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File Number: 21-350 <br />The City contracts with CalPERS to administer its pension plans. Pension costs are made up of <br />two parts including normal cost and unfunded liability amortization. Normal cost represents <br />service credits earned by active employees in the current year and is calculated as a percentage <br />of payroll. Based on the 2019 actuarial valuation reports provided by CalPERS, the normal cost <br />rates for Miscellaneous and Safety plans are expected to remain close to the 2020-2021 rates. <br />While benefits remain unchanged, pension contributions are expected to increase due to prior <br />year portfolio losses and changes in actuarial assumptions. Pension costs are projected to <br />increase by 9% in 2021-2022 estimated at approximately $21,600,000 for all funds. Please note <br />that the unfunded pension liability includes costs for firefighters who separated from the City when <br />fire services were contracted out. <br />Over many years, the City has taken proactive steps to buy down its unfunded liabilities. The <br />Finance Committee has been evaluating funding strategies for pension liabilities as the City’s <br />Other Post-Employment Benefits (OPEB) liability is adequately funded. The City Council directed <br />staff to establish a pension trust to mitigate rising pension costs and the proposed budget reflects <br />resource allocation for a $5,000,000 pension reserve. <br />Fire Contract <br />The 2021-2022 proposed budget for the fire services contract with the Alameda County Fire <br />Department amounts to $26,009,000 and this amount is expected to increase to $26,969,000 in <br />2022-2023. Estimated year-end savings are included in the budget resulting in slightly lower <br />amounts. The contract provides both emergency and non-emergency fire services in the City. <br />The 2020-2021 projected budget for contract services amounts to $25,578,000 before estimated <br />savings. <br />Transfers Out <br />Transfers out of $6,660,800 in 2021-2022 and $13,739,500 in 2022-2023 include General Fund <br />contributions to Capital Improvement Program projects, the Business Improvement District, the <br />Gas Tax Fund, Self-Insurance Fund, and the Information Technology Fund. <br />Service Enhancements Reflecting City Council Goals <br />City program and service level enhancements have been proposed consistent with the City <br />Council goals and priorities. The proposals include certain recommendations from the <br />Community Advisory Budget Task Force that was formed in late 2020. Enhancements cover a <br />wide range of programs from mental health services, a homeless navigation center, police <br />oversight, street and road maintenance/CIP projects, a financial system upgrade, economic <br />development efforts, park and building maintenance studies, and investments in community <br />resiliency. <br />In addition to the funds reallocated from the Police Department at last year’s budget adoption, <br />Fiscal Recovery Funds and General Fund reserves are used for one-time costs and investments. <br />These investments will be beneficial to the City in the long run in enhancing services and building <br />infrastructure. Resource allocations are detailed in the attachment. One-time funding sources <br />include $1,700,000 from 2020-2021 reallocated police funds, $1,200,000 from the General Fund <br />Community Impact Reserve, and $5,700,000 from the General Fund Undesignated Reserve. <br />Page 5 City of San Leandro Printed on 6/23/2021 <br />15