HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/03/2013 - FIRST READING OF ORDINANCE NO. 169, 2013, APPROPRIAgenda Item 7
Item # 7 Page 1
AGENDA ITEM SUMMARY December 3, 2013
City Council
STAFF
John Voss, Controller/Assistant Financial Officer
Mike Beckstead, Chief Financial Officer
SUBJECT
First Reading of Ordinance No. 169, 2013, Appropriating Prior Year Reserves in the General Employees
Retirement Plan.
EXECUTIVE SUMMARY
The purpose of this item is to approve additional spending in the General Employee Retirement Trust
Fund. At the time of retirement, qualified persons have the option to elect monthly payments or one-time
cash out. Using historical data, the actuary estimates that 30% of future retirees will elect a single-sum
payout. The 2013 budget made the same assumption. Retirees electing cash outs this year have
exceeded the assumed election rate.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
The City Council created the General Employees Retirement Plan (the “Plan”) in 1971 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 1988, 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 this standpoint, lump sum
payments are considered financially favorable.
The 2013 budget for payments to retirees is currently $3.2 million. Of that amount $960,000 was
assumed for lump sum cash outs and $2,240,000 for monthly payments. Lump sum cash outs have been
twice the amount anticipated.
FINANCIAL / ECONOMIC IMPACT
The assets of the General Employees Retirement Plan are held in a trust fund. As of October 31, 2013
the Plan assets totaled approximately $43.5 million. This Ordinance appropriates $1 million from prior
year reserves in the General Employees Retirement Trust Fund. This has no impact to other operating
budgets of the City in this year or future years.
BOARD / COMMISSION RECOMMENDATION
None. At the November 14, 2013, meeting of the General Employees Retirement Committee. staff
communicated the need to increase the 2013 budget.
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ORDINANCE NO. 169, 2013
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE
GENERAL EMPLOYEES RETIREMENT 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 reserves were not
previously appropriated; and
WHEREAS, the City has prior year reserves in the General Employees' Retirement Plan
Trust Fund (the ?Plan?); and
WHEREAS, the City Council unanimously approved Resolution 1998-086 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 1998-137 approving an
amendment to the eligibility and contribution provisions of certain employee pension plans; and
WHEREAS, it is necessary to appropriate funds to accommodate an additional
$1,000,000 in single-sum benefit payment requests received by the Plan during the current fiscal
year; and
WHEREAS, the Plan has assets of approximately $39 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 Plan Trust Fund, the sum of ONE MILLION DOLLARS ($1,000,000) to
be used for single-sum benefit payments in the current fiscal year.
Introduced, considered favorably on first reading, and ordered published this 3rd day of
December, A.D. 2013, and to be presented for final passage on the 17th day of December, A.D.
2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
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Passed and adopted on final reading on the 17th day of December, A.D. 2013.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk