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Home My WebLink About06-28-2016 FR&P AGENDA . CITY OF AUBURN INTEROFFICE MEMORANDUM TO: Fire Relief and Pension Board Mayor Nancy Backus, Chair Shelley Coleman, Finance Director Bill Petersen, Member Robert Wigley, Member FROMc Danielle Daskam, City Clerk DATE: June 21, 2016 SUBJECT' FIRE RELIEF AND PENSION BOARD,AGENDA FOR TUESDAY, JUNE 28, 2016 AT 10:00 AM __ COUNCIL CONFERENCE ROOM, CITY HALL FIRE RELIEF AND PENSION BOARD JUNE 28, 2016 10:00 AM _ . AGENDA I. CALL TO ORDER II, APPROVAL OF MINUTES A. Minutes of the June 30, 2015 Fire Relief and Pension Board meeting,* (Recommendation: Boa�d approve the June 30, 2015 minutes as distributed.) III. UNFINISHED BUSINESS IV. NEW BUSINESS A. Actuarial Valuation B. Annual Affidavits Verifying Benefit Eligibility C. Fire Relief and Pension Cost of Living Benefit Adjustments (Recommendation: Board approve the annual pension benefits to pensioners and beneficiaries.) D. Approval of Claims (Recommendation: Boa�d approve the 2015 expenses.) E. Investment Authorization (Recommendation: Board authorize the Finance Director of the City to make such investments as may be appropriate from the Fire Relief and Pension Fund.) V. ADJOURNMENT > FIRE RELIEF AND PENSION BOARD JUNE 30, 2015 8:30 AM MINUTES I. CALL TO ORDER Mayor Nancy Backus called the meeting to order at 8:30 a.m. in the Executive Conference Room located on the second floor of Auburn City Hall. Fire Relief and Pension Board Members present included Mayor Backus, Finance Director Shelley Coleman, Fire Relief and Pension retiree Bill Petersen ancl Fire Relief and Pension retiree Bob Wigley. Also present was City Clerk Danielle Daskam. II. APPROVAL OF MINUTES A. Minutes of the June 5, 2014 Fire Relief and Pension Board meeting. Motion by Member Petersen, second by Member Wigley to approve the June 5, 2014 meeting minutes. MOTION CARRIED UNANIMOUSLY. 4-0 �II. UNFINISHED BUSINESS There was no unfinished business. IV. NEW BUSINESS A. Actuarial Valuation Milliman Consultants and Actuaries prepare an actuarial valuation of the Fire Fighters Fension Fund every two years as required by the Government Accounting Standards Board (GASB). The last report prepared is dated January 1, 2015. The plan experienced a liability decrease due to benefits increasing less than anficipated and a higher than expected mortality rate. This decrease was partially offset by the changes in demographic assumptions. The City has chosen to contribute to the fund as needed by utilizing an eiccess property tax levy pursuant to RCW 84.52.04. Since January 1, 2007, there have been no long-term care or other non-pension benefits paid from this fund. The present value of 4he liabilities is $3.13 million with total assets of $3.35 million as of January 1, 2015. � Fire Relief& Pension Board June 30, 2015 Page 2 The City retains the Fire Insurance Premium due to the ongoing liability for the retirees. B. Annual A�davits Verifying Benefit Eligibility Finance Director Coleman reported in May 2015, all retirees and beneficiaries were sent affidavits requesting updated personal information. Seven of the thirteen affidavits have been returned. Eleven of the thirteen retirees and beneficiaries are receiving a monthly pension benefit from the City. Two retitees are not receiving a mon4hly pension benefit from the City, as fheir current monthly retirement a.11owance from the state covers the percentage of pension benefit required. C. Fire Relief and Pension Cost of Living Benefit Increase The Board reviewed a memo dated June 23, 2015 addressed to Finance Director Coleman from Payroll and Accounts Payable Supervisor Ronda Stella regarding the Fire Relief and Pension benefits. The City adjusts the pension payments based on the salary schedules in the current Fire Fighters' contract. On January 1, 2013, per the contract, pension payments increased by 0.635% and 2.0% for the Battalion Chief rank and all other ranks, respectively. On January 1, 2014, pension payments increased by 1.2% for all fire ranks. On April 15t of each year, the State applies a COLA adjustment to their portion of the pension payments to retirees. This results in a reduction in 4he pension payments made by the City. To calculate the Gity's portion of the pension payments, the retirees' pension benefits (as calculated in accordance with RCW 41.18) is reduced by the monthly retirement allowance they receive from the Stafe. The deficit is paid by the City in accordance with RCW 41.26. Motion by Member Petersen, second by Member Wigley, to approve the cost of living increases in annual pension benefits tb pensioners and beneficiaries Tinsley, Partridge and Reno. MOTION CARRIED UNANIMOUSLY. 4-0 B. Approval of Claims = Fire Relief & Pension Board June 30, 2015 Page 3 Board Members briefly reviewed fund expenses in the amount of $160,521 for benefit payments and and administrative expenses, including actuarial valuation costs. It was noted that all medical expenses and long-term care e,xpenses are paid out of the General Fund. The total 2014 expenses paid from the Fire Relief and Pension Fund and the General Fund are $299,124 a 18.8% decrease. The decrease is due to reduced medical reimbursement requests submitted by retirees in 2014 and a decre.ase in medical insurance premiums. Motion by Member Petersen, second by Member Wigley tb approve the 2014 expenses of tlie Fire Relief and Pension Fund. MOTION CARRIED UNANIMOUSLY. 4-0 C. Investment Authorization Fund assets in 2014 are in the amount of $2,616,264. The funds are invested in the Washington State Investment Pool, treasury notes and bonds, and the average investment return in 2014 was approximately .11%, down .04% frbm the previous year. Motion by Member Petersen, second by Member Wigley to authorize the Treasurer of the City of Auburn to make such investments as may be appropriate from the Fire Relief and Pension Fund. MOTION CARRIED UNANIMOUSLY. 4-0 V. ADJOURNMENT There being no further business to come before the Fire Relief and Pension Board, the meeting adjourned at 8:47 a.m, Approved this day of , 2016. Nancy Backus, Mayor Danielle Daskam, City Clerk f:lclerkUeofP�FR8P�2015FR&Pm06-30.doc � crrxoF * * Interoffice Memorandum � � � � � * WASHII�TGTON II To: Slieliey Coleman, Finance Director From: Ronda Stella, Payroll &AP Supervisor CC: File Date: June 15, 2016 Re: Fire Relief and Pension Benefits The following information is for the presentation to the Fire Relief and Pensfon Board at their annual meeting which is scheduled forTuesday June 28�', 2016. I have included information concerning the COLA and other information below. • Actuarial Valuation Milliman Consultants and Actuaries prepare an ac#uarial valuafion of the Firefighters Pension Fund every two years as required by the Governmental Accounting Standards Boerd (GASB). The last report prepared is dated January 1, 2015. The pla,n experienced a liability decrease due to benefits increasing less than anticipated antl a higher than expected mortality rate. This decrease was partially offset by the changes in demographic a"ssumptions. Since January 1, 2007 there have been no long-term care or other non-pension benefits paid from this fund. . Annual A�davits Verifvina Benefit Ellalbilitv In April 2016, all retirees and beneficiaries were sent affidavits re.ques4ing updated personal information. The City requested that the Affidavits be notarized and returned to the payroll department by the 11th of May. Currently eleven of the affidavits have been received, out of twelve sent. Eleven of the twelve retirees and beneficiaries are receiving a monthly pension benefit _ from the city. One retiree is not receiving a monthly pension benefit from the city, as his current monthly retiremeM allowance from tfie state covers the percentage of pension benefit required. Page 1 of 2 AUBURI�* MORE THAN YOU IMAGINED • Pension Adiustmerits for Pensloners and Beneficiaries The City adjusts the pension payments based on the salary schedules in the current Fire Fighter's contract. On January 1, 2014, perthe cont[act, pension paymerits increased by 1.2%and on January 1, 2015, pensiorrpayments increased by 2.2%. On April 1� of each year, the State applfes a COLA adjustment to thefr po�ion of the pension payments to ret(rees. This re"sults in a reduction in the pension payments made tiy tHe City. To calculate the City's portion of the pensfon payments, the retirees' pension benefit (as calculated in accordance with RCW 41.18) is reduced by the monthly retirement allowance they �eceiye from the State. The deficit is paid by the city in accordance with RCW 41.26. Pensioners'8eneficiaries , Payment rates for the following pensioner beneficiaries are: Anrival Wagea Annual Wages Paid by the City Paid by the City Beneflciarv . April 1,2014 Anril 1. 2015 Ms Mary Jane Tfnsley $20,622 $21;192 IVIs.Jeanne Partricige $12;193 $12,578 Ms Robert Reno $19,038 $19,583 Anproval ofClaims $177,6Z2 was paid from the Fire Relief Pension Fund, an increase in the amount of $17,151 attributed to inoreases in the retiree pension 6enefit payments and professional services suppiied by the City's actuary, Milliman. A full actuarial valuation of the FRP Fund is perFormed every iwo years. $158,425 was paid from the General Fund for LEOFF 1 Fire Fighters' medical expenses. The total 2015 expenses paid from the FRP Fund and General Fund are $336,097 a 12:4% increase. The increase is due to increased medical reimbursement requests submitted by retirees 'in 2015 arid an increase in medical insuran"ce premiums. Investment Authorization 2015 fund assets in the amourrt of$2;519,564 ere invested in the Washington State Investment Pool,heasury notes, and bonds. The average inyestmenf retum in 2015 was approximately .18%, up .07%from the previous year. Page 2 of 2 AUBURN * MORETHAN YOU IMAGINED Draft-U naud ited II City of Auburn, Washington STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS December 31, 2015 Fire Relief Pension TrustFund ASSETS: Cash and Cash Equivalents $ 2,447,214 Investments 71,695 Receivab�es: CustomerAccounts - Interest 655 Total Assets 2;519,564 LIABILITIES: Curcent Payables 7,007 Due to Other Governmental Units - Total Llabilities 7,007 NET POSITION Held ln Trust for Pension Benefits and Other Pu�poses $ 2,512,557 The notes to the financial statements are an integral part of this statement. C:1Users\scolemalAppData\Local\MicrosofilWindows\Temporary Infernet FileslContent.OutlooklKIQ3SXYR\2015 Fiduciary Fund Balance Sheet:xlsx Draft-Unaudited City of Auliurn, Washington STATEMENT OF CHANGES7N FIDUCIARY NET POSTION FIDUCIARY FUNDS For the Year Ende.d December 31, 2015 Fire Relief Pension Trustfund ADDITIONS: Contributions: Fire Insurance Premiums $ 75,702 Investment Eamings 5,065 Total Additions 80,767 DEDUCTIONS: Benefit Payments 157,936 Professional Services 6,660 Administrative Expenses 13,076 Total Deductions 177,672 Change in Net Postion (96,905) Net Position-Beginning 2,609,462 Net Position-Ending $ 2,512,557 The notes to the financial statements are an integral part of thls statement. C:\UserslscolemalAppDatalLocal\MicrosoftlWindows\Temporary Internet Files\Content.0utlook\KIQ3SXYR12015 Fiduciary FuncJs-ReV Exp CFig in Fund Bal.xlsx Actuarial Valuation of Firefighters'Pension Fund City ofAuburn �� January 1, 2015 SECTION 1 I Conclusions and Recommendatlons The Cfty's obligations under the FPF are Iimited to the beneflts provided to flreflghters who reUred prior to March 1, 1970, pius payments of excess redrement beneftts to acUve members as of that date. To meet these obiigations,the City may contribute annually to the Fund the amount raised by levying all or part of a tax of up to $0.45(only$0.225 of which can be in excess of the property tax limit pursuant to Revised Code of Washington (RCV1� 84,52.043) per $1,000 of true and fair market value, the maximum provided by law for mafntaining the Fund. Contributionsalso include donations and income ftom the state fire fnsurance premium collection. The Fund is operating on a pay-as-you-go basis. As of January 1,2015, the actuarial present value of future excess pension beneflts to be provided by the City is$3,130,000. As of January 1,2013,(the date of our last valuation), the present velue of excess pension benefits was determined to be $3.387 million. The expected value es of January 1, 2015 based upon our 2013 vaivation was $3.260 millfon. The actual present value of$3.130 million was 4% lowerthan expected for reasons summarized in the following chart: a ry ncrease (Decrease)as a Reason Percenta e Demogrephic experience (6%) Chenges in benefit emounts compared to expectations (9%) Changes In economic assumptions 0% Changes in demogrephic assumptfons �°(Q Totel 4% The plan ezperienced a Ilability decrease since our last valuation, This is attributable to FPF benefits inc�easing less than anticfpated and higtier than expected moRality. Thie decrease was partially offset by the chenge.s in demograph(c assumptions. The mortality t_able us.eii was ohanged fo match the most recent experience study by the State Actuary. This resulted in inoreased life expectancies and therefore, higher Ilabpftles. Changes In the economic assumptions we�e mostly offsetting and did not haye a signiffcant Impact on Iiabflities. The plan is sensltive to demographic experience that deviates from expectations due to the small size of the plan membe�shfp, The plan also remains highly sensitive to both deviatfon In the excess benefit amounts from expectatlons and tfie assurriptions used for wage inereases and CPI. Thln work product wee prepered aolely for Ihe CNy MAubum Por tha puryoeea deeulbeE hereln end mey not 6e epp�oprkle to uae for ethu puryoeei.MYlimen doea nut Intentl to tienaflt and emumea no duty or Ilehlltty to othar 6 I�M i I I iman PeNes who recelve thle work.Mllllmen rccommende thet NIM pertlea be elded by thelr own ectuary orother � � quelilled profeaelonefwhen rodawlnp Ihe Mllllmen Jitirk protlucl. fpc007Y.tlocn 200W7 FPC 3B/30.008.FPC.10.201</ORWIRFB/sat Actuarial Valuatlon df Fireflghters' Pension Fund City of Aubum January 1,2015 TABLE 2 Deriva4lon of Contrlbutions Requlre.d for Pension Benefita A. Actuarlal present value of all future pension benefits not provided by the LEOFF System(Teble 1): Foractive members $ 0 For retireea and survivors 3,130,000 $ 3,130,000 B. Asseta of the Fund: - Market Value Cash $ 0 Investments 2,618,000 Other Assets 0_ $ 2,618,000 Less liabilitles (7,000) TotalAssets $ 2,609,000 C. Present value of future flre Insurance premiums to be allocated tothe FundtHrough 2024•: 741,000 D. Total Assets[B+C]: 3,350,000 E. Actuarial deficiency: Actuarial present value of amount to be funded from City eppropriafions, begfnning in 2015[A-D, not less than zero]: $ 0 � Based on amount ot(ote!flre lnsurence premlum jexes allocefed tothe Fund iq plan year 2014. The flre Insurance premlum(s assumed to be payeble to the Cfry Por 10 yearsfrom the velueNon date. Thla vrork Oroduot wes prepered aolely for Ihe Clty of Au6um far the puryoeea daecrlbatl hereln end mey not be �Lu epproprlefe to uee for Wher purposee.Mpllmen doee not Inrond a 6aneflt end eeeumae no dury or Ilebnuy ro omar 13 M i I I i ma n PeNee who recelve thla work.H11111mqn recommande Ihel thlN pertlee 6e eldetl by Ihelr axn ecWary or other qualllleC piofeaslonel whbdrevlawlnB�he Mllllmdn vroik producl FpC001B.decx YO 0003 FPC 3B/20.OD3.FPC.10.2014/DRVJ/RFB/sel