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CITY OF SEWARD,ALASKA
RESOLUTION 2014-093
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING THE 2014 BUDGET TO RECORD
EXPENDITURES OF $372,955.97 PAID BY THE STATE OF ALASKA ON
BEHALF OF THE CITY TOWARD THE CITY'S PUBLIC EMPLOYEES
RETIREMENT SYSTEM LIABILITY FOR THE PERIOD JANUARY
THROUGH JUNE, 2014
WHEREAS, in accordance with the 2013 Alaska State Legislature's passage of House
Bill 65, the State of Alaska Department of Administration, Division of Retirement & Benefits
("DRB") contributed $372,955.97 on behalf of the City of Seward from January through June,
2014 on the City of Seward's behalf, reflecting the 13.68% difference between the actuarially
required contribution rate of 35.68% as adopted by the Alaska Retirement Management Board'
and the 22% employer"capped" rate established by SB53; and
WHEREAS, this contribution represents $211,014.00 toward pension costs and
$161,941.97 toward healthcare costs, on behalf of the city; and
WHEREAS, in accordance with generally accepted accounting principles, the city must
record payments made on its behalf, and must therefore amend the 2014 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, the city will further retroactively amend the 2014 Budget upon verification
of the State payments made on behalf of the city for the period July through December, 2014;
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:
fir.. 1 The ARC reflects normal cost rate of 11.49% plus past service cost rate of 24.19%, and is further
expressed as pension costs of 16.47%, healthcare costs of 15.84%, and DCR normal cost of 3.37%.
CITY OF SEWARD, ALASKA
RESOLUTION 2014-093 tj
Section 1. The 2014 Operating Budget shall be amended to appropriate $372.955.97
from State PERS on behalf Grant Revenues accounts xxxxx-0000-4201 to various
fund/department expense accounts xxxxx-xxxx-6201 allocated on a pro-rata basis, per the
attached schedule, totaled by Fund as follows: General Fund total: $266,185.33; Harbor Fund
total: $42,688.95; Electric Fund total: $18,901.04; Water Fund total: $26,422.85; Wastewater
Fund total: $18,757.80.
Section 2. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 8th
day of December, 2014.
THE CITY OF SEWARD, ALASKA
can Bardarson, Mayor
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AYES: Keil, Casagranda, Squires, Butts, Darling, Bardarson
NOES: None
ABSENT: Terry
ABSTAIN: None
ATTEST:
4 J hanna • . ey, CMC .
ity Clerk
(City Seal) '•%i OF'S.e.,,°°
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COUNCIL AGENDA STATEMENT
Meeting Date: December 8, 2014 jof se's,
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Through: James Hunt, City Manager!'r
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From: Kristin Erchinger, Finance Director
Agenda Item: 2014 Budget Amendment appropriating State PERS on-behalf
contributions of$372,955.97 for January through June 2014
BACKGROUND &JUSTIFICATION:
The 2013 State legislature passed House Bill 65, appropriating$312,472,952 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, 2014) is
$372,955.97, and the City will also benefit from on-behalf payments for the period July through
December 31, 2014, with the amount to be determined in January. These amounts are 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 required to account for the State's
contribution as both 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 2006. 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.
INTENT: The intent of this action is to amend the 2014 budget to account for State contributions
on behalf of the City for contributions to the public employees retirement system for the period
January through June, 2014.
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-
FISCAL NOTE:
The State's contribution of$372,955.97 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 $3,100,702 toward the City of Seward's
portion of the Public Employees Retirement System unfunded liability.
Approved by Finance Department tletfig, 4/€4/11e)
ATTORNEY REVIEW: Yes No
RECOMMENDATION:
Council approve Resolution 2014- a`13 amending the 2014 Operating Budget by appropriating
$372,955.97 from State grant revenues, to various fund retirement expense accounts, on a pro-
rata basis.
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