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Lathrop catching up with pension liabilities

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POSTED January 30, 2014 1:25 a.m.

LATHROP – Medical benefits are expensive.

And much like every other city, Lathrop is trying to figure out the best way to strike a delicate balance – how to provide adequate healthcare coverage to retirees without incurring the massive costs that go with it.

It’s a $3 million high-wire act.

During a strategic planning session Monday evening at City Hall, Finance Director Cari James spelled out a simple truth for the City Council – taking care of city workers living out their golden years is going to cost the city a lot of money.

In order to catch up on other post-employment benefits – also known as OPEB – the city will have to cough up $3 million. The city started the fiscal year with $7.9 million in the general fund. Additional unfunded liabilities will tack on $500,000 to that. Maintaining a fund that will provide for improvements in the community will throw another $500,000 into the mix.

That doesn’t necessarily have to be the case. City Manager Steve Salvatore said that the annual payments could be reduced by negotiating during the next round of contract talks with represented employees.

Right now, he said, the health benefits are good for life. Other communities have found ways to curtail those costs by cutting them back to a designated age and then offering stipends to augment government-sponsored programs available for seniors.

But Mayor Sonny Dhaliwal said that the council doesn’t want to do that. Right now they’re pushing ahead with the annual funding even though that the 10-year forecast shows the city’s coffers dipping into the red as early as 2019.

And they’ve already got their eye on the improvements that they want to make.

The arches that mark the entrance to River Islands, Dhaliwal said, would be placed at the two main entrances to the city – on Lathrop Road and Louise Avenue. Bathrooms at River Islands would also be a part of the package that they’ll consider in the coming months.

Everything, however, hinges on whether the city can come up with a plan to pay for everything.

Dhaliwal said that while the forecast right now shows that the general fund would dip into the red by the end of the decade if both the OPED and PERS (public employee retirement system) were fully funded, there’s still plenty of time for staff to look into ways to make sure that doesn’t happen.

“The most important thing is that the City of Lathrop remains financially solvent,” he said. “We wouldn’t do anything knowing that it’s going to cost us like that.”

Based on the current forecasting models, Lathrop will end this fiscal year with just under $2 million in the general fund and will be sitting on $3.7 million being set aside in a reserve fund – 25 percent of what they started with in July. That number includes the general fund reserves from the previous fiscal year.

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