LAKEPORT >> A resolution regarding the restructure of certain obligations Lakeport has to the California Public Employees’ Retirement System (CalPERS) was approved by the Lakeport City Council.
With the purpose of stabilizing the city’s Unfunded Accrued Actuarial Liability payment structure, which would “greatly enhance budget predictability,” according Lakeport Finance Director Daniel Buffalo. Additionally, savings to the general fund would total between $200,000 and $300,000 through 2040.
“If we didn’t try to adjust it now … it would just make things more difficult,” Buffalo said.
In addition to the UAAL payment, the city make a normal cost payment to CalPERS. Both payments go toward retired public safety and miscellaneous employees.
“The normal cost payments are the annual cost of providing retirement benefits for services performed by today’s members,” Buffalo explained. “The Unfunded Liability is the difference between accrued liabilities and the accrued assets and usually develops due to below average investment performance by CalPERS and/or changes to benefits and plans.”
A total of $265,000 is estimated for the normal cost payment for the next fiscal year, Buffalo said. Total payments for the UAAL change each fiscal year, with next year’s being approximately $600,000. By 2021 the payment will increase to $857,000 before dropping to $486,000 in 2022.
With restructuring, the “peaks and valleys” in the payments will be “smoothed out” through 2040 Buffalo explained.
Working with San Rafael-based NHA Advisors, the city’s contract financial advisor, three options were developed to address the restructuring, all of which use pension obligation bonds (POBs) to pay off a portion of the UAAL.
The first option would pay a total of approximately $1.92 million, or 26 percent of the total UAAL, over the course of a little more than seven years. A total of approximately $2.65 million would be paid over a nine-year period with the second option, which is 36 percent of the total UAAL.
With the final option, 46 percent of the total UAAL, or approximately $3.39 million would be paid over a nine-year period.
The board voted to restructure under the third option with a 4-0 vote, Councilman Marc Spillman was absent. Documents from NHA Advisors will be presented to the council at its next meeting.
“You can always change your mind for a lesser amount,” Lakeport City Manager Margaret Silveira said.
“We keep all the options on the table,” Councilwoman Stacey Mattina said.
Contact J. W. Burch, IV at 900-2022.
