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HomeMy WebLinkAboutRes2013-011 Sponsored by: Hunt CITY OF SEWARD, ALASKA RESOLUTION 2013 -011 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RETROACTIVELY AMENDING THE 2012 BUDGET TO RECORD EXPENDITURES OF $625,512 PAID BY THE STATE OF ALASKA ON BEHALF OF THE CITY TOWARD THE CITY'S PUBLIC EMPLOYEES RETIREMENT SYSTEM LIABILITY WHEREAS, in accordance with the 2011 Alaska State Legislature's passage of House Bill 108, the State of Alaska Department of Administration, Division of Retirement & Benefits ( "DRB ") contributed $292,080.27 on behalf of the City of Seward from January through June, 2012, reflecting the 11.49% difference between the actuarially required contribution rate of 33.49% as adopted by the Alaska Retirement Management Board' and the 22% employer "capped" rate established by SB53; and WHEREAS, in accordance with the 2012 Alaska State Legislature's passage of House Bill 284, the State of Alaska DRB contributed $333,431.32 on behalf of the City. of Seward from July through December, 2012, reflecting the 13.84% difference between the actuarially required contribution rate of 35.84% 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 2012 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 11.01% plus past service cost rate of 22.48 %, and is further expressed as pension costs of 14.65 %, healthcare costs of 16.11 %, and DCR normal cost of 2.73 %. 2 The ARC reflects normal cost rate of 11.68% plus past service cost rate of 24.16 %, and is further expressed as pension costs of 15.75 %, healthcare costs of 20.09 %. CITY OF SEWARD, ALASKA RESOLUTION 2013 -011 Section 1. The 2012 Operating Budget shall be retroactively amended to appropriate $625,512 from the State grant revenues accounts x01 - 0000 - 4350 -0150 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 11 day of February, 2013. THE CITY OF SEWARD, ALASKA David Seaway , yor AYES: Valdatta, Keil, Shafer, Casagranda, Terry, Seaward NOES: None ABSENT: Bardarson ABSTAIN: None ATTEST: A rte It A_ _AJ Jo' anna Kinney y Clerk (City Seal) *09 7' © 4 • • O • � • SEAL r i • j COUNCIL AGENDA STATEMENT Meeting Date: February 11, 2013 � , � of sF Through: James Hunt, City Manager c, �� From: Kristin Erchinger, Finance Director FA 1tnsKP Agenda Item: 2012 Budget Amendment appropriating the State PERS on- behalf contributions in the amount of $625,512 BACKGROUND & JUSTIFICATION: The 2011 State legislature passed House Bill 108, appropriating $242,609,397 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 January 1 through June 30, 2012) is $292,080.27. 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. The 2012 State legislature passed House Bill 284, appropriating $307,302,392 directly to PERS on behalf of Alaska municipalities, to help offset retirement liabilities in the PERS defined benefit plan. The City of Seward's portion of this appropriation (for the period July 1, 2012 through December 31, 2012) is $333,431.32. 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 2009. 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 N/A 1. Comprehensive Plan (document source here): X 2. Strategic Plan (document source here): X 3. Other (list): X I �` CITY OF SEWARD RESOLUTION 2013 - FISCAL NOTE: The State's contribution of $625,512 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 i ATTORNEY REVIEW: Yes No RECOMMENDATION: Council approve Resolution 2013 - 0 k` retroactively amending the 2012 Operating Budget by appropriating $625,512 from State grant revenues, to various fund retirement expense accounts, on a pro -rata basis, to accounts X01 -XXXX -5060. 1\