Finance Highlights 2008 0729 - Laserfiche WebLink

Home

competent service to the City. The key areas of difference are the level of customer service and plan flexibility. Cal PERS is clearly a large and well established organization but tends to offer a "one size fits all" product. PARS, on the other hand is a smaller organization and promotes customer service as one of its key advantages. In addition, with PARS, the City can exercise some control over the operation of the plan. Consequently, given these factors, staff would like additional time to review each provider and then take a final recommendation, (selecting either Cal PERS or PARS) to Council (without returning to the Finance Committee) in September of this year. Or, if the Committee wishes staff could return to the Finance Committee in September with a final recommendation. Transition to Pre-Funding OPEB Obligation As noted above, Council has indicated that it wishes to pre-fund its OPEB obligation. Pre-funding means that the annual contribution will go from a pay as you go amount to an actuarially computed payment that funds both current costs and the unfunded portion. Presently, the pay as you go contribution is approximately $900,000 and the pre-funding contribution is approximately $1.4 million or $500,000 greater. This is a significant difference and increasing the 2008-09 operating budget by this amount presents a challenge. To mitigate the impact of such an increase, staff is recommending that $500,000 of the set aside funds of $1.5 million be used to subsidize 2008-09 pre-payment amount. Consequently, the $1.4 million actuarially determined ARC would be funded by the operating budget, $900,000, which is currently budgeted, and $500,000 from the funds set aside by Council in the Insurance Fund for the OPEB obligation. This would leave $1 million in the insurance fund for Council's future consideration. If the Committee supports the use of the "set aside" funds as recommended by staff, then staff will bring forward the necessary resolutions to Council to authorize the use of funds as approved by the Committee.