Loading...
HomeMy WebLinkAbout09.13.05 Work Session Minutes CITY COUNCIL WORKSHOP SEPTEMBER 13, 2005 MINUTES 1. CALL TO ORDER Mayor Soderberg called the meeting to order at 5 :00 p.m. Present: Soderberg, McKnight, Pritzlaff, Wilson Absent: Fogarty Also Present: Andrea Poehler, City Attorney; Robin Roland, Acting City Administrator/Finance Director; Cynthia Muller, Executive Assistant Ken Kuchera, Fire Chief; Cataract Relief Association Members Bill Sauber, Jay Clinkscales, Tom Hemish 2. APPROVE AGENDA MOTION by Pritzlaff, second by McKnight to approve the agenda. APIF, MOTION CARRIED. 3. CATARACT FIRE RELIEF ASSOCIATION PENSION There are two issues - the City's contribution level and the pension level. In 1996 the Cataract Association received an annual contribution amount based on a certain dollar amount per member. There were 36 members and the contribution was $45,000 which amounts to $1250 per member. They received a 3% increase per year. As the number of members increased, the amount per member decreased. They expect to have 48 members in 2006. The City contribution is a combination of the City's contribution which is required under tax levy and the City also passes through the entire amount ofthe fire contribution from the state. In 1996 the contribution from the City and the state is $2,142 per member. In 2003 it was $3,316 per member. In 2006 with a $60,000 contribution and the estimated $108,000 contribution amounts to $3,503 per member with 48 members. The Fire Department is trying to build up the number of firefighters to fully staffboth stations. It was decided to add 2 members per year over 5 years to get the additional staffing. The construction of the fire station was moved up and it was decided to add 4 members for this year and 4 members for 2007. Regarding the pension level, in 1996 the annual benefit per year of service was $1,600. A member with 20 years of service who retired at 50 years of age would receive a lump sum payment of $32,000. In 2005 the annual benefit per year of service is $3,200. A member with 20 years of service and who retires at age 50 receives a $64,000 lump sum. In nine years the pension has doubled in payout amount and the pension obligation is almost fully funded at 93.6%. The idea of the benefit level is that the City is able to use this to recruit individuals with a fair and reasonable amount of money. The Cataract Association proposed an increase for 2006 of$300 to a level of$3,500. The Cataract Association's funding comes from three sources, the City's tax levy, the state's contribution, and investment earnings. For 2006-2010 staff estimated a 5% increase in the benefit level each year which maintains a level close to 100% funding. Council Workshop September 13,2005 Page 2 Mayor Soderberg asked ifthe Association wanted to maintain a steady contribution per member or keep the fund fully funded. Mr. Sauber felt ifthe City is giving so much per year per member that it continue to increase as with the City employees. By giving $60,000 based on 36 members and now they are up to 44 members, the top 36 members are getting less money. Mayor Soderberg replied the fund is remaining fully funded and the benefit received has gone up more than 5% a year. Mr. Sauber stated the reason is two years ago their investments made 20%, last year it was 15%, and 12.5% this year. If they are taking the time to invest properly he felt the members should receive the gain. He asked if the City should gain because the Association invested wisely. Mr. Sauber stated that is why they are looking at the amount per member the City is paying just like any other employee in the City. Mayor Soderberg stated the Association needs to decide if they want the assurance ofthe benefit or the assurance ofthe contribution. Mr. Clinkscales stated when the funding was down they did not take increases as it would have required a large contribution by the City. At that time they determined it was not feasible for the Association or the City to do it. They made compromises to stay within their budget. Finance Director Roland stated the City's contribution did increase at that time. It went from $50,000 to $55,000 and stayed at that level. Mayor Soderberg asked if they want a per person contribution and take a chance with the market. From 1996- 2005 the benefit has doubled. You either get the guaranteed contribution per member or the guaranteed benefit. The Cataract Association presented a comparison of other cities. Mr. Sauber stated it shows they are not at the same level as comparable cities. Mr. Clinkscales stated the comparison shows the average of the cities is 20,000 in population, average number of members is 42, average pension amount is $4564 and the funding ratio is 89%. The City's contribution is $65,000, which they requested, and the state aid is $126,000 which is slightly higher than they are receiving, but could be close to that this year. Farmington is at 43 members, the pension amount is $3200, the funding ratio is above the average and the City contribution is $60,000 and the state aid is slightly less. Mr. Hemish stated if they were on a plan for a 3% increase each year, in 2005 they would be at $1630, in 2006 at $1678 and with 48 members the contribution would be $80,544. In 2007 with 52 members the contribution would be $89,856. For 2006 the Association wants $65,000 contribution level for 48 members which comes to $1,354 per member and a benefit increase from $3200 to $3500 per year of service. Finance Director Roland stated for City employees we do not have a guaranteed benefit for full time City employees. There is a guaranteed contribution. The Association is asking for a guaranteed benefit and a guaranteed contribution. You cannot have both. Staff proposed to maintain the contribution level at $60,000 for 2006 and increase the benefit level to $3350 for 2006. This would maintain the 95%-100% funding and would keep the City's contribution level at $60,000. The increase in benefit level is 5%. Councilmember McKnight asked from 2006 on there is a 5% increase where did that increase come from? Finance Director Roland stated she was instructed to do the 5% increase by the City Administrator. He asked what is the Association's most important number. Mr. Sauber replied it is a combination of benefit level and funding ratio. Councilmember McKnight stated the employees will not get a 5% increase. He would be willing to look at moving the $65,000 figure from 2008 to 2006. Mr. Clinkscales stated they are working to increase the pension level. To do that and keep the funding ratio Council Workshop September 13,2005 Page 3 where they are, they need the City to increase their contribution. To make up for where they did not take increases other years, going to $3500 this year and the $65,000 would move them in the right direction. Going forward they need to do better planning to increase the benefit level and provide the City with a set dollar figure for their contribution. Finance Director Roland replied because of the state contribution and the earnings it does not mean if you increase your benefit level that you will need an increased contribution from the City. There are other factors such as the investments. Mr. Clinkscales stated they are trying to increase the pension level. They need the City to increase their level to get closer to other cities. Finance Director Roland stated if the City was to modify the contribution level to $65,000 for 2006 they will have to find $5,000 to cut somewhere else. Mayor Soderberg would be comfortable looking at increasing the contribution level in the next budget cycle for 2007. If increasing the benefit level to $3500 keeps the funding level at or above 90% he is comfortable with that. There has been a 3% increase in contribution from the City which is consistent with increases employees have received. Finance Director Roland asked if instead of doing the 9% every three years, would Council want to go to a contribution in 2006 of $60,000 plus 3% rather than bunching it $60,000 - $60,000 - $60,000 do $60,000 in 2005 then $61,800 in 2006. It would give 3% and increase the benefit level as well. Mayor Soderberg stated as long as it keeps the funding level at or above 90%. Councilmember McKnight stated his concern with the benefit at $3500 is the other employees who see a 10% increase. Councilmember Wilson suggested staff prepare the scenario the Mayor brought up and the scenario from Councilmember McKnight and evaluate the options at the budget workshop. Finance Director Roland agreed and Council could also then see the increase in the operational budget as well. The City's contribution is already part of the levy. Council needs to determine what part of the levy will be dedicated to the fire levy. Councilmember McKnight also suggested $62,500 and $3350 for 2006. Mr. Clinkscales stated in the future they would like to be included in the budgeting process earlier. Finance Director Roland assured him they will be. 4. COMMUNICATION PLAN Present for this portion of the meeting: Soderberg, McKnight, Pritzlaff, Wilson Absent: Fogarty Also Present: Andrea Poehler, City Attorney; Robin Roland, Acting City Administrator/ Finance Director; Kevin Carroll, Community Development Director; Dan Siebenaler, Police Chief; Randy Distad, Parks and Recreation Director; Brenda Wendlandt, Human Resources Director; Lisa Shadick, Administrative Services Director; Cynthia Muller, Executive Assistant Councilmember McKnight asked why the Council cannot communicate as five? He learned information at the School Board meeting that he should have already known. Mayor Soderberg explained there were things happening the morning of the Council Meeting, there were time constraints, and they have to be careful to not violate the open meeting law. Councilmember Pritzlafffelt out of the loop when Mayor Soderberg and Councilmember Fogarty attended meetings with the school district. Councilmember McKnight stated he does not need all the details, but he does need to know the top layer. Council Workshop September 13, 2005 Page 4 Police Chief Siebenaler stated if one Councilmember has an idea to implement, they should relay it to the City Administrator, and the City Administrator can disseminate the information without feedback. When the City Administrator receives updates, that can be disseminated. This should not be done bye-mail. It has to be done by phone. Council needs to decide who sets the message and who delivers it? When messages get passed from one person to another there are different words used, different tones, and different interpretations. They need to talk with a single voice and establish a common understanding. City Attorney Poehler agreed that this is correct. Council's other option is to have more work sessions. (City Attorney Poehler left at 6:30 p.rn.) Before Council does anything, they need to figure out how to deal with agreement and disagreement. They need to establish a unified front. When one Councilmember speaks out against what has been agreed on, it allows the minority vote to veto the majority message. Council's responsibility is to craft the message. When you ask who, why and how it needs to be followed with why. Council needs to decide as a unit what are the values of the City and what priority do they take. If you cannot answer why, they should question the who, why and what. Council needs to control the message. The City is not lacking in ways to get the message across. They need a single source. 5. ADJOURN MOTION by McKnight, second by Pritzlaffto adjourn at 6:54 p.m. APIF, MOTION CARRIED. Respectfully submitted, ~Jr7~ Cynthia Muller Executive Assistant