City of South Pasadena Page 1
CALL TO ORDER: Mayor Michael Cacciotti
ROLL CALL: Mayor Michael Cacciotti
Mayor Pro Tem Jon Primuth
Councilmember Jack Donovan
Councilmember Diana Mahmud
Councilmember Evelyn G. Zneimer
PLEDGE OF ALLEGIANCE: Councilmember Diana Mahmud
CITY OF SOUTH PASADENA
CITY COUNCIL
A G E N D A
SPECIAL MEETING
WEDNESDAY, JANUARY 12, 2022 AT 6:30 P.M.
CITY COUNCIL CHAMBERS
1424 MISSION STREET, SOUTH PASADENA, CA 91030
VIA ZOOM TELECONFERENCE
South Pasadena City Council Statement of Civility
As your elected governing board, we will treat each other, members of the public, and city employees with patience, civility and courtesy as a model of the same behavior we wish to reflect in South Pasadena for the conduct of all city business and community participation. The decisions made tonight will be for the benefit of the South Pasadena community and not for personal gain.
NOTICE ON PUBLIC PARTICIPATION & ACCESSIBILITY
Pursuant to Government Code Section 54953, subdivision (e) (3), the City Council may conduct its meetings remotely and be held via video conference. The City Council may allow public participation to continue via live public comment conducted over ZOOM.
The South Pasadena City Council Meeting for January 12, 2022 will be conducted virtually from the Council Chambers, Amedee O. “Dick” Richards, Jr., located at 1424 Mission Street, South Pasadena.
The Meeting will be available
• Live Broadcast via the website – http://www.spectrumstream.com/streaming/south_pasadena/live.cfm • Via Zoom – https://us06web.zoom.us/j/82599992830
• Webinar ID: 825 9999 2830
To maximize public safety while still maintaining transparency and public access, members of the public can observe the meeting via Zoom in one of the three methods below.
1. Go to the Zoom website, https://zoom.us/join and enter the Zoom Meeting information; or
2. Click on the following unique Zoom meeting link:
https://us06web.zoom.us/j/82599992830or
3. You may listen to the meeting by calling: +1-669-900-6833 and entering the Zoom Meeting ID and Passcode when prompted.
For additional Zoom assistance with telephone audio, you may find your local number at:
https://zoom.us/u/aiXV0TAW2
Special Meeting Agenda South Pasadena City Council January 12, 2022 City of South Pasadena Page 2:3
PUBLIC COMMENT AND SUGGESTIONS Pursuant to Government Code Section 54954.3, public comment is limited to items on the special meeting agenda only.
The City Council welcomes public input, public comment will only be available at the beginning of the meeting and limited to items on the special agenda. Members of the public may participate by means of one of the following options:
Option 1:
Participants will be able to “raise their hand” using the Zoom icon during the meeting, and they will have their microphone un-muted during comment portions of the agenda to speak for up to 3 minutes per item.
Option 2:
Email public comment(s) to [email protected].
Public Comments received in writing will not be read aloud at the meeting, but will be part of the meeting record. Written public comments will be uploaded online for public viewing under Additional Documents.
There is no word limit on emailed Public Comment(s). Please make sure to indicate:
1) Name (optional), and
2) Agenda item you are submitting public comment on.
3) Submit by no later than 2:00 p.m., on Wednesday, January 12, 2022.
1. INTRODUCTION OF STAFF
Tameka J. Cook, Chief City Clerk
Domenica Megerdichian, Deputy City Manager
2. ADOPTION OF A RESOLUTION AUTHORIZING REMOTE TELECONFERENCE
MEETINGS OF THE LEGISLATIVE BODIES OF THE CITY
RESOLUTION
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOUTH PASADENA,
CALIFORNIA, AUTHORIZING REMOTE TELECONFERENCE MEETINGS OF
THE LEGISLATIVE BODIES OF THE CITY OF SOUTH PASADENA FOR THE PERIOD OF JANUARY 12 THROUGH FEBRUARY 12, 2022, PURSUANT TO
BROWN ACT PROVISIONS
Recommendation
It is recommended that the City Council approve the attached authorizing remote teleconference meetings of the legislative bodies of the City.
3. CELL TOWER REVENUE DESIGNATION
Recommendation
1. Receive and file presentation by Bartel & Associates
2. That the City Council give direction on the use of the Cell Tower Revenue.
PRESENTATION
CONSENT
STUDY SESSION
Special Meeting Agenda South Pasadena City Council January 12, 2022 City of South Pasadena Page 3:3
4. UPDATE ON CURRENT CAPITAL IMPROVEMENT PROGRAM (CIP)
PROJECTS AND DISCUSSION OF FISCAL YEAR 2022 – 2026 CIP
PROJECTS
ADJOURNMENT
FOR YOUR INFORMATION
FUTURE CITY COUNCIL MEETINGS
(OPEN SESSION)
January 19, 2022 Regular City Council Meeting Council Chamber 7:00 p.m.
February 2, 2022 Regular City Council Meeting Council Chamber 7:00 p.m.
PUBLIC ACCESS TO AGENDA DOCUMENTS AND BROADCASTING OF MEETINGS City Council meeting agenda packets, any agenda related documents, and additional documents are available online for public inspection on the City’s website:
https://www.southpasadenaca.gov/government/city-council-meetings/2021-council-meetings.
Regular meetings are live streamed via the internet at:
http://www.spectrumstream.com/streaming/south_pasadena/live.cfm
AGENDA NOTIFICATION SUBSCRIPTION
If you wish to receive an agenda email notification please contact the City Clerk’s Division via email at [email protected] or call (626) 403-7230.
ACCOMMODATIONS
The City of South Pasadena wishes to make all of its public meetings accessible to the public. If special assistance is needed to participate in this meeting, please contact the City Clerk's Division at (626) 403-7230 or [email protected]. Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities. Notification at least 48 hours prior to the meeting will assist staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting (28 CFR 35.102-35.104 ADA Title II).
CERTIFICATION OF POSTING
I declare under penalty of perjury that I posted this notice of agenda for the meeting to be held on January 12, 2022, on the bulletin board in the courtyard of City Hall at 1414 Mission Street, South Pasadena, CA 91030, and on the City’s website as required by law, on the date listed below. 01/10/ 2022 Tameka J. Cook
Date Tameka J. Cook, Chief City Clerk
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Emergency Declaration/AB 361
January 12, 2022
AB 361 allows a local agency legislative body to hold a meeting utilizing teleconferencing without complying with the Brown Act’s standard teleconferencing requirements if the Governor has proclaimed a State of Emergency and any of the following circumstances are present:
• State or local officials have imposed or recommended measures to promote social distancing.
• The meeting is being held for the purposes of determining, by majority vote, whether as a result of the emergency, meeting in person would present imminent risks to the health or safety of attendees.
• The legislative body has determined by majority vote that as a result of the emergency, meeting in person would present imminent risks to the health or safety of attendees.
If those circumstances are met and the City passes a resolution authorizing holding meetings by teleconference, then the City may hold meetings by teleconference if they comply with the following standards:
• Notice of the meeting must be given as required by the Brown Act. • The agenda must state how members of the public can access the meeting and offer public comment, including attendance by call-in option and/or internet-based service option. If the meeting broadcast or access to participation is disrupted (e.g., by technology issues), the City cannot take further action on agenda items until public access to the meeting is restored.
• The City cannot require public comments be submitted in advance of the meeting, but instead must provide an opportunity for real-time participation by members of the public.
The City can encourage public comment be submitted before meetings. • If the City provides a timed public comment period for each agenda item (i.e., 20 minutes per item), it cannot close public comment until that time period has concluded. If the City does not provide a timed public comment period for each agenda item, then it must allow a reasonable amount of time for members of the public to participate.
Background
Beginning in March 2020, Governor Newsom issued a series of Executive Orders aimed at containing the novel coronavirus. Executive Orders—N-25-20, N-29-20, and N-35-20 (Brown Act Orders) waived requirements in the Brown Act expressly or impliedly requiring the physical presence of city councilmembers, staff, or the public at local agency meetings. Specifically, the orders:
• waived the requirement that local agencies provide notice of each teleconference location from which a member of the legislative body will be participating in a public meeting, • waived the requirement that each teleconference location be accessible to the public, • waived the requirement that members of the public be able to address the legislative body at each teleconference conference location,
• waived the requirement that local agencies post agendas at all teleconference locations, and,
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Emergency Declaration/AB 361
January 12, 2022
• waived the requirement that at least a quorum of the members of the local body participate from locations within the boundaries of the territory over which the local body exercises jurisdiction.
On June 11, 2021, the Governor issued Executive Order N-08-21, to begin winding down some of the prior measures that were adopted to respond to COVID-19. Notably, N-08-21 rescinds the Brown Act Orders, effective September 30, 2021.
On March 18, 2020, pursuant to Government Code Section 8630(c), the South Pasadena City Council adopted Resolution No. 7646 declaring a local emergency, restricting private and public gatherings, and establishing protections for residential and commercial tenants, among other things. The City has renewed the declaration of local emergency on May 5, 2020 (Resolution No. 7648), on June 17, 2020 (Resolution No. 7657), on August 5, 2020 (Resolution No. 7669), on August 19, 2020 (Resolution No. 7678), on October 21, 2020 (Resolution No. 7685), on December 16, 2020, (Resolution No. 7690), on February 17, 2021 (Resolution No. 7703), on April 7, 2021 (Resolution No. 7713), June 2, 2021 (Resolution No. 7721), July 21, 2021 (Resolution No. 7726), September 15, 2021 (Resolution No. 7732), November 3, 2021 (Resolution Nos. 7734 and 7739), December 1, 2021 (Resolution No. 7741), and on December 15, 2021 (Resolution No. 7743).
On September 16, Governor Newsom signed AB 361, which allows cities to continue to meet remotely during proclaimed states of emergency under modified Brown Act requirements that are similar but not identical to the rules and procedures established by the Brown Act Orders.
Unlike the Brown Act Orders, AB 361 requires the City to make affirmative findings to take advantage of the more flexible teleconferencing standards.
AB 361 added Government Code section 54953, subdivision (e)(3), which states:
“If a state of emergency remains active, or state or local officials have imposed or recommended measures to promote social distancing, in order to continue to teleconference … the legislative body shall, not later than 30 days after teleconferencing for the first time … and every 30 days thereafter, make the following findings by majority vote:
(A) The legislative body has reconsidered the circumstances of the state of emergency. (B) Any of the following circumstances exist:
(i) The state of emergency continues to directly impact the ability of the members to meet safely in person.
(ii) State or local officials continue to impose or recommend measures to promote social distancing.”
The attached resolution makes the necessary findings authorizing the City to use teleconferenced meetings for the next 30 days. The City will need to adopt a resolution finding a public need to host teleconferenced meetings at subsequent meetings if it desires to maintain fully remote or hybrid meetings.
The proposed actions to preserve life, property, and public order are consistent with California Government Code section 8634 and South Pasadena Municipal Code Chapter 11. 2 - 3
Emergency Declaration/AB 361
January 12, 2022
The City of South Pasadena is committed to keeping our community safe amidst the recent surges in COVID-19 cases. Since the June 15 reopening of everyday activities in the State of California, there has been a nationwide rise in new COVID-19 cases because of the more contagious Delta and Omicron variants. The Los Angeles County Department of Public Health continues to track variant cases in Los Angeles County.
In light of the drastic increases in cases and resultant hospitalizations, and to lessen the severity of the Omicron and Delta variant surge in Los Angeles County and protect against overwhelming the health care delivery system, the Los Angeles County Public Health Officer issued a revised order on December 31, 2021, revising Isolation and Quarantine Requirements to mainly align with the State Public Health Officer’s revised Guidance issued December 30, 2021.
As recently as January 5, 2022, the Los Angeles County Public Health Officer issued latest revised order, Responding Together At Work and In the Community, Beyond the Blueprint for a Safer Economy, High Transmission- Encouraging COVID-19 Vaccination and Booster dose coverage with significant risk reduction measures, updating masking requirements for employers effective no later than January 17, 2022 and updating definitions for mega events effective January 15, 2022 in alignment with the State Public Health Officer's December 31, 2021 Order.
Legal Review
The City Attorney’s office has reviewed this item.
Fiscal Impact
With the State declaration of a health emergency, local COVID-19 response efforts may be eligible for state or federal reimbursement. The costs of responding to COVID-19 are unknown at this time due to evolving conditions but are being tracked by staff. The costs of conducting teleconference meetings have been factored into the City’s budget.
Public Notification of Agenda Item
The public was made aware that this item was to be considered this evening by virtue of its inclusion on the legally publicly noticed agenda, posting of the same agenda and reports on the City’s website.
Attachment:
1. City Council Resolution
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270845.1
CITY OF SOUTH PASADENA
RESOLUTION NO. XXXX
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SOUTH PASADENA, CALIFORNIA,
AUTHORIZING REMOTE TELECONFERENCE MEETINGS OF
THE LEGISLATIVE BODIES OF THE CITY OF SOUTH PASADENA
FOR THE PERIOD OF JANUARY 13, 2022 THROUGH FEBRUARY 12, 2022,
PURSUANT TO BROWN ACT PROVISIONS
WHEREAS, the City of South Pasadena is committed to preserving and nurturing public access and participation in the meetings of its legislative bodies; and WHEREAS, all meetings of the City of South Pasadena’s legislative bodies are open and public, as required by the Ralph M. Brown Act (Cal. Gov. Code 54950 – 54963), so that any member of the public may attend, participate, and watch the City’s legislative bodies conduct their business; and
WHEREAS, the Brown Act, Government Code section 54953(e), makes provisions for remote teleconferencing participation in meetings by members of a legislative body, without compliance with the requirements of Government Code section 54953(b)(3), subject to the existence of certain conditions; and
WHEREAS, a required condition is that a state of emergency is declared by the Governor pursuant to Government Code section 8625, proclaiming the existence of conditions of disaster or of extreme peril to the safety of persons and property within the state caused by conditions as described in Government Code section 8558; and WHEREAS, a proclamation is made when there is an actual incident, threat of disaster, or extreme peril to the safety of persons and property within the jurisdictions that are within the City’s boundaries, caused by natural, technological, or human-caused disasters; and WHEREAS, it is further required that state or local officials have imposed or recommended measures to promote social distancing, or, the legislative body meeting in person would present imminent risks to the health and safety of attendees; and WHEREAS, on March 4, 2020, Governor Gavin Newsom declared a state of emergency to exist in California as a result of COVID; and WHEREAS, on March 4, 2020, the Chair of the Los Angeles County Board of Supervisors and the Los Angeles County Health Officer declared a local emergency and a local health emergency, respectively, as a result of COVID-19; and WHEREAS, on March 18, 2020, the South Pasadena City Council adopted Resolution No. 7646 declaring a local emergency, restricting private and public gatherings, and establishing protections for residential and commercial tenants, among other things; and the South Pasadena City Council has renewed the declaration of local emergency on May 6, 2020 (Resolution No. 7648), June 17, 2020 (Resolution No. 7657), August 5, 2020 (Resolution No. 7669), August 19, 2 - 5
270845.1
2020 (Resolution No. 7678), October 21, 2020 (Resolution No. 7685), December 16, 2020 (Resolution No. 7690), February 17, 2021 (Resolution No. 7703), April 7, 2021 (Resolution No. 7713), June 2, 2021 (Resolution No. 7721), July 21, 2021 (Resolution No. 7726), September 15, 2021 (Resolution No. 7732), November 3, 2021 (Resolution Nos. 7734 and 7739), December 1, 2021 (Resolution No. 7741), and December 15, 2021 (Resolution No. 7743); and WHEREAS, on September 16, 2021, Governor Newsom signed AB 361, which allows cities to continue to meet remotely during proclaimed states of emergency under modified Brown Act requirements that are similar but not identical to the rules and procedures established by the Brown Act Orders; and
WHEREAS, on December 31, 2021, in light of the drastic increases in cases and resultant hospitalizations, and to lessen the severity of the Omicron and Delta variant surge in Los Angeles County and protect against overwhelming the health care delivery system, the Los Angeles County Public Health Officer issued a revised order revising Isolation and Quarantine Requirements to mainly align with the State Public Health Officer’s revised Guidance.
WHEREAS, as recently as January 5, 2022, the Los Angeles County Public Health Officer issued latest revised order, Responding Together At Work and In the Community, Beyond the Blueprint for a Safer Economy, High Transmission- Encouraging COVID-19 Vaccination and Booster dose coverage with significant risk reduction measures, updating masking requirements for employers effective no later than January 17, 2022 and updating definitions for mega events effective January 15, 2022 in alignment with the State Public Health Officer's December 31, 2021 Order.
WHEREAS, the City previously adopted Resolution No. 7734 finding that the requisite conditions exist for the City of South Pasadena to conduct teleconference meetings under California Government Code section 54953(e); and
WHEREAS, Government Code section 54953(e)(3) requires the legislative body adopt certain findings by majority vote within 30 days of holding a meeting by teleconference under Government Code section 54953(e), and then adopt such findings every 30 days thereafter; and WHEREAS, the City will continue to ensure public access to meetings of its legislative bodies pursuant to the relevant sections of the Government Code as it has done throughout the Governor’s declaration of a State of Emergency.
WHEREAS, the City of South Pasadena desires to continue to have the ability to hold its public meetings by teleconference consistent with Government Code section 54953(e).
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SOUTH
PASADENA, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
SECTION 1. Recitals. The preceding Recitals are true and correct and are hereby incorporated and adopted as findings and determinations by the City Council as if fully set forth herein.
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270845.1
SECTION 2. Proclamation. The City Council does hereby find:
A. That a state of emergency continues to exist within our community, and that the Los Angeles County Department of Public Health continues to impose and recommend measures to promote social distancing;
B. That as a consequence of the State and local emergencies and the physical distancing requirements recommended by the State and local public health officers, the City Council does hereby find that the legislative bodies of the City of South Pasadena may conduct their meetings without compliance with paragraph (3) of subdivision (b) of Government Code section 54953, as authorized by subdivision (e) of section 54953, and that such legislative bodies shall comply with the requirements to provide the public with access to the meetings as prescribed in paragraph (2) of subdivision (e) of section 54953; and
C. That the City will continue to ensure public access to meetings of its legislative bodies pursuant to the relevant sections of the Government Code as it has done throughout the Governor’s declaration of a State of Emergency.
SECTION 3. Remote Teleconference Meetings. The City Manager and legislative bodies of the City of South Pasadena are hereby authorized and directed to take all actions necessary to carry out the intent and purpose of this Resolution including, conducting open and public meetings in accordance with Government Code section 54953(e) and other applicable provisions of the Brown Act. Furthermore, City Manager and staff are directed to return to the City Council no later than thirty (30) days after the adoption of this resolution for the City Council to consider whether to again make the findings required to meet under the modified teleconference procedures of AB 361.
SECTION 4. Effective Date of Resolution. This Resolution shall take effect immediately upon its adoption and shall be effective until the earlier of February 12, 2022, or such time the City Council adopts a subsequent resolution in accordance with Government Code section 54953(e)(3) to extend the time during which the legislative bodies of the City of South Pasadena may continue to teleconference without compliance with paragraph (3) of subdivision (b) of section 54953.
PASSED, APPROVED AND ADOPTED on this 12th day of January, 2022.
Tameka J. Cook, Chief City Clerk Andrew L. Jared, City Attorney Michael A. Cacciotti, Mayor
ATTEST:
APPROVED AS TO FORM:
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DATE:
FROM:
PREPARED BY:
SUBJECT:
Recommendation
City Council
Agenda Report
January 12, 2022
Armine Chaparyan, City Manager .Ar.
Ken Louie, Interim Director of Finance
Cell To'\-Yer Revenue Designation
1. Receive and file presentation by Bartel & Associates ITEM NO. 3
2. That the City Council give direction on the use of the Cell Tower Revenue.
Background
This item was presented and discussed at length during the regularly scheduled November I 0, 2020 City Council meeting. At that meeting, the City Council determined that they had additional questions that would require the actuarial and author of report to be present to field questions. A representative from Bartel & Associates will be on hand this evening.
During Fiscal Year 2020-2021, the City Council approved a new cell tower lease that resulted in the City receiving a one-time payment of $4,374,439, in lieu of receiving annual payments.
When the funds were received, the City Council asked the Finance Commission to research and give direction on the most prudent use of these funds. The City Council and Finance Commission would later concur on the use of these funds to pay down pension liability with CalPERS ("PERS") and Other Post-Employment Benefits (OPEB). The City then secured the services of Bartel Associates, LLC ("Bartel") to perform a thorough analysis of both the City's pension obligations as well as the City's OPEB obligations. Upon completion of their analysis (actuarial and financial), they provided a detailed breakdown and payment options to the Finance Commission at the Commission's regularly scheduled meeting of September 23, 2021. At that meeting, after hearing the complete presentation, the Commission came to agreement on a specific recommendation to be forwarded to the City Council.
Discussion/ Analysis
The City of South Pasadena has 2 major PERS plans (Miscellaneous and Safety) and 3 PEPRA plans (Miscellaneous, Police and Fire). The PEPRA plans by definition are self-funding by the ensuring that employees pay their share of retirement costs. Conversely, the Miscellaneous plan is 71 % funded with an Unfunded Liability of $15.5 million. The Safety plan is 68% funded with an Unfunded Liability of $30.2 million. Additionally, the City has a liability with regards to its Other Post-Employment Benefits (OPEB) that are underfunded by $17.4 million. 3 - 1
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Finance Commission
Agenda Report ITEM NO. ____
DATE: September 23, 2021
FROM: Elaine Aguilar, Interim Assistant City Manager
Ken Louie, Interim Finance Director
SUBJECT: Funding Alternatives for Pension and Other Post-Employment Benefits Liability (OPEB)
Recommendation
It is recommended that the Finance Commission make a recommendation to the City Council regarding the Commission’s preferred funding alternative and funding amount.
Discussion/Analysis
Bartel Associates, LLC (“Bartel”) has been secured to perform a thorough analysis of both the City’s pension obligations as well as the City’s OPEB obligations. Upon completion of their analysis (actuarial and financial) they will provide the City a detailed breakdown and recommendation. At the time of this report, Bartel has not submitted their report or recommendations but still plan to make a full presentation at this meeting. The report will be forwarded to the Commission as soon as it is received.
Background
The City provides government employee pensions through the California Public Employee Retirement System (CalPERS). In addition, pursuant to law and various memorandum of understanding with the City’s bargaining units, eligible employees may receive reimbursement of health insurance costs. The health insurance reimbursements are “Other Post-Employment Benefits” or OPEB. There are on-going annual and “long term” costs associated with the provision of OPEB and pensions. The City Council has been aware of these looming liabilities, and previously requested that the Finance Commission evaluate funding alternatives to assist in paying for these costs. In addition, this item is listed on the Finance Commission’s 2021 Work Plan.
During Fiscal Year 2020-2021, the City Council approved a new cell tower lease that resulted in the City receiving a one-time payment of $4,374,439, in lieu of receiving annual payments.
When the funds were received, the City Council asked the Finance Commission to comment on the possible use of these one-time funds. When the Finance Commission reviewed the budget for the current fiscal year, one of the discussion items was the possible use of these funds. There was Commission concurrence that the Council should consider using the entirety of the cell tower revenues towards the pension and OPEB liabilities. This was reported back to the City 3 - 4
Property and Sales Tax Update
January 28, 2021
Council as part of the FY 2022 Budget approval process. As of this date, the City Council has not made a final determination regarding the use of the cell tower funds, however, the Council did direct staff to pull the revenue out of Undesignated General Fund Reserves, and allocate the funds to a new General Fund Designated Reserve, Cell Tower Revenue. The intent was to keep these funds separate until the Council takes formal action to spend the funds.
In addition to the one-time cell tower revenues, the City will be receiving one-time Federal COVID recovery funds, known as ARPA funding. The ARPA funding is currently estimated at $6,059,235. Before allocating any of these one-time funding sources, the Council embarked on a strategic planning process that will among other things, assist in allocating these funds.
Information regarding the strategic planning process can be found at the two links below:
https://www.southpasadenaca.gov/Home/Components/News/News/2677/714?backlist=%2f https://www.southpasadenaca.gov/government/departments/management-services/strategic-plan Members of the public and Finance Commissioners are encouraged to participate. The goal is to use the strategic plan to lead into the preparation of the budget and allocation of these one-time funds.
In order to be prepared for the upcoming planning process, additional information needed to be prepared regarding the City’s funding alternatives for its pension and OBEB liabilities, and to provide information about future liability if additional funds, above the annual amounts required, were allocated. The City Manager authorized staff to secure the services of Bartel Associates to assist in preparing the financial analysis. In order to have a potential funding amount, staff asked Bartel Associates to assume the use of the $4 million allocation, as this amount is roughly the amount of the cell tower revenues.
Fiscal Impact
The cost of the services provided by Bartel Associates, is $23,000. The agreement was previously approved by the City Manager, and funds were included in the FY 2021-2022 Annual Budget for this expense (Finance Department, Contract Services 101-3010-3011-8180).
Public Notification of Agenda Item
The public was made aware that this item was to be considered this evening by virtue of its inclusion on the legally publicly noticed agenda, posting of the same agenda and reports on the City’s website.
Attachments
1. Bartel Associates Report – To be forwarded separately 3 - 5
CITY OF SOUTH PASADENA
MISCELLANEOUS AND SAFETY PLANS
CalPERS Actuarial Issues – 6/30/20 Valuation
Preliminary Results
Mary Elizabeth Redding, Vice President
Bianca Lin, Assistant Vice President
Matthew Childs, Actuarial Analyst
Bartel Associates, LLC
September 23, 2021
Contents
o:\clients\city of south pasadena\projects\calpers\6-30-20\ba sopasadenaci 21-09-23 calpers misc safety opeb 20 draft.docx Topic Page
Definitions 1
Background 8
Miscellaneous Plan:
Historical Information 19
Projections 29
Safety Plan:
Historical Information 37
Projections 47
Combined Miscellaneous and Safety 55
Leaving CalPERS 57
PEPRA Cost Sharing 59
Paying Down the Unfunded Liability 61
Irrevocable Supplemental (§115) Pension trust 67
Additional Discretionary Payment Illustration 71
OPEB Plan Funding 87
Certification 94
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September 23, 2021 DRAFT 1
DEFINITIONS
CalPERS
Established in 1932
Basis is in California Government Code
2.1 million members
639,000 public agency members (not State or school employees) 1,563 public agencies
$485 billion assets (9/20/2021)
Largest US pension fund
September 23, 2021 DRAFT 2
DEFINITIONS
CalPERS
Administers CalPERS pension plans in accordance with State law and Board policies
List of pension benefits offered is in State law
CalPERS calculates benefits, pays retirees, and tracks all data CalPERS collects contributions from employees and employers CalPERS actuaries determine required contributions, in accordance with Board policies
CalPERS invests the funds in accordance with Board policies www.calpers.ca.gov
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September 23, 2021 DRAFT 3
DEFINITIONS
CalPERS Board
Meets monthly in Sacramento
13 Board members:
Elected by Members (6)
Public Agency members
School members
State members
Retirees
All members (2)
Appointed (3)
Appointed by Governor – elected official of a local government Appointed by Governor – official of a life insurer
Appointed by Speaker of Assembly and Senate Rules Committee – public representative
Ex Officio (4)
State Treasurer
State Controller
Director of CA. Dept of Human Resources
Representative of State Personnel Board
September 23, 2021 DRAFT 4
DEFINITIONS
CalPERS Defined Benefit Promise:
At retirement, employees receive a monthly annuity for life Final average pay (monthly) x years of service x factor Cost of living increase up to 2% per year
City employees have no Social Security
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September 23, 2021 DRAFT 5
DEFINITIONS
Member Contributions
Specified in law
Classics hired before 2013 = specified % of PERSable pay (7% or 9%) PEPRA hired 2013 and later = ½ cost of benefits earned each year City Contributions – Total required amount minus Member contributions September 23, 2021 DRAFT 6
DEFINITIONS
Current Normal Cost (NC):
Value of benefits earned during
current year
Actuarial Liability (AAL):
Value now of benefits earned to date
[value of past service benefit]
Target - Have money in the fund to
cover Actuarial Liability
Unfunded Liability (UAL) - Money short of target at valuation date If all actuarial assumptions were always exactly met, then the plan assets would always equal AAL
Any difference is the unfunded (or overfunded) AAL
Every year, the actuary calculates the difference between the expected UAL and Actual UAL. This is a new layer or amortization base
Each new layer gets amortized (paid off) over a period of time as part of the contribution [rate]
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September 23, 2021 DRAFT 7
DEFINITIONS
Basic Pension Rule:
Benefits + Expenses
=
Contributions* + Investment Earnings
* Employee + Employer
September 23, 2021 DRAFT 8
HOW WE GOT HERE
Investment Losses
CalPERS Contribution Policy
Enhanced Benefits
Demographics
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September 23, 2021 DRAFT 9
HOW WE GOT HERE – INVESTMENT RETURN
Returns (after 2001) shown are gross returns, unreduced for administrative expenses, from CalPERS valuation reports, when available. The discount rate is based on expected returns net of administrative expenses. 20-Year and 30-Year
average return rates on
6/30/21 are 6.9% and
8.3%, respectively
September 23, 2021 DRAFT 10
HOW WE GOT HERE – OLD CONTRIBUTION POLICY
Effective with 2003 valuations:
Slow (15 year) recognition of investment losses into funded status Rolling 30 year amortization of all (primarily investment) losses Designed to:
First smooth rates and
Second pay off UAL
Mitigated contribution volatility
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September 23, 2021 DRAFT 11
HOW WE GOT HERE – ENHANCED BENEFITS
At CalPERS, Enhanced Benefits implemented using all (future & prior) service Typically not negotiated with cost sharing
City of South Pasadena did not adopt Enhanced Benefits Tier 1 PEPRA
Miscellaneous 2%@55 FAE1 2%@62 FAE3
Safety Police & Fire 2%@50 FAE1 2.7%@57 FAE3
Note:
FAE1 is highest one year (typically final) average earnings FAE3 is highest three years (typically final three) average earnings PEPRA tier implemented for new employees hired after 1/1/13 Employee pays half of total normal cost
2021 Compensation limit
Social Security participants: $128,059
Non-Social Security participants: $153,671 (City of South Pasadena is not in Social Security)
September 23, 2021 DRAFT 12
HOW WE GOT HERE – ENHANCED BENEFITS
Available CalPERS Benefit formulas. City of South Pasadena formulas shown in red.
For any retirement age, chart shows benefit multiplier (% FAE per year of service) Retirement Age
Benefit Multiplier
3 - 12
September 23, 2021 DRAFT 13
HOW WE GOT HERE – ENHANCED BENEFITS
Benefit Multiplier
Retirement Age
September 23, 2021 DRAFT 14
HOW WE GOT HERE – DEMOGRAPHIC
Around the State
Large retiree liability compared to actives
State public agency average: 57% for Miscellaneous, 66% for Safety as of 6/30/2019.
Declining active population and increasing number of retirees Higher percentage of retiree liability increases contribution volatility City of South Pasadena percentage of liability belonging to retirees:
Miscellaneous 53%
Safety 67%
3 - 13
September 23, 2021 DRAFT 15
CALPERS CHANGES
Recent contribution policy changes:
No asset smoothing
No rolling amortization
20-year, level dollar amortization of post-2018 gains, losses, & changes 5-year ramp up for investment gains and losses
CalPERS Board changed the discount rate:
Rate Initial Impact Full Impact
6/30/16 valuation 7.375% 18/19 22/23
6/30/17 valuation 7.25% 19/20 23/24
6/30/18 valuation 7.00% 20/21 24/25
September 23, 2021 DRAFT 16
CALPERS CHANGES
Risk Mitigation Strategy
Move to more conservative investments over time to reduce volatility Only when investment return is better than expected
Lower discount rate in concert
Essentially use ≈50% of investment gains to pay for cost increases Likely get to 6.0% discount rate over 20+ years
Risk mitigation suspended from 6/30/16 to 6/30/18 valuation Did not trigger for 6/30/19 or 6/30/20 valuations
Will trigger for 6/30/21 valuation – 6.8% discount rate In the November 2021 meeting, CalPERS Board will adopt new Capital Market Assumptions
Discount rate and investment allocation
Discount rate expected to be equal to or lower than 6.8% We expect the same or higher investment risk than current portfolio Experience study (Demographic assumptions)
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September 23, 2021 DRAFT 17
CALPERS CHANGES
September 23, 2021 DRAFT 18
CALPERS CHANGES
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September 23, 2021 DRAFT 19
SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS
2011 2016 2019 2020
Actives
Counts 118 104 97 86
Average PERSable Wages $ 47,900 $ 59,600 $ 58,300 $ 72,600 Total PERSable Wages 5,700,000 6,200,000 5,700,000 6,200,000 Inactive Members
Counts
Transferred (working at another
CalPERS agency) 92 103 115 123
Separated 79 89 120 135
Receiving Payments 128 143 147 153
September 23, 2021 DRAFT 20
SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS
3 - 16
September 23, 2021 DRAFT 21
PLAN FUNDED STATUS - MISCELLANEOUS
June 30, 2019 June 30, 2020
Actuarial Accrued Liability
Active $12,200,000 $12,200,000
Retiree 26,000,000 28,200,000
Inactive 12,700,000 13,300,000
Total 50,900,000 53,700,000
Assets 36,400,000 38,200,000
Unfunded Liability 14,500,000 15,500,000
Funded Ratio 71.6% 71.1%
Average funded ratio for
CalPERS Public Agency
Miscellaneous Plans 72.2% N/A
September 23, 2021 DRAFT 22
PLAN FUNDED STATUS - MISCELLANEOUS
City CalPERS Assets and Actuarial Liability ($Millions) 3 - 17
September 23, 2021 DRAFT 23
PLAN FUNDED STATUS - MISCELLANEOUS
Discount Rate Sensitivity
June 30, 2020
Discount Rate
7.00% 6.50%1 6.00%
AAL $53,700,000 $57,600,000 $61,400,000
Assets 38,200,000 38,200,000 38,200,000
Unfunded Liability 15,500,000 19,400,000 23,200,000
Funded Ratio 71.1% 66.3% 62.2%
1 Estimated by Bartel Associates.
September 23, 2021 DRAFT 24
FUNDED RATIO - MISCELLANEOUS
6/30/21 funded status estimated
3 - 18
September 23, 2021 DRAFT 25
FUNDED STATUS (THOUSANDS) - MISCELLANEOUS
6/30/21 funded status estimated
September 23, 2021 DRAFT 26
CONTRIBUTION RATES - MISCELLANEOUS
Last Side Fund payment in 2020/21
3 - 19
September 23, 2021 DRAFT 27
CONTRIBUTION RATES - MISCELLANEOUS
6/30/20 Valuation
2022/2023 Contribution Rates
Total2 Tier 1 PEPRA
2%@55 2%@62
Base Total Normal Cost 15.8% 17.2% 14.2%
Class 1 Benefits
Final One Year Compensation 0.3% 0.6% -
Post-Retirement Survivor Allowance 0.8% 0.7% 0.8%
Total Normal Cost 16.8% 18.5% 15.0%
Formula’s Expected EE Contr. Rate 7.1% 6.9% 7.3%
ER Normal Cost 9.7% 11.6% 7.8%
Amortization Payment 17.7% 33.8% 0.4%
Amortization of Side Fund - - -
Total ER Contribution 27.4% 45.4% 8.2%
Employee counts 86 38 48
Employee payroll (in 000’s) $ 6,776 $ 3,499 $ 3,277
Total ER Contribution $ (in 000’s) 1,858 1,589 269
2 Weighting of total contribution based on projected classic and PEPRA payrolls September 23, 2021 DRAFT 28
CONTRIBUTION RATES - MISCELLANEOUS
6/30/19 6/30/20
2021/2022 2022/2023
Total Normal Cost 16.9% 16.8%
Employee Normal Cost 7.1% 7.1%
Employer Normal Cost 9.9% 9.7%
Amortization Payments 17.0% 17.7%3
Total Employer Contribution Rate 26.9% 27.4%
2021/22 Employer Contribution Rate 26.9%
Payroll > Expected (1.3%)
6/30/16 Discount Rate Change (5th Year) 0.3%
6/30/17 Discount Rate & Inflation (4th Year) 0.3%
6/30/18 Discount Rate change (3rd Year) 0.5%
Other (Gains)/Losses 0.7%
2022/23 Employer Contribution Rate 27.4%
3 Equivalent to 7.8% of UAL. One year, 7% interest on the UAL is 15.8% of payroll. 2022/23 amortization payment exceeds interest on the UAL, so there is no “negative amortization.” 3 - 20
September 23, 2021 DRAFT 29
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
Market Value Investment Return:
June 30, 2021 21.3%4
Future returns based on stochastic analysis using 1,000 trials Single Year Returns at5 25th Percentile 50th Percentile 75th Percentile Current Investment Mix 0.1% 7.0% 14.8%
Ultimate Investment Mix 0.8% 6.0% 11.4%
Assumes investment returns will, generally be 6.5% (as compared to 7.0%) over the next 8 years and higher beyond that.
Discount Rate decreases due to Risk Mitigation policy No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Different from CalPERS projection
Impact of Risk Mitigation Policy:
Combined impact of investment gain and discount rate change amortized over 20 years with 5 year ramp up
4 Gross return based on July 2021 CalPERS press release. 5 Nth percentile means N percentage of our trials result in returns lower than the indicated rates.
September 23, 2021 DRAFT 30
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
New hire assumptions:
97.5% of 2021/22 new hires are PEPRA members and 2.5% are Classic members
Percentage of PEPRA member future hires to increase from 97.5% to 100% in last year
3 - 21
September 23, 2021 DRAFT 31
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
September 23, 2021 DRAFT 32
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
3 - 22
September 23, 2021 DRAFT 33
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
September 23, 2021 DRAFT 34
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
3 - 23
September 23, 2021 DRAFT 35
FUNDED STATUS - MISCELLANEOUS
September 23, 2021 DRAFT 36
FUNDED STATUS - MISCELLANEOUS
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September 23, 2021 DRAFT 37
SUMMARY OF DEMOGRAPHIC INFORMATION - SAFETY
2011 2016 2019 2020
Actives
Counts 54 53 49 53
Average PERSable Wages $91,100 $96,300 $97,100 $107,000 Total PERSable Wages 4,900,000 5,100,000 4,800,000 5,700,000 Inactive Members
Counts
Transferred 36 23 27 28
Separated 11 9 18 18
Receiving Payments 113 138 140 138
September 23, 2021 DRAFT 38
SUMMARY OF DEMOGRAPHIC INFORMATION - SAFETY
3 - 25
September 23, 2021 DRAFT 39
PLAN FUNDED STATUS - SAFETY
June 30, 2019 June 30, 2020
Actuarial Accrued Liability
Active $23,100,000 $27,800,000
Retiree 64,300,000 63,900,000
Inactive 4,100,000 3,900,000
Total 91,500,000 95,600,000
Assets 63,500,000 65,400,000
Unfunded Liability 28,000,000 30,200,000
Funded Ratio 69.4% 68.4%
Average funded ratio for
CalPERS Public Agency
Safety Plans 68.6% N/A
September 23, 2021 DRAFT 40
PLAN FUNDED STATUS - SAFETY
City CalPERS Assets and Actuarial Liability ($Millions) 3 - 26
September 23, 2021 DRAFT 41
PLAN FUNDED STATUS - SAFETY
Discount Rate Sensitivity
June 30, 2020
Discount Rate
7.00% 6.50%6 6.00%
AAL $95,600,000 $101,700,000 $107,800,000
Assets 65,400,000 65,400,000 65,400,000
Unfunded Liability 30,200,000 36,300,000 42,400,000
Funded Ratio 68.4% 64.3% 60.7%
6 Estimated by Bartel Associates.
September 23, 2021 DRAFT 42
FUNDED RATIO - SAFETY
6/30/21 funded status estimated
3 - 27
September 23, 2021 DRAFT 43
FUNDED STATUS (THOUSANDS) - SAFETY
6/30/21 funded status estimated
September 23, 2021 DRAFT 44
CONTRIBUTION RATES - SAFETY
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September 23, 2021 DRAFT 45
CONTRIBUTION RATES - SAFETY
6/30/20 Valuation
2022/2023 Contribution Rates
Total7 Tier 1 PEPRA
2%@50 2.7%@57
Base Total Normal Cost 26.8% 27.1% 25.8%
Class 1 Benefits
Final One Year Compensation 0.8% 1.1% -
Post-Retirement Survivor Allowance 1.7% 1.7% 1.6%
Total Normal Cost 29.3% 29.9% 27.4%
Formula’s Expected EE Contr. Rate 10.2% 9.0% 13.8%
ER Normal Cost 19.1% 21.0% 13.7%
Amortization Payment 39.6% 52.8% 0.9%
Amortization of Side Fund - - -
Total ER Contribution 58.7% 73.8% 14.6%
Employee counts 53 36 17
Employee payroll (in 000’s) $ 6,150 $ 4,584 $ 1,566
Total ER Contribution $ (in 000’s) 3,611 3,383 228
7 Weighting of total contribution based on projected classic and PEPRA payrolls
September 23, 2021 DRAFT 46
CONTRIBUTION RATES - SAFETY
6/30/19 6/30/20
2021/2022 2022/2023
Total Normal Cost 29.4% 29.3%
Employee Normal Cost 10.0% 10.2%
Employer Normal Cost 19.4% 19.1%
Amortization Payments 41.6% 39.6%8
Total Employer Contribution Rate 61.0% 58.7%
2021/22 Employer Contribution Rate 61.0%
Payroll > Expected (6.6%)
6/30/16 Discount Rate Change (5th Year) 0.7%
6/30/17 Discount Rate & Inflation (4th Year) 0.8%
6/30/18 Discount Rate change (3rd
Year) 1.2%
Other (Gains)/Losses 1.6%
2022/23 Employer Contribution Rate 58.7%
8 Equivalent to 8.1% of UAL. One year, 7% interest on the UAL is 34.4% of payroll . 2022/23 amortization payment exceeds interest on the UAL, so there is no “negative amortization”. 3 - 29
September 23, 2021 DRAFT 47
CONTRIBUTION PROJECTIONS - SAFETY
Market Value Investment Return:
June 30, 2021 21.3%9
Future returns based on stochastic analysis using 1,000 trials Single Year Returns at10 25th Percentile 50th Percentile 75th Percentile Current Investment Mix 0.1% 7.0% 14.8%
Ultimate Investment Mix 0.8% 6.0% 11.4%
Assumes investment returns will, generally be 6.5% (as compared to 7.0%) over the next 8 years and higher beyond that.
Discount Rate decreases due to Risk Mitigation policy No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Different from CalPERS projection
Impact of Risk Mitigation Policy:
Combined impact of investment gain and discount rate change amortized over 20 years with 5 year ramp up
9 Gross return based on July 2021 CalPERS press release. 10 Nth percentile means N percentage of our trials result in returns lower than the indicated rates.
September 23, 2021 DRAFT 48
CONTRIBUTION PROJECTIONS - SAFETY
New hire assumptions:
97.5% of 2021/22 new hires are PEPRA members and 2.5% are Classic members
Percentage of PEPRA member future hires to increase from 97.5% to 100% in last year
3 - 30
September 23, 2021 DRAFT 49
CONTRIBUTION PROJECTIONS - SAFETY
September 23, 2021 DRAFT 50
CONTRIBUTION PROJECTIONS - SAFETY
3 - 31
September 23, 2021 DRAFT 51
CONTRIBUTION PROJECTIONS - SAFETY
September 23, 2021 DRAFT 52
CONTRIBUTION PROJECTIONS - SAFETY
3 - 32
September 23, 2021 DRAFT 53
FUNDED STATUS - SAFETY
September 23, 2021 DRAFT 54
FUNDED STATUS - SAFETY
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September 23, 2021 DRAFT 55
COMBINED MISCELLANEOUS AND SAFETY
September 23, 2021 DRAFT 56
COMBINED MISCELLANEOUS AND SAFETY
Funded Status Summary on June 30, 2020
(Amounts in $Millions)
Miscellaneous Safety Total
AAL $ 53.7 $ 95.6 $ 149.3
Assets 38.2 65.4 103.6
Unfunded AAL 15.5 30.2 45.7
Funded Ratio 71.1% 68.4% 69.4%
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September 23, 2021 DRAFT 57
LEAVING CALPERS
Participation in CalPERS is governed by State law and CalPERS rules The following are considered “withdrawing” from CalPERS:
Exclude new hires from CalPERS & giving them a different pension Stop accruing benefits for current employees
“Withdrawal” from CalPERS:
Treated as plan termination
Liability increased for conservative investments
Liability increased for future demographic fluctuations Liability must be funded immediately by withdrawing agency Otherwise, retiree benefits are cut
September 23, 2021 DRAFT 58
LEAVING CALPERS
CalPERS Termination Estimates on June 30, 2020 (Amounts in Millions) Ongoing Plan Termination Basis
Discount Rate 7.00% 0.75% 2.50%
Miscellaneous
Actuarial Accrued Liability $ 53.7 $131.9 $ 97.0
Assets 38.2 38.2 38.2
Unfunded AAL (UAAL) 15.5 93.7 58.8
Safety
Actuarial Accrued Liability $ 95.6 $ 227.5 $ 173.7
Assets 65.4 65.4 65.4
Unfunded AAL (UAAL) 30.2 162.1 108.3
Total
Unfunded AAL (UAAL) 45.7 255.8 167.1
Funded Ratio 69.4% 28.8% 38.3%
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September 23, 2021 DRAFT 59
PEPRA COST SHARING
Target of 50% of total normal cost paid by all employees PEPRA members must pay greater of 50% of total normal cost or bargained amount if higher
Employer cannot pay any part of PEPRA member required employee contributions
Employer may impose current employees pay 50% of total normal cost (limited to 8% of pay for Miscellaneous and 12% for Safety) if not agreed through collective bargaining
Miscellaneous Plan 2022/23:
Classic Members New Members
Tier 1
2%@55 FAE1
PEPRA
2%@62 FAE3
Employer Normal Cost 11.6% 7.76%
Member Normal Cost 7.0% 7.25%
Total Normal Cost 18.6% 15.01%
50% Target 9.3% 7.51%
September 23, 2021 DRAFT 60
PEPRA COST SHARING
Safety Plan 2022/23:
Classic Members New Members
Tier 1
2%@50 FAE1
PEPRA
2.7%@57 FAE3
Employer Normal Cost 21.0% 13.66%
Member Normal Cost 9.0% 13.75%
Total Normal Cost 30.0% 27.41%
50% Target 15.0% 13.71%
PEPRA Member Contributions – no change expected for FY22/23:
2021/22 2022/23
Group
Total
NC
(Basis)
Member
Rate
Total
Normal
Cost Change
Member
Rate Method
Miscellaneous 14.32% 7.25% 15.01% 0.69% 7.25% PEPRA
Members
Safety 27.63% 13.75% 27.41% (0.22%) 13.75% PEPRA
Members
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September 23, 2021 DRAFT 61
PAYING DOWN THE UNFUNDED LIABILITY & RATE STABILIZATION All options for mitigating future contribution increases involve paying more money sooner
CalPERS liabilities grow 7% per year
City internal investments restricted to very low risk Where do you get the money from?
Sources of funds: City funds, borrowing, bargain with employees to pay more How do you use the money?
September 23, 2021 DRAFT 62
WHERE DO YOU GET THE MONEY FROM?
POB:
Usually thought of as interest arbitrage between expected earnings and rate paid on POB
No guaranteed savings
PEPRA prevents contributions from dropping below normal cost Savings offset when investment return is good
GFOA Advisory
Currently very popular due to low borrowing costs, but no guarantees! Borrow from General Fund similar to State
One time payments
Governing body resolution to use a portion of one time money, e.g. 1/3 to one time projects
1/3 to replenish reserves and
1/3 to pay down unfunded liability
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September 23, 2021 DRAFT 63
HOW DO YOU USE THE MONEY?
Internal Service Fund
Typically used for rate stabilization
Restricted investments:
Likely low (0.5%-1.0%) investment returns
Short term/high quality, designed for preservation of principal Assets can be used by governing body for other purposes Does not reduce Unfunded Liability
September 23, 2021 DRAFT 64
HOW DO YOU USE THE MONEY?
Make payments directly to CalPERS:
Likely best long-term investment return
Must be considered an irrevocable decision
Extra payments cannot be used as future “credit”
PEPRA prevents contributions from dropping below normal cost Option #1: Request shorter amortization period (Fresh Start):
Higher short term payments
Less interest and lower long term payments
Likely cannot revert to old amortization schedule
“Soft” fresh start is more popular, but administratively difficult
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September 23, 2021 DRAFT 65
HOW DO YOU USE THE MONEY?
Make payments directly to CalPERS (continued):
Option #2: Additional Discretionary Payment (ADP):
Extra contribution’s impact muted by reduced future contributions CalPERS can’t track the “would have been” contribution No guaranteed savings
Larger asset pool means larger loss (or gain) opportunity Paying off shorter amortization bases: larger contribution savings over shorter period:
e.g. 10 year base reduces contribution 11.9¢ for $1
Less interest savings vs paying off longer amortization bases Paying off longer amortization bases: smaller contribution savings over longer period:
e.g. 25 year base reduces contribution 6.2¢ for $1
More interest savings vs paying off shorter amortization bases Maintaining the current payment schedule – not letting payments reduce due to extra payment – gives the greatest long-term savings Administratively and politically difficult
September 23, 2021 DRAFT 66
HOW DO YOU USE THE MONEY?
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September 23, 2021 DRAFT 67
IRREVOCABLE SUPPLEMENTAL (§115) PENSION TRUST
Can only be used to:
Reimburse City for CalPERS contributions
Make payments directly to CalPERS
Investments significantly less restricted than City investment funds Fiduciary rules govern Trust investments
Usually, designed for long term returns
Assets don’t count for GASB accounting
Are considered Employer assets
Well over 100 trusts established, mostly since 2015
Trust providers: PARS, PFM, Keenan
California Employers’ Pension Prefunding Trust (CEPPT) effective July 2019
Strategy 1: 48% stocks / 52% bonds
Strategy 2: 22% stocks / 78% bonds
September 23, 2021 DRAFT 68
IRREVOCABLE SUPPLEMENTAL (§115) PENSION TRUST
More flexibility than paying CalPERS directly
City decides if and when and how much money to put into Trust City decides if and when and how much to withdraw to pay CalPERS or reimburse Agency
Funding strategies typically focus on
Reducing the unfunded liability
Fund enough to make total CalPERS UAL = 0
Make PEPRA required payments from Trust when overfunded Stabilizing contribution rates
Mitigate expected contribution rates to better manage budget Combination
Use funds for rate stabilization/budget predictability Target increasing fund balance to pay off UAL sooner
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September 23, 2021 DRAFT 69
IRREVOCABLE SUPPLEMENTAL (§115) PENSION TRUST
Consider:
How much can you put into Trust?
Initial seed money?
Additional amounts in future years?
When do you take money out?
Target budget rate?
Year target budget rate kicks in?
Before or after CalPERS rate exceeds budgeted rate?
September 23, 2021 DRAFT 70
COMPARISON OF OPTIONS
Supplemental Trust CalPERS
Flexible Locked In
Likely lower long-term return Likely higher long-term return Investment strategy choice No investment choice
Does not reduce net pension
liability for GASB reporting
Reduces net pension liability for
GASB reporting
More visible More restricted
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September 23, 2021 DRAFT 71
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Following illustrates additional $3.4 million contribution to CalPERS on June 30, 2022 $.6 million to OPEB illustrated later. Total $4 million Miscellaneous ($1.2 million)
Safety ($2.2 million)
Estimated Savings
Miscellaneous Safety
Apply ADP to Shortest Bases $1.2 million $2.2 million
Total $ Savings (000’s) over 30 years $ 571 $1,155
Present Value of Savings @ 3% (000’s) 277 555
Apply ADP to Longest Bases $1.2 million $2.2 million
Total $ Savings (000’s) over 30 years $1,398 $ 2,580
Present Value of Savings @ 3% (000’s) 592 1,090
Do Not Let Payments Reduce $1.2 million $2.2 million
Total $ Savings (000’s) over 30 years $2,827 $5,318
Present Value of Savings @ 3% (000’s) 1,158 2,171
September 23, 2021 DRAFT 72
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Miscellaneous Safety
Trust Contributions $1.2 million $2.2 million
Trust Earnings 5% 5%
Trust Target
- Target City contribution rate11 25.0% 53.0%
- Projected 1st year of trust
withdrawals 2028/29 2028/29
- Projected last year of trust
withdrawals 2035/36 2034/35
$ Savings (000’s) over 30 years $825 $1,428
Present value of savings @ 3%
discount rate (000’s) 312 567
11 If CalPERS rates are below the target rate, the difference is paid to the Trust. If CalPERS rates are above the target rate, funds are withdrawn from the trust to pay CalPERS.
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September 23, 2021 DRAFT 73
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Miscellaneous
September 23, 2021 DRAFT 74
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Miscellaneous
3 - 43
September 23, 2021 DRAFT 75
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Safety
September 23, 2021 DRAFT 76
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Safety
3 - 44
September 23, 2021 DRAFT 77
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Miscellaneous
September 23, 2021 DRAFT 78
ADDITIONAL PAYMENT ILLUSTRATION
Direct Payment to CalPERS
Safety
3 - 45
September 23, 2021 DRAFT 79
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Miscellaneous
September 23, 2021 DRAFT 80
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Miscellaneous
3 - 46
September 23, 2021 DRAFT 81
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Miscellaneous
September 23, 2021 DRAFT 82
ADDITIONAL PAYMENT ILLUSTRATION
3 - 47
September 23, 2021 DRAFT 83
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Safety
September 23, 2021 DRAFT 84
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Safety
3 - 48
September 23, 2021 DRAFT 85
ADDITIONAL PAYMENT ILLUSTRATION
Payment to 115 Trust
Safety
September 23, 2021 DRAFT 86
ADDITIONAL PAYMENT ILLUSTRATION
3 - 49
September 23, 2021 DRAFT 87
OPEB PLAN FUNDING
Retiree Healthcare Benefits
City pays:
Single-employee premiums for pre-2012 retirees
Up to $625/$715 per month for other Safety employees and Miscellaneous hired before 7/1/2020
CalPERS minimum ($143/month in 2021) for Miscellaneous hired after 7/1/2020
Retirement after age 50 with 5 years CalPERS service
Health plans through CalPERS
No dental, vision, or life insurance
District not pre-funding the OPEB obligation
Discount rate depends on municipal bond rate (2.21% at 6/30/2021) If prefunding, use fund’s long term expected return on assets
September 23, 2021 DRAFT 88
OPEB PLAN FUNDING
Actuarial Obligations
(Amounts in 000’s)
6/30/19
Discount rate 3.5%
Actuarial Accrued Liability (AAL)
• Actives (future retirees) $ 5,501
• Retirees 11,337
• Total 16,838
Assets 0
Unfunded AAL 16,838
Projected benefit payments FY2021 $815
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September 23, 2021 DRAFT 89
OPEB PLAN FUNDING
Why prefund OPEB?
Financial: Future benefits can be paid partly from investment earnings instead of from current City budget
Intergenerational equity: Taxpayers/residents who receive City services should pay for the compensation and retiree benefits -- they should not be paid by later taxpayers
Logical: OPEB is an employee benefit just like pensions.
September 23, 2021 DRAFT 90
OPEB PLAN FUNDING
6/30/2021 Actuarial Obligations and Recommended Contributions (Amounts in 000’s)
Current Pre-funding Pre-funding
Discount rate (expected long term
return on trust assets) 3.5% 6.25% 4.75%
Actuarial Accrued Liability (AAL) $ 17,471 $ 12,865 $ 15,093 Assets 0 600 600
Unfunded AAL (UAL) 17,471 12,265 14,493
Normal cost (value of benefits
earned in the coming year) 673 399 527
Amortization payment 12 N/A 861 923
Actuarially Determined
Contribution (ADC) N/A 1,260 1,450
Projected benefit payments 840 840 840
Net recommended trust
contribution for FY2022 N/A $ 420 $ 610
12 20 year, level percent of pay (3% per year payment escalation) 3 - 51
September 23, 2021 DRAFT 91
OPEB PLAN FUNDING
Illustration of Projected Recommended Contributions vs. Benefit Payments
6.25% Discount Rate
September 23, 2021 DRAFT 92
OPEB PLAN FUNDING
Illustration of UAL Amortization Payments
6.25% Discount Rate
3 - 52
September 23, 2021 DRAFT 93
OPEB PLAN FUNDING
Illustration of UAL Paydown
6.25% Discount Rate
September 23, 2021 DRAFT 94
ACTUARIAL CERTIFICATION
This report presents analysis of the City of South Pasadena’s CalPERS pension plans. The purpose of this report is to provide the City:
Historical perspective on the plan investment returns, assets, funded status and contributions. Projections of likely future contributions and the impact of investment volatility The calculations and projections in this report are based on information contained in the City’s June 30, 2020 and earlier CalPERS actuarial valuation reports. We reviewed this information for reasonableness, but do not make any representation on the accuracy of the CalPERS reports.
Future investment returns and volatility are based on Bartel Associates Capital Market model which results in long term returns summarized on pages 23 and 41.
Future results may differ from our projections due to differences in actual experience as well as changes in plan provisions, CalPERS actuarial assumptions or methodology. Other than variations in investment return, this study does not analyze these.
To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted actuarial principles and practices. As members of the American Academy of Actuaries meeting the Academy Qualification Standards, we certify the actuarial results and opinions herein.
Respectfully submitted,
Mary Elizabeth Redding, FSA, EA, FCA, MAAA
Vice President
Bartel Associates, LLC
DRAFT
Bianca Lin, FSA, EA, FCA, MAAA
Assistant Vice President
Bartel Associates, LLC
DRAFT
3 4-11 - 53
4 - 1
CAPITAL IMPROVEMENT
PROGRAM (CIP)
Study Session #2
Finance, Management Services, & Public Works Departments 1 4 - 2
CIP Study Session #2 Objectives
• No adoption decisions are made tonight
• Briefly review what was covered during Study Session #1 • Clarify status of past projects
• Consider the recently adopted strategic plan in concert with the draft 5-Year CIP
• Gather consensus on the current direction of the CIP
• Discuss funding and next steps
2 4 - 3
CIP Study Session #1 Recap
• Introduction: What is a CIP? What is included/excluded? • 5-Year Structure: Year 1 adopted, Years 2-5 Informational • Discussed the CIP process (Now through June 2022)
• Several study sessions to explain process and gather consensus on project priorities before 2022-2023 budget adoption
5 Year CIP Plan & Budget
2022-2023 2023-2024 2024-2025 2025-2026 2026-2027
Adopt in
June 2022
with Annual
Budget
3 4 - 4
CIP Study Session #1 Recap
• Reviewed Previous CIP 2020-2024 Plan Projects
• Council Requested Clarity on Previous Project Statuses • Reviewed Preliminary 5-Year Project List & Schedule
• Discussed 2021-2022 Mid-Year Adjustments
• Brief Review of potential projects without identified funding 4 4 - 5
Post CIP Study Session #1
• After the November 10th CIP Session #1:
• Nov 21st MTIC: Recommended Subregional Transportation Projects • Dec: Staff Received Final Draft of One Water Plan
• Dec 15th Council: Adopted Strategic Plan
• Dec 15th Council: Reviewed City Electrification Projects 5 4 - 6
Tying it All Together
5-Year Capital
Improvement
Program (CIP)
Annual CIP Review
Capital Project List
Funding Sources Community Input
CIP
Budget
Annual Operating
Budget
General Plan Strategic Plan Master Plans
6 4 - 7
Previous CIP Projects
7 4 - 8
Completed Projects
From Previous 2020-2024 CIP
• Compressed Natural Gas (CNG) Station Upgrade
Installed new fast-fill CNG station for fleet vehicles and new 50 kW DCFC EV Charger
• Building Repairs (Civic & Senior Centers HVAC Systems) Replaced/Retrofitted City Hall, Police Department & Senior Center HVAC • Monterey Road and Orange Grove Signal & Streets
New traffic signal and pavement, sidewalk, curbs/gutters, pedestrian elements, and water meters, valve, hydrants, etc.
8 4 - 9
CNG Station
City Hall HVAC System
Monterey & Orange
Grove
Completed Projects
From Previous 2020-2024 CIP
9 4 - 10
Completed Projects
From Previous 2020-2024 CIP
• Graves Reservoir
Replacement of reservoir and pump station and installation of new wellhead treatment systems, as well as overall site improvements • Huntington & Fair Oaks Turf Removal & Landscape
Median improvements that included installation of drought tolerant plants and drip irrigation systems
• City Hall Impervious Surface Removal & Drought Tolerant Landscaping
Replaced landscaping at Civic Center exterior courtyard (Mission street entry way) and interior courtyard
10 4 - 11
Graves
Reservoir
Huntington & Fair Oaks Turf Removal
City Hall Landscaping
Completed Projects
From Previous 2020-2024 CIP
11 4 - 12
Previous 2020-2024 CIP
Projects Pending Completion
12 4 - 13
• Stormwater Projects Concept, Feasibility and Strategy Development for Grants
• Arroyo Seco Lower Arroyo Park Infiltration Basin, Golf Course Wetland, and Golf Course Driving Range Wetland/Infiltration undergoing fully funded feasibility study – recently conducted stakeholder & community outreach
• Huntington Drive Regional Green Street – contract award pending by LA County to to begin fully funded feasibility study
• Camino Verde Stormwater Treatment/Infiltration Project being considered by the Measure W Watershed Area Steering Committee for funding of a feasibility study
• Rio Hondo Load Reduction Strategy (LRS)
Low flow treatment system along the Alhambra Wash – South Pasadena shares cost with other Cities (3%) discharging stormwater to the Rio Hondo – project is in design phase with expected completion in 2024 Previous 2020-2024 CIP
Projects In-Progress
13 4 - 14
Previous 2020-2024 CIP
Projects In-Progress
• Street Improvement Projects
FY 2019-2020 Street Project List – 60% Design Complete
FY 2020-2021 Street Project List – Street Segments Selected Review Funding Source Eligibility
• Street Preventative Maintenance
FY 2018-2019 & 2019-2020 Streets identified for Cape (plans) & Slurry Seal • Berkshire & Grevelia Pocket Parks
Conceptual Designs Complete & CEQA Pending
• Fair Oaks Avenue Signal Synchronization
Construction underway for installation of traffic signal system equipment, including emergency vehicle preemption system, pullboxes, conduit, and fiber optic along Fair Oaks, Huntington, Mission & Fremont 14 4 - 15
Previous 2020-2024 CIP
Incorporated into New Plan
• Buildings and Facility Repairs
New citywide facility condition assessment that also includes space planning and security concerns
• VoIP Phone System Installation
Implementing voice communications into the data network to replace existing telephone systems which are no longer manufactured or supported – offers an opportunity to reduce costs, streamline management add features.
• Water & Sewer Pipeline Replacements
5-year CIP replacement schedule based on 30-year master plan 15 4 - 16
Previous 2020-2024 CIP
Incorporated into New Plan
• Mission St. Pedestrian Crossing Enhancements
Conceptual plan developed for placement of traffic signal feedback pedestrian sensors & solar rectangular rapid flashing beacons • Transportation Projects
Seeking regional Measure M funding allocation for modification of signals at Columbia/Pasadena and Garfield/Monterey, as well as Columbia & Orange Grove Striping
Signal at Garfield/Oak to be evaluated
Neighborhood Traffic Management Plan Implementation
• Citywide Sidewalk & ADA Improvements
Previously Planned for 12 intersections along Meridian - Lyndon to Bonita Proposed schedule to repair and update sidewalks as needed considering condition, pedestrian demand, and removal of architectural barriers. 16 4 - 17
Strategic Plan & CIP
1. Develop and Implement Strong Fiscal Policies to Ensure a Resilient Financial Future.
• Capital Improvement Program & Indirect Cost Allocation Plan
2. Create a Strong Economic Development Strategy to
Strengthen Local Business.
• Permit Management Software
3. Develop a Comprehensive Emergency Preparedness Plan
to Ensure Public Safety through Active Response and
Recovery Efforts.
• Public Safety Facilities & Capital Equipment
17 4 - 18
4. Enhance Community Sustainability through Investment in Infrastructure and Environmental Management Programs.
• Comprehensive Capital Improvement Program
• Implement Climate Action Plan
• Implement One Water Plan
• Berkshire & Grevelia pocket parks construction
• Update Mobility Master Plan including bike lanes & walkability • Facility condition and security assessment & space planning • Transportation Demand Management (TDM) / Transportation System Management (TSM) Alternative
• City fleet electrification
Strategic Plan & CIP
18 4 - 19
Strategic Plan & CIP
5. Plan for Affordable Housing to Comply with State
Mandates and Respond to Community Needs.
6. Enhance Customer Service through Innovation to More
Effectively Respond to Community Priorities.
• Neighborhood Traffic Management Policy Adoption and
Implementation
• Technology improvements, such as Automated Customer Care Application, Agenda Management, & Library Radio Frequency Identification (RFID) and Automated Materials Handling (AMH) System
19 4 - 20
Next Steps for Budget Season
• Mid-Year Budget Approval
In addition to Operating Budget adjustments, make updates to the already approved FY 2021-2022 CIP project list and budget
• Identify CIP Funding Sources & Grant Requirements
To be reviewed by staff and recommendations presented during budget process
• CIP Presented to City Council for Approval
Council and community feedback to refine project list
20 4 - 21
• Local Return Funds
• Received by the City annually from collected taxes
• Restricted as to what may be funded (mainly transportation and infrastructure related) • On average, the City is awarded $2.6 Million in Local Return Funds annually • Current usage of Local Return Funds include the Dial A Ride Program, street and pedestrian improvements
• Operational budget also makes use of Local Return Funds: salaries, equipment, etc.
• Grant Funds
• Awarded to City after a competitive application process • Restrictive in terms of usage
• Once awarded, City must comply with reporting requirements such as expenditure reporting and reimbursement invoicing
• Over the past two Fiscal Years, the City has been awarded $2.4 Million in grants • Example: Metro Open Streets was awarded to the City and was used for the Slow Streets Program
Types of Funding
4 - 22
Fund Name Purpose of Funds
Measure M Improvement of traffic flow, road improvements, traffic signal improvements, and other transit related projects
Measure R Improvement of traffic flow, road improvements, traffic signal improvements, and other transit related projects
Measure W
Improvement of water quality, projects that provide preparation to future droughts, and provide communities with parks and wetlands
Proposition A Local transit projects and/ or services
Proposition C To benefit public transit through repairs of transportation infrastructure and services/ equipment purchases
Road Maintenance and
Rehabilitation
(RMRA/ SB1)
The maintenance and rehabilitation of local streets, traffic control devices and complete street components
State Gas Tax Street-related construction and/or maintenance projects Transportation
Development Act (TDA) Bicycle and pedestrian facilities Local Return Funds
22 4 - 23
Fund Name Purpose of Funds Amount
Coronavirus Aid Relief
and Economic
Security (CARES) Act
Federal funding awarded to states to distribute to
local governments in response to the COVID-19
pandemic to provide direct economic assistance
for expenditures related to the pandemic
$314,333*
American Rescue Plan
Act (ARPA)
(New regulations
released as of
January 6th, 2022)
Federal funding awarded to local governments to
mitigate the impacts of COVID-19 pandemic.
Funds may be used in the following categories:
(1) Investments in Sewer, Water and Broadband
Infrastructure, (2) Support for Essential Workers
(3), Support Public Health, & (4) Economic Impact
Mitigation
$6,059,235
Infrastructure
Investment and Jobs
Act
Federal Funding will be allocated to states for
distribution to local governments - investing in
infrastructure such as roads and bridges, with the
goal of promoting safety and combating the
climate crisis
TBD
*funds have been expended
Recently Approved Funding
23 4 - 24
Discussion & Next Steps
• Council Policy Discussion/Direction on CIP Project List CIP reflects General Plan & Strategic Plan goals
• Mid-Year Budget Approval
In addition to Operating Budget adjustments, make updates to the already approved FY 2021-2022 CIP project list and budget
• Staff Identify CIP Funding Sources & Grant Requirements To be reviewed by staff and recommendations presented during budget process
• CIP Presented to City Council for Approval
Council and community feedback to refine project list
24 4 - 25
Questions
25 4 - 26