5.1. SR 07-22-1996ity of
iver
ITEM 5.1.
FROM:
DATE:
SUBJECT:
MEMORANDUM
Mayor & City Council
Lori Johnson, Assistant City Administrator
July 22, 1996
Fire Relief Benefit Level
Introduction
Each year before August 1, the Fire Relief Association is required to report to
the City Council its minimum required municipal contribution. At that time
the Relief Association typically also requests an increase in the per year
benefit level. By statute, the Relief Association can't increase the per year
benefit without Council approval unless, with the increase, the Relief
Association would be 110 percent funded.
This year the Relief Association request includes increasing the per year
benefit to $2,500.00, up from $2,350.00. Last year the Council did not
approve an increase in the benefit level because the Fire Compensation Task
Force had not completed its work. The Council also did not contribute the
$17,500 requested in 1995 but chose instead to contribute only the minimum
required contribution which was $663.00. The remainder of the funds were
reserved with the intention that they be released to the Relief Association
after the Fire Compensation Task Force presented a total compensation
package which had been approved by the Council and the Relief Association
membership. The Relief Association is now requesting release of the 1995
funds as well as a 1996 contribution of $17,500.00
Background
As you are aware, the Fire Compensation Task Force was appointed several
years ago to address firefighter compensation, retirement benefits and to
facilitate a change from a defined benefit plan to a defined contribution plan.
With a defined contribution plan, there is no potential liability placed on the
City and there is no required contribution. Under the defined benefit plan,
the City guarantees a certain benefit to each firefighter. If for some reason
the Relief Association assets were not adequate to meet the required benefit
payments, the City would be required to make up the difference. In most
cases this is unlikely unless the investments decrease in value or there are
numerous benefits paid in a short time frame. However, the City must
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
consider the potential of a shortfall when approving the benefit level. The
defined benefit plan may require an annual City contribution depending
upon the assets available and the liability necessary to fund the benefit level
approved by the City. The defined contribution plan does not require a City
contribution; however, the City could contribute any amount it determined
appropriate.
The Task Force has been unable to reach a consensus on a total
compensation package which is agreeable to both the firefighters and the
City; the Task Force has not met since last September. For sometime now,
Mayor Duitsman and I, as City representatives on the Task Force, have
requested that the Task Force meet to again try agree on a package to be
presented to both parties. However, no meeting has been scheduled. One of
the main issues of the fire department Task Force representatives is that if a
change to defined contribution is approved, the City will not make future
contributions. I have explained to the Task Force that even though this
Council can't bind future Councils to making a contribution, the Relief
Association should rely on the City's history of contributions when trying to
predict future contributions. I do not believe it is the City's intent to in any
way decrease the compensation received by the firefighters; in fact, one of
the goals of the Task Force was to insure that the firefighters are indeed
receiving fair compensation.
Attachments
Attached are numerous items related to the Relief Association's request for
an increase in the benefit level. The Relief Association's consultant, Gus
Welter prepared a five year study of the proposed liability and City
contributions required under various scenarios. No actuarial study has been
completed based on these scenarios and a thorough review has not been
completed by the City; it is probably in the City's best interest to have an
independent actuarial study completed to support the information presented
by Mr. Welter. Copies of some of the reports prepared by Mr. Welter are
attached.
Also attached is a letter from Relief Association president Jim Nystrom
outlining the Relief Association's request. The letter also includes a table
showing the minimum municipal contributions for the next five years based
on the assumptions as outlined below the table.
The Relief Association is requesting an increase in benefits to $2,500 per year
of service and release of the 1995 and 1996 City contributions. As the
attached 1997 Schedule II indicates, if the City contributes $35,000 in 1996
there is no City contribution required in 1997. However, if the City does not
contribute $35,000 in 1996 there is a required minimum contribution of
$735.00 in 1997. Unfortunately, I did not receive a copy of that Schedule II
to attach.
If the increase and contribution are approved at this time, I believe there is
little chance that the Relief Association will approve a change to a defined
contribution plan. Further, due to the timing of the increase approval, there
is not adequate time to have an actuarial study completed which would
provide information on future required City contributions and funding levels.
If the Council wants to get a total compensation package approved which
includes a change to a defined contribution plan, the requests should
probably be denied. If this is not the Council's intent and the increase is
approved, the City will be required to contribute a minimum of $735.00 in
1997 unless the 1995 and]or 1996 contributions are released in which case
no contribution will be required.
Action Requested
The Council is asked to consider the Relief Association's request for an
increase in benefit level to $2,500 per year of service for 1997 and the request
for release of the 1995 and 1996 contributions.
SCHEDULE I-II FOR STATE FIRE AID YEAR 1997
ELK RIVER COUNTY OF SHERBURN
FIREFIGHTERS' RELIEF ASSOCIATION
Report of financial condition to end of 1996 and requirements for 1997
SCHEDULE I
CALCULATION OF SPECIAL FUND LIABILITY FOR ALL MEMBERS AT
PENSION LEVEL OF $2,500 PER YEAR OF ACTIVE SERVICE
ENTRY TO END OF 1996 TO END OF 1997
NO NAME DATE YRS LIAB YRS LIAB
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
3O
31
32
33
34
35
36
37
38
39
4O
41
42
43
44
45
46
47
48
49
5O
DEF
C O 4/75-4/95 20 X 2350
E.Vo
P LeF 10/81-10/93 .64X2100Xll
B B 9/89-1/96 .44X2350X6
ACCRUED LIAB FOR ACTIVE MEMBERS
31 77 500
31 77 500
29 72 500
29 72 500
24 60,000
20 50,00O
19 46,100
18 42,450
18 42,450
17 39.000
16 35.700
16 35.700
15 32.600
15 32 600
13 26 750
13 26 750
12 24 050
12 24 050
12 24 050
9 16 650
9 16 650
9 16 650
7 12 300
7 12 300
7 12 300
4 500
4 500
4 ,500
2 ,100
2 ,100
0 0
0 0
0 0
ACCRUED LIAB FOR DEFERRED MEMBERS
ACCRUED LIAB FOR EARLY VESTED MBRS
ACCRUED LIAB FOR UNPD INSTALLMENTS
ACCRUED LIABILITY THROUGH
AD
LIABILITY THROUGH
51,200
14,784
6,204
954,800
51,200
20,988
1997
1996 1,026,988
1997
32 80 000
32 80 000
30 75 000
30 75 000
25 62 500
21 52 500
20 50 000
19 46 100
19 46 100
18 42 450
17 39 000
17 39 000
16 35,700
16 35,700
14 29.600
14 29.600
13 26~750
13 26.750
13 26.750
10 19.000
10 19000
10 19 000
8 14 400
8 14 400
8 14 400
5 350
5 35O
5 350
3 750
3 750
1 500
1 500
1 500
53,760
164:784
204
1,037,750
53,760
20,988
I;112,498
026,988
85,510
SCHEDULE II .
Section 1. PROJECTION OF SPECIAL FUND ASSETS TO DECEMBER 31, 1996
ASSETS AT JANUARY 1, 1996 (12/31/95) 1. $ 895,562
PROJECTED INCOME TO DECEMBER 31. 1996
A) Minn. State Aid $ 42,091
· B) City Contribution 35,000
C) Donations, etc. 0
D) Investment Income 44,778
E} Realized Gains {losses) 0
F) Unrealized " (lossesl n
· G) Other income '
TOTAL OF LINES A THROUGH G ............... =- 2. $ 121,869
PROJECTED ASSETS PLUS INCOME 12/31/96 3. $ 1,017,431
Projected Disbursements through_end of this year
H) Pensions ~ 0
I) Other benefits 0
J) Administrative 2,650
TOTAL OF LINES H-I-J .........
4. $ 2,650
PROJECTED ASSETS AT 12/31/96 (L.3 - L.4) 5. $ 1,014,781
Section 2. Determination of projected SURPLUS or DEFICIT @ 12/31/96.
Projected Assets (Line 5] 6.
Accrued Liability (Line ~, Schedule 1) 7 ~1,026,9881,014,781
If L.6 > L.7, enter difference: SURPLUS Sa. $ 0
If L.7 > L.6, enter difference: DEFICIT Bb. $ 12,207-'
**Go to Section 3 if SURPLUS *** To Section 4 if DEFICIT**
Section 3.
Normal Cost (line C, Schedule 1)
Calculated Adm. Expense (95 amt x 1.035)
Less:
~1Minn- State Aid $ 0
5% of Line 5 0
10% of Line 8a 0
Total Subtractions
1997 City Contribution if SURPLUS exists (L. Sa)
Determination of 1997 Municipal Contribution (if SURPLUS)
9. 0
10 ~ 0
11. $ 0
12. $ 0
Section 4.
Determination of Municipal Contribution (if DEfiCIT)
Amortization of deficit(s) incurred
prior to end of 1996
YR ORIGIN. AMT RET AMT LEFT
INCUR. AMOUNT PREV TO RETIRE
19 (1) (2) (3~
19 0
19 0
Totals 0
0 0
TOT ORIG DEF 0 X .10 = ..... 13a. $
Deduct col (3) total from L. Bb.
If col 3 < L.Sb, difference is a
NEW DEFICIT.
Normal Cost (Line C, Sch.1 --- 14.
Expense
Calculated
Total Costs lines 13a+13b+14+15 16
LESS: ·
q) Minn. State Aid ......
42,091
r) 5% of Line 5---
50,739
Total Subtractions
17. $
1997 City Contribution, if DEFICIT exists 18.
0
1,221
89,474
92,830
(3,356)
FF
34
32
34
A_VERAGE SPECIAL FEHqD INCOME (non-invest~nent) PER M~4BER
FOR PREVIOUS TRREE Ir~ PERIOD.
YEAR STATE LOCAL
1/10 ANNUAL AVERAGE 3 YR
AID TAXES SURPLUS TOTAL PER MBR TOTAL
1995 42,091 0 42,091 1,238
1994 41,526 19,000 60,526 1,891
1993 38,514 19,000 57,514 1,692 4,821
3YR TOTAL/3 4,821 / 3 $1,607
Max pension (Avg. X 1.85, from ch~rt) $2,900
CERTIFICATION OF SPECIAL FUND REQUIREMENTS
This information m~st be certified to the clerk of the municipality or
to the independent non-profit firefighting corporation by 08/01/96.
We, the officers of the Elk River Firefighters' Relief Association,
state that the accompanying schedules have been prepared in accordance
with the provisions of the Minn. Stat. Ch. 69.772, subd 4. The average
amount o~a~lab~ ~nanc~ng ~e~ 9ctiye ~embe~ for t~e. pas~ ~hree year~ wa
%z,ou~ fur=her, senezi~ levels nave seen estaslisned in accor~anc
with the average amount of available financing, as required by Miun.law.
The minimum city contribution for 1997 is: ($3,356)
, President Date
, Secretary Date
, Treasurer Date
These Schedules were prepared
from information prov~de~ by .
Officers of the Relief Association
and State Auditor Reports.
Calculated as 12/31/96
Prepared by:
Gus Welter, consultant
1901Meadowview Road
Bloomington, MN 55425
(612) 854-8856
CLERK'S CERTIFICATION
I am the clerk (or other desi~ated official) of the city of Elk River.
I have received the completed Office of the State Auditor Schedules I & II
from the Elk River Fire~ighters Relief Association on ¢ 1996.
I have reviewed Section 2~ lines 8, 12. and 18 of Sch.' II. I~ I~ne 12 or 1
reflects a required municipal contribution¢ I certify that I will
so advise the municipal governin~ body at ~ts next regularly scheduled
meeting. If the Certification of the Officers discloses that the Bylaws
have been amended to provide a benefit increase, I certify that the
municipal governing body has passed a resolution which approves the change
in the bylaws. A copy of the resolution is attached (if required).
Date ,1996 Signature
Phone # Title City Clerk
(Note: Failure to file this document in a timely ~ang. er, whether or not
a municipal contribution is required, will resul~ ~n loss of state aid.)
SCHEDULE II
Section 1.
ASSETS AT JANUARY 1, 1998 (12/31/97)
PROJECTION OF SPECIAL FUND ASSETS TO DECEMBER 31, 1998
1. $ 965,304
PROJECTED INCOME TO DECEMBER 31. 199~0'
A) Minn. State Aid $ 00~
B) City Contribution
C) Donations, etc.
D) Investment Income 57,91
E) Realized Gains (losses)
F) Unrealized " flosse~l
G) Other income '
TOTAL OF LINES A THROUGH G
PROJECTED ASSETS PLUS INCOME 12/31/98
Projected Disbursements through end of this year
H) Pensions $ 78,000
I) Other benefits 1,000
J) Administrative 2,650
TOTAL OF LINES H-I-J ........
PROJECTED ASSETS AT 12/31/98 (L.3 - L.4)
Section 2.
2. $ 107,918
3. $ 1,073,222
4. $ 81,650
5. $ 991,572
Determination of projected SURPLUS or DEFICIT @ 12/31/98.
Projected Assets (Line 5) 6. 991,572
Accrued Liability (Line B, Schedule 1) 7 ~ 1,011,668
If L.6 > 5.7, enter difference: SURPLUS 8a ~ ~ 0
If L.7 > L.6, enter difference: DEFICIT 8b~ 096
**Go to Section 3 if SURPLUS *** To Section 4 if DEFICIT '
Section 3. Determination of 1999 Municipal Contribution (if-~URPLUS) .........
Normal Cost (line C, Schedule
Calculated Adm. Expense (97 amt 1.035)
9. 0
10 ~ 0
Less:
~1Minn' State Aid $ 0
5% of Line 5 0
10% of Line 8a 0
Total Subtractions
1999 City Contribution if SURPLUS exists (L. 8a)
11. $ 0
12. $ 0
Section 4.
Amortization of deficit(s) incurred
prior to end of 1997
YR
INCUR.
1997
19
Determination of Municipal Contribution (if-DEFICIT)
ORIGIN. AMT RET AMT LEFT
AMOUNT PREV TO RETIRE
2
0
17. $
18. $
19 0
Totals 25,217 5,121 20,096
TOT ORIG DEF 25,217 X 10 = ..... 13a. $
Deduct col (3) total from L. Bb. '
If col 3 < L.8b, difference is a
NEW DEFICIT. $ 0 X .10 = ........ 13b. $
Normal Cost (Line C, Sch. 1) 14.
Calculated Adm. Expense (97 amt x 1.035) ..... 15. ~
Total Costs lines 13a+13b+14+15 16
LESS: ·
q) M~nn. State Aid ......
r) 5~ of Line 5 .......... ~ 50,000
49,579
Total Subtractions
1999 City Contribution, if DEFICIT exists
2,522
0
91,118
2,743
96,383
99,579
(3,195)~,~--~
SCHEDULE II
Section 1. PROJECTION OF SPECIAL FUND ASSETS TO DECEMBER 31, 1999
ASSETS AT JANUARY 1, 1999 (12/31/98) 1. $ 965,304
PROJECTED INCOME TO DECEMBER 31, 1999
A) Minn. State Aid $ 52,000
B) City Contribution 0
C) Donations, etc. 0
D) Investment Income 57,918
E) Realized Gains (losses) 0
F) Unrealized " (losses% 0
G) Other income ' 0
TOTAL OF LINES A THROUGH G .......
2. $ 109,918
PROJECTED ASSETS PLUS INCOME 12/31/99 3. $ 1,075,222
Projected Disbursements through end of this
H Pensions $ 14~, year
Other benefits
Administrative 2~000
800
TOTAL F LINES H-I-J ........ 4. $ 153,000
PROJECTED ASSETS AT 12/31/99 (L.3 - L.4) 5. $ 922,222
Section 2. Determination of projected SURPLUS or DEFICIT @ 12/31/99.
Projected Assets (Line 5) 6.
Accrued Liability (Line B, Schedule 1) 7. ~ 922,222
952,506
If L.6 > L.7, enter difference: SURPLUS 8a 0
If L.7 > L.6, enter difference: DEFICIT 8bi ~ 30,284
**Go to Section 3 if SURPLUS *** To Section 4 if DEFICIT**
Section 3. Determination of 2000 Municipal Contribution (if SURPLUS)
Normal Cost (line C, Schedule 1 0
Calculated Adm. Expense (97 amt)x-~--- 1~ ~ 0
Less:
~lMinn' State Aid $ 0
5% of Line 5 0
10% of Line 8a
Total Subtractions 0
11. $ 0
2000 City Contribution if SURPLUS exists (L. Sa) 12. $ 0
Section 4. Determination of Municipal Contribution (if DEFICIT) :==== .....
Amortization of deficit(s) incurred
prior to end of 1997
YR ORIGIN. AMT RET AMT LEFT
INCUR. AMOUNT PREV TO RETIRE
1) 2
19
19 0
0
Totals 25,217 7,643 17,574
TOT ORIG DEF 25,217 --- X 10 = ..... 13a. $ 2,522
Deduct col (3) total from L. Bb. '
If col 3 < L.Sb, difference is a .
NEW DEFICIT. $ 12,710 X .10 = ........ 13b. $ 1,271
Normal Cost (Line C, Sch. 1) 14. 9~
Calculated Adm. Expense (97 amt x 1 035) 15. ~ 104
...... 898
Total Costs lines 13a+13b+14+15 ............
LESS: 16. 97,794
q) Minn. State Aid
r) 5~ of Line 5 .......... ~ 52,000
46,111
Total Subtractions
17. $ 98,111
2000 City Contribution, if DEFICIT exists 18. $ (317)
Section 1.
SCHEDULE II
ASSETS AT JANUARY 1, 2000 (12/31/99) .......
PROJECTION OF SPECI ASSETS TO DEC ER
1.
PROJECTED INCOME TO DECEMBER 31, 2000
A) Minn. State Aid $ 54,000
B) City Contribution 0
C) Donations. etc. 0
D) Investment Income 55,333
E) Realized Gains (losses) 0
~) Unrealized ', (losses) 0
G) Other income 0
TOTAL OF LINES A THROUGH G ........
922,222
2. $ 109,333
3. $ 1,031,555
PROJECTED ASSETS PLUS INCOME 12/31/00
Projected Disbursements through end of this year
H) Pensions $ 59,800
I) Other benefits 1,000
J) Administrative 2,800
TOTAL OF LINES H-I-J ........
4. $ 63,600
PROJECTED ASSETS AT 12/31/00 (5.3 - 5.4) 5. $ 967,955
Section 2. Determination of projected SURPLUS or DEFICIT=~=~~=~ ....
Projected Assets (Line 5] ~ 967,955
Accrued Liability (Line ~, Schedule 1) ~ 1,000,069
If L.6 > L.7, enter difference: SURPLUS Sa. 0
If L.7 > L.6, enter difference: DEFICIT Bb. ~ 32 114
**Go to Section 3 if SURPLUS *** To Section 4 if DEFICIT**'
Section 3. Determination of 2001 Municipal Contribution ~-~~==== .....
Normal Cost (line C, Schedule 1 9. 0
~alculatedAdm. Expense (97 amt)x-~iSL~7--- 10 ~ 0
~ess:
~/Minn' State Aid ' 0
5% of Line 5 0
10% of Line 8a
Total Subtractions 0
11. $ 0
2001 City Contribution if SURPLUS exists (L. Sa) 12. $ 0
Section 4. Determination of Municipal Contribution (if DEFICIT)
Amortization of defici~6~ incurred
prior to end of
YR ORIGIN. AMT RET ~ LEFT
INCUR. AMOUNT PREV' TO RETIRE
l) 2
1999 12,710 1,271 11,439
19 0 0 0
Totals 37,927 11,359 26,568
TOT ORIG DEF 37,927 X 10 = ..... 13a. $
Deduct col (3) total from L. Bb. '
If col 3 < L.Sb, difference is a
NEW DEFICIT. $ 5,546 X .10 = ........ 13b.
Normal Cost (Line C, Sch. 1) 14.
Calculated Adm. Expense (97 amt x 1.035) ..... 15
Total Costs lines 13a+13b+14+15 ............
LESS: 16.
q) Minn. State Aid
r) 5% of Line 5 .......... ~ 54,000
48,398
Total Subtractions
2000 City Contribution, if DEFICIT exists
17. $
18. $
3,793
555
9~;159
898
100,404
102,398
(1,994)
Section 1. PROJECTION OF SPECIAL FUND ASSETS TO DECEMBER 31, 2001
ASSETS AT JANUARY 1, 2001 (12/31/00) ....... 1. $ 967,955
PROJECTED INCOME TO DECEMBER 31. 2001
A) Minn. State Aid ~ 56,000
B) City Contribution 0
C) Donations, etc. 0
D) Investment Income 58,077
E) Realized Gains (losses) 0
F) Unrealized ', (losses% 0
G) Other income ' 0
TOTAL OF LINES A THROUGH G ........
2. $ 114,077
PROJECTED ASSETS PLUS INCOME 12/31/01 3. $ 1,082,032
Projected Disbursements through end of this year
H) Pensions $ 119,250
I) Other benefits 2,000
J) Administrative 2,900
TOTAL OF LINES H-I-J .........
4. $ 124,150
PROJECTED ASSETS AT 12/31/01 (L.3 - L.4) 5. $ 957,882
Section 2. Determination of projected SURPLUS or DEFIC~ ~ ~~======
Projected Assets (Line 5) 6. 957,882
Accrued Liability (Line B, Schedule 1) 7. ~ 1,005,274
If L.6 > L.7, enter difference: SURPLUS ea. $ 0
If L.7 > L.6, enter difference: DEFICIT Bb. $ 47,392
**Go to Section 3 if SURPLUS *** To Section 4 if DEFICIT**
Section 3. Determination of 2002 Municipal Contribution (if SURPLUS)
Normal Cost (line C, Schedule 1) 9. 0
Calculated Adm. Expense (97 amt x 1.035) 10. ~ 0
Less:
~/Minn' State Aid $ 0
5% of Line 5 0
10% of Line 8a
Total Subtractions 0
2002 City Contribution if SURPLUS exists (L. Sa)
11. $ o
12. $ 0
Section 4.
Amortization of defici~ incurred
prior to end of
YR ORIGIN. AMT RET AMT LEFT
INCUR. AMOUNT PREV TO RETIRE
1) 2 3
1999 12,710 3,725 8,985
2000 5,546 555 4,991
Totals 43,473 14,364 29,109
TOT ORIG DEF 43,473 ........... X .10 = ..... 13a $
Deduct col (3) total from L. Bb. '
If col 3 < L.eb, difference is a
NEW DEFICIT. $ 18,283 X .10 = ........ 13b. $
Normal Cost (Line C, Sch. 14.
Calculated Adm. Expense (9~)a~ x 1.035) ..... 15. ~
Total Costs lines 13a+13b+14+15 16
LESS: ·
q) Minn. State Aid ......
r) 5% of Line 5 .......... ~ 56,000
47,894
Total Subtractions
17. $
2002 City Contribution, if DEFICIT exists 18. $
Determination of Municipal Contribution (if DEFICIT)
4,347
1,828
94,622
3,002
103,800
103,894
(94)
TO: Mayor and City Council
FROM: Jim Nystrom, President of the Elk River Fire Relief Association
Background of the Association
The ERFD Relief Association is made up of the active paid-on-call members
of the ERFD. The purpose of the association is to provide retirement,
disability and death benefits to the members or beneficiaries of members of
the department.
The State of Minnesota provides the basic funding for the association
through distribution of money collected from a gross earnings tax on fire
insurance premiums sold in the state. The funds are allocated to the
departments based on the population and property values in the area served
by that department.
Beginning in the mid 80s and as late as 1994, the City Council supplemented
the state funds with an annual contribution that was approximately 50
percent of the state-aid funding.
The ERFD Relief Association has invested and reinvested the funds until,
when taken over a long term, the interest and increases in share value
comprise the largest portion of yearly income.
The ERFD Relief Association is directed by six trustees elected by members
of the ERFD, the fire chief, the city Finance Director, and the Mayor. A
minimum of four meetings are held each year to oversee the management of
the association's funds.
Proposal
The ERFD Relief Association is requesting that the City contribution of
$17,500 budgeted for each of the years 1995 and 1996 be released to the
association and that the Council approve an increase in the yearly benefit
rate from $2,350 to $2,500 per year of service.
Since the State of Minnesota provides the basic funding for relief
associations, the State Auditor maintains strict oversight of the management
of funds through reporting and statutes. By August 1st each year, all
associations must file reports that estimate the income from the prior year
and compare the income to the accrued liability of the fund. Based on our
1996 report to the State Auditor, the increase in the fund value is anticipated
to be large enough to support an increase in yearly benefits from $2,350 to
$2,500 per year of service and still maintain a $6,000 surplus at the end of
1997.
In past years several members of the council have expressed concern that the
City might be liable for extra expense in the event that a series of
extraordinary events could occur. To address those concerns, the association
has completed a series of annual reports of the fund that considers
retirements, new members, and estimated income. A tabulation of the
results of those reports is included. They show that not only are current
benefit rates sustainable, they can also increase at approximately the rate of
inflation. The Relief Association histories of benefit increases during the
past 12 years and projected into the next five years have always been
consistent with income and have not placed any unusual liability on the City.
This proposal is fair because it maximizes the benefits for the members yet
maintains a surplus for the future.
TABULATION
Year 97-98 98-99 99-00 00-01 01-02
Benefit 2575 2700 2750 2750 2950
Surplus 956 (1134) (1085) 7843 92
(Deficit)
ASSUMPTIONS
6% Return on Fund
2% Yearly Increase in State Aid
$19,000 Yearly Contribution From City
Two Retirements Even Years, One Odd Years
34 Member Total