Title
Staff Report for Discussion on OPEB and Pension Funding Policy
Staffreport
COUNCIL PRIORITY
Fiscal Sustainability and Transparency
SUMMARY AND RECOMMENDATIONS
Staff recommends the Finance Committee review the proposed Other Post-Employment Benefits and Pension Funding policies and forward to the City Council for approval.
BACKGROUND
A primary City Council priority is placing San Leandro on a firm foundation for long-term fiscal sustainability. One component for achieving this goal is reducing the City's unfunded liabilities related to employee benefits (i.e., retiree health care and retirement pensions). An unfunded liability is the monetary difference between the estimated future costs of future benefits and the assets set aside to pay those benefits.
City unfunded liabilities fall into two categories - Other Post-Employment Benefits (OPEB) and pensions. OPEB refers to health benefits for employees who have retired from the City. The City provides its employees with a retiree health care plan that is relatively modest in scope with strict not-to-exceed monthly contribution caps, which has fortunately limited its associated long-term financial liability. Pension refers to the City employees' pension plan that is administered by the California Public Employees Retirement System (CalPERS). As of June 30, 2024, preliminary unfunded liability amounts are approximately $1,074,764 for OPEB and $235,676,854 for pension. Additionally, the City has agreed to pay the fully burdened cost of Alameda County Fire Department (ACFD) contract services for personnel assigned to the City of San Leandro, which includes an amortized portion of ACFD's unfunded OPEB costs.
The current OPEB and Pension Funding Policy was adopted by Council with resolution No. 2022-200 and discussed in staff report No. 22-658.
DISCUSSION
Current Pension and OPEB Funding Policy
This Policy establishes guidelines for setting City contributions to both the OPEB and Pension Trusts:
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