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Home My WebLink AboutRes2016-026 Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2016-026 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RETROACTIVELY AMENDING THE 2015 BUDGET TO RECORD EXPENDITURES OF $132,435.21 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, 2015, AND APPROPRIATING FUNDS WHEREAS, in accordance with the 2015 Alaska State Legislature's passage of House Bill 2001, the State of Alaska Department of Administration, Division of Retirement & Benefits ("DRB") contributed $132,435.21 on behalf of the City of Seward from July through December, 2015, reflecting the 5.19% difference between the actuarially required contribution rate of 27.19% as adopted by the Alaska Retirement Management Board' and the 22% employer "capped" rate established by SB53; and WHEREAS, this July through December, 2015 contribution represents $92,638.23 toward pension costs and $39,796.98 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, 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 10.66% plus past service cost rate of 16.53%, and is further expressed as pension costs of 14.43%, healthcare costs of 8.15%, and DCR normal cost of 4.61%. CITY OF SEWARD, ALASKA RESOLUTION 2016-026 Section 1. The 2015 Operating Budget shall be retroactively amended to appropriate $132,435.21 as follows: $93,154.18 from State grant revenues accounts 01000-0000-4201 to various General Fund department expense accounts 01000-XXXX-6201; $12,444.34 from State grant revenues account 11000-2000-5920 to Harbor Department expense accounts 11000- XXXX-6201; $18,498.83 from State grant revenues account 15000-0000-5920 to Electric Department expense accounts 15000-XXXX-6201; $4,432.61 from State grant revenues account 17000-0000-5920 to Water Department expense accounts 17000-XXXX-6201; and $3,905.25 from State grant revenues account 18000-0000-5920 to Wastewater Department expense accounts 18000-XXXX-6201. Section 2. This appropriation shall be 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 gee2/n)Zudaf/to.^/ can Bardarson, Mayor AYES: Casagranda, Keil, Squires, Altermatt, McClure, Bardarson NOES: None ABSENT: Butts ABSTAIN: None ATTEST: S G / �✓/�A Johanna Ki CMC 1 ity Clerk (City Seal) •.0,,....,,,,,, •..�o * ` • • ® SEAL ) . ) •''s+4��•OF .k-r';•`. AGENDA STATEMENT Meeting Date: March 29, 2016 4:: Through: James Hunt, City Mana4A\ Oil/ (. .410 p From: Kristin Erchinger, Finance Director O Agenda Item: 2015 Retroactive Budget Amendment appropriating State PERS on-behalf contributions of$132,435.21 for July through December 2015 BACKGROUND &JUSTIFICATION: The 2015 State legislature passed House Bill 2001 appropriating $126,520,764 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 July 1 through December 31, 2015) was $132,435.21. When combined with the appropriation for the period January 1 through June 30, 2015 of$1,265,143.10, the total amount of$1,397,578.31 for 2015 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 through the City, we are nonetheless required to account for the State's contribution as both revenue and 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 from 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 $47,000 per year, or an additional $1.081 Million over the remaining 23-year life of the unfunded PERS liability. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan(document source here): X 2. Strategic Plan(document source here): X 3. Other(list): X '�l FISCAL NOTE: The State's contribution of$132,435.21 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 f ""--0 ATTORNEY REVIEW: Yes No X RECOMMENDATION: Council approve Resolution 2016-026 retroactively amending the 2015 Operating Budget by appropriating $132,435.21 from State grant revenues, to various Fund retirement expense accounts, on a pro-rata basis.