AgdaPkt 2018-10-01 Joint SA PFA - Laserfiche WebLink

Browse Search

Government Code Section 7507 requires the City to secure the services of an actuary to provide a statement of the actuarial impact upon future annual costs, including normal costs and any additional accrued liability, before authorizing changes in public retirement plan benefits or other postemployment benefits. Additionally, at least two weeks before changes are considered for adoption, the City is required to make public at a public meeting the actuary’s determinations. This report allows the City to comply with this requirement for the PSA, which has tentatively agreed to modifications to retiree health benefits, and for any other bargaining groups which may agree to such modifications in the future. Upon adoption of any changes, the City Manager must acknowledge in writing that she understands the current and future cost of the benefit as determined by the actuary. ANALYSIS The City is working toward fully funding its retiree health obligations by increasing annual payments to the City’s retiree health fund and by working with its bargaining groups to address the existing shortfall. By creating a second tier with lesser benefits, the City is decreasing the cost of the other post employment benefits (“OPEB”). The City is also making a correction to the MOU language that describes Tier One which applies to current employees. The new language more accurately describes the current benefits paid by the City. Although the correction is not an enhancement, the change in language may be perceived as an enhancement. As a result, as a precautionary measure, the City is following the procedures described in Government Code Section 7507. ALTERNATIVES The City Council can reject the proposed changes and direct staff to negotiate different proposals with the applicable bargaining units. FISCAL IMPACT Attachment 1 to the staff report provides a total assessment of the positive financial benefit to the City if all employee groups adopted the second tier retiree health proposal. If this were to occur, the present value of the City’s savings over the lifetime of current active employees is estimated to be $2.4 million. The annual savings for all employee groups is estimated to be $262,000 in FY 2018-19 and would increase over time. Attachments 2 – 9 assess the financial impact by each group of employees. As noted above, at this time only the PSA has tentatively agreed to the City’s proposed changes to retiree health benefits. The present value of the City’s savings over the 8.A. - Page 3