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File Number: 22-658 impacts citywide revenues. Annual investment earnings over the past five years averaged $1,100,000. Benefits for current retirees are currently funded by the City on a pay-as-you-go (Pay-Go) basis. The City will continue funding Pay-Go outside of the trust until the OPEB unfunded liability is paid. This amount is projected over the next biennial budget to equal the $950,000 that has been included in the adopted budget in recent years. Once the OPEB Plan is fully funded in about 12 years (around Fiscal Year 2033-2034), the City will have met its OPEB funding liability and may use the funds from the trust to also pay the Pay-Go portion of the City’s liabilities. At that time, the City will need to only contribute toward the Normal Cost. If investment earnings sufficiently cover the Normal Cost, no annual budget allocation would be required, thereby relieving the General Fund of any OPEB expense and freeing up funds that could otherwise be used to support important public services for the community. As a result of the General Fund already seeing relief from OPEB ADC payments, the City should begin focusing on making contribution amounts that are greater than the Pension ADC to the Pension Trust. Funding pension liability with contributions greater than ADC will result in greater progress toward a fully funded plan over time. Liabilities Associated With ACFD’s Employee OPEB Obligations Although the City has for a number of years been setting aside a separate pool of funds that were designated toward ACFD unfunded OPEB liabilities, the City’s existing OPEB trust is now in a good fiscal position. Additionally, the City continues to maintain a strong and effective operational working relationship with ACFD staff. Consistent with the City’s existing contract with ACFD, which was last amended in 2005, the City continues to pay for all maintenance and other costs associated with its fleet of fire suppression apparatuses, five fire stations, and related equipment. Additionally, the City annually pays ACFD for the City’s proportionate share of ACFD’s annual costs to staff the City’s fire stations and support the City’s operations. However, the City has not historically paid ACFD for the costs of ACFD’s unfunded OPEB liabilities because the existing fire services contract that was adopted by both agencies contains the following provision: Section 6. Personnel a. No City Liability City shall not be liable for the payment of any wages, benefits or other compensation to any officer, employee or agent of County performing services under this Agreement including, without limitation, the persons to whom ACFD shall offer employment. Based on discussions with now-retired former city employees who were involved in the negotiation of the above provision, it is staff’s understanding that this clause was included in the existing contract because ACFD’s staff are employed directly by ACFD. The City of San Leandro has no ability to control the retiree health benefits that are offered to those employees as part of their labor bargaining agreements. Moreover, the retiree health benefits that have historically been offered to ACFD employees are far more generous than the retiree health benefits that have ever been offered to City of San Leandro employees. Furthermore, one of the Page 3 City of San Leandro Printed on 11/17/2022