City of San Leandro - File #: 22-540

• File #: 22-540
• Version: 1
• Name: OPEB and Pension Funding Policy
• Type: Staff Report
• Status: Agenda Ready
• In control: Finance Committee
• Meeting Date: 11/1/2022
• Title: Staff Report for Discussion on OPEB and Pension Funding Policy

TITLE

Staff Report for Discussion on OPEB and Pension Funding Policy

SUMMARY AND RECOMMENDATION

Staff recommends the Finance Committee provide direction regarding the City's Other Post-Employment Benefits (OPEB) and Pension Funding Policy, including transferring approximately $8,222,725 that has been assigned to address Alameda County Fire Department's (ACFD) unfunded OPEB liability to the City's Pension Trust. If enacted, this transfer would bolster the City Council's prior policy direction to address unfunded pension liabilities associated with legacy City of San Leandro Fire Department employees, as well as past and current City employees.

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. The City currently has unfunded pension liabilities for both legacy employees who previously worked for the City's former Fire Department that existed prior to fire services being transitioned to the Alameda County Fire Department, as well as past and current city employees.

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, 2022, the respective unfunded liability amounts are approximate...