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<br />JUL-08-1999 THU 10:57 AN CRETE X PURCHASING <br /> <br />FAX NO, 6122418210 <br /> <br />p, 03/12 <br /> <br />. <br /> <br />Invesfll,l.r.u1.M. <br /> <br />The Association's state-aid allocation and city's contribution are invested in the Association's <br />Special Fund. The Association has developed an investment policy providing maximum retur.n <br />consistent with preservation of principal that follows State Statutes. In 1997, the Trustees of the <br />Association elected to invest all incoming funds with the State Board ofInvestment (SBI). (1) <br />011 February 25, 1999, the Trustees agreed to revise the Special Fund Allocation section of the <br />Association's Investment Policy to permit greater investment in stock mutual funds.(2) Based <br />on that ch..mge and the opportunity to simplify record keeping, all mutual funds, with the <br />exception of the Kemper I30nd Fund, were sold and the proceeds were reinvested with the SHY. <br />lhe Kemper Bond Fund will be llsed to pay the next three retirement payments. At that point, all <br />ofthc Special Fund will be invested in the SBl and a large CD at the Bank of Elk River. <br /> <br />P.J:..llP.JJ.JJJl <br /> <br />. <br /> <br />The Association is requesting that the Council approve an increase of benefits [or the year 2000 <br />to $3,370.00 for each year of service compured to $2,900.00 for 1999. Starting in 1996 and <br />continuing through 1998, the City's Audit has shown an increasingly larger surplus in the Special <br />Fund. 13y the end of 1998, the surplus had grown to $234,OOO,OO.(3) The increased surplus <br />means that the annual benefit rates have not been raised rapidly enough in the last several years, <br />Tn a business a surplus is considercd favorably, but ill a retirement fund, it is poor practice <br />because members can only receive benefits that have been approved by Council action and will <br />not receive additional (surplus) money they have earned. <br /> <br />Each year the Association verilies that the proposed increase can be maintained in the future with <br />a multi-year projection of income and costs. This years projection indicates sufficient new <br />income to permit approximately a 10 percent annual increase for the next Jive years. <br /> <br />Attachment (.1) <br /> <br />Minnesota State Board of Investment <br />1998 Annual Report Pgs. 23 - 27 & 29 <br /> <br />Attachmcnt (2) <br /> <br />Elk River Fire Department Relief Association Investment Policy <br />Section 12.1 Rev. 2/2/5/99 <br /> <br />At1achmcnt (3) <br /> <br />Elk River Fire Department Relief Association Annual Report, 1998 <br />Pgs. 8 & 9, ABDO, ARDO, Eick & Meyers <br /> <br />. lJ:\!'AUI.^QIJ I\NI-.IUJJ.WPO <br />