pages: CityCouncil/2013-07-23.pdf, 12
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CityCouncil | 2013-07-23 | 12 | the problem is and calculates rates at present value, which is probably a good deal. The Finance Director stated staff would definitely have to do a lot of analysis if Council is interested in the program; pension obligation bonds are typically taxable, which results in a significantly higher rate; the rates are probably around 4% if the City refinances bonds; however, pension obligation bonds are 6.5% to 7%; the rates would continue to go up to 10% to 12%; he is only aware of Beverly Hills, and no other cities in California, proceeding with the option. The City Manager stated the debt would incur 6% or maybe a little more; however, medical premium estimates currently increase by about 11% to 14% every year. Mayor Gilmore stated the Finance Director has indicated two main drivers cause costs to increase: one is a larger pool of retirees and the other is healthcare costs; discussed Obama Care; stated the City is presupposing premiums are going to continue to increase at the same rate, which might occur; in 2006 or 2007, Bartel and Associates thought there would be national healthcare, which the Council did not want included in estimates since it was far away and might have never happened; now national healthcare has sort of happened; more analysis is needed on what national healthcare might look like for the City; the City should have a better idea of exactly what is being tackled because Obama Care is probably going to make rates go down or up. Councilmember Tam stated the Affordable Care Act is very complex; the Congressional budget office is completing estimates; Alameda Hospital has affiliated with the County in reaction to the Affordable Care Act because a competition increase is anticipated; healthcare premiums should go down by 10% to 18% in the next five years; that she does not know how projections are being done; the matter should be considered. The City Manager stated in spite of the Affordable Care Act, the aging population believes it has a right to live forever, so he is not very optimistic; the Affordable Care Act might provide a mitigation to what would have been a larger increase; demographics cannot be changed; being 80 years old and feeling entitled to a third knee is not going to change because of legislation. Councilmember Tam stated the City made significant progress with the last MOU negotiations; actuarials show 80% of public safety spouses outlive the retirees; retirees do not typically live longer than 12 years after retiring. The City Manager stated healthcare is provided for current public safety retirees' spouses; most employees were hired before June, 2011; there will be relief in the long term; however, how to handle the next 30 years is the problem. Mayor Gilmore stated that she would like more information about how Obama Care is likely to affect the City; the City might decide the information is not relevant or might not want to put all eggs in one basket in terms of rates; moving forward without that piece of the puzzle seems irresponsible. Regular Meeting Alameda City Council 11 July 23, 2013 | CityCouncil/2013-07-23.pdf |