Report to Mayor and City Council
Tuesday, November 05, 2019
Discussion
SUBJECT:
Title
PENSION OBLIGATION BONDS (CITY COUNCIL)
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I. SUMMARY
The City participates in the California Public Employees Retirement System (PERS) for funding current and retired employees' retirement costs. As of June 30, 2019, the City's plan was approximately 64.8% funded. The current unfunded actuarial liability (UAL) for the plan as of July 2019 is estimated to be $104,983,369. Mayor Albert Robles has requested staff to provide funding scenarios to pay down the UAL and future savings by issuing pension obligation bonds (POBs).
II. RECOMMENDATION
Recommendation
PROVIDE direction to staff on Pension Obligation Bond.
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III. ALTERNATIVES
TAKE another action deemed appropriate by City Council.
IV. BACKGROUND
Per Mayor's request, this report provides background information and funding scenarios to pay down the unfunded actuarial liability (UAL) for the City of Carson PERS plan.
The City has 1 PERS plan: Miscellaneous Plan that includes all full-time employees and some part-time staff. As of July 2019, the plan was 64.8% funded.
The City's UAL plan is comprised of multiple "amortization bases, which are positive and negative amounts generated each year based on the performance of the PERS Investment Fund and changes in the actuarial assumptions as shown in Exhibit 1. Each amortization base has a separate payment schedule over a fixed period of years.
CalPERS payments continue to increase each year. The chart on Exhibit 2 shows the existing UAL payments provided by PERS in its June 30, 2019 report. The chart on the Exhibit 2 also shows that the UAL payment for Fiscal Year 2020-2021 is $7.8 million. This is $1.2 million increase compared to last year's payment.
The City's financial advisor created a number of POB repayment structures for the City Council to consider. Since the majority of the UAL is repaid in 26 years, there is an option presented (Exhibit 3) that sh...
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