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File Number: 22-658 annual General Fund carryover funds toward unfunded liabilities. In addition, the plan directs 50 percent of all General Fund land sales toward PULL. All funds set aside through this program were to be deposited into an irrevocable trust dedicated towards unfunded OPEB liabilities. The sale of land associated with the Monarch Bay Shoreline project was excluded from this policy. Seven-years later, the $5 million PULL plan funding target has been exceeded. The City Council authorized several one-time contributions to the OPEB Trust in addition to $750,000 yearly allocations between 2014 and 2020. The OPEB Trust now holds $14.1 million, which exclusively reflects contributions from the General Fund. This Trust balance was further augmented by nearly $4.2 million in investment earnings. As of September 30, 2022, the OPEB Trust portfolio assets total $18.3 million, which includes both the General Fund contributions as well as investments earnings derived from those contributions. This approximately $18 million fund balance also reflects a $2.7 million (approximately 12%) decrease in total portfolio valuation that is a function of market volatility experienced since June 30, 2021. Focusing PULL plan contributions exclusively toward OPEB since the program’s inception has resulted in a well-funded OPEB Trust. As a result, in 2021, the City Council authorized the creation of a separate Pension Trust that included an additional $6.5 million allocation from the General Fund. The creation of the Pension Trust and the initial payment to it created a mechanism to segregate funds for pension purposes while continuing to reduce the City’s unfunded liabilities. The Pension Trust is managed by Public Agency Retirement Services (also known as “PARS”), similar to the previously existing OPEB Trust, and neatly fits under the established umbrella of the PULL program. Although the City has no legal or contractual obligation to do so, as part of its ongoing efforts to address pension and OPEB liabilities, along with the above-referenced actions, through separate action the City also began setting aside funds that were designated to assist in addressing the Alameda County Fire Department’s (ACFD) unfunded OPEB liability. According to available City records, these separate contributions commenced in approximately 2015. To date, the total set aside for this purpose is $8,222,725. Additional analysis of these specific funds is included in the Discussion section of this staff report, provided below. DISCUSSION OPEB and Pension Funding Policy The proposed new OPEB and Pension Funding Policy would fully fund the OPEB Actuarial Determined Contribution (ADC) using a 12-year amortization schedule. ADC includes Normal Cost, which represents benefits accrued for active employees during the year, plus unfunded liability payments. Funding OPEB liability based on ADC over the 12-year time period is intended to result in a fully funded plan, as measured by actuaries. Annual investment earnings are expected to substantially cover the projected ADC, thereby continuing the recent trend of precluding the need to allocate further one-time payments to the OPEB Trust. Targeting a full funding goal may periodically impact the City’s General Fund, such as if extraordinary market volatility results in a need for City Council action to supplement earnings to match the ADC, or in the event of a severe economic recession that substantially Page 2 City of San Leandro Printed on 11/17/2022