HomeMy WebLinkAboutRes2011-007 Sponsored by: Oates
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -007
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, RETROACTIVELY AMENDING THE 2010 BUDGET TO
RECORD EXPENDITURES OF $138,285.65 PAID BY THE STATE OF
ALASKA ON BEHALF OF THE CITY TOWARD THE CITY'S PUBLIC
EMPLOYEES RETIREMENT SYSTEM LIABILITY, PER HB300
WHEREAS, the State of Alaska Department of Administration, Division of Retirement
& Benefits contributed $127,557.38 on behalf of the City from January through June, 2010,
reflecting the 5.65% difference between the actuarially required contribution rate of 27.65% as
adopted by the Alaska Retirement Management Board' and the 22% employer "capped" rate
established by SB53, and the City Council appropriated these State retirement contributions in
Resolution 2010 -119 passed on December 13, 2010; and
WHEREAS, the 2010 Alaska State Legislature passed House Bill 300, appropriating
funds on behalf of the City, to cover $138,285.65 of the City's contribution to the Public
Employees' Retirement System for the period July through December, 2010, reflecting the 5.96%
difference between the actuarially required contribution rate of 27.96% as adopted by the Alaska
Retirement Management Board and the 22% employer "capped" rate; and
WHEREAS, in accordance with generally accepted accounting principles, the City must
record payments made on its behalf, and must therefore amend the 2010 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 9.46% plus past service cost rate of 18.19 %, and is further
expressed as pension costs of 10.25% and healthcare costs of 17.40 %.
2 The ARC reflects normal cost rate of 9.33% plus past service cost rate of 18.63 %, and is further
expressed as pension costs of 9.98% and healthcare costs of 17.98 %.
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -007
NJ
Section 1. The 2010 Operating Budget shall be retroactively amended to appropriate
$138,285.65 from the State grant revenues accounts x01- 0000 - 4680 -0200 to various department
retirement expense accounts allocated on a pro -rata basis, to accounts x01 -xxxx -5060.
Section 2. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
24th day of January, 2011.
THE CI ' OF SEWARD, ALASKA
' . - 1 ,,..44—, Th '-'
Willard E. Dunham, Mayor
AYES: Valdatta, Bardarson, Keil, Shafer, Casagranda, Dunham
..1 NOES: None
ABSENT: Smith
ABSTAIN: None
ATTEST:
•
Johanna Kinney
City Clerk, CMC
(City Seal)
4 sect,, ...
, o
: r a'-„ w
--0—
0
I 0
. s SE
--.._
. ° .•.,, r Rr,".•. Q .
J
### 47.4. 4 F ........ ,,.•,
COUNCIL AGENDA STATEMENT
Meeting Date: January 24, 2011 a of sel
9
Through: Philli p Oates '
Cit y Mana er Manager "74, �.A
.
From: Kristin Erchinger, Finance Director VA1 44:40,
Agenda Item: 2010 Budget Amendment appropriating the second half of the State PERS
on- behalf contributions in the amount of $138,285.65
BACKGROUND & JUSTIFICATION:
In 2010, the State legislature passed House Bill 300, appropriating $165,841,171 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 July 1 through
December 31, 2010) is $138,285.65. 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 as both a 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 Alaska Retirement Management Board has established the following PERS employer
contribution rates:
2009 2010 2011
Normal Cost 13.72% 9.46% 9.33%
Past Service Cost 21.50% 18.19% 18.63%
Total Rate 35.22% 27.65% 27.96%
Pension Cost 10.91% 10.25% 9.98%
Healthcare Cost 24.31% 17.40% 17.98%
Total Rate 35.22% 27.65% 27.96%
State On- Behalf Rate 13.22% 5.65% 5.96%
State On- Behalf $420,411.62 $265,843.03 TBD
Amount (CY)
The State is on a fiscal year ending June 30, so the City applies the above 2010 rate to employee
wages for the period January 1 through June 30, 2010, and the above 2011 rate to wages for the
period July 1 through December 31, 2010. For the first half of the City's calendar year 2010, the
State's contributions to PERS on the City's behalf totaled $127,557.38, and for the second half
the contribution was $138,285.65 for a total calendar year contribution of $265,843.03.
1ea�
CITY OF SEWARD
RESOLUTION 2011 -
Page Two
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
FISCAL NOTE:
The State's contribution of $138,285.65 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.
Approved by Finance Department ,14 4a
AhY► 1 vim Ye ►� o
RECOMMENDATION:
Council approve Resolution 2011- Ohl retroactively amending the 2010 Operating Budget by
appropriating $138,285.65 from State grant revenues, to various fund retirement expense
accounts, on a pro -rata basis, to accounts X01 -XXXX -5060.
lb