10-08-2014 Council Agenda - Laserfiche WebLink

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To: Little Canada Fire Department From: City Representatives to Fire Department Committee Re: Fire Relief City Contribution Proposal In attempting to develop concepts for City support to the Fire Relief Association as part of our contract with the Little Canada Fire Department (LCFD), we are seeking to address multiple objectives. They are: • Tax Levy Stability • Accountability to our Tax Payers • Recognition of the efforts of our volunteer fire fighters To that end, we have two options for your consideration: Option A: The LCFD has requested increased funding to aid in available revenue sources/income streams to support higher benefit levels. As part of the 2014 Budget request, $31,000 was requested. The concern the City has with providing increased funding is the lack of control over deficit situations caused by stock market pullbacks. To eliminate this risk to the City, we feel a defined contribution plan (DCP) should be considered and adopted by the Fire Department/Relief Association. As has been discussed, we see the following advantages to a DCP: • Levy volatility associated with deficit amortization is eliminated for the City. • Relief Members are assured of receiving their share (essentially a funding ration of 100%) when they retire versus building fund balance above 100% to provide a cushion for market pullbacks. • Extended discussions about benefit increases are eliminated. The City feels strongly that this is the approach we prefer for the reasons stated above. To achieve that outcome, we are willing to provide a $31,000 annual contribution. We also recognize that this type of change won't occur over night and additional research and study is needed by LCFD and the Relief Association. Therefore, assuming this type of change could take a year or more to implement, the City will make this funding commitment effective January 1, 2014 once the change is fully approved. For example, if a DCP plan is adopted in early 2016, the City will include funding from 2014 and 2015 based on the $31,000 support level. Assuming we have continued at our current $15,000 level of funding, we would provide an additional $16,000 for 2014 and 2015 to the contract payment of $31,000 for 2016 (this assumes our contract will be adjusted to the $31,000 in 2016 as part of the DCP approval process). 3