2003-09-15_Minutes--Procès-verbal
September 15,2003
Minutes of the Committee of the Whole Meeting Open to the Public,
Monday, September 15, 2003, 5:00 o'clock p.m.,
present
Mayor McAlary
Deputy Mayor White and Councillors Ball, Chase, Court, Desmond, Fitzgerald,
Fitzpatrick, Teed Titus and Trites.
- and -
Messrs. 1. Totten, City Manager; J. Nugent, City Solicitor; Andrew Beckett,
Commissioner of Finance & Corporate Services; P. Woods, Common Clerk and
Deputy City Manager, and Ms. E. Gormley, Assistant Common Clerk.
Other staff members present during the meeting were: J. Baird, Commissioner of
Planning and Development; W. Edwards, Commissioner of Buildings and
Inspection Services; R. Simonds, Fire Chief; C. Cogswell, Chief of Police; A
Bodechon, Deputy Chief of Police; P. Groody, Commissioner Municipal
Operations; S. Galbraith, Director of Works; B. Malone, Manager of Planning &
Policy, Police Department, P. Hanlon, Manager of Water & Sewerage Services,
and Ms. S. Greer, Communications Officer.
1. MeetinQ Called To Order
The Mayor called the Committee of the Whole meeting to order and offered the opening
prayer.
1 A. Proclamations
The Mayor proclaimed the day of September 21,2003 as a "Day of Peace", and the
week of September 14th - 20th, 2003 as "Think Pink Week" in The City of Saint John.
Councillor Trites raised the point that there were other agenda items scheduled for this
date other that the budget item, contrary to the recommendation made on August 18,
2003 that every second Council meeting would be set aside almost exclusively for
budget deliberations. He also pointed out that MLA's were to be invited to this meeting,
and expressed his disappointment that this was not done.
Introduction of Presentations
The City Manager gave an introduction on the presentations for the meeting, which will
be accompanied with slides: City of Saint John Employee Pension Plan and the City's
2004 Operating Budget, and outlined the manner in which the presentation would
proceed. He noted that he will be looking for direction from Council at the end of the
presentation as to what it sees as the next steps; what further information it requires if
any; and from which Departments it would like to hear. He pointed out that he has
submitted recommendations on both issues for Council's consideration.
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September 15,2003
Mr. Totten noted that the submitted Operating Budget is the same one that was
presented to Council on December 16, 2002 for the years 2003, and 2004, the 2003
budget having been approved, and that the submitted 2004 budget is the one from which
the City has been working, maintaining the same tax rate of $1.725. He explained
further that there were some assumptions in the 2004 budget:
1. That the unconditional grant would be frozen at $19,120,000., with no
indication that this will change;
2. That the tax base growth would be 2.25%, a fairly good estimate with the
possibility that it could be slightly higher;
3. That there would be no significant change to the service level, and
4. There would be no additional funding for Pension Plan Deficit.
Noting the pension deficit funding, unconditional grant funding, the Police Commission's
requirements and alteration of service levels as outstanding problematic issues, Mr.
Totten called attention to significant changes that occurred in the last nine months:
1. Loss of a major tenant at Harbour Station - $175,000. to $200,000.
2. Delays and changes to staffing alignment in the Fire Department - $200,000.
3. Reinstatement of lifeguards and perhaps services at Mispec Beach - $50,000.
4. Other operational issues/shortfalls - $100,000. to $150,000.
2. City of Saint John Employee Pension Plan
Mr. Beckett advised Council that the slide presentation is essentially the same as that
delivered on September 8th, which outlined the funding of the Pension Plan, legislative
requirements and options for considerations. He noted that the issue is complex and
that he would be providing more detail and would address questions after the
presentation. He pointed out that the City's Pension Plan is funded with contributions
from employees of 8.5 % ($3,700,000), and from the City of 7.5% ($3,300,000), the
City's contribution being .5% higher than the legislative requirement with this amount
contributing to funding the Plan deficit which is a further legislative requirement. Mr.
Beckett informed Council that the annual pension payment is approximately
$15,000,000. per year with the average annual pension being approximately $21,600.
Reference was made to the results of the December 21, 2000 Actuarial Review and the
Actuarial Report prepared by Morneau Sobeco in August, 2003. The results provide the
three basic measures that have a direct impact on how we proceed with the Plan: going
concern valuation (surplus of $24,000,000); solvency valuation (surplus of $8,000,000.),
and current service costs (16% of payroll) as at December, 2000. The most recent
assessment indicates that the going concern valuation is a deficit of $46,163,700.; the
solvency valuation is a deficit of $75,149,800., and the current service cost is 15.72% of
payroll. Mr. Beckett listed the Employee Pension Plan Legislative Requirements under
the Pension Benefits Act as follows: The going-concern deficit must be funded over a
period not to exceed 15 years; The solvency deficit must be funded over a period not to
exceed 5 years (Superintendent of Pensions currently has some flexibility to extend this
period); and The City Pension Act requires that current service cost in excess of
employee contributions must be fully funded by the City. The Actuarial Report noted that
there is a high incidence of disability pensions approved compared with "industry"
average, 28 vs. 8, adding $3 million to the Plan's liability. Mr. Beckett recommended
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Public Committee of the Whole
September 15,2003
that the Pension Board of Trustees examine this issue and report its plan to ensure that
this high incidence is addressed for the future.
The options to address the funding deficit presented for consideration were:
1. Seek changes to or exemption from legislated funding requirements.
2. Decrease benefits provided under the Pension Plan.
-eliminate future indexing (would decrease the deficit by 28.9 million);
-eliminate early retirement option ( eliminating this option immediately
would decrease the deficit by 35.5 million, while eliminating the early
retirement option in 3 years time, rather than immediately would
decrease the deficit by 20 million). Either one of these changes would
resolve the funding issue and satisfy the legislative requirements.
3. Increase contributions into the Plan.
4. Some combination of the above options.
Mr. Beckett noted that if indexing were eliminated as an option and a review were to be
completed in a year's time, whereby the Plan is found to be in a more positive position,
indexing could be re-instated.
The recommendation submitted by the City Manager is that Council send a letter to the
Superintendent of Pensions asking for a ruling on the extent to which elimination of
indexing provisions of the City's Pension Plan is acceptable under the provisions of the
Pension Benefits Act and that the Board of Trustees of the City of Saint John Pension
Plan be instructed to provide a report on actions that are to be taken with regards to
management of the disability provision of The City of Saint John Pension Act.
On motion of Councillor Trites
Seconded by Councillor Court
RESOLVED no further discussion take place on the
pension issue until September 29, 2003.
Councillors Teed and Chase questioned the need to delay discussions.
Question being taken, motion was carried with Councillors Teed and
Chase voting nay.
3. 2004 OperatinQ BudQet
Mr. Beckett referred to the submitted report on the 2004 budget noting that the total
budgeted expenditure of $93,133,590. was up by 1.66% over 2003, assuming a minimal
increase in non-tax revenue; the unconditional grant remaining frozen at the 2003 level
and a 2.25% growth in property tax base. He noted that the largest portion of the
$93,133,590. expenditure is with the Police Commission, and that Council will be
hearing from the Police Commission on September 29th
A chart was presented outlining dollars needed to balance the budget while maintaining
the tax rate up to 2014.
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Public Committee of the Whole
September 15,2003
The City Manager explained that he is presenting budgets every 2 years, the first of
which focuses on the numbers with the second concentrating on service gaps and public
perception. He advised that the 2004 budget figures are public and that the
Commissioners would have had occasion to review them and would be prepared to
present to Council.
The Mayor advised that anyone planning to request funding from Council should be
putting their requests forward during budget deliberations and not later.
The City Manager requested information and direction on Council's position on the "tax
rate"; if Council would like to hear from certain groups; other information Council needs
to make an informed decision on the 2004 operating budget, and specific areas on which
Council would like staff to focus with Councillor Trites responding that he would like to
see the Commissioners present their budgets in a binder format enabling Council to go
through them line by line during the Budget Deliberations every second Monday, and
Councillor Court adding that he would like to hear form Tourism and Parks and
Recreation specifically as it regards diversion of funding to maintenance of new
developments in the City.
The meeting adjourned.
Common Clerk