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Request for Action <br /> <br /> <br />To Item Number <br />Mayor and City Council 8.3 <br />Agenda Section Meeting Date Prepared by <br />General Business July 17, 2017 Lori Ziemer, Finance Director <br />Item Description Reviewed by <br />2018 Benefit Level for Elk River Fire Relief Cal Portner, City Administrator <br />Association <br />Reviewed by <br /> <br />Action Requested <br />Approve, by motion, an increase for the Elk River Fire Relief Association (ERFRA) benefit level to <br />$6,285 per year of service effective January 1, 2018. <br /> <br />Background/Discussion <br />Prior to August 1 of each year, the ERFRA is required to certify to the city the required municipal <br />contribution for the following year. A request for an increase in the Per Year of Service Pension amount <br />for the next year (effective January 1) must also be acted on by the Council before August 1. <br /> <br />ERFRA operates under a defined benefit plan. The pension liability is calculated by the number of active <br />service years multiplied by a set benefit level. Members who retire with less than 20 years of service and <br />have reached the age of 50 years and have completed at least five years of active membership are entitled <br />to a reduced service pension. <br /> <br />On July 12, the ERFRA recommended an increase of 14%, or $750 from the current benefit level of <br />$5,510, which was last approved effective January 1, 2016. The new rate of $6,285 would be effective <br />January 1, 2018, and does not require a city contribution for 2018. <br /> <br />The actual funding ratio of the relief assets was 113% as of 12/31/16, and even with the increased <br />benefit level a funding ratio over 100% is projected. The relief assets are managed by The Parr McKnight <br />Wealth Management Group of Wells Fargo and the year-to-date returns on their investments are 7% as <br />of June 30. <br /> <br />The mayor, fire chief, and finance director serve as trustees of the association. <br /> <br />Financial Impact <br />The annual voluntary contribution of $30,000 is planned to be budgeted in 2018 in the Fire <br />Administration budget. <br /> <br />Attachments <br /> Memo from President of the Elk River Fire Relief Association <br /> <br /> <br />