For City Council Meeting [May 11, 2021]
TO: Honorable Mayor and City Council
APPROVAL: Sean Grayson, Acting City Manager
FROM: Bob Chandler, Interim Finance Director
Title
Request City Council to 1) Receive a Presentation from Representatives of NHA Advisors, the Bayshore Consulting Group and the Law Firm of Norton Rose Fulbright (Collectively, the City's UAL Consultants) on the Options for Restructuring the City's Pension Unfunded Accrued Liability (the UAL), and 2) Provide Direction to City Regarding Next Steps in Addressing the UAL.
(ACTION)
Body
BACKGROUND
The City Council previously adopted a retirement plan with CalPERS pursuant to the Public Employees' Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended (the "Retirement Law"). The Retirement Law obligates the City to (1) make annual contributions to the System to fund pension benefits for its employees, (2) amortize the unfunded accrued actuarial liability with respect to such pension benefits, and (3) appropriate funds for the purposes described in (1) and (2). As such, the City is obligated to make certain payments to the CalPERS System with respect to its Pension Obligation under the Retirement Law and its CalPERS Contract.
The City of Rialto, and virtually all CalPERS participating agencies, have seen a significant increase in its UAL over the past several years. The City's Unfunded Accrued Liability (the UAL) under its CalPERS retirement plan has seen a 42% increase over the last 7 years; from $94.2 million in 2014, to $133.6 million in 2021. And annual payments to amortize the UAL have grown to $9.9 million in 2020, with future yearly payments projected to grow to $15.2 million by 2030. As the members of the City Council, and the community, have learned, this significant increase in the UAL is attributable to many factors, including changing actuarial assumptions on the part of CalPERS, enhanced retirement benefits provided to emplo...
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