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CITIZENS FINANCIAL ADVISORY COMMITTEE
SPECIAL MEETING MINUTES
THURSDAY, October 10, 2019, 8:00 a.m.
CITIZENS FINANCIAL ADVISORY COMMITTEE SPECIAL MEETING
CALL TO ORDER—Committee Chair Mickey Segal called the meeting to order at 8:00 a.m. in the
Council Chambers Conference Room.
ROLL CALL
PRESENT: Howard Ursettie, Robert Miller, Mickey Segal, Tommy Thai, Jessica Louie
ABSENT: None
1. PUBLIC COMMENTS—None
2. REPORTS FROM STAFF LIAISONS— None
3. REPORTS FROM CITIZEN'S FINANCIAL ADVISORY COMMITTEE MEMBERS
a. Report from Committee—None
4. DISCUSSION ITEMS
a. Presentation Regarding Pension Management Strategy by UFI
Julio Morales of Urban Futures, Inc. presented a detailed overview of the City's retirement
costs and several approaches to managing the City's pension and OPEB liabilities. Utilizing
the two "aggregate" actuarial reports from CaIPERS for the City's Miscellaneous and Safety
employees, UFI provided options for the Committee to consider. The City's Unfunded
Accrued Liability (UAL) from the Miscellaneous and Safety Plans totaled $157.5 million. The
options that Mr. Morales presented addressed the UAL, informing the committee that there
was little that the City could do to change its annual normal costs.
Before discussing financial solutions, Mr. Morales discussed how the targeting strategies
should be applied when making "Additional Discretionary Payments" (ADPs). Because
CaIPERS requires that the agency identify which Amortization Base the payments should be
applied, Mr. Morales provided an in-depth review of the 42 Amortization Bases. He referred
back to these Amortization Bases when discussing how the targeting strategies should
maximize Total Interest Costs Savings and maximize Annual Cash Flow Earnings.
Mr. Morales briefly discussed termination costs if the City should decide to pull out of
CaIPERS. Because this is essentially a risk transference payment, CaIPERS would assume
full responsibility of paying all retirees and current employees' benefits earned to date. This is
cost prohibitive to the City, and thus not a viable, or recommended, option.
A Pension/OPEB Funding Policy was also discussed. This would be a formal written policy
adopted by City Council where it outlines how to use excess monies and reserves as well as
formally documenting the allocation of additional resources and potential funding solutions.
Because there will not be any one solution that will completely lift the UAL burden, Mr.
Morales recommended a few options:
• OPEB 115 Trust—this is a pension stabilization fund which can provide the City
flexibility and additional cash flow to make UAL payments.
• Leveraged Refunding—this applies up-front savings to pre-pay the UAL.
• Tax-Exempt Exchange
• Fresh Start—this method will re-amortize the UAL by combining the bases and
shortening the period. The annual payments will be increased, but for a shorter
period.
• Synthetic Fresh Start—this is similar to a Fresh Start, but the City retains the ability to
adjust additional payments while only being required to make current UAL payments.
• Pension Obligation Bonds
A discussion ensued regarding the best approach to address the City's pension/OPEB
challenge. The committee agreed that a push for up front savings is ideal, and was interested
in partial POBs and a synthetic fresh start as solutions. Chairperson Mickey Segal also
discussed a possibility of insurance as a way of paying the costs of employee retirements. At
the conclusion of the presentation, the Committee requested to obtain the following
information:
• A new presentation from UFI, summarizing key takeaways following the Pension
Management Strategy presentation for future a City Council Study Session.
• Sample pension/OPEB funding policy
• Information on CalPERS overhead
• UFI Arcadia Pension Solutions Memo
It was the consensus of the group to schedule the next meeting on November 12, 2019 at 8:00 a.m.
in the Council Chambers Conference Room.
ADJOURNMENT
Chairperson Segal adjourned this meeting at 10:17 a.m.
By:
Mickey Segal, airier on Hue Quach, Staff Liaison