Title
Report regarding approval by the City of South San Francisco of a resolution authorizing the issuance of bonds to refund and prepay certain Pension Obligations of the City and authorizing judicial validation proceedings relating to the issuance of such bonds. (Jason Wong, Acting Director of Finance)
label
RECOMMENDATION
Recommendation
Staff requests that the City Council of the City of South San Francisco consider this administrative step by adopting a Resolution authorizing the issuance of bonds to refund and prepay certain Pension Obligations of the City; approving the Form and Authorizing the Execution of a Trust Agreement and Bond Purchase Agreement; authorizing Judicial Validation proceedings relating to the Issuance of such Bonds; and approving Additional Actions Related Thereto.
Body
BACKGROUND/DISCUSSION
Background. The City has two retirement plans (Miscellaneous and Safety) and three benefit tiers for each plan (Classic Tier 1, Classic Tier 2, and PEPRA-Public Employees' Pension Reform Act, which took effect in January 2013):
1) Miscellaneous
a. Classic Tier 1: 2.7% @ 55
b. Classic Tier 2: 2.0% @ 60
c. PEPRA: 2.0% @ 62
2) Safety
a. Classic Tier 1: 3.0% @ 50
b. Classic Tier 2: 3.0% @ 55
c. PEPRA: 2.7% @ 57
The City is a contracting member of CalPERS and, as such, the City is obligated to make certain payments to CalPERS each year. The City's annual pension obligations are comprised of two primary components: 1) Normal Costs and 2) Unfunded Accrued Liability ("UAL") Payments. Normal Costs represent the pension benefits earned by current employees during the fiscal year and are set by CalPERS as a percentage of payroll.
The UAL Payments are the annual dollar amounts needed to fund past service credit earned for (active or retired) members, as of the current valuation date. The UAL is equal to the difference between the present value of benefits earned to date, less the current market value of the assets. As of the most recent Actuari...
Click here for full text