Following a 16-month period of conducting all of its meetings over Zoom due to the COVID-19 pandemic, the Vacaville City Council will return to the Council Chambers Tuesday for its first in-person meeting since March 2020.
On
tap for this milestone meeting is a resolution confirming delinquent refuse
collection accounts from the past year and the direction to place liens on
affected properties, an informational update on legislation dealing with
methane reduction and organics recycling, and a response to the recent Solano
County Grand Jury report urging the city to stay on top of its unfunded
liabilities.
In
2019, the Grand Jury issued a report urging the city to address the sustainability
of the city’s retirement benefits package, or else it could lead to a loss in
employees and services. In 2021, the Grand Jury issued a followup report
opining that more needed to be done. The report requested a response from the
council.
Included
in the agenda for Tuesday’s meeting is a response to the findings and
recommendations that were issued by the Grand Jury.
The
first finding was that the unfunded portion of the city’s California Public
Employees’ Retirement System (CalPERS) pension plan increased from $126 million
in 2011 to $209 million in 2019, and claimed that the unfunded other
post-employee benefits liability was more than $80 million as of June 30, 2019.
In
its response, city officials disagreed with the latter claim, indicating that
the OPEB liability was $78.2 million as of that date.
The
Grand Jury’s two-part recommendation included establishing an annual
contribution schedule to retire the unfunded liabilities over a 10-to-15-year
period and apply for American Rescue Plan Act (ARPA) funds to make additional
contributions toward reducing pension and OPEB liabilities. City officials
wrote that the former recommendation had not been implemented on the pension
side — although staff would be presenting a pension funding policy to the
council later in the year — and the latter recommendation could not be
implemented since ARPA funds could not be used to make deposits into a pension
fund.
As
for the CalPERS liability, officials wrote that the increase was due to the
agency implementing measures to improve the long-term sustainability of the
pension fund and stabilize future costs.
The
Grand Jury’s second pair of recommendations was for the city to use an independent
facilitator to negotiate all labor contracts and for all labor negotiations to
address unfunded pension and OPEB liabilities. City officials wrote that both
have been implemented and disagreed with the finding that current benefits
packages were unsustainable.
“The
City and labor unions have continuously worked over the last 15 years to work
toward a sustainable model,” per the response. “Additionally, the City’s Five
Year General Fund forecast projects the City being able to maintain reserves
above policy levels throughout the life of the forecast while fully funding the
projected annual contributions towards pension and OPEB.”
The
third finding of the Grand Jury was that the city lacked control over health
care premium rates set by CalPERS, which impeded the city’s ability to contain
future health care costs. Its recommendation was to convert to a defined health
care benefits model in future labor negotiations.
The
city agreed with the finding, per its response, and noted that it had
implemented the recommendation for all non-safety employees hired on or after
Dec. 1, 2018 and safety employees hired on or after Jan. 1, 2020.
“While
the City will continue to monitor and report on its unfunded liabilities, with
the progress seen on the OPEB unfunded liability in recent years and total
General Fund revenues projected to exceed expenses into the future, attempting
to negotiate a reduction in healthcare benefits at this time is not warranted,”
officials wrote.
The
fourth recommendation was to re-establish the OPEB Advisory Committee, which
first met in Jan. 2020 for the start of a 120-day term to study the unfunded
liability and present its findings to the council. The report contended that
the council took no action on the recommendations, and the committee was later
dissolved.
Officials
wrote that the committee would not be reformed as its recommendations have been
addressed, including adding a third tier to the retiree medical structure to
move toward a defined contribution plan. To address the recommendation for a
sustainable fiscal plan, officials wrote that staff would consider taking
advantage of the 50 percent General Fund reserve to establish a pension rate
stabilization trust.
For
its final recommendation, the Grand Jury proposed the council “take actions to
ensure that issues affecting pensions and OPEB liabilities continue to be
reviewed regularly and publicly.”
Officials
wrote that this action has already been implemented, citing a March 2 study
session on OPEB and hiring a professional actuary to study OPEB every two
years, among other things.
Vacaville
Reporter
By NICK SESTANOVICH
July 22, 2021
No comments:
Post a Comment