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515 Little Canada Road <br />(612) 484 -2177 <br />97(1/4 `C/O ltlada <br />, Little Canada, MN 55117 -1600 <br />/ FAX: (612) 484 -4538 <br />MEMORANDUM <br />TO: Mayor Hanson & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: May 21, 1993 <br />RE: Fire Relief Pension Level Increase <br />MAYOR <br />Raymond G. Hanson <br />COUNCIL <br />Beverly Scalze <br />Jim LaValle <br />Steve Morelan <br />Bob Pedersen <br />ADMINISTRATOR <br />Joel R. Hanson <br />Attached are the schedules showing a projected benefit <br />level of $2,100 per year of service with interest rate <br />assumptions of 5 %, 6 %, 7% and 8 %. It is my opinion that a <br />benefit level of $2,100 per year of service is supportable <br />assuming the City is willing to contribute between $8,000 <br />and $16,000 on an annual basis as part of the budget <br />process. This assumes that interest earnings would be <br />between 6 -7% in order for the City to contribute that <br />amount. It is also important to remind you that our <br />projections are based on some conservative assumptions <br />given that we have built in a retirement schedule. The key <br />to this decision is the amount of annual contribution the <br />City would be comfortable providing the Fire Relief <br />Association. If the range listed above is not acceptable, <br />than the $2,100 level could be cause for concern. <br />At the last meeting, the need for establishment of <br />parameters by which future benefit level increases would be <br />considered was discussed. I feel it is imperative that we <br />establish these parameters in the near future. The key <br />components would be the annual City contribution the <br />Council would be willing to commit to, the range of funding <br />ratios which would be acceptable, and the fact that benefit <br />level increases will not be considered unless they fall <br />within the guidelines established. Therefore, if a benefit <br />level increase was requested and the City's contribution <br />would exceed that committed to by the City Council, then no <br />benefit level increase would be granted. On the other <br />hand, should the benefit level increase fall within the <br />parameters and not exceed the City's required annual <br />contribution under the various assumptions set forth, then <br />the benefit level increase could be made. It is my opinion <br />that this would greatly ease the difficulties associated <br />Page 77 <br />