Title
Staff Report for Resolution Authorizing Inter-Fund Loan from Water Pollution Control Plant Fund and Appropriating $6,000,000 to Pay-Down Public Safety Side Fund Obligation
Body
RECOMMENDATION
Staff recommends City Council approval of the resolution authorizing an inter-fund loan from the Water Pollution Control Plant Fund to the General Fund and appropriation of $6,000,000 to pay-down the CalPERS Public Safety Side Fund with an adjustable interest rate loan, with an initial rate of 3%.
BACKGROUND
The City’s Safety Plan in the CalPERS retirement system is a cost-sharing multiple-employer plan with pooling (cost-sharing) arrangements for participating employers. All risks, rewards, and costs, including benefit costs, are shared and are not attributable to the individual employers. A single valuation covers plan members and the same contribution rate applies to all employers. A menu of benefit provisions and other requirements are established by state statute within the Public Employees’ Retirement Law. The City has contractually selected optional benefit provisions from the benefit menu and adopted these benefits by City Council resolutions.
At the time the City was required to join the Safety Risk Pool in 2004, a side fund was created to account for the difference between the funded status of the pool and the funded status of the previous City Plan. Today, the City’s total outstanding CalPERS pension obligation and the required annual employer contribution is determined by the City’s share of the Safety Risk Pool and separate amortization of the City’s side fund. The proposed transaction would refinance the existing side fund obligation to take advantage of low bond market rates. It would not change benefits owed to existing or prior employees.
DISCUSSION
Effective June 30, 2004, CalPERS created risk pools by pooling assets and liabilities across groups of employers to produce large risk sharing pools intended to dramatically reduce or elimina...
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