pages: CityCouncil/2021-10-19.pdf, 20
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CityCouncil | 2021-10-19 | 20 | Mr. Wawrzyniak stated the payment is through the General Fund which is the same as the unfunded CalPERS liability; the General Fund includes property and sales tax and is available for all purposes; the General Fund is currently paying CalPERS; instead of paying CalPERS, there will be debt service payments on the bond; no new additional taxes would be levied. Councilmember Herrera Spencer inquired whether the City is currently covering pensions or whether the City is continuing to accrue more unfunded pension liabilities. The City Manager responded the bond would pay for the unfunded liability; stated the payment is for unfunded liabilities, which accrued over time; moving forward CalPERS set out a schedule and cost per employee for current and future liabilities; the current format is set; however, there is no guarantee of payment; as more employees are hired, an extra percentage is paid per employee. Mr. Morales stated the normal costs are part of the current bill; the City has to pay its normal cost at a minimum; the Unfunded Accrued Liability (UAL) is a past due amount; the UAL is $300 million; the City has a big mountain to climb; eventually $22 million will go to approximately $30 million; as increases or other adjustments occur, the amount will fluctuate; as long as the City makes the UAL payments, plus the $6.7 million, the City should be able to pay it off, with the caveat of annual adjustments made by CalPERS; the liability is dynamic and ever-changing; if the City keeps pace with the adjustments, the City should be able to keep pace with the liabilities; CalPERS is similar to a bank; whatever deposits are made to the system, investments are managed and trued up every year; the City could fall behind; the $30 million base liability not being paid in cash at once would mean the $6.7 million, plus the $20 million UAL payment and the new base of $33 million could be spread out over a typical 20 year period; it is important to understand that the amount is not static; the liability is changing and dynamic. Councilmember Herrera Spencer inquired whether the City has enough money in reserves to pay as it goes for the next five to ten years; stated that when she looks at the numbers, she does not think the City has enough money to pay as it goes. The Finance Director responded the normal cost is based on the percentage of payroll; each budget cycle has to budget the costs; the City currently covers the normal costs as a percentage of payroll; the budget is sufficient to cover the current and next year. Councilmember Herrera Spencer stated a chart shows the current payments as dropping at year 10 or 15; inquired whether the City will be paying more in the last years. Mr. Morales responded many cities have a similar profile; stated the payment schedule has a peak; almost every agency has the peak around $32 to $33 million; credits and liabilities are added each year, so the structure of the UAL payment increase might change as it has in the past. The City Manager stated the current annual UAL payments to the UAL total $557 million in payments without financing. Councilmember Herrera Spencer inquired how the drop from 2043 to 2044 occurs. Regular Meeting Alameda City Council 19 October 19, 2021 | CityCouncil/2021-10-19.pdf |