05-236Council File # � o��
Green Sheet # 30a5��
RESOLUTION
� OF SAINT PAUL, MINNESOTA 'Z
Presented
Referred To Committee Date
Impact of Proposed PERA Increases on the City of Saint Paul
1 WHEREAS, there are now proposals before the Legislature to increase the contribution rate for both employees and
2 employers for the PERA Coordinated Plan and for the Police and Fire plans; and
3 VJIIEREAS, under the cunent employer contribution rates and state pension aids, in 2005 the City of Saint
4 Paul will absorb $10.65 miliion in employer pension costs to PERA, and state pension aids (police, fire, and
5 coordinated) will equal $5.85 million; and
6 WHEREAS, the difference of $4.81 million will come from city taxpayers, or it will represent resources that have
7 to be diverted from other city services—including public safety functions. In the police and fire pians combined,
8 city pension costs are $6.18 million this year, against expected state police and fire pension aids of $533
9 million; and
10 WHEREAS, under the proposed employer contribution rates (to 13.5% in 2006 for police and fire plans, and 6%
11 init3ally in the coordinated plan beginning in 2006, and increasing by another .25% annually thereafter), the City
12 will be forced to absorb an additional estimated $33 million in pension contribution costs in 2006, and increasing
13 amounts in following years. Of this total amount, about $2.9 million per yeaz in addifional costs aze for the police
14 and fire plans; and
15 WHEREAS, to put a$3.3 million cost-increase in perspective, covering that amount within the city's general fwid
16 budget (where virtually all of current and prospective costs fall) would mean:
17 1. A 5% increase in the city's totai property tax levy, with no increase in services provided to the pubiic; or
18 2. A 3.2% reduction in the combined general fund budgets of the police and fire departments; and
19 WHEREAS, local government employer contribution costs fot PERA are designed to be offset, at least In part, by
20 state appropriations through the various state pension aid programs identified on the attachnnents. These pension
21 aids aze appropriated from the state general fund, and under current law are distributed throu� complex formulas
22 that limit the total pension aid payments to the total collections from certain state taxes on insurance premiums; and
23
24 VIHEREA5, increasing the funding for the PERA coordinated and police/fire plans without increasing employer
25 contribution rates and forcing additional local taY increases or spending cuts would require state actions such as:
26 • Increasing the state appropriation for pension aids, either by reallocating funding from other progams,
27 or by increasing some state tax or other revenue. Increasing state insurance premium t�es would be one
28 option for this, but it would not be required.
Reallocating the existing state pension aids program to ensure a better balance between actual employer
pension costs and state aids for individual cities; and �_ �/
�tp
3 WHEREAS, two tables aze attached. The first table shows historic and projected costs to the city for employer
4 contributions to the PERA plans under the current rate structure, compared with state pension aids that are
5 intended to offset these costs. The second table shows the additional costs to the city budget if the proposed rate
6 increases are adopted; now therefare be it
7 RESOLVED, that the City of Saint Paul utges the Legislature to be sensitive to the impact this proposal will
8 haue on local govemments; and be it further
9 RESOLVED, that the City of Saint Paul would like to seek a reasonable compromise that wouid prevent Yhis
10 situation from falling disproportionately on Saint Paul taxpayers all at once, while recognizing that there is a
11 problem witl� the Fund that needs to be resolved ideally with some combination of increased revenues and
12 decreased spending growth that would support the State's pension system into the future.
Kequested by Deparhnent of:
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Form Approved by Ciry Attorney
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Adoption Certifiechby Council Secretary Approved by Mayor for Submission to Council
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Approved ]. y o�r: Date c
B F—� i�
Adopted by Council: Date �i//C1i �.i �//O_S
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cc, -co�n
CoMaM Person & Phone:
Ken Smith
Must Be on
Contrad Sype:
RE-RESOLUiION
o� Mm�a:
,�-�R-� Green Sheet NO: 3025801
- � DepaM�ent Sent To Person
D un
Msign i a' D rhnentlrirector
Number 2 • p Ci erk
Por 3
Routing
prdgr 4
5
Total # o SignaWre P _(Clip FUI Wcations forSignature)
Action Requestetl: �
Resolution conceming the anpact of ptoposed PERA increases on the City of Saint Paul
Wffiions: Appro�e (A) or Reject (R):
Plamri�g Commission
CIB Committee
CiHi Service Commission
Personal5ervice
1. Has this perSONfirtn eeer worked under a contract for this department?
Yes No
2. Nas this persoNfirtn eeer been a cHy empioyee?
Yes No
3. Does this persoNfirtn possess a skill not twemally possessed by any
cunent city employee?
Yes No
Explafn all yes answers on separate sheet and attach W green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Wh}/j:
Advanfages N Approved:
DisadvanWaes IFApproved:
DisativanWqes If Not Approved:
Transaction:
Fundinp Source:
financlal Information:
(E�cplain)
CosURevenue BudgMed:
Activity Number:
Maich 17, 2005 11;44AM Page 1