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City ~ <br /> Paver <br /> <br />TO: <br /> <br />FROM: <br /> <br />DATE: <br /> <br />SUBJECT: <br /> <br />Item # 5. I. <br /> <br /> MEMORANDUM <br /> <br />Mayor and Council <br /> <br />Lori Johnson, Finance Director <br /> <br />July 19, 2004 <br /> <br />Consider 2005 Benefit Level for Elk River Fire Relief Association <br /> <br />By August 1 of each year the Elk River Fire Relief Association is required to certify to the <br />City the minimum required municipal contribution to the Relief Association for the <br />following year. In addition, if the Relief Association is requesting m~ increase in the per year <br />of serwqce pension amount for the next year, that request must be presented to the Council <br />for consideration prior to August 1. The Relief Association is requesting m~ increase in the <br />benefit level for 2005. Attached is a letter from Relief Association President Robert Dreissig <br />regarding the requested increase along with background data m~d the schedules that will be <br />submitted to the State Pension Division. <br /> <br />As the attached memo states, the requested increase is from $3,575 per year of serwqce to <br />$4,000 per year of serwqce. The $3,575 per year benefit has not increased since 2001. Prior <br />to that, the anaount typically increased mmually. However, low interest rates m~d a decrease <br />in the value of the Association's portfolio in recent years have made it difficult to justify m~ <br />increase. Recently the investments have rebounded m~d it is now possible to increase the <br />benefit level. The attached schedule (form SC 04) prepared by the Relief Association states <br />that no City contribution is required in 2005 based on a benefit level of $4,000. The <br />calculation includes three percent interest income on the investments. <br /> <br />Second, the 2004 budget included a voluntary payment to the Relief Association of $24,800. <br />The voluntary payment is reviewed mmually during budget discussions m~d m~ inflationary <br />increase is usually applied so the contribution increases each year. Authorization to make <br />this payment is also requested at this time. <br /> <br />Finally, as we have discussed in previous years, by ratifying m~ increase in the benefit <br />anaount, the City must provide the funds needed to support those benefits. With this <br />increase, the Association estimates that it will be beiwveen 93 m~d 95 percent funded so the <br />possibility of additional City contributions is extremely remote, but possible under the worst <br />case scenario. Both Mayor I4Jinizing m~d I serw-e as trustees of the Association m~d we will <br /> <br /> <br />