AgdaPkt 2013-01-28 - Laserfiche WebLink

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6.4.A. - Page 1 RE PO RT To the Honorable Mayor and City Council From the Cit Mana er January 28, 2013 SUBJECT Unfunded CaIPERS pension and unfunded retiree health benefit obligations of the Successor Agency of the dissolved Redwood City Redevelopment Agency RECOMMENDATION That the City Council and the Successor Agency Board each adopt a resolution approving a payment agreement in connection with the unfunded CaIPERS pension and unfunded retiree health benefit obligations of the Successor Agency of the dissolved Redwood City Redevelopment Agency. BACKGROUND As of January 31, 2012, prior to the February 1, 2012 dissolution date of the Redevelopment Agency (RDA), the RDA employed various employees of the City of Redwood City (City) to perform certain activities for the RDA. As a result of this arrangement the City is exposed to significant unfunded liabilities related to pension costs and retiree health benefits that accrued over many years of having hired employees to provide services to the RDA. Under ABx1 26, the legislation dissolving RDAs, enforceable obligations include unfunded pension liabilities and other related obligations. Given this provision, the Successor Agency has included on past Recognized Obligation Payment Schedules (ROPS) line items for unfunded pension obligations and retiree health benefit obligations related to former RDA General Fund and RDA Housing Fund employees but did not request funding until an agreement could be reached with the Oversight Board. ANALYSIS At the December 5, 2012 Oversight Board Meeting staff presented the estimated unfunded liability for pension costs provided by CaIPERS ($832,917) along with an estimate for the unfunded liability for retiree health costs benefits ($1.25 million) calculated by the finance director, both of which are attributable to former RDA personnel. The unfunded liability for retiree health benefits is calculated as a flat dollar amount per full time equivalent (FTE) because the benefit is the same regardless of salary. As of June 30, 2011 (the most recent date this information is available) the unfunded liability was $93,574 per FTE. The calculations to determine the amount attributable to the former RDA's General Fund and Housing Fund are as follow: