*available on September 15, 2007. Future amounts could increase or decrease in subsequent years.
The Relief Association will fund an actuarial review on a periodic basis, with the first one completed
prior to the 2009 benefit level in calendar year 2008. A presentation will be made to the Council.
The voluntary contribution for 2008 budget would be based on 2006 audited amount times the
18% for a 2008 budget amount of $26,362.
Fire state aid is derived primarily from a two percent tax on insurance premiums and is allocated based
on half on the market values and half on the population of each fire district. -Office of the State Auditor
Option #2
3% increase
2006 28,950.00
2007 29,800.00
2008 30,694.00
2009 31,614.82
2010 32,563.26
2011 33,540.16
2012 34,546.37
2013 35,582.76
2014 36,650.24
2015 37,749.75
Option #3
Comparable City Average
Elk River 2005 State Aid $ 136,429
Plus 25% $ 170,536
Minus 25% $ 102,322
Funding Pension
City State Aid Contribution Ratio Amount
1 Alexandria $ 117,948 $ 116,840 86% $ 5,665
2 Bemidji $ 149,741 $ 33,431 111% $ 3,750
3 Cataract $ 103,969 $ 60,000 96% $ 3,200
4 Centennial $ 149,114 $ 23,500 110% $ 3,500
5 Elk River $ 136,429 $ 28,100 106% $ 4,000
6 Excelsior $ 168,637 $ 85,234 112% $ 5,000
7 Forest Lake $ 126,544 $ 7,146 94% $ 4,100
8 Golden Valley $ 156,619 $ 2,882 116% $ 6,000
9 Grand Rapids $ 119,368 $ 24,114 108% $ 5,000
10 Hastings $ 160,422 $ - 116% $ 3,750
11 New Brighton $ 128,599 $ 31,340 101% $ 4,500
12 Northfield $ 134,863 $ 46,814 92% $ 6,600
13 Oakdale $ 155,341 $ - 117% $ 3,850
14 Owatonna $ 146,784 $ - 103% $ 3,500
15 Prior Lake $ 169,893 $ 20,000 115% $ 4,400
16 Red Wing $ 104,842 $ - 225% $ 800
17 Rosemount $ 103,671 $ 139,100 103% $ 5,300
18 Stillwater $ 162,719 $ - 124% $ 4,200
Average $ 34,361 $ 4,284