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9.A. - Page 11 of 17 and revenue enhancements. As previously mentioned, in FY 2019-20, the City Council Finance/Audit Subcommittee will be discussing opportunities for the City to increase revenue, among other financial strategies. Additionally, the City Council, staff, and community partners will need to continue to work together to align services and resources and address community needs. Maintaining the City's long-term fiscal stability requires meaningful action and a proactive approach to addressing the City's projected deficit and long-term liabilities through both revenue increases and expenditure reductions over time. Pension Challenges The City's most recent actuarial report from the California Public Employees' Retirement System indicates that the City has an unfunded pension liability of $242.0 million as of June 30, 2017, up from $238.8 million a year prior, an increase of 1.3 percent, and a retiree health liability of $57.6 million. The City's total unfunded pension and retiree health liability is $299.6 million. The City's overall funded status for its pension plans is 65.1 percent, up from 63.2 percent the prior fiscal year. The City's unfunded pension liability is primarily related to retired or inactive (employees not currently employed by or retired from the City) employees: 60% of the unfunded liability for the miscellaneous plan (non -safety employees) is associated with retired or inactive employees, and 73% of the unfunded liability for the safety plan (safety employees) is associated with retired or inactive employees. The City Council has taken a proactive and strategic approach to addressing the City's pension liabilities. The City implemented a second tier pension formula in 2011 even before the statewide Public Employee Pension Reform Act (PEPRA) was enacted in 2013. As these newer formulas only apply to recent hires, there has been little immediate impact on the City's total pension costs. However, such changes will reduce future liabilities and costs over the long-term. The City has also negotiated cost-sharing agreements with each bargaining group to ensure current employees pay a greater proportion of pension costs. Employees contribute between 8.0 and 18.0 percent of their salary toward their pension benefits, depending on bargaining unit and pension tier. Although these cost-sharing agreements represent important commitments by City employees to help pay for their pension benefits and assist the City in paying the required annual payments to CalPERS, such arrangements do not provide any additional payment toward the City's unfunded liabilities. In September 2017, the City Council approved establishing a Section 115 pension trust account with Public Agency Retirement Services (PARS) to pre -fund the City's pension obligations over time. An initial trust deposit of $10.5 million was made in January 2018, including $8.8 million from the General Fund and $1.7 million from other City funds, as some employees are budgeted in other funds, primarily the water and wastewater utilities. In March 2019, an additional $550,000 was deposited into the trust. As of the end of April 2019, the investment balance of the trust account was $11.6 million. The City has provided a great deal of public disclosure about its pension challenges and use of key strategies. The City Council has held five public hearings in the last two years related to rising pension costs and the City's strategies to address them. The City provided substantial public information regarding pension obligations during the process of placing the sales tax revenue measure on the November 2018 ballot. The City also maintains a "Fiscal Update" webpage, and has posted data and Frequently Asked City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 643