HomeMy WebLinkAbout1998-07-27 98-316 ORDERItem No, 98-316.. _
Date: 7-27-98
Ste ubjecL ORDER, Authorizing SU f m Po w Extending the Amortization Period for the
City's Unfunded Liability io the Mabe: State Retirement System
Respmeibie Departmend CityMamear
Commentary:A you are aware, tins City ofBangm is cuncn0y in 0u eleventh Yens of a Nlny yearavwrlizntioo schedule
to elimuute the unfunded liability which bu acumed oven time Me to One b e nc'ryatiw in tine M1Line State Retirement Systems
define] bemfit teliremmtplan. Based on Ile mon rawt figures provided by One mhement system, at lune 30, 199'i this
liabilhywus830,270,524.
It rarnlly came m our etlmtion Gut the City ofPonland hes mquamd and moved approve from the Mw,m Stye Remanent
Symm W amcnne they lWbilily over thirty revm,thus reducing Nair muuw payments for this fewness.
We have inquired sense simuarinsisting from the remm,ent ryalem, aM they been twpmded with an analysis whkb is
mmcaelf ycnt review. UnderNecuvemecbeduk. the Cirywtll make apuymentffJR 17wre2 lisYsuwamthis
liability. Thu ImymemwiBmcremeby 6°b fm ml,remainingywumil itinpaitl oRin FY2All with apaymmt of
$5.690,516.
Ex
According to
o the MSRS analpis, Rwe had exrended its paymau scbedul< be NhrY Yema m its, bcghming of the final Year,
vvnmtYem Payment wouwbe 51,949,95], approximemlY$OS,000Iess NanGaauwlY a. Arcual NmwseswwWbe3°/q
�Neehro we,bet tartesse0 ymbjxt Fiew pawns Maim
oils mwuntofH$90,95h.
Ahin 1themmcb l<onine30 ear scheess weer the ainiprymemdiH less
els uwotthnoting Nat Nepaymentkehll
assets in FYJA I] order a nine 30 year ecM1ednk would be ehnost E2.0 million Iw Nan is required uMet On, catrem echMule.
AIMag"fytembu
As clan bnm Ne s ti encs, ins bre Wxt aMenmge a a new amottimtion suhMub would be to rMow the manual
Poymenb requb i over the met 19 yeate. In te been yeas dice aurrnt schNuk, payment will im'.reme, by$200,000to
SJOO.000 aonuaBy. withsignifcanttxmmimplirationa. IneWition.uroMiugehe pays<mschedwe mar elw allow
(WCCM'D
ad Tl time forsheacluarisl vaWe mWmmkavelue oflhe City'etetiremmtaccouneabouomemme clwety JignM.
NIXTPAtB) !�
Depmuuwl Heed
Manager's Comments:
CityMallow
Asmduted toformatim: Order, Lelkr from MSRS, AmortizationSchedWes, Ld"Io MSRS
Budget Approval:
pylar¢ Director
Legg Approval• I '�-
Ut£FCCity SoRtit
Iu4odneed for
X Pmsage
_First Reading Page —of_
_Referral
COhDNE1VTARY CONT'D.
At Nepreernt time, Ne mmketvaluc of au city's store of Ne Pleni nsaebu ssgnitiouttY ponor Nan Ne wast al value, the
towaown uaaaw, ,oioe Ne,NuodM lNbiliry. ihiadiRafnaon of9 ntlwexkntmwnt NeimamWnuo(
reretirementsystem Mvaexcealau Ne than this. o(return of5%wmil1Y. In recant Y+ata. however. the
reNement systemhazperkrme]muchbemrNentbu.
Herta gaion over and above maumption, however, are nm couit aw l by an acmaim until the Invesbnenl is sold sod the (oda
an imdred At that pom, Ne mom oat suit is wool n do ataniug Point for mrvmed taborsovesanem ream¢ a S%.
Unless bum r on a, begin to all below the 8%level, it is a nnotba to concade that the current suawtol value of City's
share of plan assets tewln in an ovmWkmw of Our unfunded liability,
Dkmbosfiaga
fbe moazs�azifinaut�F ddiv nage of waning our amartiutioo acheduk u Net over an additiaul time it will oat as Ciry
mmaioSoNabodinga dpresmtwiluelmms.Uoderthe cummemse this
Ciry will paYaboutn auseliov ovadounxt
19 yema. BxWMing Peymeias overaaof 30 ycOu about
iodwnl Nmeme Nu samb 892.8 miWon. OnaprautvaNe bazis,we
euimem NazNu reprcaew an iocreaeeo(ahout 52.5 million.
Bn n
Iwaahlre asSno Net Nems Spoe . This wscoffllPursue exWMingthe mnmtimtian Art ho icofOur unfunded Ibbniry
wiNNemotive StlW Ii emanating au This will mitipWn ispo bin iocnauawefce will Menest 19 Peen NomcurteM
mortuamon Nusrolu<ingNsai®tificwimpem in VroPolYtaxes Nis soluble will require. Uaddidon,abaub Ne
umktt and xlanrial valva of attt W become mate closely eligmd, avd Ne mnud 8%mk oI ream bawd on current mmktt
vilue beachieved, arksding NeemoNviion period may ilbw ua m"ceptwe"tomeofWisvalue,oBaellivg wmeo(om
Pmlxttdcron.
N O a.to emceed, we mum seek approval from an Meat SMBetirwenl SYSWm's Boar] of Trvflas
98-316
Mmped to Councilor Tyler July 27, 1998
CITY OF BANGOR
(TITLE.) Mrllff Authoriziog Staff to Purace Extending the Amortization Period for We City's
Unfunded UabEfty in the Msiae Slate Mremeot System
By to City Council oft Qty ofBanyor:
ORDERED,
TnT City staffis hereby authorized b pursue extension of the cmtemt
emonization period for the City's unfunded liability in the Maine State Retirement System.
Extending the amourruss o t poriod to thirty years is approved.
IN. CITY COUNCIL 98-316
July 27, 1998 O R D E R
Motion for Passage made 6
Seeonded
Passed Title, Authorizing Staff To Pursue Ex-
tending the Amortization period for the
City's Unfunded Liability in the Maine
p $fSfeQetlieNevL$ysfem
CITY CLERK
........y.�^N.(l....y...N/./.^.r..�..,.,..(/...
W dt
......... .Ty, I.........
man
Councillman
MAINE STATE RETIREMENT SYSTEM
Kx R H,Ell,, 81m1UreOlrecw,
Gell Dalin Wtl9M1l. C&0fDv;UUDreW'
June 3, 1998
Ronald 1. Heller, Finance Director
City of Bangor
73 Harlow Street
Bangor, ME 04401
Dear Mr. Heller:
98-316
SOURS OF TRUSTEES'
DWdS. Wakalb,aw
JMn H. Khbal,V GUY
EmwCoeugyne
EunlwCMon
GwrM.Unim on
w&MEe
hoawx&MwLwgHn
DaieuwEawT EF W
Sou, i avu
Enclosed with this letter is a copy of the actuary's letter with comments regarding a
change to a 30 year amortization period from July 1. 1998, for the City of Bangor. Also
enclosed are two amortization schedules. One schedule is on the basis of the current
remaining 19 year smortization period from July 1, 1998, with annual payments increasing
at 6% per year. The other schedule is on the basis of an extended amortization period of
30 years from July 1, 1998, with annual payments increasing at 3% per year. It should
be noted that the extended amortization Period would result in an increase in total
payments by the City of Bangor of more than 25 million dollars as compered to the present
19 year schedule.
if the City of Bangor wishes to request that the amortization period be extended to
30 years from July 1, 1998, the next step in the process is for the City to submit a written
request to the MSRS Board of Trustees from a person at the City who hes authorization to
Submit such a request. The Board would expect an authorized representative from the City
of Bangor to attend the Board meeting at which the request would be considere! by the
Board.
The MSRS Board of Trustees meets on the second Thursday or each month. The
first meeting that this item could be Scheduled for would be the July 9, 1998 meeting of
the Board. Please include the meeting date in the letter of request for consideration.
If you have any questions, please contact me.
RWM/r
cc: Kay R.N. Evans, Executive Director
Sincerely.
Robert W. Mellor, Director
Actuarial Coordination and DC Mans
FAX
JUN 5 1998
Annual Amorfisafion of City 1N96-316JAL
Under Existing and Proposed 30 Year Schedules
FY
30 -Year
Schedule
Current
Schedule
Difference
PV 30 -Year
Schedule
PV Current
Schedule
PV
Difference
1999
1,949,853
1,995,036
45,183
1,848,202
1,891,029 42,827
2000
2,008,349
2,114,736 -
1063387
1,804,406
1,899,990 95,584
2001
2,068,599
2241,636
173,037
1,761,647
1,909,008 147,361
2002
2,130,657
2,376,120
245,463
1,719,902
1,918,044 198,142
2003
2,194,577
2,518,680
324,103
1,679,146
1,927,129 247,982
2004
2,260,414
2,669,820
409,406
1,639,356
1,936,276 296,920
2005
2,328,226
2,829,996
501,770
1,600,508
1,945,443 344,935
2006
2,398,073
2,999,796 1
601,723
1,562,582
1,954,664 392,082
2007
2,470,015
3,179,784
709,769
1,525,554
1963928 43$374
2008
2,544,116
3,370,560
826,444
1,489,403
1,973,229, 483,826
2009
2,620,439
3,572,796
952,357
1,454,109
1,982,582 528,473
2010
2,699,053
3,707,164
1,088,111
1,419,652
1,991,9]8 572,326
2011
2,780,024
4,014,396
1,234,372
1,386,011
2,001,420 615,409
2012
2,863,425
4,255260
1,391,835
1,353,167
2,010,906 657,739
2013
2,949,328
4,S10,581,561,244
1,321,101
2,020,434 �' 699,333
2014
3,037,807
4,781200
1,743,401
1,289,795
2,030,010 740215
2015
3,128,942
5,068,092
1,939,150
1,259,232
2,039,636 780,404
2016
3,222,810
5,372,172
2,149,362
1,229,392
2,049,300 819908
2017
3,319,494
5,694,516
2,375,022
1,200,260
2,059,018 858,758
2018
3,419,079
(3,419,079)
1,171,817
(1,171,817)
2019
3,521,651
(3,521,651)
1,144,049 1
1(1,144,049)
2020
ii 3,627,301
(3,627,301)
1,116,939
1 (1,116,939)
2021
3,736,120
(3,736,120)
1,090,4]1 ':
(1,090,471)
2022
3,848,204
11(3,848,24)
1064,631
, (1,064,631)
2023
3,963,650
(3,963,650)
1,039,403
(1,039,403)
2024
4,082,559
(4,082,559)
1,014,78
(1,014,772)
2025
4,205,036
(4,205,036)
990,725
(990,725)
2026
4,331,187
(4,331,187)
967,249
{ (967249)
2027
4,461,123
(4,461,123)
944,32
(944,328)
2028
4.59C956 956
4 594,95Q
1 921950'1
921 950
Tatele
92765067
67 5 40
541272
40009760
37.504.024' 2 05736
98-316 y('
II
Proposed
Existing
Discounted
Tac Rete
30 Year
Schedule
Difference
Di9'eratce
Difference
1999
1,949,853
1895,036
(45,183)
(42,827)
($0.03)
2000
2,008,349
2,114,736
(106,387)
(95,584)
($0.08)
2001
2,068,599
2,241,636
(173,037)
(147,361)
($0.13)
2002
2,130,657
2,376,120
(245,463)
(196,142)
($0.18)
2003
2,194,577
2,518,680
(324,103)
(247,982)
($0.24)
2004
2,260,414
2,669,620
(409,406)
(296,920)
($0.30)
2005
2,328,226
2,829,996
(501,770)
(344,935)
($0.37)
2006
2398,073
2,999,796
(601,723)
(392,082)
($0.44)
2007
2,470,015
3,179,784
(709,769)
(438,374)
($0.52)
2008
2,544,116
3,370,560
(826,444)
(483,826)
($0.61)
2009
2,620,439
3,572,796
(952,357)
(528,473)
($0.70)
2010
2,699,053
3,787,164
(1,088,111)
(572,326)
($0.80)
2011
2,780,024
4,014,396
(1,234,372)
(615,409)
($0.91)
2012
2,863,425
4,255,260
(1,391,835)
(657,739)
($1.02)
2013
2,949,328
4,510,572
(1,561,244)
(699,333)
($1.15)
2014
3,037,807
4,781,208
(1,743,401)
(740,215)
($1.28)
2015
3,128,942
5,068,092
(1939,150)
(780,404)
($1.43)
2016
3,222,810
5,372,172
(2,149,362)
(819906)
($1.58)
2017
3,319,494
5,694,516
(2,375,022)
(858,758)
($1.75)
2018
3,419,079
3,419,079
1,171,817
$2.51
2019
3,521,651
3,521,651
1,144,049
$2.59
2020
3,627,301
3,627,301
1,116,939
$2.67
2021
3,736,120
3,736,120
1,090,471
$2.75
2022
3,848204
3,846,204
1,W,631
$2.83
2023
3,963,650
3,963,650
1,039,403
$2.91
2024
4,082,559
4,082,559
1,014,772
$3.00
2025
4,205,036
4,205,036
990,725
$3.09
2026
4,331,187
4,331,187
%7$49
$3.18
2027
4,461,123
4,461,123
944,328
$3.28
2028
4,594,956
4,594,956
921,950
$3.38
Tocols
92,765,067.
67,352,340
25,412,727
2,505,736
$18.69
98-316
CITUna/�OF
G RINE nwwawemEET
...,.1VVVV/ B.WOM,rYIXE INWH
FlHANCE OEPARTAA M TEt.E01966'4400
Rmlek I. HNbr
France Olroebr
June 25, 1999
Mr. Robert W. Mellor, Director
Actuarial Comdimad on and OC Plans
Maine State Retirement System
46 Smte House Station
AugMa, ME 04333-0046
Dear Mn Mellor
Thank you far your letter of June 3rd, which accompanied the county's report Our timing, however, is
unfortulmte. Our budget cycle, as you may know, has recently been completed, and so itis too late to
make then necessary adjustments to our plans.
We would, however, like 0 pursue making the change to a 30 year amorlilation schedule at the
beginning of our rent fiscal yea, on July 1, 1999. Prior an that however, we need to have the change
mvieweat by our city council. For discussion purposes, we will use the numbers generated by your
actuaries, although we realize that they will change somewhat because of the timing difference.
1 will contact you when we are ready to proceed with a formal request to your boar. Once again, I
than: you for your assistance in this matter.
Sincerely,
RonaldRonald el
RIH:tbr
cc: Ed Basttlt