08-27-02 Personnel & Finance - Laserfiche WebLink

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Personnel and Finance Committee August 27, 2002 Page 6 Class rank. The State of Indiana should send$460,000 for pension relief to the city The Fire Department projects that ten(10) firefighters would retire next year;however he noted that there are forty-six(46) firefighters eligible to retire today which would cost$1,097,000. In response to a question from Dr. Varner, Tom Skarbek noted that in 2001, the City received "double pension relief payments" from the state in an effort to catch up in this area. They have invested some of this money which has resulted in some interest being earned. The funds are in fairly good shape for next year. Dr. Varner noted that each wage negotiations, the Council is advised that for every dollar added to the base of a 1st Class Firefighter it will cost x amount of dollars. He asked that the Controller's Office and/or the Fire Department prepare for the Council a clear explanation on how this is calculated so that everyone has a clear understanding of the cost. He added that all pension relief also be part of the explanation. He requested that this information be provided in writing within the next two(2) weeks. Police Pension Fund (Fund # 702) 2002 Revenue $ 4,361,277 2003 Revenue $ 3,889,051 2002 Expenditures $ 4,314,035 2003 Expenditures $ 4,522,453 Paul Niezgodski of the South Bend Police Department provided a handout entitled "South bend Police Pension Budget 2003" (copy attached). He stated that they are projected ten (10) police officers to retire in 2003; however sixty-two (62) officers are eligible to retire. The State of Indiana is starting a new "Drop Program" which he and Assistant Chief Switalski then briefly explained. They provided a handout entitled "Draft Explanation Materials for the Deferred Retirement Option Plan (DROP)-Indiana Municipal Police and Fire Pensions 2002 Senate Enrolled Act 60" (copy attached). The initial side effects of this program is that the City would have to budget for it. It becomes effective in 2003. At the request of Dr. Varner, the DROP program was summarized. If a firefighter or police officer has twenty (20) years of service and has reached the age of 52, he or she may enter the DROP program. One can be in the DROP program a minimum of twelve (12) months, or a maximum of thirty-six (36) months. When one enters the pension benefits and pension rate is frozen at that time. One would then take the number of months in the DROP program and then receive a lump sum payment, roll over, or installments. The trial program will be in place between 2003-2007, after which the state law will be reviewed. Sixty-six (66) are eligible to enter the DROP program. Florida has had a similar program in place. The amount needed to budget for DROP can be permitted above the fixed or frozen tax levy. In 2004, there will be a new line item in the budget for DROP. In the Fire Department, all firefighters eligible received the handouts. Dr. Varner suggested that the State Legislature should consider putting a cap on the eligibility in any one year for those wishing to participate. It was noted that in 1968, the state law changed the eligibility for retirement from 25 years to 20 years. In 2006, thirty-six (36) firefighters would be eligible for the program. Dr. Varner thanked all representives from the South Bend Fire Department and Police Department