For City Council Meeting [April 9, 2019]
TO: Honorable Mayor and City Council
APPROVAL: Sean Grayson, Interim City Administrator
FROM: Jessica Brown, Finance Director
Robb Steel, Assistant CA/Development Services Director
Title
Request City Council to Receive, File, and Provide Direction on the Report from the Pension Ad Hoc Committee. POWERPOINT
(ACTION)
Body
BACKGROUND:
As part of the adoption of the 2018-19 budget, on August 14, 2018, the City Council directed the formation of a Pension Ad Hoc Committee (Committee) to develop an implementation strategy to address the City's unfunded pension and other post-employment benefit (OPEB) liabilities, and to review and recommend potential revisions to the City's General Fund Reserve Policy. The Committee consisted of Mayor Robertson, Councilman Trujillo, City Treasurer Carrillo, the Interim City Administrator, City Attorney Fred Galante, and other management personnel.
As in many other cities in California, the growing obligations related to employee retirements represent a significant financial burden of the City. According to one state report, Rialto had the highest pension burden (pension payments as a % of payroll) of any city in San Bernardino County and the 14th highest in the State. According to the pension and OPEB plan report prepared by Bartel & Associates, the City's annual payments to CalPERS will grow from $12.0 million in 2017-18 to a high of $25.6 million in 2029-30, an increase of $13.6 million. This averages out to a $1.1 million increase each year for the next 12 years, consuming an estimated 25% of the City's projected revenue growth.
Employer contribution rates will increase from 35% of payroll to 50% of payroll for miscellaneous employees and from 50% to 80% of payroll for safety employees. Pension payments alone will grow from 16% of general fund revenues to 22% of projected general fund revenues, crowding out essential services and capital improvements. The City's last...
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