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HomeMy WebLinkAbout1980/06/09 - ADMIN - Minutes - City Council - Study Session Nit MINUTES • CITY COUNCIL STUDY SESSION ST. LOUIS PARK, MINNESOTA June 9, 1980 1. Call to Order The City Council Study Session was called to order by Mayor Phyllis McQuaid at 7:00 p.m. 2. Roll Call The following members were present at roll call: Ronald Bnckes Martha Elstrom Phyllis McQuaid John Ralles Jerrold Martin Administrative staff present included acting City Manager William Thibault, Finance Director Earl Hanson and Personnel Director Susan Richards. Also present were Lt. Percy Morris, Officer William Shook and Officer James Welna representing the Police Pension Board, and Captain Robert Gill and Captain Robert Bolmgren representing the Fire Pension Board. 3. Pension Board Presentations Lt. Morris reviewed the history of police pension's. Regarding coordination of plans, he described advantages of the local pension plan, such as local control, retirement at age 50 and escalation of benefits, and the disadvantages of the Public Employee Retirement Association - Police and Fire Fund, such as retirement at age 55 and the loss of local control. Lt. Morris also stated that he believes that a change to PERA will affect the morale of the department and possibly the delivery of police services in the community. He noted that the unfunded liability which must be amortized by 2010 would have to have been paid off one way or another. Lt. Morris said the current unfunded liability of PERA - P&P was $18,911,000 and that he believed that it would cost more in the long run to have two separate pension plans. He concluded by stating that someone should be around to protect the interests of employees after they retire and that there was no provision to provide for continuity of the local plan. Councilman Martin said that he believed the state's requirement to amortize the deficit was an unrealistic one. -190- Captain Bolmgren spoke for the Fire Pension Board saying that the hoard believes it is worth it to the City to pay the $76,000 per year (the annual State aid available to help amortize police and fire unfunded liability over 30 years) to keep the local plan. He expressed concern over morale problrs which he anticipated would develop with two plans. Captain Gill noted that if the City coordinates, 1.26 percent of covered payroll could conceivably be made available to police and fire employees for additional pension benefits. He stated this could yield approximately $21,000 per year in costs and would be subtracted from State aid that becomes available if the municipality coordinates. Captain Gill said that the Fire Pension Board's concern for the benefits of new employees is so strong that the fire fighters are willing to forgo the additional 1.26 percent benefit in order to retain the local pension fund for these new employees. Councilman Martin expressed concern that PERA recipients would lobby to ----+� have employees who are covered by local funds converted to PERA. Mayor McQuaid noted that the legislation contains a section which provides , for protection of employees covered by local pension plans. Captain Bolmgren noted that Police and Fire Pensions are escalated and that PERA does not escalate in the same fashion. He reiterated that he saw real morale problems being caused by having two different pension plans. Councilwoman Elstrom noted that teachers are under several different pension plans and that this does not cause problems. Councilman Ralles pointed out that new employees are aware of the plan under which they are hired at the time they become employed. Mayor McQuaid also stated that she did not see why different pension plans would make a difference. Councilwoman Elstrom noted that employees covered by PERA can vest after 10 years and that they are not required to remain until they reach age 55. Lt. Morris stated that he would fully support 10 year vesting if the local plans were retained. A recent police actuarial study indicated that 10 year vesting would increase normal costs by approximately .36 percent. Councilman Martin asked if it were possible to isolate the exact costs of remaining with the local fund. Earl Hanson noted that it is not really possible to deal with specific dollar figures because we don't know what the next actuarial reports will show. He also noted that the 20.57 percent normal cost figure for the local police pension does not include funds to amortize the deficit. He anticipates that the normal costs and deficits could possibly increase for the next few years and then begin to decrease. Acting City Manager Bill Thibault advised that the deficit must be amor- tized by 2010 regardless of which option the Council chooses. -191- Councilman Backes questioned whether it is the current deficit or all accrued liability which must be funded. Earl Hanson stated that all accrued liability must be funded by 2010. He noted that in the coor- dinated plan the covered payroll decreases as new employees are covered by PERA. He further stated that if the City does not coordinate, an additional tax to put the fund on an actuarially sound basis must be levied. With regard to State aid available to the City through insurance revenues, Earl Hanson stated that it makes no difference if that money is applied to the local funds to PERA-P&F, or to both of them, since the same amount of taxes would have to be levied. Mayor McQuaid concluded the meeting by stating that the Council would address the pension issue at its June 16, 1980 regular Council meeting. 4. Adjournment The Study Session was adjourned at • 8:15 p.m. -C •e& 7); Phyll s McQuaid, Mayor Attest: e. ( , fLl J� A I • l��- Susan E. Richards Recording Secretary • • -192- - -- �_. -�.