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OITY OF REQUEST FOR COUNCIL CONSIDERATION Agenda Section C REPORT Report Number: 0 f I iSTAFF liNDS Report Date: 11/8/96 ` 2J.0 1CITY COUNCIL MEETING DATE _ I November 12, 1996 Special Order of Bus. S g�jS-Partne��'Q Consent Agenda IMMIN Public Hearings 7 Council Business Item Description: Consider authorizing the Finance Director to file the required annual disclosure statements with the SEC and to negotiate a contract for administrative services for the City's Section 125 plan. Explanation/Summary(attach supplement sheets as necessary) Summary: Recently enacted federal legislation requires the City to file annual disclosure statements with the Securities and Exchange Commission relating to the financial health of the City whenever certain conditions are met. The conditions generally relate to when City has outstanding bonds. Last year the City entered into a contracted with Springsted, Inc to prepare the required disclosure at a cost of$1,500 per year; the contract does not specify a term but can be canceled by either party by giving 90 days notice. Based upon my past n experiences, I feel that I should be able to complete the required disclosure at a nominal cost, basically for the cost of obtaining required information from outside sources such as Ramsey County and possibly a nominal charge from a consultant for clarifying one or more minor points associated with the disclosure statement. 0 the early 1990's, the City established a Section 125 plan for its employees (a section of the Internal evenue Code which allows employees to pay for some of their medical costs with pre-tax dollars). The City contracted with DCA to administer the Plan; DCA charges a set fee per participating employee and but also has a minimum fee of$150 per month,plus additional fees for year end reporting;the total annual fee for 1996 will be $2,050. Based upon my experience with other administrators, this fee appeared to be high and as such, I contacted several other plan administrators to obtain additional information of their fee structure and level of service. Based upon this, it appears that if the City would change plan administrators, the fee would be approximately $1,200 for the first year and$500 for subsequent years. Our plan year runs from January through December and as such, if the City is to change Plan Administrators, we would need to do so by early December to insure that we could complete all the necessary changes by January 1st. I have been in contact with DCA to see if they would modify their fee structure and have not received their response as of the writing of this report. As such, I am requesting authorization to negotiate with DCA and if they are unable to modify their fee structure to authorize the City Clerk-Administrator to enter into a contract with the Plan Administrator that he feels will best serve the needs of the City. Bruce Kessel, Finance Director. RECOMMENDATION: Notify Springsted, Inc that the City is canceling its contract for annual SEC disclosure ccreporting, and authorize the City Administrator to contract for Plan Administration services for the