ACTION REQUESTED:
Title
Communication from the City Manager and Finance Director with a Request to APPROVE an INTRA-CITY LOAN, from the City’s Other Post Employment Benefit Fund, to Pay the Remaining Illinois Municipal Retirement Fund (IMRF) EARLY RETIREMENT INCENTIVE, to be Repaid to the City’s Other Post Employment Benefit Fund Over Ten (10) Years, at an Interest Rate of Three Percent (3.00%), with the Final Payment to be Made January 1, 2032.
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BACKGROUND: As part of the 2022-2023 Budget staff proposed to borrow approximately $6,258,000 from the Other Post Employment Benefit Fund (GASB 45 Fund) to be repaid over the next ten (10) years at an interest rate of 3.00%. Whereas, the City’s GASB 45 Fund has funds available to be invested, staff proposes to borrow approximately $6,258,000 from the fund to be repaid over the next ten (10) years at an interest rate of 3.00%. If the Council elects to not approve the payment of the Early Retirement Incentive through the intra-city loan from the Other Post Employment Benefit Fund, the City is obligated to pay the balance of the early retirement incentive to IMRF at a rate of 7.25% over the next ten years. The issuance of a lower rate liability to pay off a higher rate liability is solid debt management and will benefit the taxpayers.
FINANCIAL IMPACT: Savings of approximately $1,600,000 in interest cost over the next ten years. The City will also realize additional interest earnings in the Other Post Employment Benefit Fund of approximately $1,000,000 over the next ten years based on the average interest rate of 0.47% currently being earned in the Other Post Employment Benefit Fund.
NEIGHBORHOOD CONCERNS: N/A
IMPACT IF APPROVED: The cost of the Early Retirement Incentive will be paid in full to the Illinois Municipal Retirement Fund; thereby, maintain the City’s required contribution rate at 10.33%
IMPACT IF DENIED: The City will repay the Early Retirement Incentive to the Illinois Municipal Retirement Fund over the next ten years including interest at 7.25%.
ALTERNATIVES: None
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Keep taxes and fees competitive.
2. Have an efficient government.
DEPARTMENT: Finance