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Approval to Pre -Pay the City's Safety Plan Unfunded Actuarial Obligations <br />June 5, 2018 <br />Page 2 <br />Funding the Pre -Payment <br />As noted, CalPERS has afforded the City two alternatives (monthly or pre -payment) in satisfying <br />its UAL obligations related to the Safety Plan for FY 2018-19. As a means in funding the pre- <br />payment initiative, the City maintains sufficient available Cash to satisfy the proposed obligations <br />in addition to the normal and customary expenditures incurred by the City during the fiscal year. <br />However, as a result in making the pre -payment to CalPERS the City is projected to incur a <br />reduction in its Earnings on Investment in the amount of $176,944. The reduction in income is <br />offset by the savings projected to be realized by the City's General Fund in the amount of <br />$500,000. <br />Retirement Strategies <br />On December 2016, the City Council approved the establishment of the City's Pension Stability <br />fund in the amount of $500,000. The Fund was created to offset future increases in retirement <br />obligations. Pre -paying the UAL for the City's Safety Plan is an additional strategy <br />recommended to be implemented as a means to address rising CalPERS costs. <br />STRATEGIC PLAN ALIGNMENT <br />Approval of this item assists the City in meeting Goal #4 — City Financial Stability, Objective #2 <br />(provide a reliable five-year financial forecast that ensures financial stability in accordance with <br />the strategic plan), Strategy D (conduct an assessment of the City's debt and refinancing options <br />to achieve savings). <br />FISCAL IMPACT <br />Pre -payment to CaIPERS: <br />The payment in the amount of $18,690,264 will be made during FY 2018-19 (prior to July 31, <br />2018) as follows: <br />Accounting Unit Amount <br />PD -Field Operations (no. 01114420-61100) $9,597,149 <br />FD -Fire Suppression & EMS (no. 01115330-61100) $9,093,115 <br />Projected Savings: <br />Savings in the amount of $676,944 are projected to be incurred and included in the proposed <br />fiscal year 2018-19 budget as follows: <br />PD -Field Operations (no. 01114420-61100) $240,000 <br />FD -Fire Suppression & EMS (no. 01115330-61100) $260,000 <br />Earnings of Investments (reduction) (01102002-58000) $176,944 <br />APPROVED AS TO FUNDS AND ACCOUNTS: <br />Ala.. <br />Francisco Gutierrez <br />Executive Director <br />Finance and Management Services Agency <br />Sv <br />75A-3-2 <br />