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515 Little Canada Road, Little Canada, MN 55117 -1600 <br />(651) 766 -4029 / FAX: (651) 766 -4048 <br />w w w. c i.l it tle -ca n ad a. m n. u s <br />MEMORANDUM <br />TO: Mayor Blesener & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: January 17, 2014 <br />RE: Fire Relief Benefit Increase <br />MAYOR <br />Bill 131esener <br />COUNCIL <br />Rick Montour <br />John Keis <br />Michael McGraw <br />Shelly Boss <br />ADMINISTRATOR <br />Joel R. Hanson <br />The Little Canada Fire Relief Association, through the Little Canada Fire Department, is <br />requesting a benefit increase of $65 per year of service. This would result in a $3,265 <br />benefit per year of service at full vesting. (The last increase was approved on May 22, <br />2013. <br />To assist in your review, we have prepared some spread sheets that are based on the <br />Schedules I & II used to calculate fund performance and the need for "required <br />contributions" on the part of the City. <br />I -Iere is a summary of the key info contained in the spreadsheets: <br />• As of 12/31/13, the funding level has risen to 111% after the excellent year in the <br />stock market. <br />• Both sheets assume the most senior person retires each year and is replaced by a <br />new fire fighter. (This has a more conservative impact on the calculation than the <br />standard method.) <br />• The City's contribution is shown at $15,000. This amount is currently part of the <br />discussion in planning for a longer term approach to the Relief Benefit Issue. <br />• State Aid is shown at 2013 amounts. It is likely this amount will increase by <br />about $10,000 in 2014 due to a pending legislative change, but we are showing <br />the more conservative approach. <br />• One of the spreadsheets uses a 5% interest assumption (standard Schedule I /II <br />calculation). The other uses 4.2% which is the 15 year average rate of return <br />achieved by the Relief Association and a more conservative estimate. <br />In making a $65 increase, the funding level in both scenarios remains over 110 %. <br />Therefore, staff recommends approval of the requested increase. <br />cc: Little Canada Fire Department <br />Little Canada Fire Relief Association <br />1 <br />