AgdaPkt 2018-05-21 Joint SA PFA - Laserfiche WebLink

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retiree unfunded accrued liabilities (UAL), as well as both active and retiree healthcare and other post-employment retirement benefits (OPEB). Additionally, AB 1912 would mandate that public retirement systems, like California Public Retirement System (CalPERS), file suit against all local or state agencies that have ever been a member of a terminated JPA for all retirement related obligations. The bill also prohibits any retirement system from approving a new JPA without a contract containing express joint and several liability provisions. Moreover, the provisions set forth in AB 1912 create potential constitutional, fiscal, and operational challenges, which would effectively eliminate the ability for local and state agencies to create or maintain the use of most JPA’s. Specifically, AB 1912: · May conflict with Provisions of the California State Constitution: The California constitutional debt limit prohibits an agency from incurring indebtedness beyond the agency’s ability to pay the debt back from revenues received in the same fiscal year without the approval of two-thirds of its voters. These safeguards were placed in the State’s constitution to avoid a situation in which bond issuers might compel an increase in taxes or foreclose on local government assets. By applying retroactive joint and several liability to existing contracts, we have strong concerns that Redwood City will incur significant debts that may exceed our annual revenue without receiving voter approval—thus arguably violating the California Constitution. Further, it can be argued that retroactively incurring debts of another agency violates article XVI, §6 of the California Constitution which prohibits an agency from giving or lending public funds to any person, public or private entity. A JPA is an independent governmental body whereby the City has no legal, statutory oversight or managing authority. Liabilities from such entities retroactively applied to each member agency could constitute a gift of public funds to an individual(s) and/or public entity. · Gives Retirement Agency Authority to Increase the Amount Owed Through Assumption Changes and/or Investment Losses: Retirement obligations are unlike other forms of traditional debts and liabilities. Unfunded retirement liabilities are particularly volatile and can grow to insurmountable costs based on no fault of the agencies who contract with a retirement system for health and pension benefits. It is estimated that in FY 9.A. - Page 2