1971-4505r
RESOLUTION No. 4505
RESOLUTION CONCERNING THE AMENDMENT OF THE POLICE AND
FIREMEN'S RELIEF ASSOCIATIONS GUIDELINES ACT OF 1969
For several years prior to 1969 there was a growing realization that the
statutes governing the various paid police and firemen's relief associations were
in need of substantial revision. Relief associations, acting unilaterally within
rather broad statutory limits had established exceedingly generous benefits, while
municipalities and the members of these associations contributed only the relatively
modest sums required by law. As a result the actuarial deficits soared, jeopar-
dizing---thesolvency~~some~f theme-elief associations_._~es-ponding to what was
viewed as a potential crisis, the legislature passed the Guidelines Act of 1969
which requires the affected cities to assume, over the next decade, primary re-
sponsibility for financing the normal costs of pension and other benefits estab-
lished by the relief associations.
While we agree that responsible public policy demands that such benefits be
adequately financed and that forthright action had to be taken to arrest the growing
actuarial deficits, we believe that there are at least three other considerations
which must be incorporated into the Guidelines Act if the publfi,c interest as well as
the interests of the employees are to be safeguarded.
The first is the need for substantial financial participation by employees
as well as public employers in financing the benefits. The Guidelines Act
which requires the affected cities to bear in the order of 90% or more of
the total current cost of the benefits is virtually without precedent in
contributory public pension systems and makes it virtually impossible to
negotiate any modification in the-ex~s-Ding-benef-its_with their employees,
The second is the fact that public bodies, such as city councils, must have
effective control over the expenditure of the public funds for which they
are responsible. Yet the Guidelines Act did not modify the statutes under
which city councils have no effective control over relief associations either
on the level of benefits they adopt (or their cost) or the administration of
those benefits,
The third consideration is that city councils need some options or alterna-
tives to enable them to work out with the affected employees a level of
benefits which is acceptable to the employees and at the same time consti-
tutes a tolerable burden for the taxpayers, Since the Guidelines Act pro-
vides city councils with no options or alternatives with respect to pension
programs for future employees, they are greatly handicapped in trying to
limit their financial obligations even on a long-term basis.
The. City Council of Richfield, Minnesota strongly believes that these three
considerations must be incorporated into the Guidelines Act of 1969 and urges the
Legislative Retirement Commission and the 1971 session of the Legislature to enact
the following amendments to this Act: -
1. The normal level cost of the benefits provided by these relief associations
should be more equally shared; b~~:.the einployees.'and public employers by in-
creasing the amount contributed by the employees and employees should be
permitted the same ten-year period (i.e., 1971 to 1980) as are municipali-
ties to achieve this increased financing standard,
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2° The Board of Directors of all such relief associations should be composed
of five members, two of whom should be elected by active members of the
association, two appointed by the mayor with the concurrence of the city
council,_.and.a fifth member to act as chairman who. would be appointed by
unanimous agreement of the-other four° Some appropriate device should also
be included to resolve any ianpasse in .the selection of a chairman,
3. A11 future changes in the by-laws of relief associations affecting pension
or other benefits should be subject to ratification by the appropriate city
council..
4, '1*he benefits by such relief associations should be limited to that normal
level cost which can be met by a contribution by the public employer which
does not exceed 35% of the regular salaries of-the affected employees plus
the contributions made by those employees.
5. Public employers should have the option of placing all policemen and fire
men hired in the future under the P,F.R,A. public safety plan and should
also have the option of malting supplementary payments to such new employees
not to exceed the differential in cost between the employer contributions to
the relief association and the. employer contributions to the P°E.R.A. public
safety plan, However, those supplementary payments should not be considered
fio be a part of the employee°s base salary for pension purposes.
Adopted by the City Council of the City of Richfield this 8th day of February,
1
1971,
Attest:
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Thomas J, Moran City Clerk
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Stanley W, 01son Mayor