The City of Vacaville has issued its response to a Solano County Grand Jury report issued in June regarding the city’s retirement benefits package. The Vacaville City Council will consider approving the response at Tuesday’s meeting.
Two months ago, the grand jury authored a report warning that the city’s Other Post-Employment Benefit (OPEB) package for city retirees was “not sustainable” and would lead to a loss of employees and services to citizens if not addressed. The report was triggered by a public complaint and required City Manager Jeremy Craig and the city to issue formal responses to all findings and recommendations made in the document.
The city issued its response to the findings and recommendations, which are included in this week’s council agenda. The grand jury report contended that the city made minor adjustments to OPEB debt, but “the cost for current employees and retirees still represents a significant financial threat to the city, which has not been sufficiently addressed.”
The city wrote that it partially disagreed with this finding, namely the contention that the city’s adjustments to the OPEB debt were minor. The city cited steps taken since 2008 to address the unfunded liability, including reducing the city-paid portion of health premiums from 100 to 85 percent of the Kaiser Bay Area health rate for current employees and retirees, establishing an irrevocable trust fund with the California Public Employees’ Retirement System in 2009 to pay for OPEB in advance, requiring employee contributions to the OPEB trust fund, negotiating a reduced retiree medical benefit for new hires and adopting an OPEB funding policy to fully fund the annual actuarially determined contribution by the 2020 fiscal year.
One of the grand jury’s recommendations for this finding was to establish a citizen oversight committee to study OPEB and present recommendations to the council. The city wrote that it appreciates the recommendation but has no plans to implement it for the time being.
“The current process of staff studying OPEB; working with an independent actuary on potential impacts; gathering and sharing information on potential costsaving strategies through conferences, trainings, and communications with external municipal colleagues; and proposing recommendations to council have resulted in steady progress being made on addressing the OPEB UAL,” the city wrote. “The city’s OPEB funded ratio has increased every actuarial valuation. While the city welcomes comments/ideas from the public on the topic, the establishment of a citizen oversight committee is not necessary.”
The city agreed with a finding that the OPEB might be a complex topic for the public to understand but disagreed with a charge that materials provided to the council by staff did not address the package’s long-term impact. Specifically, it cited a report on the effect of unfunded liabilities, which was presented to the council in 2015. The report also led to an OPEB funding policy being adopted later that year, which itself was the subject of the most recent round of negotiations, the city wrote.
In response to recommendations that the city direct staff to put the impact of changes and methodology in deciding the final impact into simpler language, the city wrote that the recommendation has not been implemented but would be brought to the council for future presentations.
Another finding suggested that placing OPEB issues on the council’s consent calendar made the public less likely to be aware of them and provide input on. The city partially disagreed with the report’s assessment.
“Although there are items such as labor Memorandum of Understandings (MOU) that may affect OPEB which are placed on the Consent Calendar, OPEB is also discussed and presented outside of the Consent Calendar,” the city wrote.
The city also wrote that it would consider within approximately four months whether or not to implement the report’s recommendation to present all OPEB and retirement health premium issues as separate agenda items.
The city concurred with a finding that changes in health plan rates announced by CalPERS were not brought before the council or public. Regarding a recommendation that changes in the city’s contribution toward retirement health care or impact on OPEB liability be placed on the agenda for the council’s public review, the city wrote that contributions toward active and retiree health care premiums were on the agenda as part of a resolution approving a new labor memorandum of understanding.
“As stated in the Grand Jury Report, the city contracts with CalPERS to obtain and administer healthcare for the City,” staff wrote. “The city has no involvement in negotiations of the health plan rates announced by CalPERS (i.e. the total healthcare premium)
and these CalPERS rate changes are not required to be on the agenda, nor does the city have any authority to change the rates.”
The response to the report is on the council’s consent calendar, where it will be approved alongside other items in one motion unless it is pulled by a council member or member of the public.
August 12, 2019
The Reporter
By Nick Sestanovich
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