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Home My WebLink AboutResolution No. 2006-02~/0 ~TN ~!/b~-~'~~~sr?~ ~~ 5'~9>~ Suggested by: Administration CITY OF KENAI RESOLUTYON NO. 2006-02 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING THE AMENDMENT OF THE CITY OF KENAI, ALASKA AND PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) PARTICIPATION AGREEMENT TO EXCLUDE ALL ELECTED OFFICIALS, EFFECTIVE JANUARY 18, 2006. WHEREAS, the City of Kenai wishes to amend the agreement dated July l, 1969 to exclude all elected officials effective Januasy 18, 2006. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that effective January 18, 2005, Subparagraph 2 on Page 2 of the Participation Agreement be asnended to read as follows: 2. The political subdivision agrees that all eligible employees except in the following designated category will participate in the Retirement System: All Elected Officials PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day of January 2006. PAT PORTER, MAYOR ATTEST: Caro1 L. Freas, City Clerk Approved by Finance: , (O l/ 1 l. / 2006) hl MEMORANDUM To: Chuck Kopp, Acting City Manager From: Larry Semmens, Finance DirecYor , Date: January 10, 2006 Subject: PERS for Elected Officials ~ Representative Seaton recently published his analysis of tbe cost of PERS for elected officials. The results are quite surprising. He estimates the entity's total liability to be over $434,000 for an elected public official that vests after 10 years of service and retires to collect benefits for 22 years. The majority of the liability is generated from the medical benefit provided by PERS. Representative Seaton estiinates this to be $368,545, but could range upward to $450,000 depending on variables. The PERS system seeks to accumulate sufficient assets while an employee is working to pay for benefits paid out over the term of retirement. Employees must contribute 6.75% of salary in addition to what the employer pays. Since council members have a relatively low salary, the amount that they pay into the system~is also relatively small. The employer must make up the difference in the total cost of benefits and the amount the employee puts in. In the case of council members the City will have to put in over $13,000 annually such that there would be abouY $200,000 available at the end of 10 years using the PERS earning assumprion of 8.25°/o. One other aspect of eleeted offieials participating in PERS is that if a city council member ever works for a PERS employer in a regular salaried position, the cost of the pension benefits will be apportioned sirictly by the number of years of service at eaeh employer. Far example if a council member served for 12 years (at a low salary) then went to work for a PERS employer (at a high salary) for 4 years, the City would be liable for 75% (12116) of the pension liability. Dependin~ on Yhe salary level the City could incur greater liabili~y than would be far just the 12 years of City employment. The cities of Seward and Homer have opted elected officials out of PERS. N N X C ~ Y ~ O T ~ ~ C ~ O ~ ~ ^, W b ~ ~ ~ ~ ~ • ~ ~ ~ ~t 3 ai U N A w ~ ' ° O ~, ~ - ~ ~.! y L ~ ~i °~ c .= N N O , '~ ~ ~ V ~ ~ O ~ 4 U .~ T ~ ~ ~ ' U ~ ~ ~ ~ ~ ~ ~-~ ~p ~ G i, ~ '~+ N ~ U N ~ '+-+ ~ 'L7 L 00 N n. O N ~ ,~ ~ ~ ~ ~ ~ b A ~ > '~ ~ ~ fl. ,.a 3 4- "C ~ c~y at ~ ~ ~ ~ ~ ~ ~ ~ ~+ ~ N ~ ~ ~ '~' , „ .~ ' " ~ .L L% ¢S L ~ N ~ ~ W ' ~ ~y P .-1 ti ~ '~ ~ O ¢ O • ~i a~ a~ ~ v; . ~ G ~ ~ ~ ~ '~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ w a. .~ O C `~ o ~ O a~ ~ Q N C J ~ `v r~ v, y ~ e i ,c i 4:, ~ ~ ~~ ='° ~ c ~ ~ U ~ ~ ,, cC ~ C~ ~ T p Q Q ~ ..~ 0 ~ ~ ~ ~ ~ ~ ' b V~ N ~ A tC ~ T Vi ~O ~' a! O ~ = M M 00 M [~ ~ n~ O s. ~ w ~ N ~' ~ ~ C~G - ^ T b W ~ oo ~ ~ c0 ~ ~ GA .fl ~ N t~ ~ l ~ l ~ ~ ~ ~. ~ ~ N N N L~' G ..,*j. ... 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