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6.1.C. - Page 5 • Established a Section 115 Pension Trust Account, with an initial deposit of $10.5 million, to pre - fund the City's pension obligations over time • Maximized fees charged to developers • Developed and implemented a plan to pay down the City's unfunded actuarial liability • Budgeted for additional direct payments to CalPERS above and beyond the required annual pension contribution, in addition to budgeting annual payments towards the Section 115 pension trust • Changed service delivery methods and sought greater efficiencies through partnerships and shared service models The City's responses largely agree with the findings outlined in the Grand Jury report. In fact, there are numerous instances in the report where the City's sound financial practices are cited as examples of how other cities can proactively address rising pension costs. The long-term fiscal sustainability of the City is based upon taking prudent, meaningful, and swift actions to address the City's pension obligations. As discussed, the City has already taken many significant steps towards this goal, and staff will work with the City Council's Finance and Audit Committee to consider the recommendations contained in the Grand Jury report and take additional steps towards addressing the City's pension costs. Below are the City Council's specific responses to the findings and recommendations in the report. FINDINGS F1. Each City's CAFR for the fiscal years ending June 30, 2015, June 30, 2016 and June 30, 2017 reported covered payroll for the City's pension plans in the amount set forth beside its name for that year in Appendix A. Response: The City agrees with this finding as pertaining to the City of Redwood City data. F2. Each City's CAFR for the fiscal years ending June 30, 2015, June 30, 2016 and June 30, 2017 reported contribution payments to CalPERS on the City's pension plans in the amount set forth beside its name for that year in Appendix A. Response: The City agrees with this finding as pertaining to the City of Redwood City data. F3. Each City's CAFR for the fiscal years ending June 30, 2015, June 30, 2016, and June 30, 2017 reported Unfunded Liabilities (as defined in this report) for the City's pension plans in the amount set forth beside its name for that year in Appendix A. Each City has been required to make large Amortization Cost (as defined in this report) payments of principal and interest to CalPERS on those Unfunded Liabilities. These payments have diverted money that could otherwise have been used to provide public services or to add to reserves. Response: The City agrees with this finding as pertaining to the City of Redwood City data. While it is true that the City has been required to make amortization cost payments of principal and interest on the unfunded pension liability, these are normal costs associated with a long-term liability. In recent years, when revenue has exceeded expenditures at fiscal year-end, and the City's reserve has been at or above the General Fund reserve level, the City has made additional payments toward unfunded liabilities. 2