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<br />The City has provided a great deal of public disclosure about its pension challenges and use of key
<br />strategies. The City has held numerous public hearings in the last two years related to rising pension costs
<br />and the City's strategies to address them. This topic was addressed at City Council meetings on May 22,
<br />2017, June 12, 2017, February 26, 2018, and June 11, 2018. In addition, the City has also provided a
<br />significant amount of information to the public during tonight's mid -year budget update, and will revisit
<br />the issue in June 2019 with the adoption of the FY 2019-20 budget. The City provided further disclosure
<br />during the process of placing the sales tax revenue measure on the November 2018 ballot. The City also
<br />maintains a "Fiscal Update" webpage, and has posted data and Frequently Asked Questions about the
<br />City's pension challenge for the public to review at this site: www. redwoodcity.org/fiscaIupdate.
<br />The Preliminary Ten -Year General Fund Forecast includes General Fund contributions towards the City's
<br />pension liability beyond the required annual payment, including additional direct annual payments to
<br />CalPERS of $500,000, and annual contributions of $1.1 million to the City's Section 115 pension trust
<br />account. Trust proceeds, including investment earnings, will be used in future years to help pay for
<br />increased annual pension costs. Increasing the funds invested in the trust, and maintaining those funds
<br />over a longer timeframe, will provide greater resources to pay the City's pension costs in the future.
<br />The Preliminary Ten -Year Forecast does not include an increase in the number of Full Time Equivalent
<br />(FTE) positions; however, benefit costs associated with existing staff, coupled with liabilities associated
<br />with retirees, are expected to increase significantly over the next ten fiscal years.
<br />As shown in the chart below, the City's annual pension costs are expected to rise significantly over the
<br />next decade to pay off the unfunded liability. In ten years, the City's annual CalPERS payment is projected
<br />to be approximately $43.4 million, which is $19.1 million more than it is today, or a 78 percent increase.
<br />Notably, these estimates are at a 50 percent confidence level, meaning that there is a 50 percent chance
<br />they could be higher or lower.
<br />$50,000
<br />$45,000
<br />$40,000
<br />$35,000
<br />$30,000
<br />$25,000
<br />$20,000
<br />$15,000
<br />$10,000
<br />$5,000
<br />City's Projected Annual CalPERS Contributions
<br />During Preliminary 10 -Year Forecast Period
<br />(in thousands)
<br />$33,220
<br />$30,207
<br />$27,737
<br />$24,340
<br />$37,916 $39,636 $40,183
<br />$35,968
<br />$40,003 $41,629 $43,402
<br />FY 2018- FY 2019- FY 2020- FY 2021- FY 2022- FY 2023- FY 2024- FY 2025- FY 2026- FY 2027- FY 2028-
<br />19 20 21 22 23 24 25 26 27 28 29
<br />Safety Miscellaneous
<br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore
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