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6.1.C. - Page 38
<br />their websites. 100,101,102,103 Appendix B's guide to locating pension information in CAFRs shows
<br />that a certain level of specialized knowledge and concerted effort is required to extract
<br />information about pension costs from CAFRs. While the Cities' published budgets often refer to
<br />growing budgetary challenges faced by pension costs, the information provided about costs,
<br />especially projected future costs and descriptions of how the Cities are planning to meet them, is
<br />generally not set out in a systematic way. The information falls far short of what it should be
<br />given the importance and growing urgency of the subject matter.
<br />What can the Cities do About Their Rising Pension Costs?
<br />Develop a Financial Plan.
<br />As with any challenge, the first step is to acknowledge the problem. In the case of pensions, this
<br />requires an analysis of future obligations, under various scenarios, over at least a 10 -year time
<br />horizon. The second step is for each City to develop a long-term financial plan over at least a 10 -
<br />year time period to address rising costs. Such a plan should include:
<br />• Specific objectives, such as identifying a target Funded Percentage, eliminating the
<br />Unfunded Liabilities over "n" years and maintaining the City's share of Normal Costs at
<br />"n" percentage of payroll
<br />• Policies to achieve these objectives, such as making supplemental contributions to
<br />Ca1PERS, making annual contributions to a reserve or IRS Section 115 trust (described
<br />below) for the purpose of meeting unanticipated future pension costs, keeping salary
<br />increases below the actuarially assumed increase rate, or negotiating cost-sharing
<br />100 The City of Burlingame provides information about its plans for addressing rising pension costs in Staff Reports
<br />and proposed budgets. See for example, Augustine, Carol, Staff Report to Burlingame City Council, July 3, 2017,
<br /><httD://burlin2ameca.le2istar.com/2ateway.asnx?M=F&ID=145flc47-afe4-48e6-8c90-7af8684l c428.docx>;
<br />Augustine, Carol, Staff Report to Burlingame City Council, March 14, 2018, pp. 11, 12, 27, 28 and 48,
<br /><httD://burlinaameca.leaistar. com/aateway.asnx?M=F&ID=8bf43Of2-6a90-46f4-a5 e8-bc5Oad7l O524.docx>;
<br />Augustine, Carol, Staff Report to Burlingame City Council, May 9, 2018,
<br /><httD://burlineameca.leeistar.com/i!ateway.asnx?M=F&ID=68ce413d-4c73-4e2b-abf2-d2e04b ldde86.docx>.
<br />101 The Town of Hillsborough's FY 2018-19 Proposed Budget notes that annual pension costs are projected to
<br />double over the next ten years (from $2.4 to $5.7 million. The Town also provides a 10 -year forecast of expenditures
<br />that incorporates data regarding projected pension costs, but the actual pension costs themselves are not broken out.
<br />Town of Hillsborough, FY 20187-19 Proposed Budget, pp. 27 and 96,
<br /><htt-os://www.hillsborouah.net/ArchiveCenterNiewFile/Item/212>.
<br />102 Foster City's preliminary budget for FY 2018-19 states that, between FY 2017-18 and FY 2022-23, the City's
<br />Miscellaneous Plan contribution rate will rise from 27.9 to 40.8 percent and its Safety Plan contribution rate will rise
<br />from 45.2 to 70.4 percent. City of Foster City, Preliminary Budget Fiscal Year 2018-2019, p. 10,
<br /><httos://www.fostercitv.org/sites/default/files/fileattachments/financial services/Da2e/3521/fv 2018-
<br />2019 Dreliminary budget nublished.Ddf>. The proposed budget does not include more specific information about
<br />dollar amounts represented by these percentages.
<br />103 The City of Belmont's 2018 Budget includes a chart showing increasing pension contribution rates over the next
<br />4 years. City of Belmont, FY2018 Budget, p. 18, httDs://www.belmont.aov/home/showdocument?id=15433>.
<br />2017-2018 San Mateo County Civil Grand Jury 24
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