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HomeMy WebLinkAboutRes2015-010 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2015-010 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RETROACTIVELY AMENDING THE 2014 BUDGET TO RECORD EXPENDITURES OF $969,955.36 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,2014 WHEREAS, in accordance with the 2014 Alaska State Legislature's passage of Senate Bill 119, the State of Alaska Department of Administration, Division of Retirement & Benefits ("DRB") contributed $372,955.97 on behalf of the City of Seward from January through June, 2014 and $969,955.36 from July through December, 2014, for a total contribution of $1,342,911.33 on the City of Seward's behalf, reflecting the 13.68% difference between the actuarially required contribution rate of 35.68% as adopted by the Alaska Retirement Management Board' and the 22% employer "capped" rate established by SB53; plus additional funds were allocated in SB119 bringing the State's on-behalf rate for FY2015 to 64.41%; and WHEREAS, this July through December, 2014 contribution represents $969,955.36 toward pension costs and$0.00 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 2014 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: Section 1. The 2014 Operating Budget shall be amended to appropriate $969,955.36 as follows: $631,543.29 from State grant revenues accounts 01000-0000-4201 to various General Fund department expense accounts 01000-XXXX-6201; $106,380.96 from State grant revenues account 11000-2000-5920 to Harbor department expense accounts 11000-XXXX-6201; ' The ARC reflects normal cost rate of 11.49%plus past service cost rate of 24.19%,and is further expressed as pension costs of 16.47%,healthcare costs of 15.84%, and DCR normal cost of 3.37%. CITY OF SEWARD,ALASKA RESOLUTION 2015-010 $145,511.48 from State grant revenues account 15000-0000-5920 to Electric department expense accounts 15000-XXXX-6201; $46,061.92 from State grant revenues account 17000-0000-5920 to Water department expense accounts 17000-XXXX-6201; and $40,457.70 from State grant revenues account 18000-0000-5920 to Wastewater department expense accounts 18000-XXXX- 6201. Section 2. This resolution shall be retroactive to December, 2014. PASSED AND APPROVED by the City Council of the City of Seward, Alaska,this 26th day of January, 2015. THE CITY OF SEWARD,ALASKA A2442) /C&LtdeP2/2,141 Bardarson, Mayor AYES: Keil, Terry, Squires, Butts, Bardarson NOES: ABSENT: Casagranda, Darling ABSTAIN: ATTEST: J. arena Ki ! CMC ty Clerk (City Seal) •�°w® uti°• .NI of sE : S 0 to • COUNCIL AGENDA STATEMENT Meeting Date: January 26, 2015 40F SFty Through: James Hunt, City Manager gAKP �wL From: Kristin Erchinger, Finance Director. O Agenda Item: 2014 Retroactive Budget Amendment appropriating State PERS on-behalf contributions of$969,955.36 for July through December 2014 BACKGROUND &JUSTIFICATION: The 2013 State legislature passed House Bill 65 appropriating $312,472,952 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, 2014) was $372,955.97, and was appropriated in Resolution 2014-093. The 2014 State legislature passed Senate Bill 119 appropriating $1 Billion directly to PERS on behalf of Alaska municipalities. The City's portion of this appropriation (for the period July through December 31, 2014 is $969,955.36. The combined total of$1,342,911.33 for 2014 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. CONSISTENCY CHECKLIST:' Yes No N/A 1. Comprehensive Plan(document source here): X 2. Strategic Plan(document source here): X 3. Other(list): X CITY OF SEWARD RESONITION 0 FISCAL NOTE: The State's contribution of$969,955.36 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 $4,070,658 toward the City of Seward's portion of the Public Employees Retirement System unfunded liability. Approved by Finance Department jfAujz. 44;6/! , ATTORNEYREVIEW: Yes No X RECOMMENDATION: Council approve Resolution 2015- 00 retroactively amending the 2014 Operating Budget by appropriating $969,955.36 from State grant revenues, to various Fund retirement expense accounts, on a pro-rata basis.