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MINUTES <br />CITY COUNCIL <br />MAY 12, 1993 <br />Scalze again indicated that the City Administrator felt <br />that City's maximum contribution should be set and then <br />figure out where the benefit level works out. <br />Pedersen pointed out that there appears to be two <br />issues, the first being to increase the benefit level <br />to $2,100 per year of service, and the second to set up <br />a formula for determining future increases. <br />Scalze pointed out that if investments stay at 8%, then <br />the $2,100 will work. However, if the 8% earnings <br />decrease, the City's contribution must be increased. <br />LaValle pointed out that if the fund becomes unfunded, <br />there would be no future increases until it builds back <br />up. <br />DeBace indicated that the $2,100 is doable for 1993. <br />The question is getting away from negotiatinq this <br />issue every year, and pointed out that there is <br />agreement to sit down and develop a formula to <br />determining benefit levels. When fundedness is not <br />there, there would be no increase. DeBace projected 8 <br />to 10% investment earnings for the fund. <br />LaValle stated that he had no problem with the $2,100 <br />benefit level, and suggested that the City's <br />participation for the next five years be determined. <br />Scalze pointed out that assuming 8% investment earnings <br />for 1993, the City's participation level is $16,500. <br />However, if investment earnings decrease to 5%, the <br />City is looking at $24,000 to $25,000 participation. <br />Scalze felt it would be a gamble at this point to rely <br />on the 8% investment earning projection. Whatever <br />portion of the benefit level is unfunded, the City is <br />liable for. The question is what level of City <br />participation is the Council comfortable with. <br />DeBace pointed out that interest earnings have always <br />done better than 5%, and indicated that the accountants <br />are required to use the 5% figure. As of today, the <br />fund will be about $75,000 overfunded. <br />Scalze pointed out that the only variable is the amount <br />of City contribution. <br />DeBace pointed out that there would be no City <br />contribution if the fund makes 8% on its investments. <br />Scalze pointed out that the City's contribution would <br />be about $25,000 if earnings are 5%. <br />Page 18 <br />