pages: CityCouncil/2008-01-15.pdf, 11
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CityCouncil | 2008-01-15 | 11 | money can be set aside if the budget turns around. Councilmember deHaan inquired whether phasing-in will be the most likely method. Mr. Bartel responded very few agencies pay the ARC right awayi stated a few agencies started setting money aside, allocating internal service funds, and transferring money into an irrevocable trust; the majority of agencies will either phase into paying the full ARC or intend to phase into the full ARC over a five or ten year period; new strategies include Pay-As-You-Go plus normal costs; normal costs are the value of benefits being earned during the year by active employees. Councilmember deHaan inquired whether bond rating might become the real factor in pushing municipalities. Mr. Bartel responded that he is not a bond rating expert; stated he had two clients that set money aside in an internal service fund; both were going through a bond rating for a capital improvement project; both expressed a strong interest in pre-funding, paying the full ARC, and moving the money into a irrevocable trust; both agencies had an upgrade in bond rating because they were addressing the unfounded liability; a bond rating might not change but may be downgraded if not addressed. Councilmember deHaan inquired whether anyone has ever borrowed to pay. Mr. Bartel responded two agencies in the State have done so; stated Peralta College is one; CalPERS premiums can be 50% one year and 5% the next volatility in actuarial liability is created if changes happen when an evaluation is done; he is reluctant to advise agencies to bond for the entire amount ; he would be cautious about paying off the entire unfunded liability. Mayor Johnson stated that it is important for people to look at the charts on page 3 and 5 of the report; the cheapest option is Pay- As-You-Go the ten year payout projections increase from $1,861 million for 2007-2008 to $4,342 million for 2016-1017; the better options are more expensive; the cost comes out of the General Fund. The City Manager stated that the cost comes out of the General Fund for the most part. Mayor Johnson inquired what is the General Fund for the current year, to which the City Manager responded $85 million. Regular Meeting Alameda City Council 11 January 15, 2008 | CityCouncil/2008-01-15.pdf |