Title
Adoption of Resolution Authorizing the Issuance of One or More Series of Pension Obligation Bonds (POB) to Refinance Outstanding Obligations of the City to the California Public Employees' Retirement System, Authorizing the Initiation of a Judicial Validation Action by the City Attorney, and Approving and Directing Related Matters. (Finance 10024051)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City of Alameda's (City) 2020 CalPERS Unfunded Accrued Liability (UAL) was approximately $297 million for both miscellaneous and public safety retirement programs. This report provides an overview of potential funding strategies evaluated by Urban Futures, Inc. (UFI) to address the City's UAL and recommends the City Council authorize the issuance of one or more series of pension obligation bonds to refinance the City's UAL owed to CalPERS.
BACKGROUND
In 2019, the City Council & City Manager identified a need to further study the City's growing pension liabilities, to evaluate pension funding strategies, and to assess the risks associated with the issuance of pension obligation bonds. In May 2020, City Council authorized an agreement with UFI to complete a customized pension model and to assist the City with evaluating pension funding strategies. UFI was selected following a competitive request-for-proposal (RFP) process. Now that UFI has completed its review of funding options available to the City, staff is recommending that the City Council authorize the issuance of pension obligation bonds.
Attached as Exhibit 2 to the staff report is additional, more detailed information on the various pension funding strategies examined by UFI, including pension obligation bonds as one of the strategies.
DISCUSSION
Annual Pension Costs
CalPERS bifurcates annual pension costs into two component parts:
Normal Costs - are the costs attributable to pension benefits earned by active employees during the then current year. These costs...
Click here for full text