2023.07.10 Packet - Laserfiche WebLink

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14669 Fitzgerald Avenue North, Hugo, MN 55038 • (651) 762‐6300 • www.ci.hugo.mn.us TO: Honorable Mayor Tom Weidt and Members of the City Council FROM: Anna Wobse, Finance Director SUBJECT: Firefighter’s Relief Association Pension Increase DATE: For the City Council Meeting of July 10, 2023 DESIRED COUNCIL ACTION Motion to Ratify Board of Trustees Request for $300 Increase in Lump‐Sum Pension and Approve Revised Bylaws OPTIMUM PENSION BENEFIT LEVEL On April 2, 2012, the City Council adopted a Resolution Adopting the Firefighter Relief Pension Fiscal Policy. The policy sets the optimum pension benefit level as the average lump‐sum benefit provided by relief associations that receive state fire aid within 10% of the amount received by the Hugo Firefighter’s Relief Association, as last reported by the Office of the State Auditor. According to the Office of the State Auditor, eight other lump‐sum relief associations received state fire aid in 2022 within 10% of the amount received by Hugo. These associations are located in: New Prague, Albert Lea, Little Falls, Albertville, Fergus Falls, Marshall, Waconia and Ham Lake. Staff feels that this is a good sampling of associations. Using data from these eight associations, staff can establish the optimum pension benefit level at $4,595 per year of service. This average is $295 above the current benefit amount and staff recommends that we reach this average with an immediate increase of $300. The Board of Trustees voted to increase their lump‐sum pension benefit from $4,300 per year of service to $4,600 and is asking the City Council to ratify this increase as well as approve a revision to the bylaws incorporating this new benefit level. FINANCIAL STATISTICS The Finance Department has reviewed the financial status of the relief association and finds that the recommended increase will result in the following: Total Pension Assets: $2,491,199 (projected) Total Pension Liability: $1,641,076 (after $300 increase) Projected Surplus: $850,123 (52% of liability) The attached projections show that the investment portfolio can withstand a 35% market correction while still maintaining a surplus. RECOMMENDED PENSION BENEFIT LEVEL INCREASE Staff is recommending the City Council approve a motion to ratify the Board of Trustees request for a $300 increase in the lump‐sum pension benefit and approve a change to the bylaws incorporating this new benefit level. This will bring Hugo’s pension benefit to $4,600 per year of service (within $5 of the optimum level described above).