The Shakopee Fire Department Relief Association (SFDRA) approved an amendment to the Association's bylaws at their member meeting on March 25, 2024.  In order for the bylaw amendment to become effective, it needs to be approved by the City Council.  The bylaw amendment becomes effective upon City Council approval with the pension benefit increase effective April 15, 2024.  The bylaw amendments are in coordination with the voluntary dissolution of the relief association.

The bylaws are attached showing the proposed amendments.  Appendix A and Appendix C of the attached bylaws includes a summary of the changes and also a history of bylaw amendments.  The yellow highlighted areas of the bylaws are the areas that are changing.

There are three changes incorporated in the bylaw changes.

1) Request for a change in the pension benefit level.

In 2017, the council adopted a guideline for approving benefit increases for the SFDRA.  The goal of the guideline is to ensure the SFDRA assets are sufficiently funded compared to the liabilities before requesting a pension benefit from the council.  The guideline helps ensure that no additional city contribution is required to fund the pension benefit increase request.

Below is a recap of the pension benefit guideline.

The recommended FCP and corresponding per year of service pension benefit percentage increases are as follows:

1. FCP less than 112% - no increase

2. FCP 112% or greater - 3% increase

3. FCP 117% or greater - 4% increase

4. FCP 122% or greater - 5% increase

5. FCP 127% or greater - 6% increase

The guideline also further stipulates the actual dollar amount increase would be rounded to the nearest twenty-five-dollar increment. Based on the Funding Coverage Percentage (FCP) of 126.4 percent as of December 31, 2023, the SFDRA is requesting an increase of 5 percent or $550 per year of service, bringing the total yearly pension benefit to $11,375

2) Change in definition of "years of active service"

A proposed change to the calculation for computing benefits from completed years or service to completed months of service.  This change is necessitated by the dissolution of the association to provide a credit for active members who have completed a partial year of service.  The benefit payout will be based on full months of completed service.

3) Increase in Fire Relief Officer compensation levels

Included as Appendix D an increase in compensation levels is proposed for Fire Relief Board members to account for the additional work related to the dissolution and distribution of the fire relief association and pension plan.