Title
Receive an Informational Report on Pension Funding and the Pension Rate Stabilization Program. (Finance 10024051) [City Council]
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
In October 2022, City Council authorized a revision of the Pension Rate Stabilization Program and Other Post-Employment Benefits Funding Policy (Policy). The main revision to the Policy at that time was to clarify the language and amount the City of Alameda (City) would contribute to either a Trust Fund for future CalPERS or OPEB payments, or to pay down directly the CalPERS unfunded liability.
At this time, staff is bringing an update to City Council of the funded status of the CalPERS pension plans and the City's 115 Pension Trust. Staff will return to City Council in April 2024 to discuss the City's current OPEB status.
BACKGROUND
The purpose of this informational staff report is to provide a comprehensive analysis of the current funding status of the City pension plans with CalPERS. The underfunded pension plans pose a financial challenge that continues to require attention and strategic planning.
The City has partnered with GovInvest, a leading consultant in pension and OPEB planning in order to help the City clarify its current position and options for the future. They have prepared a short presentation including CalPERS pension basics, a comparison to other agencies, changes to CalPERS and their impacts to the City, and addressing the City's unfunded liability.
DISCUSSION
The following section provides an update on the City's CalPERS net pension liability. CalPERS bifurcates annual pension costs into two component parts:
Normal Costs -The costs earned by active employees during the current years. These costs are based on a percentage of payroll: 10.97% on average for Miscellaneous Plan employees and 20.72% on average for Safety Plan employees.
Unfunded Accrued Liability (UAL) -The funding sho...
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