Title
Discussion of a Funding Goal for the City's Other Post-Employment Benefits (OPEB) Plan
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that the Finance Committee (Committee) review the report and provide feedback regarding a funding goal for the City's OPEB Plan.
BACKGROUND
One of the City Council's highest priorities has been to place San Leandro on a firm foundation for long term fiscal sustainability. A key component in achieving this goal is to reduce the City's Unfunded Liabilities related to employee benefits (primarily pensions and retiree health care). Other factors that meet the goal of sustainability include stable and diversified revenue sources, cost containment, and exposure/risk management.
Unfunded Liabilities fall into two main categories: Pensions and Other Post-Employment Benefits. Pension liabilities refer to the City employee's pension plan with the California Public Employees Retirement System (CalPERS). Other Post-Employment Benefits (OPEB) typically refer to health benefits for employees who have retired from the City of San Leandro. The City provides its employees with a retiree health care plan that is relatively modest in scope which has fortunately limited its long-term financial liability associated with this benefit.
In September 2015, the City Council adopted a Prioritizing Unfunded Liability Liquidation (PULL) Plan with a 5-year goal of allocating $5 million toward reducing unfunded liabilities. The PULL Plan calls for the City to direct up to 50% of all annual General Fund carryover toward funding of unfunded liabilities; the City may also direct up to 50% of all General Fund land sales toward the PULL Plan. The PULL Plan supports funding the full Actuarial Determined Contribution (ADC), as determined by the actuaries for each fiscal year. ADC includes normal cost for benefits earned during the same fiscal year and funding shortfall/unfunded liability payments that has occurred over time. Funding OP...
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