1o Approval of Fire Deparetment Bylaws & Pension Benefits
.la.
MEMORANDUM
CITY OF
CHANHASSEN
TO:
Mayor & City Council
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
FROM:
Todd Gerhardt, City Manager
~.
DA TE:
February 13, 2006
Administration
Phone: 952227.1100
Fax: 952.227.1110
SUBJ:
Approval of Amendment to Chanhassen Fire Department Relief
Association Bylaws and Increase in Pension Benefits
Building Inspections
Phone 952.227.1180
Fax: 952227.1190
BACKGROUND
Engineering
Phone 952.227.1160
Fax 952227.1170
The City of Chanhassen has a 42-member on-call volunteer/paid Fire
Department (established in 1966). Volunteer firefighters often receive payments
due to the time commitment needed to perform the duties of a firefighter, such
as training, 24-hour on-call for service, and weekly meetings. In Chanhassen,
volunteers are compensated in two forms-an hourly rate of $8 for call-outs,
training, meetings, etc., and the Fire Relief Association Pension.
Finance
Phone: 952.227.1140
Fax: 952227.1110
Park & Recreation
Phone: 952227.1120
Fax: 952227.1110
Currently a firefighter would be fully vested after 5 years of service. As an
example, a firefighter with 7 years of service would receive the following
pensIOn:
Recreation Center
2310 Coulter Boulevard
Phone: 952227.1400
Fax: 952227.1404
7 years of service x $4,000 = $28,000 x 48% (40% + 4% per year early vesting)
= $13,440
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952227.1110
All current members are on a lump sum pay-out based upon their years of
service; however, we do still have 12 retired members receiving a monthly
annuity of $4 I 0 per month. The last time we increased the pension fund was in
2001 with a rate increase of 48.15% (see Attachment #1).
Public Works
1591 Park Road
Phone: 952227.1300
Fax: 952227.1310
ACTION REQUIRED
Senior Center
Phone: 952227.1125
Fax: 952.227.1110
Staff has met with representatives of the Fire Relief Board and has negotiated a
three year increase of 8.75% per year beginning in 2006, with the condition that
the funding ratio remains above 75% (see Attachment #2). These increases will
help the Fire Depattment in recruiting new firefighters and also help to retain
our more experienced firefighters.
Web Site
www.ci.chanhassen.mn.us
One of the areas you need to pay attention to when considering a rate increase is
the funded ratio. Attachment #3 shows two forecasts of the pension fund's
assets and liabilities. In both cases, the funding level never dips below 75%
over the next three years. You will also notice that the City of Chanhassen does
The City 01 Chanhassen · A growing community with clean lakes, quality schools, a channing downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play
Mayor & City Council
February 13, 2006
Page 2
not have to make a contribution, based on these assumptions, over the next three
year period. The funding source for the benefit increase would come from state
fire aid and investment earnings derived from the pension fund assets (see
Attachment #4 for the history of city contributions, state aid, and investment
income).
RECOMMENDA TION
Staff would recommend that the Mayor and City Council approve the attached
resolution amending the bylaws and authorizing a $4,350 increase in 2006, a
$4,700 increase in 2007, and a $5,050 increase in 2008 to the Chanhassen Fire
Department Fire Relief Association with the condition that the funding ratio
remains above 75%. Approval of this resolution requires a simple majority vote
of those City Council members present.
A TT ACHMENTS
1. Resolution Amending the Bylaws.
2. History of Chanhassen Pension Fund Increases.
3. Key Financial Cities Comparison and Proposed Rate Increases.
4. Forecasts of the Pension Funds with a 5% and 7% Return.
5. Revenues and Expenses by Source 1995-2004.
6. Chanhassen Fire Relief Association Investment Review.
G:\admin\tG\fire relief assn increase request cc approval.doc
Resolution Amending Bylaws
Attachment #1
CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTY, MINNESOTA
RESOLUTION
Date
Resolution No.
Motion By
Seconded By
RESOLUTION AMENDING THE BY -LA WS OF THE
CHANHASSEN FIREFIGHTERS RELIEF ASSOCIATION
WHEREAS, the Chanhassen Firefighter's Relief Association has requested the City to
approve amendments to Article X, Section 10.1, Article XII, Section 12.1 B., and Article XV,
Section 15.1 of the Association's By-laws; and
WHEREAS, it is in the best interest of the City and of the Relief Association that the
By-law amendments be approved.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Chanhassen, Minnesota
The attached amendments to Article X, Section 10.1 modifying pension benefits; Article
XII, Section 12.1 B. modifying death benefits; and Article XV, Section 15.1 modifying
amending By-laws, of the Firefighter's Relief Association By-laws be approved.
APPROVED AND ADOPTED this _ day of
,2006.
CITY OF CHANHASSEN
By:
Thomas A. Furlong, Mayor
ATTEST:
Todd Gerhardt, City Manager
123034 v2
AMENDMENT TO ARTICLE X, SECTION 10.1
Section 10.1. Pension. . Effective January 1,2006. If the pensions plan balance does
not drop below 75% funded as determined by the annual audit in May of said year and upon
request of a retired member, who has at least 20 years of active service, and approval of the
Board of Trustees, the member may be entitled to a full service pension computed on the basis of
$4,350.00 per year of active service of said member in the Chanhassen Fire Department. The
Value of a full pension shall be based on the account balance at the end of the year in which the
member retired from the Chanhassen Fire Department. The pension shall start on the first day of
the month following retirement from the Association. Payments are to be made retro active.
Effective January 1,2007. If the pensions plan balance does not drop below 75% funded
as determined by the annual audit in May of said year and upon request of a retired member, who
has at least 20 years of active service, and approval of the Board of Trustees, the member may be
entitled to a full service pension computed on the basis of $4,700.00 per year of active service of
said member in the Chanhassen Fire Department. The Value of a full pension shall be based on
the account balance at the end of the year in which the member retired from the Chanhassen Fire
Department. The pension shall start on the first day of the month following retirement from the
Association. Payments are to be made retro active.
Effective January 1,2008. If the pensions plan balance does not drop below 75% funded
as determined in May of said year and upon request of a retired member, who has at least 20
years of acti ve service, and approval of the Board of Trustees, the member may be entitled to a
full service pension computed on the basis of $5,050.00 per year of service of said member in the
Chanhassen Fire Department. The Value of a full pension shall be based on the account balance
at the end of the year in which the member retired from the Chanhassen Fire Department. The
pension shall start on the first day of the month following retirement from the Association.
Payments are to be made retro active.
AMENDMENT TO ARTICLE XII, SECTION 12.1B.
Section 12.1. Death Benefits.
B. Active Member Who is Not a Vested or a DefelTed Vested Member. Effective
January 1,2001. A death benefit of $25,000.00 shall be paid to the designated
beneficiary of an active member of this Association who is also an active member
of the Chanhassen Volunteer Fire Department who is not a Vested or Deferred
Vested Member under Section leA) of this Alticle. This benefit shall be paid out
of the Special fund.
123034 v2
AMENDMENT TO ARTICLE XV, SECTION 15.1
Section 15.1. Amending By-Laws. Rewrite section on amending. 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 50% of voting
members are present and provided further that notice of any proposed amendment or
amendments shaH be given by reading the same at a regular or special meeting not more than 31
days next preceding that upon which such amendment or amendments are acted upon and that a
notice be mailed to each member at his/her last known address not less than ten (10) days prior to
such meeting. If such amendment or amendments shaH change the amount of benefits or
pensions, aH such amendments shaH be submitted to the Chanhassen City Council for approval.
Approved by the Chanhassen City Council September 10, 1984
Approved by Amendment by the Chanhassen City Council March 3, 1986
Approved by Amendment by the Chanhassen City Council October 24, 1988
Approved by Amendment by the Chanhassen City Council January 28, 1991
Approved by Amendment by the Chanhassen City Council November 25,1991
Approved by Amendment by the Chanhassen City Council October 25, 1993
Approved by Amendment by the Chanhassen City Council April 9, 2001
Adopted by the Chanhassen Relief Association October 29, 1984
Amended by the Chanhassen Fire Relief Association March 17, 1986
Amended by the Chanhassen Fire Relief Association December 14, 1988
Amended by the Chanhassen Fire Relief Association October 15, 1990
Amended by the Chanhassen Fire Relief Association December 16,1991
Amended by the Chanhassen Fire Relief Association August 31, 1993
Amended by the Chanhassen Fire Relief Association
123034 v2
History of Chanhassen
Pension Fund Increases
Attachment #2
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Revenue & Expenses by Source
1995-2004
Attachment #5
\;.
CHANHASSEN.'FIRE DEPARTMENT RELIEF ASSOCIATION
SPECIAL FUND .:.., PENSION TRUST FUND
REVENUES BY SOURCE AND EXPENSES BY TYPE
Years 1995 through 2004
(Unaudited) .
Fiscal
Year.
1995
1996 .
1997
1"998.
1999
2000
2001 '
2002 .
2003
2004
Fiscal
Year
1995
. 1996
1997,
1998
1999
2000
2001
2002
2003
2004'
Exhibit 4
. . Revenues by Source .
City State Contributions
. Contnbutions " 2% Aid Supplemental
. ..
Irivestment
.' Income
. Total'
..
$ 14,789 $ 41,111 $ .$' 128,762 ' $ 184,662'
17,614 56,262 39,162 113,038 :
14,214 56,786 1,000 . 152,702 224,702' ,
10,574 61,426 2,000 135,936 '209,936
, 24,058 63,481-. 2,000 : 179,603 269,142
17,101, 66,223 (46,313) 37,011"
99,315 82,921.. (86,543) .' 95,693
48,651 96,113 . .'1;000 (137,301) 8,463 .
12,227 . 118,745 ' 2,000. 331;012 463,984
154,033 " .1,000: 163,948 318,981
Expenses By Type . ,~
Benefit . Administrative.
Payments Expenses Total
$ 33,704 . $ 2,913 $ 36,617
54;020 3,115 57,135
132,013 ,9,303,', 141;316
. 42,914 6,806 49,720.
150,522 5,732 . 156,254
94,522 8,924 . 103,446 .
. 59,256 . 5,788 65,044
46,150 5,060 5 1,2 I 0
208,150 7,670 215,820
59,786 6,685 66,471
20
Chanhassen Fire Relief Association
Investment Review
Attachment #6
........
-
.-....
-----.. ..~j;. ~~.~.-
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ll,_ ""~~ 'I "
.~ ~4/J
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-', :{)
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,.....,.
Chanhassen
Fire Relief Association
Investlllent Review
July 5, 2005
The Parr Financial Group
of Wachovia Securities
80 South 8th Street, Suite 3400
Minneapolis, MN 55402
Anthony Parr
First Vice President - Investments
(612) 340-4553
anthony.parr@wachoviasec.com
Brian McKnight
Associate Vice President - Investments
(612) 340-4555
brian.c.mcknight@wachoviasec.com
-
.-...
.-...
The Parr Financial Group
Your Team
at Wachovia Securities
-...
"
Who We Are
Collectively, the professionals of The Parr Financial Group of
Wachovia Securities have more than 50 years of experience in
providing clients with sound financial solutions. Backed by the
resources of one of the nation's largest brokerage firms, we
use state-of-the-art technology and conservative investment
products and services to help our clients reach their financial
dreams. The mission of The Parr Financial Group is to help
individuals, corporations and other institutions develop the best
strategies for achieving the goals they value without undue
sacrifice while avoiding unnecessary investment risk.
What We Do
...........
As part of our private client services, we provide
comprehensive wealth planning, retirement-plan
analysis, investment research and screening,
and portfolio-management services.
Anthony J. Parr
First Vice President - Investments
612-340-4553
anthony. parr@wachoviasec.com
Brian C. McKnight
Associate Vice President - Investments
612-340-4555
brian .c.mcknight@wachoviasec.com
Barbara J. Folz
Senior Registered Account Administrator
612- 340-4512
barbara.j. folz@wachoviasec.com
Jodi Benson Houglum
Account Administrator
612-340-4545
jodi. bensonhougl um@wachoviasec.com
Fax: 612-332-4071
Toll-free: 800-331-4923
http://www.parrfinancialgroup.wbsec.com
WACHOVIA SECURITIES, LLC, MEMBER NYSE AND SIPC. (03/05)
,...,.
,-.,.
-Chanhassen Fire Department
Integrated Performance Monitor
as of December 31, 2004
A
0;' fT
DIl W.h d
N W h
N W h 12/31/03
C h PI
/
ccount 00 ota o ar elgl te ct ort ct ort as OW+ -
Special Account 24% 6.16% S 419,239.10 S 872,770.07 S (491,337.10
FundSourcc Account 19% 4.00% S 337,155.89 S - S 325,000.00
Pru-Advisor Account 19% 9.56% $ 327,957.91 S 357,173.45 S (60,000.00
MPMG Account 18% 17.40% S 323,622.53 $ 309,182.78 S (25,000.00
DMA-Agg Gr II Account 20% 15.20% S 342,622.48 S - S 300,000.00
Total
100%
10.64%
$
1,750,597.91 $
1,539,126.30 $
48,662.90
Total Assets
$ 1,750,597.91
Allocation Table
Indices as of 12/31/04
Small Cap 6.37%
Mid Cap 14.01%
In tema tional 16.35%
Large Cap 32.33%
Bonds/Bond Funds 14.13%
Cash and Equivalents 16.70%
Specialty 0.11%
Total 100.00%
S&P 500 10.90%
DIIA 30 5.30%
Russell MidCap 20.20%
Russell 3000 18.30%
EAFE 20.70%
LB Govt/Credit 4.20%
SBI I ncome Share 9.20%
60%S&P500/40%LB Agl!r 8.30%
'"
Allocation Chart
Bonds/Bond Funds,
14.13% Cash and
Equivalents, 16.70%
Specialty, 0.11 %
Small Cap, 6.37%
International,
16.35%
Large Cap, 32.33%
,....,.
CI Small Cap
. Bonds/Bond Funds
. Mid Cap 0 International
l:J Cash and Equivalents . Specialty
o Large Cap
Information contained on this page is believed to be reliable. It has not been verified for accuracy or completeness by Wachovia Securities
Incorporated or any of its employees.
~
~
. , . ..
Chan..hassen. Fire. Departm,ent ReJJef AssQci:ati'on
Understanding Your Five Accounts.
D~
>Pi-imarily Diversified Mutual Fyn.ds
>FocusOn High Category Rankin'gs . '
~ .. >CDs,/and Preferred' Used OccasionaWy " I,
'~ >Retirement~Payments ~~adeFronl'fhis Account ~1 ,
i':(O~DM~ACC~U nt', Div.~riified!Ma'ria "~d'AI16catiofisJ'1:~j, If
:!:~. ~.~ .,,~,,' >fy1JJltiple.-M6ney'fv1ariager~:in:Orie':l A'ccou,nr'.:.'{ ," ~:"r~"~. -'{ " .' :/,:~'
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:.:.;,./~ ' ",'>Wor.la Class Manage,rs. ,,', ~ '}~lh:: j',;\,~t; ,~:~ ," ,i '. _ ~
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~ " . ' .. . \ ., .c.,: ,~ .
:~;., >7. .....Div"rrsifica~ipn. Nt " .j. ,r- ' .,. ,< f:'" , '/ ; "~. ...,~/~"
ii. ::.!'.. l 1'~'. . > Lower Costs. f. ..IE. ". '. ,~ ;, . , :- d' " .'
~--n:~~ (F-' - _ _,' ~- _, _'~ -"t -~ _" ',' .1"- i. ,/. ':~/~
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;~!t).iM1Wiie~ oli~~~offtciliolMaria" errttht~~~cf~2tJ',t:\~if(;j...:"l..
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'. , . " . .'iManaged and Supervised.~fv1y.t.yal F~fl~,~.p;rogt~M'J:t'-:.' ~,:,.:~...: ;'-:;': ~l .t
.; >Over 12,000 Funds'Scree'ned" High Level of Du~ Diligence
;;..Optimal Blend Portfolios (Puzzle vs. the Pieces) . .
;;..High Level of Diversification
,Automatic Annual Rebalancing, Many Institutional Class Shares
-.
Asset Allocation Presentation
r"\
J"""\
CHANHASSEN FIRE DEPARTMENT
Current vs Strategic Allocation
-I\IIarket Capitalization Analysis
Current
Custom-FRA 60/40
'E.Ji.-~'"
'~l"""'>"
.~~
. Large Cap (30.70%)
. Mid Cap (14.01%)
o Small Cap (6.37%)
. International Equity (16.35%)
. Multi-Class (3.25%)
m Fixed Income (12.50%)
o Cash Equivalent (16.70%)
. Real Estate Investment Trusts (0.11 %)
. Other (0.00%)
~.+1!
j~,~ ~....
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o.."l;'J
. Large Cap (25.00%)
. Mid Cap (10.00%)
o Small Cap (10.00%)
. International Equity (15.00%)
[] Fixed Income (35.00%)
o Cash Equivalent (5.00%)
Long Positions
Market Cap Current Strategic Difference
Large Cap $ 537,468.85 30.70% $ 437,649.48 25.00% $ 99,819.37 - 5.70%
Mid Cap $ 245,190.19 14.01% $ 175,059.79 10.00% $ 70,130.40 - 4.01 %
Small Cap $ 111,597.06 6.37% $ 175,059.79 10.00% $ - 63,462.73 3.63%
,.....
International Equity $ 286,259.75 16.35% $ 262,589.69 15.00% $ 23,670.06 - 1.35%
Multi-Class $ 56,924.44 3.25% $ 0.00 0.00% $ 56,924.44 - 3.25%
Fixed Income $ 218,844.28 12.50% $ 612,709.27 35.00% $ - 393,864.99 22.50%
Cash Equivalent $ 292,296.03 16.70% $ 87,529.90 5.00% $ 204,766.13 -11.70%
Real Estate Investment Trusts $ 1,951.79 0.11% $ 0.00 0.00% $1,951.79 - 0.11 %
Other $ 65.52 0.00% $ 0.00 0.00% $ 65.52 0.00%
Total: $ 1,750,597.91 100.00% $ 1,750,597.91 100.00% $ 0.00 0.00%
The Disclosures at the end of the report include definitions of the terms on this page and other detailed information.
Market Values are based on previous day's closing price and positions.
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Copyright@ 2005. Wachovia Securities, LLC. All Rights Reserved.
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