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8.B. - Page 22 of 122 Finance/Audit Subcommittee this spring so that the City Council may consider the Committee's recommendations during the FY 2019-20 budget hearing in June. Other Post -employment Benefit (OPEB) Liabilities — Retiree Health A second category of retirement -related benefits which impact the City's finances is the City's retiree health program. The City currently provides eligible retirees with reimbursement of their medical insurance premiums, subject to their collective bargaining agreement, which includes a maximum reimbursement amount. In 2010, the City established a Section 115 OPEB trust account through the California Employer's Retiree Benefits Trust (CERBT) program to fund retiree health benefits. As of December 31, 2018, there was a balance of $30.4 million in the trust account. As of the most recent actuarial report, June 30, 2017, the City's unfunded liability for these benefits was $57.6 million. The City is currently in the process of having an updated actuarial report prepared. The Preliminary Ten -Year Forecast includes anticipated additional General Fund contributions to the CERBT Section 115 OPEB trust account of $300,000 annually in order to build resources towards paying off the unfunded retiree health liability in future years. Industrial Disability Retirements Public safety employees who are injured on the job and are thus unable to perform essential job duties may apply for and receive an industrial disability retirement (IDR). The City currently reimburses safety employees who retire on an IDR the amount of $1,675 per month for health plan premiums, which includes medical coverage for the retiree and their family. The family medical benefit is not offered to safety employees who retire on a service retirement related to the years they have worked; those retirees receive health plan premium reimbursement for the retiree only. The City must pay 22 percent of payroll for sworn Police employees, and 12 percent of payroll for sworn Fire employees, to fund retiree health benefits. Over the last three years, 73 percent of Police Department retirees have retired on an IDR, which is 200 percent higher than the CalPERS actuarial retiree health projections, and 50 percent of Fire Department retirees have retired on an IDR, which is 50 percent higher than CalPERS actuarial retiree health projections. The high IDR rates greatly impact the City's unfunded retiree health liability by increasing the City's costs. This spring, the City and affected public safety bargaining units will begin working together on IDR Committees in an effort to develop alternative solutions to reduce the City's retiree health liability as related to IDRs. Workers' Compensation Over the last few years, the City has focused on effective workers' compensation claim management and return -to -work programs, as well as enhancing health, safety, and wellness programs for City employees, with a specific focus on public safety personnel. These efforts have helped reduce the City's liability. Based on the most recent actuarial analysis, the City's loss and loss adjustment expenses are projected to increase by only $100,000 for FY 2019-20. This increase is $900,000 less than last fiscal year's increase of $1.0 million. City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 248