09-11-2013 Council Workshop Minutes

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MINUTES CITY COUNCIL SEPTEMBER 11, 2013 Morelan then explained how the pension plan works in detail, including how fire fighters become vested in the plan. He noted that currently the benefit level for a fully vested fire fighter is $3,200 per year of service. He indicated that this pension plan is an excellent recruitment and retention tool for the Fire Department. Little Canada fire fighters are volunteers and are paid a stipend for every call they respond to. That stipend averages $1,500 per fire fighter per year. Morelan explained that there are three sources of income for the Fire Relief pension plan. One is the investment income generated by the pension plan dollars, the second is aid from the State of Minnesota which is 2% of fire insurance premium dollars that are paid by property owners ($38,000 to $39,000 per year generally for Little Canada), and the third is the City's voluntary contribution. Morelan indicated that for the past several years the City has been contributing $15,000 annually, although there have been years where that contribution has been greater. Morelan reported that at the end of each year, the Board of Trustees for the Fire Relief Association looks at the pension fund and decides whether or not the fund can support an increase in the pension benefit. The pension benefit was just recently increased by $50 per year of service, but for several years prior, the fund could not sustain a benefit increase. Morelan stated that ideally, the Fire Department would like to have annual inflationary increases in the benefit level. Blesener pointed out that the reason the benefit was not increased for a few years was due to the economy. Morelan agreed that the primary reason was investment returns. He indicated that the Fire Department has discussed this and has concluded that it needs more revenue into the fund. The Department has also concluded that the only viable way to increase revenue is to ask the City to increase its voluntary contribution. Therefore, as part of the 2014 Budget, the Department is asking that the $15,000 City contribution be increased to $31,000, which equates to $1,000 per year per fire fighter. Morelan pointed out that there has not been a lot of time for preliminary budget discussions up to this point, and noted that in a perfect world the issues of the duty crew and the increase in the City's pension fund contribution would have been discussed with the Council and City staff prior to submittal of the Fire Department budget. Blesener indicated that the City and the Fire Department will have to sit down and discuss the issues raised this evening relative to implementation of a duty crew and an increase in the City's voluntary contribution to the pension fund. Blesener suggested that the City Administrator contact the Fire Chief to determine available dates for a workshop with the Council and Fire 4