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Home My WebLink AboutRes2016-025 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2016-025 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RETROACTIVELY AMENDING THE 2015 BUDGET TO RECORD EXPENDITURES OF $1,265,143.10 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, 2015,AND APPROPRIATING FUNDS WHEREAS, in accordance with the 2014 Alaska State Legislature's passage of Senate Bill 119, the State of Alaska Department of Administration, Division of Retirement & Benefits ("DRB") contributed $1,265,143.10 on behalf of the City of Seward from January through June, 2015. The Alaska Retirement Management Board set the actuarially required rate at 44.03%'. The legislature providing funding in excess of the actuarially required rate, with the contribution reflecting the 42.41% difference between the legislative on-behalf rate of 42.41% and the 22% employer"capped"rate established by SB53; and WHEREAS, this contribution represents $1,265,143.10 toward pension costs and $0 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 2015 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 2015 Budget to reflect the State payments made on behalf of the city for the period July through December, 2015; 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: 1 The ARC reflects normal cost rate of 11.00%plus past service cost rate of 33.03,and is further expressed as pension costs of 23.24%, healthcare costs of 16.61%, and DCR normal cost of 4.18%. CITY OF SEWARD, ALASKA RESOLUTION 2016-025 Section 1. The 2015 Operating Budget shall be retroactively amended to appropriate $1,265,143.10 as follows: 1) $889,894.56 from State PERS On-Behalf Grant Revenues account 01000-0000-4201 to General Fund/department expense accounts xxxxx-xxxx-6201 allocated on a pro-rata basis, per the attached schedule; 2) State PERS On-Behalf Grant Revenue account 11000-2000-5920 totaling $118,897.79 for Harbor Fund; 3) account 15000-0000-5920 totaling $176,717.85 for Electric Fund; 4) 17000-0000-5920 totaling $42,344.34 for Water Fund; and 18000-0000-5920 totaling $37,306.55 for Wastewater Fund. Section 2. This appropriation is retroactive to December 31, 2015, and the resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 29th day of March, 2016. THE CITY OF SEWARD, ALASKA can Bardarson, Mayor p I AYES: Casagranda, Keil, Squires, Altermatt, McClure, Bardarson NOES: None ABSENT: Butts ABSTAIN: None ATTEST: 3 / Lihar.p•� / G hanna ey, CMC ity Clerk (City Seal) ♦ R t , ,.aLP, °R •. "' (i #. • Sd • :Y,:. 4 s •� .. .' .of,�''•,� . ♦. 4j �•OF•.,.l - -.e+s..rst6rr r♦x• COUNCIL AGENDA STATEMENT Meeting Date: March 29, 2016 of sFw (4 Through: James Hunt, City Man r f q-P From: Kristin Erchinger,Finance Director . Agenda Item: 2015 Budget Amendment appropriating State PERS on-behalf contributions of$1,265,143.10 for January through June 2015 BACKGROUND &JUSTIFICATION: The 2014 State legislature passed Senate Bill 119, appropriating $1 Billion directly to PERS on behalf of Alaska municipalities and PERS employers, 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, 2015) is $1,265,143.10, and the City also benefits from on-behalf payments for the period July through December 31, 2015. 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. As of this date, for every 1% increase in the employer contribution rate cap (i.e. from 22%to 23%),the City's annual PERS contributions will increase by approximately$47,000. INTENT: The intent of this action is to amend the 2015 budget to account for State contributions on behalf of the City for contributions to the public employee's retirement system for the period January through June, 2015. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan (document source here): X 2. Strategic Plan (document source here): X 3. Other (list): X 1LP FISCAL NOTE: The State's contribution of$1,265,143.10 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 $5,468,236 toward the City of Seward's portion of the Public Employees Retirement System unfunded liability,through 12/31/2015. Approved by Finance Department ,91.4444.141. ATTORNEY REVIEW: Yes No A RECOMMENDATION: Council approve Resolution 2016-025 amending the 2015 Operating Budget by appropriating $1,265,143.10 from State grant revenues, to various fund retirement expense accounts, on a pro- rata basis.