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DRAFT <br />City of San Leandro <br />City OPEB and Pension Funding Policy <br /> <br />Purpose of Policy <br /> <br />The OPEB and Pension Funding Policy of the City of San Leandro establishes the foundation <br />designating support for unfunded other post-employment benefits (OPEB) and pension <br />obligations, meeting the City Council’s goal of insuring fiscal stability and the sustainability of <br />operations. Establishing designated OPEB and pension funding is an important step in shaping <br />the City’s long-term financial plan. <br /> <br />OPEB refers to health benefits for employees having retired from the City. The City provides <br />former employees with a retiree health care plan that is relatively modest in scope that has <br />limited the long-term financial liability associated with this benefit. Pension liabilities refer to the <br />City employees’ pension plan with the California Public Employees Retirement System. <br /> <br /> <br />OPEB and Pension Funding Guidelines <br /> <br />This Policy establishes guidelines for setting City contributions to the OPEB and Pension Trusts: <br /> <br />• The City will make contributions toward the unfunded liabilities annually. <br />• The Plans’ respective actuaries shall conduct actuarial evaluations biennially. <br />• Coordination of funding and investments earnings will attempt to minimize volatility of <br />each trust’s Actuarial Determined Contribution (ADC). <br /> <br />OPEB and Pension Funding Policy <br /> <br />The OPEB and Pension Funding Policy outlines fully funding the OPEB ADC using a 12-year <br />amortization schedule. ADC includes normal cost for benefits earned during the same fiscal <br />year and unfunded liability payments (funding shortfalls) that occurred over years. Funding <br />OPEB liability based on ADC will result in a fully funded plan over time, as measured by <br />actuaries. Current assets plus future assets from annual investment earnings will eliminate the <br />OPEB unfunded liability. <br /> <br />Annual investment earnings in the OPEB Trust are substantially expected to cover the projected <br />ADC. Targeting the 100% funding goal may periodically impact the City’s General Fund. <br />Extraordinary market volatility may require City Council periodic action supplementing earnings <br />to match the ADC. <br /> <br />As the City funds its OPEB ADC with investment earnings rather than General Fund allocations, <br />funds should be directed toward the Pension Trust in amounts greater than the Pension ADC. <br />Any funds currently set aside for an OPEB or pension liability purpose should be moved to the <br />Pension Trust. Funding pension liability with contributions greater than ADC will result in <br />greater progress toward a fully funded plan over time. <br /> <br /> <br />Policy Transparency and Reporting <br /> <br />Funding the City’s OPEB and Pension Trusts shall be transparent to all parties including