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6.1.C. - Page 42
<br />years. 123 The City does not indicate how much savings is expected to result from these additional
<br />payments.
<br />The City of Foster City's preliminary budget for FY 2018-19 calls for an additional payment to
<br />Ca1PERS of $2.1 million, representing 4.3% of its projected general fund operating expenditures
<br />budget that year. 124
<br />(2) Make Contributions to a Reserve.
<br />In the current good financial times, most of the Cities have experienced rising revenues and
<br />should be able to set their general fund budgets to yield a surplus of revenues over expenses and
<br />put the difference into a general fund reserve to be applied in their discretion against future
<br />unanticipated, special, or one-time expenses. 125 A portion of such reserves could be used to
<br />manage or smooth payments to Ca1PERS, consistent with budgetary needs. However, since the
<br />Cities retain the right to use these reserves as they deem appropriate, there is no guarantee that
<br />these reserves will be applied to pension costs. 126 Payments into a reserve do not reduce the
<br />Amortization Costs charged by Ca1PERS.
<br />Several of the Cities have established reserves out of their general fund budgets that are
<br />earmarked for future increased pension contributions.
<br />Menlo Park. The City has established a "Strategic Pension Funding reserve" which, as of June
<br />30, 2017, held assets of $3.2 million. That represents approximately 7 months of its annual
<br />pension contribution costs of $5.56 million. 127 Menlo Park's policy is to assign 25 percent of any
<br />general fund operating budget surpluses to this pension reserve. 128 Based on its expected general
<br />fund operating budget surplus of approximately $2.5 to $3.5 million in FY 2017-2018, this
<br />policy will add another $625,000 to $875,000 to the reserve. 129 However, the Strategic Pension
<br />Funding reserve currently represents only approximately 10 percent of the City's total general
<br />fund reserves' 30 and, even assuming continued growth in the Strategic Pension Funding reserve
<br />similar to FY 2017-2018, would only modestly help pay for increases in the City's expected
<br />pension costs over the next 10 years. 131
<br />123 City of San Mateo, Proposed 2018-20 Business Plan, pp. 58 and 67.
<br />121 City of Foster City, Preliminary Budget Fiscal Year 2018-2019, p. 50.
<br />121 See, for example, City of Menlo Park, Adopted Budget, Fiscal Year 2017-18, pp. 8, 33 — 38; City of San Mateo,
<br />Adopted 2017-18 Budget, pp. 6, 32, 36; City of Foster City, Preliminary Budget Fiscal Year 2018-2019, pp. 47 — 48;
<br />City of Belmont, FY 2018 Budget, , p. 16, 22; City of Brisbane, Fiscal Years 2016-2017 & 2017-2018, Adopted
<br />Two Year Operating Budget, p. 11, <httn://www.brisbaneca.or2/sites/default/files/City%20of%20Brisbane l.bdf>;
<br />Town of Portola Valley, Adopted Budget, Fiscal Year 2017-2018, p. 4,
<br /><htto://www.i)ortolavalley.net/home/showdocument?id=10921>; Town of Hillsborough, FY 2017-18 Adopted
<br />Budget, p. 26; Town of Hillsborough, FY 20187-19 Proposed Budget, p. 95.
<br />126 Interviews by Grand Jury.
<br />127 Appendix A.
<br />12s City of Menlo Park, Adopted Budget, Fiscal Year 2017-18, p. 48.
<br />129 Interviews by Grand Jury.
<br />13o City of Menlo Park, Adopted Budget, Fiscal Year 2017-18, p. 49.
<br />131 Menlo Park expects its pension costs to almost double to $10.14 million per year by FY 2027-28. City of Menlo
<br />Park, Adopted Budget, Fiscal Year 2017-18, p. 48.
<br />2017-2018 San Mateo County Civil Grand Jury 28
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