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Home My WebLink AboutRes2014-013 Sponsored by: Bunt L. CITY OF SEWARD, ALASKA RESOLUTION 2014-013 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RETROACTIVELY AMENDING THE 2013 BUDGET TO RECORD EXPENDITURES OF 5325,900.14 PAID BY THE STATE OF ALASKA ON BEHALF OF THE CITY TOWARD THE CITY'S PUBLIC EMPLOYEES RETIREMENT SYSTEM LIABILITY FOR THE PERIOD JULY THROUGH DECEMBER, 2013 WHEREAS, in accordance with the 2012 Alaska State Legislature's passage of House Bill 284, the State of Alaska Department of Administration, Division of Retirement & Benefits ("DRB") contributed $363,319.84 on behalf of the City of Seward from January through June, 2013 and $325,900.14 from July through December, 2013, for a total contribution of $689,219.98 on the City of Seward's behalf, reflecting the 13.84% difference between the actuarially required contribution rate of 35.84% as adopted by the Alaska Retirement Management Board' and the 22% employer"capped" rate established by SB53; and WHEREAS, this July through December, 2013 contribution represents $184,394.28 toward pension costs and $141,505.86 toward healthcare costs, on behalf of the City; and j` WHEREAS, in accordance with generally accepted accounting principles, the City must record payments made on its behalf, and must therefore amend the 2013 Budget to account for both the expenditures paid on behalf of the City, and the corresponding revenues paid by the State of Alaska Department of Administration; and WHEREAS, failure to amend the budget to reflect the State's payments on-behalf of the City, will result in an imbalance between the actual and budgeted revenues and expenditures, giving the appearance of revenues and expenditures exceeding the annual budget as approved by the Seward. City Council. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: The ARC reflects normal cost rate of 11.68% plus past service cost rate of 24.16%, and is further expressed as pension costs of 15.75%, healthcare costs of 20.09%, and DCR normal cost of 3.01%. CITY OF SEWARD, ALASKA RESOLUTION 2014-013 Section 1. The 2013 Operating Budget shall be amended to appropriate $325,900.14 from the State grant revenues accounts x01-0000-4350-0150 to various fund/department expense accounts x01-XXXX-5060 allocated on a pro-rata basis, as follows: General Fund total: $279,506.41; Harbor Fund total: $13,286.60; Electric Fund total: $6,620.61; Water Fund total: $15,504.74; Wastewater Fund total: $10,981.78. Section 2. This resolution shall be retroactive to December, 2013. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10th day of February, 2014. THE CITY OF SEWARD, ALASKA 1cN/ / ZC4224er ' an Bardarson, Mayor g AYES: Keil, Casagranda, Terry, Squires, Butts, Bardarson NOES: None ABSENT: None ABSTAIN: None VACANT: One ATTEST: I 4 ( ' ( " , . , 444a/ Jo anna Ki ey, C KC, Clerk (City Seal) ao�`°*.� ° i' `9 0 e!y' V 4• ��4hl Qa' ■ ■ 7. 0 e o ° • lei- pa q6 COUNCIL AGENDA STATEMENT Meeting Date: January 27, 2014 e of Stip 44-C4 ° Through: James Hunt, City Manager VRA) %IF* 1Cksv, From: Kristin Erchinger, Finance Director Agenda Item: 2013 Budget Amendment appropriating State PERS on-behalf contributions of$325,900.14 for July through December 2013 BACKGROUND &JUSTIFICATION: The 2012 State legislature passed House Bill 284, appropriating $307,302,392 directly to PERS on behalf of Alaska municipalities, to help offset retirement liability costs to local taxpayers. The City of Seward's portion of this appropriation (for the period January 1 through June 30, 2013) is $363,319.84, and for July through December 31, 2013 is $325,900.14. This amount is being paid directly to the City's PERS account with the State of Alaska Division of Retirement & Benefits. While the funds did not come directly through the City, we are nonetheless required to account for the State's contribution as both a revenue and an expense/expenditure on the City's financial statements. In 2008, Senate Bill 125 was passed, capping the annual PERS contribution rates for employers at 22%, and creating a cost-sharing plan in which all employers pay the same employer contribution rate. This was a departure from the previous plan, in which every employer was assigned a different employer cost rate, depending on their individual experience. The attached spreadsheet lists the PERS employer contribution rates as established by the Alaska Retirement Management Board, itemizing the portion of the overall rate covered by the State of Alaska on-behalf of municipal employers, as well as a history of the amount paid by the State on behalf of the City of Seward since 2009. Municipal governments in Alaska have benefited significantly by the State's coverage of PERS costs in excess of 22%. However, it is important to note that the legislature may, at any time, modify the amount of subsidy provided by the State toward PERS contributions. Any future reduction in the State's current practice of covering contribution rates exceeding 22%, will equate to equivalent additional required contributions by the City. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan(document source here): X 2. Strategic Plan(document source here): X 3. Other(list): X CITY OF SEWARD RESOLUTION 2014- 0 1.5 FISCAL NOTE: The State's contribution of$325,900.14 is considered a State grant award and is recognized as such on the City's financial statements, with an equivalent amount recorded as retirement expense/expenditure, allocated on a pro-rata basis, to each department's operating budget. Since 2006, the State of Alaska has contributed a total of $2,727,747 toward the City of Seward's portion of the Public Employees Retirement System unfunded liability. Approved by Finance Department ATTORNEY REVIEW: Yes No X RECOMMENDATION: Council approve Resolution 2014- 01.3 amending the 2013 Operating Budget by appropriating $325,900.14 from State grant revenues, to various fund retirement expense accounts, on a pro- rata basis, to accounts X01-XXXX-5060.