R97-120 AUTHORIZING ADOPTION OF IMRF

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FINANCIAL MANAGEMENT MEMORANDUM #97 -23 August 12, 1997 TO: The Honorable Mayor and City Council Members FROM: James L. Williams,� ., City Manager Beth B. Couter, Director of Financial Management �'j� SUBJECT: IMRF Early Retirement Incentive(ERI) Governor Edgar has signed into law the Illinois Municipal Retirement Fund (IMRF) Early Retirement Incentive (ERI) program allowing municipalities to offer early retirement to eligible employees. This law provides for each municipality to decide at the local level whether it will authorize the ERI to its IMRF city employees who have worked for the municipality at least 20 years and are at least 50 years old. IMRF identified 35 City of Decatur IMRF members who would be eligible for this , program. The City distributed a non-binding survey to determine how many of the eligible I employees would be interested in the program. Twenty-five employees either answered yes to the survey or did not reply. Ten employees have either retired before the program could go into place, or are not interested in taking early retirement. Of the 25 employees who could take early retirement if the Council authorizec� it, 11 employees are already eligible to retire, and 14 would become eligible for retirement due to this program. IMRF has provided an estimate of the first vears savin�s of$129,000 to the City if the ERI program was authorized by the Decatur City Council. The estimate calculates the cost of providing enhanced retirement benefits for those employees choosing the ERI, and nets it against the resulting payroll savings by hiring new employees at lower pay rates. Our IMRF representative has stated IMRF's actuaries will only estimate the first year's financial impact. The savings decrease each year during the ten year amortization period for the ERI, and in the last few years there may be more costs than savings to the City, as those employees who took early retirement would have retired anyway by that time at a lower cost to the City without the ERI. Attached is a resolution provided by IMRF authorizing the ERI to go into effect September 1, 1997.