CITY COUNCIL STAFF REPORT
Meeting Date: February 26, 2024
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
SUBJECT: ADOPT RESOLUTION NO. ___-24 APPROVING AN ADDITIONAL
CONTRIBUTION TO THE PUBLIC AGENCIES POST-EMPLOYMENT
BENEFITS TRUST PROGRAM WITH PUBLIC AGENCY RETIREMENT
SERVICES (PARS) SECTION 115 TRUST
SYNOPSIS
The City Council is requested to review and adopt the proposed resolution approving an additional contribution into the City’s Public Agencies Post-Employment Benefits Trust Program with Public Agency Retirement Services (PARS), a Section 115 Trust based on the Pension Rate Stabilization Funding Policy, as recommended by the Budget Committee
DISCUSSION
Background
On May 2, 2022, the City Council adopted Resolution No. 30-22 approving a Section 115 Trust with PARS, with an initial contribution of $1.0 million, and approved the Pension Rate Stabilization (PRSP) Funding Policy, which includes potential contributions based on excess audited unassigned General Fund Balance.
“The City will consider making additional contributions to the Trust based on the net position of the General Fund recommended by the City Manager and Finance Manager. The amount will be based on unassigned General Fund Balance when revenues exceed costs (not including Measure K funds) in the audited financial statements. The contribution amount will be based on the annual excess audited unassigned General Fund Balance (not including Measure K). The recommended contribution amount will be based on the higher of 10% or $50,000 of the excess unassigned General Fund Balance.”
Audited General Fund Balance
At its meeting of February 14, 2024, the Budget Committee received the Fiscal Year 2022/2023 (FY 22/23) audited financial statements. For financial reporting purposes, the General Fund in the Annual Comprehensive Financial Report (ACFR) includes other general ledger funds, such as the Measure K Fund and the CARES Act Fund. The Measure K Fund is included since this is considered a general sales tax revenue, even though the City Council has prioritized specific projects and programs. The CARES Act Fund was created to track COVID-19 costs, so the City could reimburse itself from available grant sources. The fund was named the CARES Act Fund to reflect the initial source of funding, without which the General Fund would have been responsible for covering these costs. Below is a detail of each of those components that is reflected in the General Fund ACFR:
General Fund
Only Measure K CARES Act
ACFR - General
Fund
Beginning Fund Balance - June 30, 2022 $11,908,277 $10,190,465 ($149) $22,098,593 Fiscal Year 2023 Activity:
Revenues including transfers in 31,171,619 5,693,890 100,000 36,965,509 Expenditures including transfer out (29,293,870) (11,426,844) (99,851) (40,820,565) Change in Fund Balance 1,877,749 (5,732,954) 149 (3,855,056) Ending Fund Balance - June 30, 2023 $13,786,026 $4,457,511 $0 $18,243,537 The fiscal year ending result was a net increase of $1,877,749 for the “General Fund Only.” Based on the audited results, the General Fund Balance increased from the previous fiscal year.
Therefore, there are excess funds to contribute to the PARS Section 115 Trust. Based on the policy approved by City Council, the unassigned fund balance increased $157,009 (see table below, amount is in Annual Comprehensive Financial Report p.19), since some of the amounts are assigned to the reserves and/or encumbrances. Also, the City Council approved an initial transfer based on preliminary financial results last December, pursuant to the recommendation of the Budget Committee, for $100,000 (Resolution No. 82-23). In accordance with the PRSP Funding Policy, there is an additional $57,009 to be transferred to the Section 115 PARS Trust.
General
Fund Only
Unassigned Fund Balance - June 30, 2023 (1) $2,968,559
Unassigned Fund Balance - June 30, 2022 (2) $1,398,465
Increase (1) - (2) = (3) $1,570,094
PRSP Policy - 10% of Unassigned Fund Balance
or $50,000
(3) * 10% = (4) $157,009
City Council approved $100,000 transfer on
December 18, 2023 (5) ($100,000)
PRSP Transfer to PARS 115 Trust per Policy
(4) - (5) $57,009
The Budget Committee’s recommendation to the City Council is to increase the annual contribution to $300,000 based on the increase of the audited unassigned fund balance of $1.57 million. Since the City Council already approved a contribution of $100,000 last December, the Budget Committee’s recommendation would require an additional contribution of $200,000, in lieu of the required $57,009, to the PARS Section 115 Trust.
FISCAL IMPACT
Adoption of the proposed resolution will result in a transfer of $200,000 into the PARS Section 115 Trust using the audited financial information in accordance with the PRSP Funding Policy.
PUBLIC CONTACT
Public contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
Adopt the proposed resolution approving an additional contribution into the City’s Public Agencies Post-Employment Benefits Trust Program with Public Agency Retirement Services (PARS) a Section 115 Trust, as recommended by the Budget Committee.
ALTERNATIVES TO RECOMMENDED ACTION
Do not adopt the proposed resolution and provide direction to staff.
ATTACHMENT(S):
a. Proposed Resolution – approving additional contribution into the City’s Public Agencies Post-Employment Benefits Trust Program with Public Agency Retirement Services a Section 115 Trust
b. Resolution No. 30-22 - includes the City of Pleasant Hill Pension Rate Stabilization Program Funding Policy Proposed Resolution
c. Resolution No. 82-23 – approving the City of Pleasant Hill’s additional contribution of $100,000 to Public Agency Retirement Services a Section 115 Trust Prepared by: Erick Cheung, Finance Manager
Approved by: Ethan Bindernagel, City Manager