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Finance Commission Minutes February 14, 2017 – Draft Minutes Page 7 of 8 Finance Director Miller stated Legislature has to change the rate and has historically happened 271 once every 4-5 years and this is currently 6.75% for employees in coordinator plan and is 12.5% 272 for police and fire and the percent is a little less for employees. 273 274 Commissioner Murray stated the documents state legislature has set the expected rate of return at 275 8% and the City has this at 7.5%. This creates a funding gap but it looks like the fire fund is 276 overfunded. The long-term expected rate of return rate for pension funds is typically 6.9%. He 277 stated there would always be a funding deficit unless the market changes significantly. He asked 278 if the $34 per month contribution rate for firefighters was a set amount or if this was adjusted for 279 inflation. 280 281 Finance Director Miller stated this is a fixed amount and this is established by the City Council. 282 The City Council can change this contribution rate. 283 284 Commissioner Murray stated the legislature sets the rate the City contributes and the actuaries 285 come up with they are going to pay out and the earnings rate. The City has no control over these 286 amounts. He suggested when the City has a contract with the unions or City employees that 287 there is language that states the City would contribute to their PERA fund but what the employee 288 gets out of the fund is between the employee and the PERA. 289 290 Finance Director Miller stated this couldn’t be included because the City cannot supersede State 291 law. State law covers the employees and only it dictates what employees get. There is an 292 unfunded liability of $12million to account for the funding gaps. 293 294 Commissioner Bachhuber stated the State has created the rules that creates the unfunded balance 295 for the City. 296 297 Finance Director Miller stated State law does not allow the City to leave this pension plan. 298 299 Commissioner Bachhuber stated the actuary assumptions have nothing to do with what will 300 actually be paid. 301 302 Commissioner Zeller stated the City can start setting aside funding for this since they are aware 303 that it will be coming due in the future. 304 305 Chair Schroeder suggested the Commission review this fund annually. 306 307 308 Identify Discussion Items for the Future Meeting 309 310 Chair Schroeder stated prior to the next meeting the Commission will have the tour of the 311 maintenance facility. Finance Director Miller will verify the time. The comment card needed 312 more time and will be reviewed in March. The March agenda will also include the investment 313 portfolio performance review and discussions on the tracking report. There may be a new 314 Commissioner identified by the March meeting. 315