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2008-09, the California Public Employee Retirement System (CalPERS) lost <br />approximately $100 billion dollars in assets resulting in a gross loss of 34.75 <br />percent of the fund’s total value. Moreover, CalPERS employer contributions are <br />projected to double by FY 2024-25. Additionally, those numbers are poised to <br />grow even more in the short term when factoring CalPERS recent decision to <br />modify its amortization schedule from 30 years to 20. <br /> <br />The measure would hold all agencies of a JPA accountable for the investment <br />shortfalls, future discount rate reductions, and other assumptions changes made <br />by the retirement agencies even if the agencies are able to pay the lump sum <br />amount of the current unfunded liability from the JPA. <br /> <br />· Creates Funding and Operational Impairments: <br />The Governmental Accounting Standards Board (GASB) issued regulations <br />(GASB 68, 2012 and 76, 2015) that require each state and local agency to report <br />all financial liabilities associated with public pension and OPEB liabilities. These <br />reporting standards play a vital role in assessing the fiscal health and viability of <br />an agency. Incurring retroactive debt would require each originating agency of a <br />JPA to report these liabilities as debts, thus impacting an agency’s net financial <br />position. A drastic spike in liability could contribute to the downgrading of an <br />agency’s credit rating, which in turn would make issuing and servicing future <br />bonds more costly through higher interest costs and additional required <br />insurance. <br /> <br />ALTERNATIVES <br />The City Council may elect to support or take no position on this legislation. <br /> <br />FISCAL IMPACT <br />The substantial fiscal liability the City could incur under this bill cannot be overstated; it <br />is in the hundreds of millions of dollars or more... <br /> <br />ENVIRONMENTAL REVIEW <br />This activity is not a project under CEQA as defined in CEQA Guidelines, section <br />15378, because it has no potential for resulting in either a direct or reasonably <br />foreseeable indirect physical change in the environment. <br /> <br /> <br /> <br /> <br /> <br /> <br />9.A. - Page 3