10-05-82 CCM - Laserfiche WebLink

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OM --Whittaker - memo summarizes financial position of special fund which is basic pension fund. If we adopt by-laws they're proposing, the program would be fully funded, would be financially sound, and we'd have surplus at the end of 1983 of $9,133.11. --Fraser - how does this relate to what's in existence now? --Whittaker - we'd be in much better shape if we stayed with existing system, now at $40/month pension. Second element is they're proposing that a bonus be paid for service over 20 years, and present liability in the general fund for that bonus would be $10,820. Under the Statutes, this bonus cannot come out of the special fund, it has to come out of general fund. Present accrued liability for that bonus as proposed is $10,820; at this point, money isn't in the general fund and that could be a real problem; however, would not have to pay $10,820 in 1983, would have to pay $5,100. The State statutues require the City to make sure special fund is balanced; there's enough there for accrued liability; does not require that we balance the general fund or that we provide for this bonus. Two key policy decisions tonight: whether or not we want to go to this new pension plan in the special fund, and whether or not we want to approve by-laws that provide for a bonus (that I know we can't finance right now)... perhaps firemen can tell us how it'll be financed. Firemen have said they're not looking for any City levy in 1983. --Bruce Kuettner, Fire Chief - we're looking to get into a lump sum... easier to administer and more beneficial to firemen at retirement age. Also explained incentive bonus program and survivor's benefits. What we're looking at is a simplified set of by-laws that'll cost less, approximately $600-1,000 a year to maintain. --Fraser -- I need to know where we're at now, reasons for changes, and where we want to be. Is of sufficient complexity I'm not going to understand this in a few minutes. --Whittaker - reviewed 9/2/82 memo where policy issues were dealt with - what this change means in terms of the ultimate pension the average fireman would get and the increase in liability to the pension fund because of these changes. In effect, it's going to double the effective pension each fireman gets, and it may double the liability for the pension fund because more people qualify at 10 years than 20 years. Present money in pension fund would support this proposal without special levy in foreseeable future. Special fund has accrued through the years through State aid (2% of insurance premiums collected in City), money added by the City, and interest earnings. Money can't be used for anything except for fireman benefits. Any change in benefits - i.e. by-laws - would have to be approved by the City. Change in character of fire department (more members, age changes, etc.) could affect this in next 10 years. --Mottaz - if there are changes such as more members, more 2% would be going into fund to compensate. Feel we've been getting pretty good service without much outlay on the City's part. --Whittaker - bonus is not funded, and money has to come .from someplace. If we approve by-laws, we're tacitly accepting a $10,000 liability_£or- 1983. Will it be paid by donations, firemen's activities, or City levy at some point? What we would have to pay next year is $5,100'if two men retire as planned, plus our $500 increase in liability because five firemen would be eligible for this. --Jim Bjorkman - we've been dumping extra money we've earned (such as ( from RR) into this special fund, and now we can't use it. We could probably have paid for this if we had put it into general fund. --Fraser - what we have here is something that is good and desirable, but more information is needed before we can act responsibly and would take more time to study.