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HomeMy WebLinkAboutRes2017-069Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2017-069 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AMENDING THE 2017 BUDGET TO RECORD EXPENDITURES OF $126,433.99 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, 2017, AND APPROPRIATING FUNDS WHEREAS, in accordance with the 2016 Alaska State Legislature's passage of House Bill 256, the State of Alaska Department of Administration, Division of Retirement & Benefits ("DRB") contributed $_126,433.99 on behalf of the. City. of Seward from January through June,. 2017 on the City of Seward's behalf. The Alaska Retirement Management Board set the actuarially required rate at 26.14%. The State's contribution was 4.14%, reflecting the difference between the legislative on -behalf rate of 26.14% and the 22% employer "capped" rate; and WHEREAS, this contribution represents $126,433.99 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 2017 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 2017 Budget to reflect the State payments made on behalf of the City for the period July through _December, 2017; 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-, Section 1. The 2017 Operating Budget shall be retroactively amended to appropriate $126,433.99 as follows: 1) $86,022.28 from State PERS On -Behalf Grant Revenues account 01000-0000-4201 to General Fund/department expense accounts 01000-1xxx-6201 allocated on a pro-rata basis; 2) State PERS On -Behalf Grant Revenue account 11000-2000-5920 totaling 111,783.91 for Harbor Fund; 3) account 15000-0000-5920 totaling $21,444.81 for Electric Fund; 4} 17000-0000-5920 totaling $4,011.41 for Water Fund; and 19000-0000-5920 totaling $3,171.58 for Wastewater Fund. CITY OF SEWARD, ALASKA RESOLUTION 2017-069 Section 2. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 23'd day of October, 2017. THE CITY OF SEWARD, ALASKA za":�Q'� David quires, Mayo AYES: Casagranda, Keil, McClure, Slater, Towsley, Horn, Squires NOES: None ABSENT: None ABSTAIN: None ATTEST: Brenda J. Ballot/, MMC r City Clerj .j of Sew, (�G�:•�9�p �R9�►�•y0 SEAS* 1 1 1 COUNCIL AGENDA STATEMENT Meeting Date: November 6, 2017 Through: James Hunt, City Manager CK From: Kristin Erchinger, Finance Director Agenda Item: State of Alaska PERS on -behalf contributions of $126,433.99 for January through June 2017 ACKGRMM &JUSTIFICATION: The 2016 State legislature passed House Bill 256, appropriating $99,166,576 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, 2017) is $126,43399 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°/O, 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 (Le. from 22s/9 to 23%), the City's annual PERS contributions will increase by approximately $30,540. IIJ'ENT: The intent of this action is to amend the 2017 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, 2017. CONSISTENCY CI]ECEMT• Yes No N/A 1. Comprehensive Plan (document source here): X 2. Strategic Plan (document source here): X 3. Other (list): August 15, 2017 letter from SOA DOA X CITY OF SEWARD RESOLUTION 2017-069 FISCAL NOTE: The State's contribution of $126,433.99 is considered a State grant award and is recognized as such on the City's financial statements, with an equivalent amount recorded as retirement mgxmse/expenditure, allocated on a pro-rata basis, to each departmenVs operating budget. Approved by Finance Department _ ,�t�.4,,j0, ,61 ..�.�: ATTORNEY REVIEW: Yes,___ _ _ No_jt _ RECONIlVIENDATION: Council approve Resolution 2017-069 amending the 2017 Operating Budget by appmpriating $126,433.99 from State grant revenues, to various fund retirement expense accounts, on a pro-rata basis.