Manteca’s elected leaders could continue to whittle away at the city’s unfunded pension and retirement health benefit obligations.
The City Council is meeting in special session Tuesday at 4 p.m. at the Civic Center, 1001 W. Street. On the agenda besides paying off a small portion of the city’s pension liability is a presentation on the municipal reserve policy. There is also a closed door session regarding potential litigation.
The council will consider paying off the unfunded liability connected with retirement for police and firefighters hired after Jan. 1, 2013 whose retirement plans are under provisions of the California Public Employees’ Pension Reform Act (PEPRA) as well as police officers covered under Tier 2 of the California Public Employees Retirement System
The unfunded liability is $59,059. If it is paid prior to the end of the month, the city will avoid paying $20,000 of interest if it were amortized over 30 years as PEPRA allows.
The previous council in January 2018 approved a similar move that saved $85,500 in interest by paying off $110,000 that was unfunded at the time. If the current council follows suit, it would eliminate unfunded liability for the public safety employees covered under PEPRA and CalPERS Tier 2 covering police for this year
Finance Director Jeri Tejada is recommending that if the council opts to wipeout the small shortfalls that the money come from a reserve fund for pension payments that was set up to provide money to help cover those costs during future economic slowdowns when city revenue drops off. That way the impact of pension costs that have been rising and a drop in city revenue to pay for them could be somewhat blunted.
Overall the city has unfunded pension liabilities of $145 million.
The current general fund reserve policy adopted in July 2018 includes:
A pension stability reserve at 5 percent of operating expenditures.
The change of the fiscal stability reserve for cash flow and contingencies to 30 percent as opposed to the previous 25 percent.
Capping the economic development reserve at $2.5 million with excess money coming from residual property tax from property in the redevelopment agency going into undesignated reserves.
Reducing the assignment for capital facilities from 4 percent of operating revenues to 3 percent with a cap of $2.5 million.
Reducing the technology reserve from 5 percent of operating expenses to 3 percent with a maximum cap of $1.5 million.
The budget for the current fiscal year ending on June 30, 2019 projects there will be $20,237,472 in the general fund reserve accounts plus $1,257,330 in unassigned reserves for a total of $21,494,802.
To contact Dennis Wyatt, email firstname.lastname@example.org