⚠️ Aviso de traducción: Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Note: Missing finding numbers detected: F6
Findings 6 findings
F1
- Pension and OPEB benefits amount to less than 10% of Napa County and its jurisdictions' total annual budgets. Response – Agree with respect to the all funds budget for the City of Napa. However, for the City of Napa, comparing costs to the total budget reduces the impact of pension and OPEB costs because the biggest impact of labor, pension and OPEB costs is to the City's General Fund. Pension costs were 5.18% of the total budget in FY 2012-13, with OPEB costs at 0.58%, for a total of 5.76% of the annual expenditures for all funds. For the General Fund, pension costs came in at 11.27%, with OPEB costs at 1.2% for a total of 12.47% of the General Fund budget. This number is expected to increase to 16% of the General Fund budget by FY 2014-15.
F2
– Napa County jurisdictions had pension liability funding levels that ranged from 70.3% in Calistoga to 84.3% in St. Helena for the 2012/2013 fiscal year. Response – Agree that the pension liability funding levels for the City of Napa are in this range. The City of Napa's Miscellaneous pension plan was funded at 74% as of June 30, 2012 and Safety pension plan was funded at 77% as of June 30, 2012, the last full year reported in the CalPERS actuarial reports received in December 2013. There is only one year since FY 2006-07 that the pension plans fell below the 70% funding level, and that was as of June 30, 2009, after the CalPERS investment portfolio experienced a negative return (investment loss) of approximately 25.9%. As of June 30, 2009, both of the City's pension plans were funded at between 55 and 57%, a significant drop from the previous year funding levels of 82-83%. Since FY 2009-10, the City of Napa's pension plans have been consistently funded at between 74 and 78%. This number is expected to increase slightly as the City recently made a payment to CalPERS of approximately $0.4 million on top of the annual contributions to fully fund the former Redevelopment Agency's outstanding unfunded pension liability based on an actuarial report prepared after the dissolution.
F3
- All jurisdictions have introduced employee sharing of pension (PERS) costs, although many of those plans only apply to future employees. Response -For the City of Napa, partially agree, since all employees share pension costs. The City of Napa employees have been sharing in the cost of pension benefits for years beginning with negotiated cost share of the employer rates between 14% and 19%, whereby Safety employees have contributed 2.5% since FY 2005-06 and Miscellaneous employees paid a portion of the employer contribution beginning in FY 2007-08 and increasing to 1.5% in FY 2011-12. In 2012, City employees agreed to an additional cost share of 3%, with Safety employees picking up 5.5% of the employer rate and Miscellaneous employees picking up 4.5% of the employer rate, resulting in Safety employees paying 14.5% and Miscellaneous employees paying 12.5% toward pension benefits. While PEPRA calls for new employees to pay at least 50% of the cost of retirement benefits and does not allow municipalities to impose the cost share until 2018, Napa employees have been picking up at least 50% of the normal cost of retirement benefits for several years. All MOUs continue this employee cost share commitment into the future.
F4
- Some jurisdictions are phasing in employee share for OPEB where possible via memorandums of understanding but will only apply to new employees. Response - Disagree with respect to the City of Napa. While this is an option, and it is our understanding that the City of St. Helena has implemented an employee cost share of OPEB benefits, the City of Napa has taken other measures to reduce the unfunded liability for OPEB benefits. The City was successful in negotiating changes in retiree medical benefits for future and most current Public Safety Fire Department employees by converting a portion of each employee's annual sick leave accrual and matching 1.75% of each employee's salary with a contribution to a Health Retirement Account (HRA) on an annual basis, thereby funding retiree medical benefits with a defined contribution rather than a defined benefit and reducing the City's liability by $0.3 million. The introduction of the HRA also eliminated the option to convert unused sick leave to additional PERS service credits, thus reducing the City's pension liability. Additionally, the City has implemented a Retiree Medical Trust (RMT) for police officers in exchange for reduced or eliminated retiree medical benefits, which served to reduce both the pension and OPEB unfunded liability in a similar way as the HRA did for the Fire bargaining groups. In addition, the City was successful in separating the active and non-Medicare retiree health care benefits, thereby removing the implied subsidy for retiree medical costs. The combination of those changes (except Police RMT which was implemented after the last actuarial analysis was performed), along with projected contributions to the Trust, has resulted in a reduction to the City's OPEB unfunded liability from $18 million in 2006 to a projected $9.8 million in 2013. The City continues to look for ways to reduce the unfunded pension and OPEB liabilities through creative benefit changes and employee cost share programs.
F5
– Jurisdiction OPEB funded ratios are estimated to range from 27.8% to 35%. Response – Agree with respect to estimated funded ratios for the City of Napa. The City set aside funds in FY 2007-08 and 2008-09 with the intention of funding an OPEB trust; however, decided to hold the funds internally as CalPERS was experiencing large investment losses at that time, including the significant 25.9% approximate loss in FY 2008-09. In 2010, the City opened a California Employment Retirement Benefits Trust (CERBT) with an initial contribution of $1.5 million from the funds set aside in previous years. Since 2010, the City has funded the annual required contribution (ARC) as a percentage of payroll on a bi-weekly basis, and has contributed more than the ARC in three of the past four years. The last OPEB Actuarial Report was prepared based on June 30, 2011 balances, and at that time showed the City's OPEB liability funded at 17.3%. That same actuarial report projected a funded ratio of 27.8% as of June 30, 2013. The City is currently working with the actuary to update the actuarial report for OPEB benefits as of June 30, 2013, and we expect the funded ratio to exceed the initially estimated 27.8% due to over funding the ARC the past few years as well as the agreement by the Police employees to convert the defined benefit retiree medical program to a defined contribution program by which the City contributes to a Retiree Medical Trust during the employee's working career, which is then used to fund retiree medical costs for the employee.
F7
- Most Napa County jurisdictions are trying to achieve full funding of their OPEB liability well before 2040, the 30 year amortization rate recommended by the Government Finance Officers' Association in March 2013. Response - Agree with respect to the City of Napa. The City of Napa's June 30, 2011 OPEB actuarial shows full funding of the City's OPEB liability by 2040. As stated above, the City has been overfunding the OPEB trust and has made additional changes to the post-employment benefit structure for various bargaining groups which is anticipated to result in full funding of the OPEB liability by 2040, if not before.
Recommendations 2
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R1- Napa County Board of Supervisors and the incorporated Napa jurisdictions form a pension/OPEB committee with appropriate financial and human resources management to establish a communication process and a planning best practices platform to share insights and collaborate on strategies for addressing and managing pension/OPEB funding. Response – This recommendation will not be implemented because it is not warranted. Each jurisdiction has vastly different circumstances and different options available for managing pension and OPEB funding - what may be a solution for one agency will not necessarily be the best fit for another. However, we believe that there is still value in meeting together to discuss pension funding strategies and managing the pension and OPEB liabilities. The Finance Directors of the various cities and town meet with the County Auditor-Controller on a quarterly basis and discuss various issues impacting all agencies. The City Managers from each agency also meet on a monthly basis and share policies, status, suggestions and ideas for various issues, including the pension and OPEB liabilities, options and funding mechanisms. These regularly scheduled meetings provide beneficial information for addressing the intent of the recommendation by the Grand Jury with respect to a county-wide pension/OPEB committee to share strategies and collaborate to address and manage pension and OPEB funding.
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R2- Napa County Board of Supervisors and the incorporated Napa jurisdictions through the pension/OPEB committee issue an annual report that summarizes each entity's pension/OPEB funding status at the end of each fiscal year. Response – This recommendation will not be implemented because it is not warranted. All agencies are issued an actuarial report from CalPERS on an annual basis, and are required to have an actuarial valuation performed on the OPEB liability every 2-3 years, depending on agency size. All of these reports are public information and most are available on each agency's website. In addition, each agency is required to provide this information in the same format for "apples to apples" comparisons between agencies in a footnote to the basic financial statements each fiscal year for both pensions and OPEB, and with the recent release of the new Governmental Accounting Standards Board (GASB) pronouncement No. 68 which requires government agencies to begin reporting the unfunded liabilities in the financial statements rather than simply in the footnotes, this information will be even more transparent and available to interested parties through the agencies' Comprehensive Annual Financial Reports (CAFR). This information is readily available and posted to each agency's respective website. Because the agencies are so different, and unfunded liabilities in one agency have absolutely no bearing on the other agencies' funding or services provided to citizens, re-creating an annual report to combine the annual reports already provided by each agency would have little to no added benefit to citizens. We do agree that the public should be informed about post-employment benefit funding obligations and believe that sufficient public information is readily available that would address the Grand Jury's recommendation.
* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.