#16 - Statewide Volunteer Firefighter Pension Increase

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STAFF REPORT DATE: December 3, 2024 REGULAR TO: City Council FROM: Dustin Kalis, Fire Chief AGENDA ITEM: Approve Statewide Volunteer Firefighter Plan Benefit Level Increase REVIEWED BY: Nicole Miller, City Administrator Dustin Kalis, Fire Chief Clarissa Hadler, Finance Director Mike Schwarz, President, Lake Elmo Firefighters Relief Association BACKGROUND: On January 1st, 2024, the Lake Elmo Firefighters Relief Association transferred funds and began operating under the direction of the Statewide Volunteer Firefighter Plan (SVF). Annually, Public Employees Retirement Association of Minnesota (PERA) and the Statewide Volunteer Firefighter Plan provides an Actuarial Valuation Report to the city. Information provided in this report provides information used when seeking a pension benefit level increase. ISSUE BEFORE COUNCIL: Should the City Council adopt a resolution authorizing the Statewide Volunteer Firefighter Plan Benefit Level Increase to $8,000 per year of service. PROPOSAL DETAILS/ANALYSIS: The Statewide Volunteer Firefighter Plan is the sole retirement benefit provided to paid-on-call fire department staff. The plan is funded through the department’s pension assets and annual fire state aid contributions from the State of Minnesota. The proposed change would increase the retirement benefit from $7,000 per year of service to $8,000 per year of service. The current vesting schedule is 5 years (40%) and full vesting at 20 years (100%). A fire department’s SVF Plan benefit level is the dollar amount corresponding to each year of a volunteer firefighter’s certified service. PERA’s cost analysis is intended to help the city determine whether and the extent to which a benefit level increase is appropriate for their fire department. The city has the authority to approve benefit level increases for the fire department and may elect to do so once per year. A benefit level increase approved in a given year will go into effect on January 1 of the next year. The city cannot elect to decrease the fire department’s benefit level. FISCAL IMPACT: The 2024 Actuarial Valuation Report indicated that at our current benefit level of $7,000 per year of service, with the plan currently 147.39% overfunded and requiring no municipal contribution to the plan for 2025. A benefit level analysis provided by PERA on 10/8/24 accounted for a recent and anticipated retirement payout. At the $8,000 per year benefit level, our funding amount is 156%.