HomeMy WebLinkAboutRes2010-017 Sponsored by: Oates
CITY OF SEWARD, ALASKA
RESOLUTION 2010 -017
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING THE 2009 BUDGET AND APPROPRIATING
$430,411.62 FROM THE STATE OF ALASKA TO THE PUBLIC
EMPLOYEES RETIREMENT SYSTEM ON BEHALF OF THE CITY OF
SEWARD
WHEREAS, two bills passed during the 2008 Alaska legislative session (House Bill 310 and
Senate Bill 125) and one bill passed during the 2009 Alaska legislative session (House Bill 81) had a
marked impact on the public employees' retirement system (PERS) costs of Alaska's municipal
employers in 2009; and
WHEREAS, House Bill 310 appropriated $241,600,000 for deposit into the defined benefit
plan in the public employees retirement system, as an additional state contribution for the fiscal year
ended June 30, 2009, and House Bill 81 appropriated $107,953,000 into the same plan for the fiscal
year ending June 30, 2010; and
WHEREAS, Senate Bill 125 converted the PERS to a cost - sharing plan, whereby all PERS
employers share one uniform PERS rate, as opposed to the previous method of individual employers
having their own employer rates; and
WHEREAS, Senate Bill 125 also capped the PERS contribution rate for employers at 22
percent for all PERS defined benefit contributions, even though the Alaska Retirement Management
Board adopted rate was 35.22 percent for 2009 and 27.65 percent for 2010, resulting in a subsidy
from the State of Alaska equal to 13.22 percent of employer covered wages in 2009 and 5.65 percent
in 2010 for PERS defined contribution employees; and
WHEREAS, for the City of Seward, the State of Alaska's coverage of costs in excess of 22%
results in a cost savings to local taxpayers of $430,411.62 in 2009; and
WHEREAS, it is necessary to modify the 2009 Budget in order to reflect the State's payment
for PERS contributions made on behalf of the City of Seward.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA, that:
Section 1. The amount of $430,411.62 is hereby accepted from the State of Alaska, as
payment on behalf of the City of Seward PERS, and the 2009 Budget is retroactively amended to
December 31, 2009, as follows: 1) $332,833.19 for PERS reimbursement to account 101 -0000-
4680 -0200 allocated to General Fund departments; $49,326.58 to account 401 - 4360- 4680 -0200
CITY OF SEWARD
RESOLUTION 2010 -017
allocated to Harbor departments; $2.79 to account 402 - 4020 - 4680 -0200 allocated to 402 - 4020 -5060;
$2,892.42 to account 417- 4500- 4680 -0200 allocated to SMIC departments; $19,633.59 to account
501- 0000 - 4680 -0200 allocated to Electric departments; $13,879.89 to account 701 -7110- 4680 -0200
allocated to Water departments; and $11,843.16 to account 703 -7120- 4680 -0200 allocated to
Wastewater departments.
Section 2. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 22 day
of February, 2010.
THE CITY OF SEWARD ALASKA
4, di?
illard E. Dunham, Mayor
AYES: Valdatta, Bardarson, Keil, Amberg, Shafer, Dunham
NOES: None
ABSENT: Smith
ABSTAIN: None
ATTEST:
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Jets Lewis, City Clerk
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COUNCIL AGENDA STATEMENT
Meeting Date: February 22, 2010 a of se
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Through: Phillip Oates, City Manager / "'
From: Kristin Erchinger, Finance Director pit ici
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Agenda Item: 2009 Budget Amendment appropriating State PERS contribution
BACKGROUND & JUSTIFICATION:
In 2008, the State legislature passed House Bill 310, appropriating $241.6 million directly to
PERS on behalf of Alaska municipalities, to help offset retirement liability cost increases to local
taxpayers. In 2009, the legislature passed House Bill 81, appropriating $107.9 million to help
subsidize PERS costs for employers. 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 on the City's books, and to book the corresponding expense.
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 Alaska Retirement Management Board established the 2009 PERS employer contribution
rate at 35.22 %, and the 2010 rate at 27.65 %. Since the State is contributing funding for rates
exceeding 22 %, the State is contributing 13.22% of City of Seward annual wages toward
retirement contributions in 2009, and 5.65% in 2010. The State is on a fiscal year ending June 30,
so the City applies the 2009 rate to employee wages for the period January 1 through June 30,
2009, and the 2010 rate for wages for the period July 1 through December 31, 2009. For the
City's calendar year 2009, the State's contributions to PERS on the City's behalf, totals
$430,411.62.
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
1. Comprehensive Plan
2. Strategic Plan
3. Other
4. Not applicable X
7
CITY OF SEWARD
RESOLUTION 2010 - OM
Page Two
FISCAL NOTE:
The State's contribution of $430,411.62 is considered a State grant award and is recognized as
such on the City's financial statements, and an equivalent amount is recorded as retirement
expense, allocated on a pro -rata basis, to each department's operating budget.
Approved by Finance Department jt 4i
o
RECOMMENDATION:
Council approve Resolution 2010 -017 retroactively amending the 2009 Operating Budget by
appropriating $430,411.62 from State grant revenues, to various fund retirement expense
accounts, on a pro -rata basis, to accounts X01 -XXXX -5060.
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