10d Consent - Laserfiche WebLink

Home

File Number: 22-658 foundational justifications that was used to justify the elimination of the City’s former in-house fire department and the transition to a contract with ACFD for fire services was to harness the economies of scale associated with a regional fire services model and to reduce ongoing costs to the City. Nevertheless, since ACFD continues to incur liabilities associated with the generous retiree health benefits that they offer to their employees who are staffing local fire stations, ACFD has proactively sought to identify new methods of offsetting the costs associated with their agency’s unfunded OPEB liabilities. To remedy the above-described situation, the City Manager and the ACFD Fire Chief have agreed that the City will prospectively commence paying the fully burdened cost of the contract each fiscal year. Because the OPEB Trust has a plan for being fully funded, the $8,222,725 set aside should be moved to the City’s Pension Trust. Going forward, the City will be paying the true cost of ACFD services, which includes an amortized portion of ACFD’s unfunded OPEB costs. Review by Finance Committee The Committee met on November 1, 2022 to review the proposed OPEB and Pension Funding Policy and the transfer of $8,222,725 from funds set aside for ACFD’s OPEB liability to the City’s Pension Trust. The Committee unanimously recommended the matters be moved forward to the City Council for adoption. Fiscal Impacts The City Council’s proactive approach funding unfunded liabilities generates investment income and achieves significant future savings to San Leandro taxpayers over little more than a decade. The intention of the proposed OPEB and Pension Funding Policy is to have investment earnings cover the OPEB ADC and not require a General Fund contribution to the OPEB Trust while beginning to place a greater focus on funding liabilities through the Pension Trust. These prudent steps will ultimately have a positive impact on the City’s overall budget and its long-term financial stability, thereby providing significant long-term benefits to the San Leandro community. As the City’s OPEB unfunded liability is now on a path toward liquidation, funds can be contributed to the new Pension Trust. The transfer of $8,222,725 from funds set aside for ACFD’s OPEB liability to the City’s Pension Trust will increase the City’s assets to mitigate its pension liability, resulting in the City’s funded pension liability going from 3.6 percent to 8.4 percent. The OPEB and Pension Funding Policy does not affect the PULL Program as PULL directs allocation of funds toward “unfunded liabilities” - including OPEB and pension. ATTACHMENTS Att A: Resolution Att B: OPEB and Pension Funding Policy PREPARED BY T. Michael Yuen, Finance Director Page 4 City of San Leandro Printed on 11/17/2022