DATE: November 21, 2017
TO: Board of Mayor and Aldermen
Budget & Finance Committee
FROM: Eric Stuckey, City Administrator
Kristine Tallent, Assistant City Administrator/Chief Finance Officer
SUBJECT:
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Consideration of an Extension to Contract No. 2011-0118, a contract between U.S. Bank and the City of Franklin for Custodian Relationship Relative to the City of Franklin Pension Plan (11/30/17 Budget & Finance 4-0)
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Purpose
The purpose of this memo is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning a proposed extension to the contract with the current custodian for the City’s Pension Plan.
Background
On October 3, 2011, the City entered into a contract with U.S. Bank to provide custodian and certain administrative functions for the City’s Pension Plan. Administrative services included monthly remittance of payments to retirees and preparation of monthly and annual IRS reporting. The contract called for a three year term with options for two additional years, expiring in October 2016.
In October 2016, the Board of Mayor and Alderman voted to transfer certain administrative functions, including investment management and custodianship of assets under management, to the Tennessee Consolidated Retirement System “TCRS”. At that time, TCRS indicated the option for the City to transfer administrative services related to payment of retirees. The initial advisement from TCRS was a January 1, 2018 effective date. TCRS currently advises an effective date of April 1, 2018. Staff recommends continuing the reduced level of custodial services with U.S. Bank until that time in which monthly administrative payment services are transferred to TCRS.
Financial Impact
U.S. Bank has proposed an increase in the minimum annual fee by $2,500 from $5,000 to $7,500. The fee per retiree payment is proposed to increase from $1.75 to $3.00. Assuming 180 payments per month, the monthly increase is $225, a rise from $315 to $540.
Recommendation
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Staff recommends extension of Contract 2011-0118 with U.S. Bank for services relative to the City of Franklin Pension Plan.