pages: CityCouncil/2011-03-29.pdf, 4
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CityCouncil | 2011-03-29 | 4 | Mayor Gilmore inquired whether cuts are the only way departments can absorb the decrease in General Fund revenues, to which the Controller responded either General Fund revenues would have to be raised or expenditures would have to be cut; noted the City plans on conducting a Cost Allocation Plan in FY 11-12. Mayor Gilmore stated in the event redevelopment goes away, not only the redevelopment activity goes away, the redevelopment agency's share of paying for overhead in, for example, Legal, Finance, Human Resources; departments will have to pick up a larger share of costs. Councilmember deHaan noted the costs are fixed. The Controller continued his presentation. Councilmember Johnson noted the City was expecting to have PERS increases in FY 12-13, not FY 11-12. The Controller stated the FY 11-12 budget just rolled over the amounts from the FY 10- 11 budget and did not include any cost of living adjustments. In response to Councilmember Johnson's inquiry about whether PERS had indicated there would not be any increase until FY 12-13, the Controller state PERS provided information in October 2009; PERS was not sure if the assumed rate of return would be changing and indicated the matter would be addressed in February; the Board decided not to increase the rate to 7.5%, which would have increased the City's cost by 1 to 4%. Councilmember Johnson inquired what the increased amount is based on if PERS did not adjust its rates and is leaving it 7.75%. The Controller responded PERS lost 24% in 2008; PERS valuations are two years behind; reviewed a slide which shows rates remained the same from FY 08-09 to FY 10-11; stated the first smoothing mechanism PERS adopted did not assume such a dramatic loss; the City would have had to pay a huge increase under said mechanism; PERS adopted a new smoothing mechanism, which makes the rates gradually go up and kept the rates from going up 10% or more in FY 11-12; the drawback is rates will stay higher for a longer period of time. In response to Councilmember Johnson's inquiry regarding PERS's current return on investment rate, the Controller stated the rate changes daily, but he has heard PERS has earned 10 to 11% for the year; earning a little more than 7.75% provides little benefit the next year because it is spread over such a long period of time. Councilmember Johnson inquired how much loss in the PERS portfolio has not been realized; stated one loss was the huge investment in Mountain House; the property will not be worth very much for a long period of time; PERS has not taken some losses yet. Special Meeting Alameda City Council 4 March 29, 2011 | CityCouncil/2011-03-29.pdf |