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return in future years) shows that the per year benefit level can continue to <br />increase with a surplus still being shown in its assets. <br /> <br />To help explain to the Council why I feel that establishing the per year <br />benefit amount is somewhat a "best guess," one only has to look at the <br />projections from the department for last year. Last July the department <br />projected that the 1999 benefit level would not change from the $2,674 <br />amount established in 1998. Using a 6 percent return per year estimate, the <br />department projected that the benefit level would go to $2,900 in the year <br />2000 (see attachment). As you can tell by the current request, the <br />investments have returned more than expected. The request this year takes <br />into consideration a conservative estimate last year and is providing for the <br />department to slightly catch up. I believe this is appropriate and I would <br />always like to be a little conservative and a year behind versus a year ahead <br />in the benefit level. <br /> <br />The economy and the stock market have been good the last few years. A <br />relatively modest percent of the department's assets is invested in stocks, so <br />a major correction in the stock market would not have a major impact on the <br />department's assets. Nonetheless, I believe that a 9 percent projection in <br />1999, followed by several years of 7 percent projections is somewhat <br />optimistic and I would prefer to be more conservative and simply catch up <br />again in future years. <br /> <br />There is no magic way to determine the appropriate level of per year benefit, <br />but I am more comfortable closer to the $2,900 per year level than pushing <br />the envelope as much as possible to the requested $2,970 level. <br /> <br />Attachments <br /> <br />· July 1997 Five Year Projection from Relief Association <br />· Chart of Per Year Benefit Changes Since 1981 <br /> <br />Recommendation <br /> <br />It is recommended that the City Council release $20,150 in city funds; part <br />from the fire department budget and part from the city council contingency <br />fund, to the Fire Department Relief Association. <br /> <br />It is recommended that the City Council establish a per year benefit level for <br />the Fire Department Retirement Plan somewhere between $2,900 per year <br />and $2,970 per year. <br /> <br /> <br />