HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/01/2009 - SECOND READING OF ORDINANCE NO. 126, 2009, APPROPR DATE: December 1, 2009 AGENDA ITEM SUMMARY
STAFF: Chuck Seest FORT COLLINSCOUNCIL
iB
Second Reading of Ordinance No. 126, 2009, Appropriating Prior Year Reserves in the General Employees'
Retirement Plan.
EXECUTIVE SUMMARY
The City Council created the General Employees' Retirement Plan in 1971 to provide a retirement benefit in addition
to the Social Security system. The plan has an allowance for election of single-sum payments by the members. The
Plan has distributed over$1.5 million in single-sum payments to seven Plan members through the end of October
2009. This amount was greater then what was budgeted at the beginning of 2009 and is the primary reason for this
appropriation. This Ordinance, unanimously adopted on First Reading on November 17, 2009, appropriates
$1,200,000 from prior year reserves in the trust fund.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary- November 17, 2009.
(w/o original attachments)
ATTACHMENT 1
DATE: November 17, 2009 0
STAFF: Chuck Seest • - • •
First Reading of Ordinance No. 126, 2009,Appropriating Prior Year Reserves in the General Employees' Retirement
Plan.
EXECUTIVE SUMMARY
The City Council created the GenerakEmploees Rern�etirent Plan in 1971l'to provide a retirement benefit in addition
to the Social Security system. Oversight-is provided-by a six-member Committee, five of whom are appointed by
Council, the other being the Financial Officer.
The single-sum benefit, approved by City Council in 1998, is designed to be actuarially neutral to the Plan. When an
employee elects to receive a lump sum amount from the Plan, the liability of providing a future pension benefit to the
employee is removed from the Plan.Although actuarially neutral, voluntary elections of single sum payments reduce
the uncertainty regarding the number of employees for whom the Plan must provide an income over an unknown
period of years. From that standpoint, lump sum payments are considered financially favorable.
BACKGROUND / DISCUSSION1I��
Although the actuary for the Plan does_estimate�the�.umber of employees who are approaching the expected
retirement age of 65,the actuary also assumes that a majority of these individuals will elect to receive their retirement
benefit as an income over their lifetime as opposed to a one-time single-sum payment.
When reviewing the budget for the Plan, City staff noted that approximately$1,000,000 of single-sum payments were
paid during each of the years 2007 and 2008 to eighteen and fourteen Plan members respectively. The other
component of the Plan appropriation is the amount of monthly income paid to retirees.As more Plan members retire,
this amount has grown from $111,000/ month at the beginning of 2007 to approximately $144,000/ month as of
October 2009.
The plan has an allowance for election of--single-sum-pay rtYs_by`he members. The Plan has distributed over$1.5
million in single-sum payments to seven Plan members through the'end�of October 2009. This amount was greater
then what was budgeted at the beginning a�a iPrima ry reasori/for this appropriation.
FINANCIAL IMPACTS �J
The assets of the General Employees' Retirement Plan (the"Plan") are held in a trust fund. As of January 1, 2009,
the date of the most recent draft actuarial report, the Plan assets totaled approximately$33 million. This Ordinance
appropriates$1,200,000 from prior year reserves in the trust fund.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance onL)eadilIng.
LJ
November 17, 2009 -2- ITEM 13
BOARD / COMMISSION RECOMMENDATIONS
The General Employee's Retirement Committee recommends the adoption of the Ordinance for Appropriating Prior
Year Reserves.
ATTACHMENTS
1. General Employees' Retirement Committee Minutes, September 10, 2009
ORDINANCE NO. 126, 2009
OF "fl-iE COUNCIL. OF THE Cf-l'Y OF FOR"I' COLI..INS
APPROPRIATING-PRIOR YEAR RESE?RYES IN THE
GENERAL EN1PLOYEES11RET[RE[v11?NT PLAN
WHEREAS, Article V. Section 9 of the City Charter permits the City Council to appropriate
by ordinance at any time during the fiscal year such funds for expenditure as may be available from
reserves accumulated in prior years, notwithstanding that such rescrves were not previrnuly
appropriated; and
WHEREAS,the City has prior year reserves in the General Employees' Retirement I'lan(the
"Plan")-, and
WHEREAS, the City Council unanimously approved Resolution 98-86 amending the Plan
to allow for a single-sum benefit for vested former employees of the City; and
WHEREAS, the City Council unanimously approved Resolution 98-137 approving the
amendment of the eligibility and contribution provisions of certain employee pension plans; and
WHEREAS, it is necessary to appropriate funds to accommodate an additional $1,200,000
in single-sum benefit payment requests received during the current fiscal year; and
WHEREAS, the Plan has assets of approximately$33 million available for appropriation.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS that there is hereby appropriated from prior year reserves in the General Employees'
Retirement Fund, the sum of ONE MILLION TWO HUNDRED THOUSAND DOLLARS
($1,200,000) to be used for single-sum benefit payments.
Introduced, considered favorably on first reading, and ordered published this 17th day of
November,A.D. 2009,and-to be presented for final passage on 1st day of December,A.D. 009.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading on the I st day of December, A.D. 2009.
Mayor
ATTEST:
City Clerk