The Other Post-Employment Benefits (OPEB) Advisory Committee
held its inaugural meeting Thursday to go over Vacaville’s approach to OPEB and
begin the process of making recommendations to the City Council.
On June 25, the Solano County Grand Jury issued a report which
opined that the city’s OPEB package for retirees was “not sustainable” and
could lead to a loss of employees and services to citizens if not addressed.
Among the report’s recommendations was the formation of an OPEB oversight
committee to study the OPEB package and deliver suggestions to the council.
Staff did not initially support this recommendation, but the
council formally suggested that an “advisory committee” would be more
appropriate.
At Thursday’s meeting, Jay Yerkes, the city’s treasurer, served
as chair and Robert Denton, Sherri McBride, Jim Leland and Laura Dougherty
served as committee members. The group will meet over a 120-day period to
produce a report to be submitted to the City Council.
“We are doing a limited, few-month scope of work to see if
there is any stone that hasn’t been overturned already and if we can magically
come up with something that hasn’t been talked about in the last 10 years that
the city’s already been working on this,” Yerkes said.
Other Vacaville city staff were on hand to answer questions
and present reports, including City Manager Jeremy Craig, Human Resources
Division Manager Jessica Bowes, Administrative Services Director Dawn
Leonardini and Finance Manager Ken Matsumiya. Bowes and Matsumiya delivered a
Power Point presentation on the city’s OPEB background and how the package
works.
According to the presentation, the city contracts with the
California Public Employees’ Retirement System (CalPERS) for pension and health
benefits. The contract began in 1975, and Bowes said that the pension was
dictated by the Public Employees’ Retirement Law, while health insurance was
dictated by the Public Employees’ Medical & Hospital Care Act.
The city currently has three tiers for retiree medical. The
first tier consists of an 85-15 contribution and a vesting schedule. The second
tier consists of just a vesting schedule, which is based on an employees’ total
years of service with at least their last five years being in Vacaville. The
third tier consists of a substantial reduction in retiree benefits while
keeping an employee’s benefit the same as other active employees.
Bowes said the first two tiers are closed plans that do not
allow new entries. The third tier, however, is an open plan and has about 20
employees enrolled.
Matsumiya said valuation is performed by the city every two
years, and the data is sent to an actuary. The actuary will be presenting the
results of the most recent valuation at the next meeting.
In the 2019 fiscal year, $5.2 million was contributed to the
OPEB trust fund, and $45 million was in the trust as of Dec. 31. The city also
paid $4.8 million for health premiums.
“Retiree premiums annually end up being around $5 million,”
Matsumiya said. “We’ve set aside pretty much $8 (million) to $9 million to fund
retiree payments.”
In a public comment, resident Wendy Breckon said she had
studied the OPEB issue since the Grand Jury report was issued. She was thankful
the city established the committee because she felt Vacaville’s fiscal status
was something that needed to be addressed.
Breckon cited a Transparent California report, which ranked
Vacaville No. 112 out of 465 cities for health care spending, as well as a
report by Sen. John Moorlach, R-Costa Mesa, which ranked the city in the bottom
10 percent for “financial soundness.”
“To fix any problem, you have to realize there’s a problem,”
she said.
Breckon also felt that 120 days was a short amount of time to
solve a complex issue. Yerkes said the council intended to have it done in a
limited time period to see if the committee could come up with good solutions
in a finite time period.
Leland noted that the next meeting fell on a Monday — Jan. 27
— and asked if it was possible for meetings to be held the same day of the
week. Yerkes said it was possible to regularly hold meetings on Thursdays at 2
p.m., but Leonardini said the Monday meeting was due to the actuary being in
town and scheduled to present at the City Council the day after.
“You’re just getting an opportunity to see it first,” she
said.
Meetings are held in Conference Rooms A/B at Vacaville City
Hall, 650 Merchant St. They are open to the public.
January 16, 2020
The Vacaville Reporter
By Nick Sestanovich
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