1n. Fire Relief Bylaws, Change in Benefits I ,
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CITY OF
' ' CHANHASSEN
1 .. ,,
, , ..
y 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
I ....„7, .
(612) 937-1900
II MEMORANDUM
TO: Mayor and City Council
IFROM: Don Ashworth, City Manager
IIDATE: October 21, 1988
SUBJ: Fire Relief Bylaws, Reflect Change in Benefits
IIThe 1989 Budget includes an adjustment for fire relief benefits .
The City Council, approximately three years ago, adjusted fire
II relief benefits stating that such should not be re-adjusted for
a three year period. Accordingly, the Fire Department did with-
hold any requests for adjustment. Included in the 1989 Budget is
II an adjustment for fire relief . The adjustment truly represents a
cost of living adjustment more so than an increase in benefits
per se. The budget increase to fully fund the increase being
requested is at a similar level to all other budgetary increases .
IAttached please find the Actuarial Report reflecting the cost to
the City for the adjustment being requested. Also included are
II comparative figures with other departments regarding relief bene-
fits .
Approval of the fire relief benefit request is hereby recom-
Imended.
I (25343— \ os,L1 , -, q=2
II
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I 1
{ CITY OF
CHANHASSEN
1 . :,j
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
4 (612) 937-1900
IMEMORANDUM
TO: Mayor and City Council
IFROM: Don Ashworth, City Manager
IDATE: October 21, 1988
SUBJ: Fire Relief Bylaws, Reflect Change in Benefits
IIThe 1989 Budget includes an adjustment for fire relief benefits.
The City Council , approximately three years ago, adjusted fire
I relief benefits stating that such should not be re-adjusted for
a three year period. Accordingly, the Fire Department did with-
hold any requests for adjustment. Included in the 1989 Budget is
II an adjustment for fire relief. The adjustment truly represents a
cost of living adjustment more so than an increase in benefits
per se. The budget increase to fully fund the increase being
requested is at a similar level to all other budgetary increases .
IAttached please find the Actuarial Report reflecting the cost to
the City for the adjustment being requested. Also included are
I comparative figures with other departments regarding relief bene-
fits.
Approval of the fire relief benefit request is hereby recom-
Imended.
br-j---' C,AL ,
III
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I
BY-LAW CHANGE I
ARTICLE I
Name and Title - Change line 2. Fireman to Firefighters. I
ARTICLE VII . SECTION 1
Change Line 4 from $180.00 to $228.00.
Change Line 5 from $9.00 to $11 .40
II
ARTICLE VII , SECTION 3
--- Change Line 9 from $9.00 to $11 .40 I
Change Line 12 from $1 ,350.00 to $1 ,710.00 -
ARTICLE VII , SECTION 4
IIChange Line 17 from $9.00 to $11 .40
Change Line 20 from $1,350.00 to $1 ,710.00
ARTICLE VII . SECTION 4
II
Change Lines 24 to 35, 10 years 607. 54.40 to 68.40 - 8,000.00 to 10,260.00
20 years 100. 180.00 to 228.00 - 27,000.00 to 34,200.0C
ARTICLE VII , SECTION 5 (A) I
Change Line 6 from $9.00 to $11 .40
ARTICLE VII , SECTION 5 (B) I
Change Lines 19 through 2& to Lines 12 through 18
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YEAR OF I
MONTHLY LUMP SUM FUNERAL WIDOW VESTING INCREASE
Chanhassen 180.00 27000.00 1000.00 10 yr. certain 10 yr. 1988 I
Mound 350.00 -1-10000.00 1,500.00 100% 20 yr. 1990
Chaska 180.00 27000.00 2,000.00 100% 15 yr. 1989 II
Prior Lake 29000.00 1,000.00 100% 10 yr. 1989 I
Eden Prairie 480.00 48000.00 1,000.00 100% 10 yr.
Excelsior 33000.00 100% 10 yr.
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ow
BY-LAWS OF THE CHANHASSEN VOLUNTEER FIRE DEPARTMENT RELIEF
11 ASSOCIATION, INC.
ARTICLE I
Name and Title. "^•�M-
4 shall be "The Chanhassen FirefightersaRelieflAssociation, Incation
ARTICLE II
Section 1 . Membership. All members of the Chanhassen
Department shall be eligible to join this association afternservingre
one year probationary period. All applications for membership shall
' be sent to the Board of Trustees. Each application shall be in
writing, signed by the applicant, stating name, residence and the date
that he joined the fire department. He shall then be entitled -to a
certificate of membership in the association and said certificate
shall be signed by the president and the secretary of the association.
Section 2. Dues. Each member shall pay to the association annual
dues of $25.00.
Section 3. Ape. Requirements. No person forty-one (41 ) years of age
' or over shall be allowed to join this association. Anyone placed on
probation may be reinstated in the relief association regardless of
age.
Section 4. Rights and Privileges Forfeited . Any person expelled , on
probation or resigning from the Chanhassen Volunteer Fire Department
shall forfeit all claims for death or other benefits.
Section 5. -Membership After Retirement. Any ber who
said fire department after being vested shall bemrelievedr from ehisrom
obligation of paying dues but shall remain a member of this association .
Once retiring from said fire department, however, a member shall not
be eligible for disability relief from this association .
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ARTICLE III
Section 1 . Funds. The property and monies of this association shall
' be kept in two separate and distinct funds known as the "General Fund"
and the "Special Fund" .
Section 2. General Fund . The funds received by this association from
dues, fines, initiation fees, entertainments, and other miscellaneous
sources shall be kept in a General Fund and may be disbursed by the
Board of Trustees for any purpose reasonably suited to the welfare of
the association and its members, (including a
General Fund based on months of service for any share ig the
after five years) . However, u Y member who resigns
present and voting at a regularooraspecialf meeting lany such hmoniesemay
be placed in the Special Fund.
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Section 3. Special Fund . All monies received from the annual tax
levied by the City Council and all monies received from the tax on
insurance premiums shall be kept in the Special Fund , designating the
specific source of such funds. The monies in this fund may be dis-
bursed
only as provided by the laws of the state and as approved by
the City Council .
ARTICLE IV '
Section 1 . Officers. The officers of this association shall be a
President, a Vice-President, a Secretary, and a Treasurer. '
Section 2. Election and Term of Office. Said officers shall be
elected annually from the Board of Trustees at their annual meeting in
February of each year.
Section 3. Board of Trustees. The Board of Trustees shall be com-
posed of six trustees, at least one but not more than two of whom
shall be retired firemen as soon as someone is retired. Two trustees
shall be elected annually at the regular meeting of the association
and they shall hold their respective offices for the term of three
years or until their successors have been elected and duly qualify.
The following shall be ex officio members of the Board of Trustees:
The Mayor of the City of Chanhassen
City Manager
The Chief of the Chanhassen Volunteer Fire Department
ARTICLE V
Section 1 . President' s Duty. It shall be the duty of the President
to preside at all meetings of this association , to sign all cer-
tificates and notices as may be requiring his signature to authenticate
them, and to have general supervision over the association .
Section 2. Vice-President' s Duty. The Vice-President shall perform
the duties of the President during his absence or disability and in
the case a vacancy in the office of President, until a successor has
been elected.
Section 3. Secretary' s Duty. It shall be the duty of the Secretary
to keep a true and accurate record of the proceeding of all meetings
of the association and of the Board of Trustees. He shall keep a
correct record of all amendments, alterations and additions to the
Articles of Incorporation or the Bylaws in a separate book from the
minute books of the association . He shall cause due notice of all
special meetings of the association and of the Board of Trustees two
weeks in advance of the meeting along with an agenda. He shall receive
all moneys due the association and pay the same over to the Treasurer.
He shall keep a roll of membership, with the date of joining , resigna-
tion, discharge, leaves of absence, dues and assessments paid and relief
or pensions furnished . His books shall at all times be open to inspec-
tion by the Board of Trustees. Prior to entering upon the duties of his
office, he shall give a bond in such amount and with such sureties as
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may be required and approved by the Board of Trustees, conditioned upon
the faithful discharge of his trusts and the full performance of the
duties of his office. Such bond will be paid for from the Special Fund
of the Association . He shall sign all orders for payment issued to the
Treasurer, and jointly with the Treasurer, prepare and file all reports
and statements required by law. He shall receive such salary as may be
fixed from time to time by the Board of Trustees, subject to approval of
the association , and payable from the Special Fund of the association .
' Section 4. Treasurer' s Duty. It shall be the duty of the Treasurer
to receive from the Secretary all funds belonging to the association
' and hold them subject to the order of the President and countersigned
by the Secretary. He shall keep separate and distinct accounts of the
Special and General Funds, and shall prepare and present to the Board
of Trustees a full and detailed statement of the assets and liabili-
ties of each fund at each meeting of the Board of Trustees, and prior
to the annual meeting of the association. He shall deliver to his
successor in office, or to any committee appointed by the Board of
' Trustees to receive the same, all moneys, books, papers, and other
items pertaining to his office immediately upon the expiration of his
term of office. Prior to entering upon the duties of his office, he
shall give a bond in such amount and with such sureties as may be
required and approved by the Board of Trustees, conditioned upon the
faithful discharge of his trust and the faithful performance of the
duties of his office, to be paid for from the Special Fund of the
' association . Jointly with the Secretary, he shall prepare and file
all reports and statements required by law. He shall receive such
salary as may be fixed by the Board of Trustees from time to time,
subject to approval of the association , and payable from the Special
Fund of the association .
Section 5. Removals. Any officer or general trustee may be removed
for just cause at a special meeting of the members by a 2/3 vote of
those entitled to vote at an election of officers and trustees. No
officer or general trustee shall be removed unless notice of the
' meeting at which removal is to be considered states such
pu .
When an officer or trustee has been removed , new officers orpgeneral
trustees may be elected at the same meeting to serve until the next
annual meeting of the members and until their successors have been
' elected and have qualified .
Section 6. Debts Prohibited . No officer or member of this
' association shall contract any debt for the same unless authorized by
the Board of Trustees.
ARTICLE VI
Section 1 . Powers of the Board . The Board of Trustees shall have
exclusive control and management of all funds received by the
' Treasurer, and shall constitute the governing body of said association
with full power and authority to carry out the objects and purposes of
the association as set forth in the Articles of Incorporation and
Bylaws of the association and the laws of the State of Minnesota.
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Section 2. Application for Relief . All applications for relief or
benefits shall be made to the Board of Trustees in writing . Said
applications shall be accompanied when disability relief is applied
for by a certificate of disability from the Physician in attendance,
stating the length of time such member has been unable to perform the
duties of a fireman .
Section 3. Approval of Claims. The Board of Trustees upon being
satisfied of the merit of any claim for benefits shall endorse its
approval with 2/3 vote thereon and the same shall forthwith be paid by
the association .
ARTICLE VII
f Section 1 . Permanent Disability Relief . If a member is sick or
injured from causes outside or in the line of duty and a physicians
,Irireport shows that he is unable to perform his duties he may receive, as
i/ the Board of Trustees decide, an amount of $226.00 $1BO.,O0, per month or
4r$11 .40 $9.00 per month per year of service, whichever is greater. ,
6 Section 2. Temporary Disability Benefits. Upon the approval of the
q application therefore, any member of this association who becomes tem-
g porarily physically incapacitated for active duty in the Fire Department
q of the City of Chanhassen because of illness or injury sustained in the
Ap performance of such duty and is unable to work for one week or longer
// shall be paid a benefit of $5.00 per day for a period no longer than 120
/2 days in any one fiscal year, providing he is under the care of a physi-
/3 cian or doctor during this period .
/ Section 3. Pension . A member is entitled to a full pension if the
a member has actively served in the Chanhassen Fire Department for at
,3 least 20 years provided that the member shall have been a member of
4/this association for at least 10 years and shall have reached the
gage of 50.
6 The pension will start on the first day of the month following '
r/ retirement from the association . Thirty days prior to the start
8 of benefits, the member shall elect whether he wants a monthly
q pension or a lump sum pension . The monthly pension is $11 .40 $9.00 per
/V year of Fire Department service up to a maximum of 30 years and
// is payable for the lifetime of the member. The lump sum pension
//is $1 ,710.00 .$1 ,350.00 per year of Fire Department service up to a maximum
!3 of 30 years and is payable as a single amount as settlement of all
/rights under the plan .
( Section 4. Vesting and Option of a Reduced Pension . Any member may
Lreceive a reduced pension if retiring with at least 10 years but with
3 less than 20 years of active service with the Fire Department , and
1/10 years active membership in the association . Such member shall be
S placed on the deferred vested pension roll . This vesting procedure
, provides for the payout of assets of the Special Fund to the retiring
q member. During the time a member is on the deferred pension roll he
twill not be eligible for any disability benefits as provided in Section
q I of this article, and he shall be relieved of the obligation of payment
/oaf dues.
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// The deferred pension will start on the first day of the month following `
/ .. attainment of age 50 if the member retires with less than 20 years prior
to reaching age 50. A member eligible for a reduced pension who retires-
/Yafter age 50 shall be immediately eligible for the appropriate pension .
/7 Thirty days prior to the start of benefits, the member shall elect
Il/o whether he wants a monthly pension or a lump sum pension . The monthly
IT pension is the vesting percentage times $11 .40 $9.00 per year of Fire
/ Department service up to a maximum of 30 years and is payable for the
I ifet,q l
ime of the member. The lump sum pension is the vesting percentage '''`
attimes 31 ,710.00 $1 ,350.00 per year of fire department service up to a
;./maximum of 30 years and is payable as a single amount as settlement of all
0-rights under the plan . The vesting percentage is determined from the
1 2following table:
*Completed Years Vesting
Iof Active Service Percentage Monthly Lump Sum
AL/ Less than 10 years No Pension
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p-5 10 years 60%
I6 $68. 40 54. 40 10,260.00 8,000.00
a 11 years 64. $80.26 63.36 12,038.40 9, 540.00
al 12 years 6B% $93.02 73. 44 13,953.60 11,016.00
;ir 13 years 727. $106.70 84.24 16,005.60 12,636.00
2? 14 years 76% $121 .30 95. 76 18, 194.40 14,364.00
3O 15 years 80. $136.80 108.00 20, 520.00 16,200.00
3 / 16 years 84% $153.22
�� 17 years 120.96 22,982.40 18,144.00
I88% $170. 50 134.64 25, 581 .60 20, 196.00
33 18 years 92% $188.78 149.04 28,317.60 22,356.00
3y 19 years 96. $207. 94 164. 16 31 , 190.40 24,624.00
1 3S-20 or more years 100% $228.00 180.00 34,200.00 27,000.00
Section 5. Death Benefits.
I (a) Death Prior to Benefit Commencement
/ Upon the death prior to benefit commencement of an inactive member
I 2 who is on the deferred vested pension roll or any active member who is
3 vested ( that is, has met the eligibility criteria of Section 4) a monthly
Al/ pension shall be paid to the member' s designated beneficiary. The monthly
I-pension is the member' s vesting percentage as determined in Section 4
I6 times $11 . 40 $9.00 per year of Fire Department service up to a maximum of 30
ijyears. Such benefit shall commence on the first of the month following
?death and shall be payable for 120 months. In the event of the benefi-
tqciary' s death prior to receipt of the 120 payments,
/0for the remainder of the 120 month payments igll continue
/(secondary beneficiary.
period of the member' s designated
I (b) Death After Benefit Commencement
/2- If a member elected a lump sum pension , no death benefits are
II 3 payable under this plan . If a me mb er elected a monthly service pension , a
/y/ death benefit of $1 ,000 shall be Paid to the designated beneficiary . In the
event of the beneficiary death prior to receipt of death benefit , payment
(, will be made to the members designated secondary beneficiary. If no sur-
7 vivinq designated beneficiary, then said amount shall be aaLl to the estate
of the deceased member.
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r% If a member elected a lump sum pensions no death benefits are
o payable under this plan . If a member elected a monthly service pension , a
( deatti benefit of $1 ,000 shall be paid to the designated beneficiary, if any,
07, then said amount shall be paid to the estate of such deceased member.
Furthermore, if a member who is receiving a monthly pension dies
prior to receiving 120 monthly payments, the payments shall continue to
the member' s designated beneficiary for the remainder of the 120 month
period . In the event of the beneficiary' s death prior to receipt of all
promised payments, payments will continue to the member' s designated
secondary beneficiary until a total of 120 payments have been made on the
member' s behalf . '
Section 6. Disbursement of Funds. All monies of this association
shall be disbursed only as heretofore provided , except by a two-thirds
(2/3) vote of the members of the association. All benefits provided
hereunder are maximum, and if the condition of the treasury does not
permit the payment of all benefits in full , the available funds shall
be pro-rated among the several beneficiaries. This applies to pension
as well as disability benefits.
Section 7. Penalty for Fraud . Any member who shall be found imposing
upon this association by feigning sickness or injury for the purpose of
defrauding the same, shall be expelled. Any member failing to account
for any money belonging to this association , which may have come into
his hands, shall be expelled . ,
ARTICLE VIII
Section 1 . Reports. All reports and resolutions shall be submitted in
writing and no report from a committee shall be received unless it is
approved by a majority of such committee, but a minority report may
always be presented .
Section 2. Armed Services. In the event that any member is required to
serve in the United States armed services either by enlistment or draft
in case of national emergency for the duration , the time that he has
accrued towards his service pension in this association shall remain
frozen, but he shall be subject to the same eligibility rules as any
other applicant for membership upon his return .
Section 3. Annual Meeting . The regular annual meeting of the asso-
ciation shall be held in February of each year and shall not start
until after 6:00 p.m.
ARTICLE IX ,
Section 1 . Aid Committee. The Aid Committee shall consist of three
members of the Relief Association , as appointed by the Board of
Directors. ,
The duties of the Aid Committee shall consist of , but not limited to,
making sure that the proper forms be filled out for any claim of bene-
fits by any member of the Relief Association and that those forms be
filed with the proper agencies. Also, this committee shall perform such
other duties which may be assigned to it by the Board of Trustees.
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' ARTICLE X
Section 1 . Voting .
A. All matters pertaining to voting must be approved by two-thirds
(2/3) of the members present.
B. Only members in good standing (excluding members on probation, or
suspension of the Fire Department) may vote.
ARTICLE XI
Section 1 . Amending By-Laws. The by-laws of this association may be
amended at any regular or special meeting thereof by a favorable vote
of two-thirds of the members present and voting, provided that a
quorum of 507. of voting members is present and provided further that
notice of any proposed amendment or amendments shall be given by
reading the same at a regular or special meeting not more than thirty
(30) days next preceding that upon which such amendment or amendments
are acted upon and that a notice be mailed to each member at his last
' known address not less than ten ( 10) days prior to such meeting . And
provided further that such amendment or amendments shall be approved
by the council or governing body if the amendments affect the benefits
to be paid by this association.
Approved by the Chanhassen City Council September 10. 1984
Approved amendment by the Chanhassen City Council March 3, 1986
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Adopted by the Chanhassen Fire Relief Association October 29, 1984
' Amended by the Chanhassen Fire Relief Association March 17, 1986
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* Approved amendments 3-3-
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CHANHASSEN FIREMEN'S
RELIEF ASSOCIATION, INC.
Actuarial Valuation and Benefit Study
as of January I, 1988
August 16, 1988
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TABLE OF CONTENTS
I PAGE
PURPOSE AND SUMMARY I
IEMPLOYEE DATA 1
IASSETS I
ACTUARIAL ASSUMPTIONS AND METHOD 2
ISUMMARY OF VALUATION RESULTS 3
CHANGE IN THE UNFUNDED ACCRUED LIABILITY 3
1 RESULTS OF BENEFIT STUDY 4
IFINANCIAL DISCLOSURE INFORMATION 4
TABLES
I
Table 1(a) Results of Actuarial Valuation as of January I, 1986 5
I ( Table 1(b) Contribution for $1 Benefit Increase Excluding
Inactive Members 6
I Table 1(c) Contribution for $1 Benefit Increase Including
Inactive Members 7
I Table 1(d) Financial Disclosure Information as of
January I, 1988 8
Table 2(a) Projected Benefits for Active Members as of
IJanuary I, 1988 9
Table 2(b) Monthly Benefits for Inactive Members as of
IJanuary I, 1988 10
Table 3 Summary of Current Plan Provisions 11
Table 4 Actuarial Assumptions and Method 12
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THE "(I/70 /COMPANY
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC.
ACTUARIAL VALUATION AND BENEFIT STUDY
AS OF JANUARY I, 1988
PURPOSE AND SUMMARY
The following report sets forth the results of our study for the Chanhassen
Firemen's Relief Association, Inc. The study included the following:
o Determination of annual contribution for the current plan. - $20,883
o Determination of annual contribution to fund $1 benefit increase, excluding
inactive members. - $4,276
o Determination of annual contribution to fund $1 benefit increase, including
inactive members. - $6,302
The results of our study are summarized in the tables of the report and discussed
further herein.
EMPLOYEE YATA
Based on data provided by the Association, there are 25 active members included
,' in the valuation. The members have an average attained age of 37.9 and an average
entry age of 29.4. Table 2(a) sets forth the prospective benefit each member may
expect to receive if he remains in the Association until the normal retirement date
assumed in the valuation, age 53 and completion of 20 years of service.
There are eight inactive members currently receiving benefits from the plan.
One other inactive member is entitled to future benefits upon attainment of age 50.
Table 2(b) is a summary of the benefits for these members.
ASSETS
The Association provided us with a copy of the financial statement of the Special
Fund as of January I, 1988. Assets are valued at $470,313 on such date. We have used
this value for valuation purposes.
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ACTUARIAL ASSUMPTIONS AND METHOD
Table 3 is a summary of the principal plan provisions of the current p lan.
Since
the last valuation of the plan, benefits were increased to $9 per month, the normal
form of payment was changed to ten year certain and life, the vesting schedule was
1 revised to included vested benefits after 10 years of service, and the lump sum death
benefit was set at $1,000.
Table 4 sets forth a summary of the actuarial assumptions used in valuing these
' plan provisions. We have used the same assumptions as used for the January I, 1985
valuation. We certify that this Actuarial Valuation and Benefit Study has been
' prepared in accordance with Chapters 356.20 to 356.23 of the Minnesota Statutes as
they apply to volunteer relief associations defined in Chapter 69.771.
As required by law, the funding method used for the valuation is the entry age
Inormal cost method. Under this method, the normal cost is computed as that level
amount which would fund all benefits if it was contributed every year from each
fireman's entry into the plan until his retirement. The total normal cost for the plan is
the sum of the normal costs for all active members.
rThe present value of all future benefits payable from the plan for all active and
1 inactive members less the present value of all future normal costs is defined as the
accrued liability. The accrued liability is the amount that would have accumulated in
' the Special Fund if all the actuarial assumptions had been exactly realized in all prior
years and if funding for all members, based on current plan benefits, had commenced
immediately upon their date of joining the Association.
' The accrued liability then is compared to the market value of the Special Fund.
Any excess of accrued liability over market value, known as the unfunded accrued
liability, is to be funded with a payment to be made annually for a number of years
( specified by law, known as the amortization payment. Your current plan has no
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THE 64217 COMPANY
unfunded accrued liability. Any increases in the unfunded accrued liability due to
changes in the benefits or actuarial assumptions must be paid over 20 years.
The amortization payment is added to the normal cost for the total annual
contribution due as of the valuation date. Interest must be added to the contribution
at the rate of 5% from the valuation date to the date of payment. Thus, if payment
were made as of December 31, 1988, the January I contribution amount would be
multiplied by 1.05.
SUMMARY OF VALUATION RESULTS
Table 1(a) sets forth a summary of the results of the valuation of the current
plan. The plan provides a monthly benefit of $9 per year of service (maximum 30
years) payable on retirement after attainment of age 50 and 20 years of service.
Death benefits, deferred vested benefits, and disability benefits are also provided.
The annual contribution required to fund the plan is $20,883. This is the amount
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of new money which must be contributed to the Special Fund each year to keep the
plan funded in accordance with state law. The sources of new money are State Aid
and the city tax levy. Interest earnings on the Special Fund cannot be used to meet
the contribution requirements.
CHANGE IN THE UNFUNDED ACCRUED LIABILITY
Chapter 356 requires a reconciliation of the unfunded accrued liability from one
valuation to the next valuation.
As of January 1, 1985 there was an unfunded accrued liability of $22,987. As of
January I, 1988, the liability had decreased to ($5,325). The decrease of $28,312 is a
result of the following:
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THE Wall COMPANY
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I. January I, 1985 Unfunded Accrued Liability $22,987
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2. Decrease due to:
a. Contributions 1985-87 $12,652
b. Experience gains 1985-87 $81 957
' c. Total decrease 94,609
3. Increase due to plan amendment $66,297
' 4. January I, 1988 Unfunded Accrued Liability $(5,325)
(I.-2.c.+3.)
' The experience gain over the period of $81,957 is principally due to favorable
investment return in excess of the 5% assumption required by state law. The excess
return resulted in an investment gain of $58,676. The remainder of the gain is
attributable to the decrease in active membership from 33 to 25 members.
' RESULTS OF BENEFIT STUDY
Tables 1(b) and 1(c) set forth the results of our benefit study for the Association.
Table 1(b) assumes a benefit increase is granted only to the active membership. Each
$1 of benefit increase raises the contribution requirement $4,276. Examples are shown
for benefit levels which result in a ratio of plan assets to plan liabilities of 80%, 90%
and 100%.
Table 1(c) presents the same information but extends the benefit increase to the
inactive membership. Each $1 increase costs $6,302. Examples for the three funding
ratios are also shown.
The Association can determine the cost of any benefit level simply by adding the
' results from column I to the benefit increase amount times column 2. Thus, the costs
for an $11.00 plan are column I plus 2 times column 2.
' However, for the amortization payment, a special adjustment must be made for
the transition from an overfunded plan to an underfunded plan. The formula for the
amortization payment for any example is the Column 2, Line 4 value times the benefit
increase minus $407, with a minimum value_of $0. Thus, for Table 1(b) for the $11.25
example, the amortization payment is $4,016 = ($2.25 x $1,966) - $407.
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THE /o
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FINANCIAL DISCLOSURE INFORMATION
Government Accounting Standards Board Statement No. 5 now requires
governmental plans to disclose certain information in their financial statement. Table
1(d) presents this information. The pension benefit obligation represents the value of
benefits earned to date. No future benefit increases are assumed. The vested
obligation includes a liability only for members with 10 or more years of service. The
total obligation includes a liability for all members.
* * * * * * * * * * * * * * * * * * *
If in connection with this study any additional work is required we will be happy
to proceed as directed.
Respectfully submitted,
> THE WYATT COMPANY
&'11241.
Victoria A. SIP. 'any
Fellow, Society of Actuaries
1
THE 6401/COMPANY
A' Table 1(a)
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION
INC.
' Results of Actuarial Valuation as of January 1, 1988
Current Plan
' 1. Accrued Liability
a. Active Members 234,104
' b. Retired Members 214,342
' c. Deferred Vesteds 16,542
d. Total 464,988
I2. Valuation Assets 470,313
3. Unfunded Accrued Liability
(1 - 2) (5,325)
`- 4. Amortization Payment for
Unfunded Accrued Liability 0
' 5. Annual Normal Cost 19,889
6. Annual Contribution Payable
as of January 1, 1988 (4 + 5) 19,889
7. Annual Contribution Payable
as of December 31, 1988 (6 x 1.05) 20,883
I
THE Ja
-6-
62rlf COMPANY
0 fr..".41 e'si . .
Table 1(b)
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC. SIN
Contribution for $1 Benefit Increase ' }!�
Excluding Inactive Members ffffff 1 t1
R°
EXAMPLES ,r '
Current $1 Increase \ '
Plan for Actives I _1 / II 2_/ III 3 / / 1 7
1. Accrued Liability - - _ I
a. Active Members 234,104 25,724 239,249 291,983 356,293
b. Retired Members 214,342 214,342 214,342 214,342
c. Deferred Vesteds 16,542 16,542 16,542 16,542
d. Total 464,988 25,724 470,133 522,867 587,177
2. Valuation Assets 470,313 0 470,313 470,313 470,313
m 3. Unfunded Accrued Liability
(1 - 2)
(5,325) 25,724 (180) 52,554 116,864
' 4. Amortization Payment for
Unfunded Accrued Liability _4_/ 0 1,966 0 4,016 8,931
5. Annual Normal Cost 19,889 2,106 20,310 24,628 29,893
6. Annual Contribution Payable
as of January 1, 1988 (4 + 5) 19,889 4,072 20,310 28,644 38,824
7. Annual Contribution Payable as
of December 31, 1988 (6 x 1.05) 20,883 4,276 21,326 30,076 40,765
_1_/ Plan would be 100% funded. Monthly benefits would increase from $9.00 to $ 9.20, an increase of $0.20.
_2_/ Plan would be 90% funded. Monthly benefits would increase from $9.00 to $11.25, an increase of $2.25.
3_/ Plan would be 80% funded. Monthly benefits would increase from $9.00 to $13.75, an increase of $4.75.
_4_/ 20 year payment of any unfunded accrued liability. For the examples, amortization payment equals benefit
increase times $1,966 minus $407, with a minimum of $0.
1 1 1 r 1 1 1 1 1 r 1 1 - 1 x 1 1
Table 1(c)
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC.
Contribution for $1 Benefit Increase `
Including Inactive Members /J P'' I'
fle.-P
Current EXAMPLES „..
$1 Increase for
Plan All Members I II _2_// III 3 /
1. Accrued Liability _1_/ - _ _
a. Active Members 234,104 25,724 236,676 262,400 295,842
b. Retired Members 214,342 23,446 216,687 240,133 270,612
c. Deferred Vesteds 16,542 1,816 16,724 18,540 20,900
d. Total 464,988 50,986 470,087 521,073 587,354
n �
2. Valuation Assets 470,313 0 470,313 470,313 470,313
• CP 3. Unfunded Accrued Liability
iZ
(1 - 2) (5,325) 50,986 (226) 50,760 117,041
4. Amortization Payment for
o Unfunded Accrued Liability _4_/ 0 3,896 0 3,879 8,944
5. Annual Normal Cost 19,889 2,106 20,100 22,206 24,943
6. Annual Contribution Payable
as of January 1, 1988 (4 + 5) 19,889 6,002 20,100 26,085 33,887
7. Annual Contribution Payable as
of December 31, 1988 (6 x 1.05) 20,883 6,302 21,105 27,389 35,581
_1_/ Plan would be 100% funded. Monthly benefits would increase from $9.00 to $ 9.10, an increase of $0.10.
_2_/ Plan would be 90% funded. Monthly benefits would increase from $9.00 to $10.10, an increase of $1.10.
_31 Plan would be 80% funded. Monthly benefits would increase from $9.00 to $11.40, an increase of $2.40.
_4_/ 20 year payment of any unfunded accrued liability. For the examples, amortization payment equals benefit
increase times $3,896 minus $407, with a minimum of $0.
Table 1(d)
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC.
Financial Disclosure Information
as of January I, 1988 I/
Pension Benefit Obligation:
Retirees and beneficiaries currently receiving
benefits and terminated members not yet
receiving benefits $230,884
Current members -
Accumulated member contributions including
allocated investment earnings 0
Vested benefits 186,603
Nonvested benefits 51 ,414
Total Pension Benefit Obligation $468,901
r
3
I/ Assumes future rate of return on plan assets of 5%.
-9-
THE Wall COMPANY
e/
II
A,
IITABLE 2(A)
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC.
IPROJECTED BENEFITS FOR ACTIVE MEMBERS AS OF JANUARY 1, 1988
ANNUAL
II BIRTH ENTRY PROJECTED
NAME DATE DATE BENEFIT
IT ALCOTT 12/54 04/84 2484
D AUSETH 07/50 05/82 2268
II B BENIEK 01/63 09/86 3132
F COULTER 12/46 03/74 2700
D DRESSLER 08/53 07/82 2592
G EIDAM 11/46 06/82 2160
ID GREGORY 03/48 03/71 3132
R HALVERSON 06/48 09/82 2160
J HEDTKE 06/38 12/70 2160
II T KELLY 10/43 12/78 2160
A KERBER 08/35 07/68 2160
M KERBER 11/52 10/74 3240
S KERBER 11/63 06/85 3240
I
R LEACH 05/37 03/73 2160
�_ M LITTFIN 09/52 05/73 3240
J MCMAHON 04/41 12/78 2160
I R MOORE 04/50 12/78 2592
R PAYNE 03/61 03/84 3132
R PEITZ 02/36 11/67 2268
R RICE 07/60 02/84 3132
S SAUTER 10/59 05/85 2916
D STAFFORD 06/45 10/77 2160
S UNDIS 06/55 05/85 2376
I R WING 03/44 03/81 2160
J WOLFF 08/58 10/86 2700
II
II
II
t
-10-
II
THE 649121/ COMPANY
11
TABLE 2(B)
CHANHASSEN E FIREMEN'S RELIEF ASSOCIATION, INC.
MONTHLY BENEFITS FOR INACTIVE MEMBERS AS OF JANUARY 1, 1988 ,
MONTHLY
NAME TYPE BENEFIT
R KAHL RETIRED 164.16
J KREGER RETIRED 180.00
F KURVERS RETIRED 180.00
H MEUWISSEN RETIRED 180.00
R MEUWISSEN RETIRED 180.00
P ROJINA RETIRED 180.00
J SCHLENK RETIRED 180.00
M WINDSCHITL RETIRED 180.00
D SCHMIEG DEFERRED 149.04
-11-
r
THE P�CI�/ COMPANY
Table 3
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC.
Summary of Current Plan Provisions
I. Normal Retirement Benefit:
Monthly benefit of $9 or lump sum
benefit of $1,350 per year of service
' payable on retirement after attainment
of age 50 and completion of 20 years of
service. No credit granted for more
than 30 years of service. Monthly
benefit payments are guaranteed for ten
years.
2. Deferred Vested Benefit: On termination after completion of 10
years of service, a deferred benefit is
payable at age 50 equal to the accrued
normal retirement benefit times the
vesting percentage. The vesting per-
centage is 60% after 10 years of service,
increasing 4% per year to 100% after 20
years.
3. Disability Benefit:
. Short Term:
On disability, a benefit of $5 per day is
payable up to 120 days.
' . Long Term: Benefit is $9.00 per month for each year
of service at date of disability.
Minimum benefit of $180 per month and
maximum benefit of $270 per month.
4. Survivor Benefits: Upon death of any active or deferred
' vested member, a monthly benefit equal
to the member's vested accrued benefit
is payable to his designated beneficiary
' for a period of 120 months.
Upon death of any member receiving
monthly benefits at time of death, who
has not yet received 120 monthly
payments, payments shall continue to
the member's designated beneficiary for
the remainder of the 120 month period.
5. Lump Sum Death Benefit: $1,000 payable on death of any inactive
' member in receipt of monthly service
pension.
-12-
THE Oyall COMPANY
M
Table 4
CHANHASSEN FIREMEN'S RELIEF ASSOCIATION, INC.
Actuarial Assumptions and Method
I. Mortality: 1971 Group Annuity Mortality Table,
without margins, projected to 1976 by
Scale E. This table used for all rates of
mortality.
2. Withdrawal: The rate of withdrawal is .060 at age 20
decreasing uniformly to zero at age 45
with no withdrawal after that age.
3. Disability: The 1947-1949 Weekly Indemnity Tabular
Annual Claims Cost was used for valuing
the short term disability benefit on a one
year term cost basis. The Railroad
Retirement Board 12th Valuation rates
of disablement were used for valuing the
long term disability benefit on a full
funding basis. Both tables were loaded
for the size and nature of the group.
4. Retirement Age: Members are assumed to retire after
attaining age 53 and completing 20 years
of service.
S. interest Rate: Five percent compounded annually.
6. Actuarial Cost Method: The entry age normal cost method has
been used with the normal cost
determined as a level amount each year
from the date of joining the Association
to the assumed retirement age.
-13-
THE '1(/ f(ILC COMPANY
IP _ , . ,
FUND #203 - FIRE RELIEF
SPECIAL REVENUE FUNDS
1989 BUDGET
I BUDGET ESTIMATED
BUDGET
1988 1988 1989
I REVENUE:
Taxes:
203 3001 Property Tax (Cert. ) 17,000 _ 17,000 18,000
II 203 3002 Allow for Delinquents -1.500 -1,100 -1.500
203 3010 Current Property Tax 15,500 15,900 16,500
203 3011 Delinquent Tax 9O0 600 800
II 203 3099 TOTAL TAXES 16,400 16,500 17,300
Intergovernmental:
203 3509 Other Shared Tax, State 18,500 19,800 21,000
I203 3599 TOTAL INTERGOVT'L 18,500 19,800 21,000
203 3801 Interest on investments 400 600 700
203 3899 TOTAL INTEREST 400 600 700
I203 3999 TOTAL REVENUE 35,300 36,900 39,000
I EXPENDITURES:
Contractual services:
203 4470 Remitt - Fire Dept. 32,380 35,580 35,580
I203 4599 TOTAL CONTRACTUAL SERVICES 32,380 35,580 35,580
203 4999 TOTAL EXPENDITURES 32,380 35,580 35,580
Revenue over (under) Expenditures 2,920 1,320 3,420
Fund Balance Forward 5,520 8,510 9,830
11 Reserve 8,040 9,830 13,250
Total Resources over(under) Liab. 400 0 0
11 ** NOTE: The $35,58.0 is based upon pon 1988 Actuarial for 25 firefighters.
A reserve equal to $1,000 per man over 25 is required.
11
II
II
11
II -52-
FUND: FIREMEN'S RELIEF
1989 BUDGET
Commentary
Function: To accurately account for the receipt of dedicated revenues, from
local and State sources, for fire relief (pension) benefits.
Expenditures:
•
General Comments: Accounting for firemen's relief was previously handled as
a part of the general fund resources/liabilities. Recognizing that the reve- ` +
nues received from the State of Minnesota (reimbursement of a special tax
placed on fire insurance policies written within individual cities) represent
dedicated monies to be used only for fire relief purposes and recognizing that
the special levy enacted by the City (general property tax) is also dedicated
for firemen's relief; prompted the City to establish a separate fund wherein
the dedicated revenues/liabilities could be separately shown. •
4470 AND 3010 - The amount of money required to fund the accrued liability
for fire relief benefits is established, by the Council, 3"
after completion of an annual actuarial report.
.
•
•
yt
tr•�
-51-