2021.11.09 CC Packet - Laserfiche WebLink

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October 26,2021 Page 10 of 12 report with assets of$5.1 million and a total liability of$2.7 million, with over$2.4 million projected surplus in the fund. Public Safety Director Paetznick explained despite strong investment performance and a healthy surplus in the retirement fund, due to the continuing lack of a municipal contribution the Relief Association has now reached its maximum benefit allowable at $9,000 per year of service pursuant to the funding formula outlined in statute. While the City has "saved" $346,500 during years 2013-2020 by not providing a municipal contribution, the overall loss to the Fire Relief Association compounded by yearly investment performance is estimated at $578,486. Had the municipal contribution been maintained for those years, it is estimated that the current maximum benefit allowable would instead be $13,100 per year of service. Whereas investment earnings previously accounted for about half of the fund's revenues, since the discontinuation of the municipal contribution, they now account for over 75% of revenue. However, the statute only allows for 10% of the fund surplus to be used in calculating the maximum benefit level in contrast to municipal contributions which receive 100% consideration in this formula. Public Safety Director Paetznick commented current state law caps the benefit level for any Relief Association at $15,000 per year of service; this was increased two years ago from the previous statutory maximum of$10,000. It would not be the intention to immediately pursue the maximum allowable benefit if a municipal contribution is received. Rather, the New Brighton Firefighters Relief Association has averaged an annual benefit level increase of$250 per year, including no increase in some years due to market conditions. This is based on an annual analysis of the audited financials and the investment performance of the fund. These benefit increases are always brought forward to the Council for consideration and ratification. Public Safety Director Paetznick stated unlike other part-time and full-time municipal employees who are covered by the Public Employees Retirement Association(PERA)with mandatory employer contributions to fund their retirement accounts, the City of New Brighton for seven-consecutive years has not provided any similar funds to the Fire Relief Association assure a retirement benefit for the sake of its volunteer/paid-on-call firefighters. For comparison, during 2020 the average annual PERA retirement contribution for a parttime employee in the City of New Brighton was $1,791.93. The Fire Division's organizational staffing model continues to provide a high-level of service using paid-on-call members and it is estimated that to transition to a"combination department" of career/full-time firefighters supplemented by parttime/duty-crew members would cost in excess of$650,000 annually. Public Safety Director Paetznick reported adjusted for inflation, the original $1,000 per firefighter funding established in 2001 is equivalent to about$1,500 in 2021 when adjusted for inflation over that 20-year period. The department is currently staffed by 36 members, with a class of eight recruit firefighters anticipated to be hired in the remaining months of 2021, resulting in a total strength of 44. It was noted 60% of firefighters leave the department before becoming fully-vested in the Fire Relief Association. In order to maintain firefighter recruitment and retention of paid-on-call members, he recommended a total voluntary municipal contribution in the year 2021 in the amount of$66,000 (44 firefighters multiplied by $1,500 per member). Councilmember Axberg thanked staff for the detailed presentation.She noted she has done a lot of thinking since June when this came to the Council at a worksession meeting.She indicated she valued the City's paid on call fire division model. She was pleased to see the City had interested candidates to serve the community. However,she noted she was also considering the fiduciary role of the City and the impact a yearly contribution would have on taxpayers.She explained not all taxpayers within the community have pensions or retirement plans for part-time positions. She stated at this time New Brighton is in the middle of the pack for its benefits.She believed there was some opportunity for an increase,but maybe not what staff was recommending.She suggested the City benchmark towards the median.She commented there were 12 cities that were not making municipal contributions out of the cities used for benchmarking which meant New Brighton was not an outlier.