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ITEM NUMBER: 26
AGENDA ITEM SUMMARY
DATE: Januan 4, 2000
FORT COLLINS CITY COUNCIL STAFF: Alan Krcmarik
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SUBJECT:
Resolution 2000-4 Amending the City of Fort Collins' General Employees Retirement Plan.
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RECOMMENDATION:
Staff and the General Employees Retirement Committee recommend adoption of the Resolution.
The Council Finance Committee reviewed the Cost of Living Adjustment as part of the budget
process and recommended the one-time adjustment.
FINANCIAL IMPACT:
The City of Fort Collins' General Employees Retirement Plan,as of November 10, 1999.held assets
with an estimated market value of$32.7 million. According to the most recent actuarial study,the
Plan holds an amount sufficient to cover the liabilities of the Plan. The Plan is funded from City
employer contributions of 4.5%of each active members annual base salary. The proposed Cost of
Living Adjustment will be funded from a one-time contribution from City funds as were
appropriated in the annual appropriations ordinance for the budget year beginning in 2000.
In its discussion regarding this matter.the Council Finance Committee recommended that this is the
last time that the Council should consider a cost of living adjustment for members of this Plan.
EXECUTIVE SUMMARY:
As part of the budget process, the General Employees Retirement Committee recommended the
Council consider a one-time cost of living adjustment for the retirees and beneficiaries of the General
Employees Retirement Plan. This Retirement Plan was designed for non-uniformed personnel hired
by the City. It is a defined benefit plan in which the amount of retirement is determined by the
number of years of service and the employees average salary- as defined in the Plan at the time of
retirement. The Plan does not contain an automatic inflationary adjustment provision.
During*the budget process,the Council included an appropriation of funds to cover the anticipated
cost of a one-time cost of living adjustment for members of the plan that retired prior to 1999. This
resolution makes the corresponding adjustment to the Plan to implement the adjustment. The cost
of living adjustment schedule calls for the increase to track the annual level of inflation experienced
since 1990 less one percent.
BACKGROUND: f
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The General Employees Retirement Plan covers approximately 455 active employees. 148
terminated vested employees. 101 retirees and I3 beneficiaries. The participants in the Plan include
primarily non-uniformed and non-management personnel that work for the City.
TE: January 4, 2000 2 ITEM NUMBER: 26
Each year,the General Employees Retirement Committee studies possible changes to the Plan. In
1997. the Committee formulated a proposal to provide a one-time cost of living adjustment to the
retirees and beneficiaries. This proposal was not recommended for funding. The Committee
continued to study this issue and re-formulated a recommendation regarding a cost of living
adjustment as part of the 2000-2001 budget process. Using analysis provided by Watson Wyatt
Worldwide,a nationally known provider of actuarial services,the Committee decided that it would
be appropriate to recommend an increase based on the annual national Consumer Price Index
percentage change less one full percent.
This recommendation was forwarded to the City Manager and Council. The Finance Committee
reviewed the proposed change and recommended the increase to the Council.
Based on the data provided by the actuary,the increases for inflation worked out as shown below.
Inflation less I% Since Percent Increase in Monthly Benefit
1990 15.28%
1991 12.38%
1992 10.39%
1993 8.33%
1994 6.73%
1995 4.95%
1996 3.40%
1997 1.06%
1998 0.58%
Based on a recent report from Watson Wyatt, the total cost to implement the cost of living
adjustment will be approximately$610,000. The annual appropriation ordinance for 2000 included
the authorization to make the increased payments to retirees and beneficiaries.
RESOLUTION 2000-4
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING THE CITY OF FORT COLLINS' GENERAL
EMPLOYEES RETIREMENT PLAN
WHEREAS, the terms of the City of Fort Collins General Employees Retirement Plan (as
restated and effective January 1,1992)(the"Plan")have been reviewed by its Retirement Committee
(the "Committee"); and
WHEREAS,the Committee has recommended to City Council the amendment of the Plan
to provide for a one-time cost of living increase for certain retired Plan members and beneficiaries;
and
WHEREAS, the City Council wishes to adopt the recommendation of the Committee; and
WHEREAS,the City Council finds that the provision of the recommended one-time cost of
living increase is reasonable and necessary to accomplish the public purpose of providing retirement
benefits for retirees and their beneficiaries; and
WHEREAS, the City Council has adopted a 2000 appropriation ordinance which funds the
cost of the proposed one-time cost of living increase; and
• WHEREAS, Article XIV. Modification or Termination of Plan, Section 2, authorizes the
Council to amend the terms of the Plan.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS. COLORADO as follows:
Section 1. That effective January 1, 2000, Article VI of the City of Fort Collins General
Employees Retirement Plan is amended by adding thereto a new Section 8 to read as follows:
Section 8. Inereased.Benefits fbr; ertain Retired Members and
Beneficiaries as of January ]; 2000." ffective january�;'2000, ttie monthly
benefits ofRetiredMembers and'Beneficiaries whose monthlyliayments commenced
prior to January'1, 1999 shall,be increased as follows:
CommencementTearof Percentage Amount
Payment=of First`Benefit of Increase in Monthly
to Retired Members or Benefits
Beneficiaries
1990 and-,prior 1528%
X 991 12.38%
1992 10.39%
. 1993 8.`33%
1994 6.73%
1995 4.95%
1996 3.40%
1997 1.06%
1998 0.58%
1999 and after 0%
These increased 'benefits shall only be applicable to Retired Members or
Beneficiaries who began receiving=a monthlynefit„during the above specified
years:; These increased benefits shall not be plicable to'Retireid Mem`6ers or
Beneficiaries wlio Have taken a smgle-sum ben'fitor V-ested Memlws who)ta"enot
commenced receiving a m mthly=benefit d e atigy specified years.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins held this
4th day of January, A.D. 2000.
Mayor
ATTEST:
City Clerk