Courier Staff Writer
The city must increase its contributions to police and fire retirement funds next year, throwing more than $1 million into the fund.
Finance Director Bob Jay said the city’s contributions to the Municipal Fire and Police Retirement System of Iowa (MFPRSI) will increase from 26 percent in fiscal year 2013 to 30 percent in fiscal year 2014.
Councilman Jeremy Weller previously told the Courier that he has concerns about how much the city must contribute to MFPRSI.
“The city is responsible for all 4 percent of that increase,” Weller said.
For example, if an officer makes $50,000 a year, the city must start contributing $15,000 into his retirement fund every year starting on July 1.
Take that times 41 police officers and 32 firefighters, and the city’s contribution will total more than $1.16 million every year starting on July 1.
“That’s a big chunk of money every year,” Weller said. “Maybe the contribution should be equal ... if they raise it 4 percent, let the employee take on some of that burden, also.”
The rate structure is determined by Iowa Code Chapter 411, which states that its Board of Trustees — which is comprised of firefighters, police officers, city treasurers, city financial officers, city clerks and citizens — determines the contribution rates.
“The rate specified for the employees is set by the statute, currently at 9.4 percent of earnable compensation. The rate for the employer is established each year by the Board of Trustees following the completion of the annual actuarial valuation,” according to the MFPRSI.
According to the code, the city’s contribution rate can never drop below 17 percent, and the employee’s contribution rate can never exceed 11.35 percent.
Of the 40 percent of the employee’s retirement fund not paid by the state, 76 percent of that has to come from the city of Ottumwa.
This money is generated through the Trust and Agency tax levy, he said, which was kept flat this year at 7.053 cents.
“My intent was not to increase that this year and we were able to do that,” Jay said. “We’re in good shape for that. But we can’t do it continuously because costs are going up.”
While he said the city was able to keep this tax levy rate stable, the city still needs to be responsible since MFPRSI is “a big part of compensation for these employees that they rely on.
“But we don’t — I don’t — want to pass that on to taxpayers,” he said. “I just don’t think it’s the right thing to do.”
In fiscal year 2013, the city contributed $554,776 to the police retirement fund and $423,935 to fire.
The police contribution does not include civilians who work for the department; they are covered by IPERS.
In fiscal year 2014, the city has budgeted to contribute $646,796 to police and $514,266 to fire. That’s a more than $180,000 increase from the previous year.
“Those rates are set by somebody else other than us and we had to comply with them,” Jay said.
Gov. Terry Branstad recently told the Waterloo-Cedar Falls Courier that he would be interested in increasing what police officers and firefighters contribute to the fund.