City gets

$2.7 million

windfall from

police pension

fund surplus

New law mandates

spending surplus

By CHRIS VETTER

Journal Staff Writer

NEW ULM -- The city of New Ulm has too much excess money in its police pension fund. And it must be spent.

While this situation may sound like a fantasy or a dream, New Ulm Treasurer Gary Gleisner insists it's true.

Gleisner presented a plan Tuesday to the city council for spending the $1.9 million surplus over the next 14 years. Including interest, the total dollar value will exceed $2.7 million.

"It's a windfall to the community," he said.

Gleisner explained that the surplus is accumulated pension money from 30 years of putting cash into the pension fund. In the mid-90s, all PERAs (Public Employee Retirement Association) contributions were consolidated into one fund. The Minnesota State Investment Board manages the funds, buying stocks and equities.

"The city had not paid any into (the pension) for several years," Gleisner said. "The market was kind."

Last year, the Legislature passed a law ordering that the surplus pension money be spent, Gleisner said. The money in the PERA account is based on what the city had of surplus in June 1999.

Gleisner said he has worked on the plan to spend the PERA money for more than a year. The council OK'd the plan Tuesday, and the proposal now heads to the state auditor's office for final approval.

However, New Ulm is limited in how it can spend the money, said Council President Dan Beranek.

"By law, we must spend this money on police-related or safety-related areas," Beranek said. "It can't be used on park and recreation activities."

For instance, the city pays $88,220 annually in debt service for the city portion of the Brown County Law Enforcement Center. The debt service will now be funded from the PERA money.

The money will allow New Ulm to hire an additional law enforcement officer. The town will spend between $16,000 next year and $60,000 in 2007 for additional law enforcement, with a portion of a new officer's salary paid for through a federal program.

The PERA cash also will pay for $160,000 in communications equipment, three new police cars by 2011, semi-annual training programs, firearm purchases and annual police software program improvements, according to city reports.

Councilor Denis Warta gave credit for the large pension surplus to past councils.

"This is a neat way to fund (the projects) without raising taxes," Warta said.

The city has held several meetings in the past year to determine ways to spend the money so it is a long-term investment into the community, Warta added.

The move to spend the surplus pension money will not effect existing police pensions, Gleisner said. That money is already set aside for officers when they retire.

Now that these future spending items -- many of which the city would have purchased regardless of the PERA windfall -- are funded with pension cash, it will free up budget funds for other expenses.

"Any of those expenses, we wouldn't make unless they were important," Warta said.

TIF delayed

In other news, the councilors delayed a public hearing on a tax-increment financing district.

Brian Tohal, New Ulm Economic Development coordinator, told councilors that a planned new facility for MTS Automation will be larger than expected. The company, which produces precise motors for electronic equipment, plans to build a 75,000-square-foot facility, rather than its original plans of a 60,000-square-foot site.

"It's because the company is anticipating larger growth in New Ulm than they originally thought," Tohal said. "Their desire is to bring additional work to New Ulm, which means additional jobs."

The larger facility means an increase in TIF dollars from $300,000 to $350,000, Tohal said. The project will not move forward without the TIF district, he added.

The company has about 65 employees right now, Tohal said. Its current headquarters is a 29,000-square-foot facility on South Bridge Street near Hy-Vee.

The location of the new site also must be slightly modified. It will now be moved closer to North Broadway on 21st Street North.

Environmental

learning center

Dr. Laurel Gamm presented a proposal for an environmental learning center. The non-profit center would feature a mini-golf course, where children and students alike would learn about the environment across the state.

"Each hole would focus on an environmental issue that is pertinent to that area," Gamm told councilors.

The center, which Gamm hopes to open by 2002, would be placed on city property on 20th South and Valley streets. City officials have been instructed to work with Gamm on a lease agreement for the space.

Gamm said the center, with its proximity to the Minnesota River, could use the water source as a "living lab."

Several councilors raved about the proposed golf course/learning center.

"I think it's a marvelous program," said Councilor Joel Albrecht. "It will enhance the gateway to that end of town."