Report to Mayor and City Council
Tuesday, March 21, 2017
Consent
SUBJECT:
Title
DELEGATION OF AUTHORITY TO REQUEST DISBURSEMENTS FROM CALIFORNIA EMPLOYERS' RETIREE BENEFIT TRUST FUND (CITY COUNCIL)
Body
I. SUMMARY
To subsidize retiree health costs incurred during FY16-17, City Council directed staff to use one year of interest earnings from the Trust account established to prefund retiree health costs. Staff requests the City Council delegate authority to request disbursements from the Trust.
II. RECOMMENDATION
Recommendation
ADOPT Resolution No. 17-029, A RESOLUTION OF THE CITY OF CARSON CITY COUNCIL DELEGATING AUTHORITY TO REQUEST DISBURSEMENTS FROM THE CALIFORNIA EMPLOYERS' RETIREMENT BENEFIT TRUST FUND.
Body
III. ALTERNATIVES
TAKE another action deemed appropriate by City Council.
IV. BACKGROUND
In FY11-12, the City established an Internal Revenue Code Section 115 Trust account, to prefund future retiree health costs. Once money is contributed to the Trust, it cannot be used for any other purpose than retiree health costs. The City's Trust account is on deposit with the California Employers' Retirement Benefit Trust (CERBT) fund, which is managed by the California Public Employees Retirement System (CalPERS).
Over 5 years, the City contributed a total of $14.2 million to the Trust and earned interest of $2.9 million. With the budget deficits of FY15-16 and FY16-17, contributions were limited to $0.3 million from special revenue funds (no General Fund money). The December 31, 2016 balance of the Trust was $17,026,711. A snapshot of Trust activity since inception follows.
Retiree health insurance is an "Other Post Employment Benefit" or OPEB. The most recent actuarial valuation of the City's OPEB has calculated a liability of $55.2 million at June 30, 2015. The balance of the Trust partially offsets the liability on the financial statements.
Pursuant to City Council direction during the 2016 budget process, staff expects to request ...
Click here for full text