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Investments <br /> <br />The Association's state aid allocation and the city's contribution are invested in the <br />Association's Special Fund. The association has developed an investment policy <br />providing maximum return consistent with preservation of principal those Follows State <br />Statues. In 1997, the Trustees of the Association elected to invest all incoming funds with <br />the State Board of Investments (SBI). (1). On February 25, 1999, the trustees agreed to <br />revise the Special Fund Allocation section of the Association's Investment Policy to <br />permit greater investment in stock mutual funds. (2) Based on that change and the <br />opportunity to simplify record keeping, all mutual funds were sold and the proceeds were <br />reinvested with the SBI. At this point, all of the Special Fund will be invested in the SBI <br />and a large CD at the Bank of Elk River. <br /> <br />Proposal <br />The Association is requesting that the City Council approve an increase of benefits for <br />the year 2001 to $3575 for each year of service compared to $3370 for 2000. Starting in <br />1996 and continuing through 1999, the City's Audit has shown an increasingly large <br />surplus in the Special Fund. By the end of 1999, the surplus had grown to $174,289. (3) <br />The increased surplus means that the annual benefit rates have not been raised rapidly <br />enough in the last several years. In a business a surplus is considered favorably, but in a <br />retirement fund, it is poor practice because members can only receive benefits that have <br />been approved by Council action and will not receive additional (surplus) money that <br />they have earned. <br /> <br /> Each year the Association verifies that the proposed increase can be maintained in the <br /> future with a multi-year projection of income and costs. This year's projection indicates <br /> sufficient new income to permit approximately a 5 percent annual increase for the next <br /> five years. <br /> <br />Attachment (1) <br /> <br />Minnesota State Board of Investments <br />1999 annual Report pg. 23-27 8:29 <br /> <br />Attachment (2) <br /> <br />Elk River Fire Department Relief Association Investment Policy <br />Section 12.1 Rev. 02/02/99 <br /> <br />Attachment (3) Elk River Fire Department Relief Association Annual Report, 1999 <br />Page 9, ABDO, ABDO, Eick & Meyers <br /> <br /> <br />