Pension surplus for fire, police handled
Published 12:00 am Tuesday, December 28, 1999
For 30 years the city and its employees in the police and fire departments have contributed far more than necessary to their respective pensions funds.
Tuesday, December 28, 1999
For 30 years the city and its employees in the police and fire departments have contributed far more than necessary to their respective pensions funds. The city will get a portion of that money back, approximately $10 million, and will use it to offset future public safety costs.
City manager Paul Sparks made the recommendation to the City Council Monday to put the money in a special, restricted use account. The interest would be allowed to accumulate and could be used to pay for unforeseen public safety expenditures, he said.
&uot;We were required by the state to increase the amount we and the city police and fire personnel put in to the pension plan and we complied, while other municipalities did not,&uot; Sparks said. &uot;As a result we have an excess amount in the pension plan, about $3 million for the police and $7 million for the fire department. We are required by state law to use that excess for public safety.&uot;
According to council rules, there was a public hearing at the council meeting Monday to discuss the issue. Former Albert Lea firefighter and state Representative Bob Haukoos spoke in support of the resolution creating the restricted use fund. He also recommended that a committee be formed, from selected individuals with an invested interest, to oversee how the funds would be spent.
&uot;I think the City Council is heading in the right direction with this resolution,&uot; Haukoos said. &uot;And I think they’ll see that the money is used appropriately. However, I think that a separate committee formed from retirees or current fire fighters and police would do a better job monitoring that fund.&uot;
The money put into the police and fire department pension funds is invested by the state in stocks.
A healthy economy and investing have created a surplus for Albert Lea employees, Haukoos said. The city has the right to have that money returned to be used in this way, he said.
Haukoos recalls when the state, thinking there would be a shortfall in the amount put into the retirement funds, requested an increase on the part of cities and their employees.
&uot;We thought then that the increases the state requested would result in a surplus. We just didn’t know that it would be this much,&uot; Haukoos said. Those municipalities that did not comply with the increase are not in as good of shape, he said.
According to Sparks, some lobbied to have the surplus used to increase the pensions of employees who are already retired. Quoting research done by the League of Minnesota Cities, however, Sparks said there was no legal precedent for police or firefighters to sue the city for an increase in pensions.
&uot;We may not negotiate for benefit improvements to retirees, that is a violation of the public purpose doctrine and state law,&uot; Sparks said. &uot;The only way that could be done is through the Legislature.&uot;
Those currently retired from the police or fire departments have the option to receive the same benefits as those currently employed would have when they retire as provided by the Public Employees Retirement Association. For the retirees to have an increase in their pensions would mean they would be earning more in retirement than those currently on the work force, Sparks said.