Finance Highlights 2011 1202 - Laserfiche WebLink

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PLAN OF FINANCING General The Bonds are being issued to: (i) refund the City's obligation to PERS with respect to the "side fund" obligation of its public safety plan evidenced by the PERS Contract and (ii) pay the costs of issuance of the Bonds. Refunding of Obligations Under the PERS Contract City Pension Plans in General. PERS maintains two pension plans for the City, a Public Safety Plan (the "Safety Plan ") and a Miscellaneous Plan (the "Miscellaneous Plan" and, together with the Safety Plan, the "PERS Plans "). The City contributes to PERS amounts equal to the recommended rates for the PERS Plans determined by the PERS actuary multiplied by the payroll of those employees of the City who are eligible under PERS. See "THE CITY'S PENSION PLAN" below for additional information. The City is not refunding any other of its obligations with respect to the Safety Plan or the obligations of the City with respect to the Miscellaneous Plan with proceeds from the sale of the Bonds. Side Funds in General. Since the June 30, 2003 PERS valuation, when a pension plan has less than 100 members, PERS includes such members in a risk pool with other public agency plans. When a local agency enters a risk pool and has an existing unfunded actuarial accrued liability (the "Prior UAAL "), the Prior UAAL is put in a side fund (the "Side Fund ") for the individual agency to pay outside the risk pool. The Side Fund functions like a loan. The loan repayment schedule to pay off the Prior UAAL is developed by PERS: the loan is amortized over a fixed number of years at the current interest rate of 7.75 %. The City's Side Fund. The Safety Plan has a Prior UAAL in a Side Fund. The Miscellaneous Plan does not have a Side Fund. Purpose of the Bonds. The Bonds are being issued solely for the purpose of refunding the Prior UAAL of the City's Safety Plan which has been placed in a Side Fund. The City will pay off its Safety Plans Side Fund balance with proceeds of the Bonds. Based upon "pay -off' letters provided by PERS, the lump sum payment due with respect to the Safety Plan Side Fund on 1, 2012 is $ ]. [CONFIRM - TO COME FROM PERS]. See "CITY'S PENSION PLAN." The PERS Contract is an absolute and unconditional obligation imposed upon the City by law, and is not limited as to payment from any source of funds of the City. Upon the refunding of the PERS Contract with the proceeds of the Bonds, the City's obligation with respect to Bonds will also be an absolute and unconditional obligation imposed upon the City by law, and will not be limited as to payment to any special source of funds of the City. See "SECURITY FOR THE BONDS" and "JUDICIAL VALIDATION." 3