HomeMy WebLinkAboutA001 - Council Action Form dated December 3, 1991 Item
Date December 3, 1991
COUNCEL ACTION FORM
Subject:
Utility Retirement System Ordinance Changes
Background
The Utility Retirement Board has approved three changes to the existing
ordinance:
a) Increase the benefit factor from 1.8% to 1.85% for persons retired less
than five years;
b) Increase the benefit factor from a surviving spouse from 1.8% to 1.85%;
c) Increase the membership of the Board of Trustees to provide for a
non-voting representative of retirees.
The changes in items a & b relate to the benefit increase that took effect July 1,
1991. In that change, the City Council approved an increase in the benefit
factor from 1.8% to 1.85% for all persons retiring after July 1, 1991, and for all
retirees who had been retired five years or more. The Utility Retirement Board's
intent had been to apply the increase in all instances where the benefit factor
was a part of the calculation of benefits.
The ordinance as written and approved by the Board members specified only new
retirees and those retired more than five years. With this change, the ordinance
will follow the full intent of the Board and include those members retired less
than five years and the surviving spouses of deceased active members.
The original cost analysis, prepared by the actuarial firm of Milliman and
Robertson, included members retired less than five years, so there is no
additional cost to the system for this change. The formula for the surviving
spouse benefit (item b) was not included in the original cost analysis. Denis
Sullivan of Milliman and Robertson, Inc. has since reviewed the analysis and
determined the additional cost would be so insignificant there would be no actual
increase to the contribution level.
Item c was approved by the Board at their meeting held November 6, 1991. This
action is the result of a request by a retiree for representation on the Board.
There are 55 retirees and 156 active members. The active members are
represented by six Board members. The Board approved expanding the Board
for a non-voting representative to provide a means of communicating retirement
board actions to retirees.
Alternatives
1) Approve the ordinance changes as written.
2) Approve items a, b, or c selectively.
3) Reject the requested ordinance changes.
Manager's Recommended Action:
It is the recommendation of the City Manager that the City Council adopt Alter-
native #1 and approve the three proposed changes to the Utility Retirement
System.
If there comes a time when a request is made to offer voting rights to the
"retiree position," it might be advisable to assure retiree representation within
the existing board number (9), rather than increasing the size of the board to
ten. Currently the board is composed of three management representatives and
six employee members. With an expansion of the board with additional mem-
bers, the larger number of board members might lessen their effectiveness as a
body, and erode the balance of perspectives inherent in the board makeup.
Council Action: