8K Consent 2017 0306 - Laserfiche WebLink

Home

File Number: 17-093 Cutter’s 2015 State of the City Address as a serious issue of concern. A series of meetings subsequently took place, followed by review and discussion by the Finance Committee on June 16 and July 21, 2015. On September 21, 2015, the City Council adopted a Prioritizing Unfunded Liability Liquidation (PULL) Plan with a 5 - year goal of allocating $5,000,000 toward reducing unfunded liabilities. In addition, Council directed staff to use the following criteria as a financial policy to assist in meeting the PULL plan goal of $5,000,000 and addressing the City’s unfunded liabilities to the maximum extent possible: 1. Pay 100% of the Annual Required Contribution (ARC). 2. Direct up to 50% of all annual General Fund carryover toward the PULL Plan. 3. Direct up to 50% of all General Fund land sales toward PULL Plan. 4. Review the 20% emergency contingency fund target with financial advisors and bond counsel toward a goal of 16.6% with any excess funds allocated to meet PULL Plan goal. 5. Create a separate San Leandro trust for the PULL Plan. 6. Provide an annual report to the City Council and Measure HH Oversight Committee on PULL Plan progress. The City Council has also responded to mitigate the City’s growing pension liability by taking the following actions. First, the City has paid the full annual required contribution (ARC), as determined by the actuaries each year. Second, the City Council approved a $24 million refinancing of pension liabilities, which accrue interest cost at the rate of 7.5% per year, with General Fund-backed debt that accrues interest at approximately 4%. Third, the City Council negotiated new labor agreements that require all staff to contribute up to 9% of salary to offset the growing pension cost. These employee contributions were subsequently phased-in, beginning in 2013. Fourth, the labor agreements created an additional pension tier for new employees hired after May 2010, which increased new employees’ contribution rates and reduced their defined benefit by 20 percent. Lastly, it is important to note that the City of San Leandro provides its employees with a retiree health care plan that is relatively modest in scope. This prudently structured plan has served to reduce the long-term financial liabilities associated with providing the benefit. The State of California also has offered some relief by passing the Public Employees’ Pension Reform Act (PEPRA). As a result of this legislation, employees hired after January 1, 2013 pay at least 6.75% of salary toward their pension, must retire at an older age, and will receive a reduced defined benefit. Existing “classic” CalPERS members (enrolled prior to January 1, 2013), are not subject to most of these changes imposed by PEPRA. In May 2014, CalPERS notified the City of a “pension surcharge” to its Safety Plan due to a formula change implemented by CalPERS. The Pension surcharge was estimated to be approximately $1.15 million annually. In May 2015, City staff appealed to CalPERS and received an alternative payment option, which would reduce City Public Safety Plan pension contributions during the next three years and produce present value savings over the next 30 years. This option was discussed at the Finance Committee meeting held in June 2015. The Committee determined that the extra payments in the years after the first three years to be too high, and instead recommends extra payments in the next five years if Page 2 City of San Leandro Printed on 2/28/2017 172