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6.A. - Page 47 of 114 Additional Payments to Ca1PERS — Menlo Park Menlo Park's staff has recommended to the council that the City make supplemental payments to Ca1PERS in excess of its Annual Required Contribution in amounts that mimic the effect of amortizing unfunded liabilities on a ten year schedule for its Miscellaneous Plans and a fifteen year schedule for its Tier 1 Safety Plan. 312 If adopted by the City Council for FY 2019-20 and included in budgets for each subsequent year (which requires affirmative City Council action each new year), this recommendation would, by the end of FY 2027-28 result in the City making aggregate supplemental payments to Ca1PERS of approximately $12.68 million in addition to its Annual Required Contribution .353 After FY 2027-28, the City projects that these additional payments will yield net, annual decreases in payments to Ca1PERS for an aggregate savings — net of the $12.68 million of additional payments - of approximately $18.1 million by FY 2033-34.354 Pension Reserve Fund — Menlo Park Menlo Park has established a "Strategic Pension Funding" reserve which, as of June 30, 2018, had a balance of $4.3 million355, up from $3.3 million the year before.356 Menlo Park's policy is to assign 25 percent of any general fund surpluses to this pension reserve. 357 Based on projected surpluses set forth in the City's FY 2018-19 budget of approximately $0.6 million in FY 2018-19, $4.24 million in FY 2019-20, $3.67 million in FY 2020-21, $2.57 million in FY 2021-22, $2.79 million in FY 2022-23 and $2.4 million in FY 2023-24358 this policy would, if the City continued to implement it, add another $4.1 million to the reserve through FY 2023-24 for an aggregate total Strategic Pension Funding Reserve of $8.4 million .359 If Menlo Park continued to apply this 25 percent policy through FY 2027-28, based on projections in the City's FY 2018-19 budget a further $3 million would be added to the reserve. 360 This would result in a Strategic Pension Funding reserve balance of $11.4 million at the end of FY 2027-28, which would equal almost a full year of projected FY 2027-28 pension costs.361 Menlo Park notes that the foregoing projections from its FY 2018-19 budget have been updated since the budget was prepared in 2018,362 however the new projections have not been published yet and so the Grand Jury relied on the FY 2018-19 budget numbers. 352 Menlo Park, Staff Report for City Council Meeting on March 5, 2019 re: Planned budget strategy for unfunded pension liability, pp. 9-10 & 11. 353 Email from Menlo Park, dated June 6, 2019. 354 cold. 351 Menlo Park, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2018, p. 74. 356 Menlo Park, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017, p. 14. 357 Menlo Park. Fiscal Year 2018-19 Adopted Budget, p. 38. 358 mid., p. 36. 359 The City has indicated that it will continue to implement this policy until otherwise affirmatively decided by the City Council. Grand Jury interview. 361 Menlo Park. Fiscal Year 2018-19 Adopted Budget, p. 37. 361 Bartel Associates, LLC report to City of Menlo Park, November 13, 2018, pp. 28 & 46. 362 Email from Menlo Park, dated June 6, 2019. 2018-2019 San Mateo County Civil Grand Jury 40 51