Memo for fiscal year 2017, updated 2016-03-22

[Archived] Are there other components of the remaining $889,839 of spending within the Pension Administration area that can instead be funded by the applicable pension funds?

The Pension Administration budget totals $889,839, of which $683,957 is funded as a retirement expense. This amount is an estimate of the time spent by Pension staff actively managing the pension, including the evaluation of actuarial assumptions and investment and allocation activities. The estimated direct costs are included as an administrative fee and charged as a payroll expense to Departments for employees that are participants in that pension plan. This cost allocation strategy has been executed for the past 10 years and enables the cost of administering the pension to be more accurately distributed across the City’s Departments.

The remaining $205,882 is not considered a direct pension administration cost. This amount covers retirement planning and employee counseling as well as office supplies. Each year as part of the budget development process, staff recalculates the eligible expenditures and adjusts the administrative fee. This includes reviewing the IRS regulations, the plan documents and applicable accounting rules. It is important to note that increasing the administrative fee to cover these direct costs represents an allocation of General Fund costs to the appropriate  City program, as their personnel budgets would need to be adjusted to pay those costs.  There would be no overall savings to the City’s General Fund budget.

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