San Mateo County Grand Jury
• 2017-2018
Soaring City Pension Costs – Follow-up on Grand Jury Report
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 27 findings
F1
Page 75
Each City’s audited annual financial report for the fiscal year ending June 30, 2018 reported combined covered payroll for the City’s pension plans for each of FY 2014-15, FY 2015-16, FY 2016-17 and FY 2017-18 in the amounts set forth beside its name for that year in Appendix A.
F2
Page 75
Each City’s audited annual financial report for the fiscal year ending June 30, 2018 reported combined contribution payments to CalPERS on the City’s pension plans for each of FY 2014-15, FY 2015-16, FY 2016-17 and FY 2017-18 in the amounts set forth beside its name for that year in Appendix A.
F3
Page 75
Each City’s audited annual financial report for the fiscal year ending June 30, 2018 reported combined Unfunded Liabilities (as defined in this report) for the City’s pension plans for each of FY 2014-15, FY 2015-16, FY 2016-17 and FY 2017-18 in the amounts set forth beside its name for that year in Appendix A. Each City has been required to make large Amortization Cost (as defined in this report) payments of principal and interest to CalPERS on those Unfunded Liabilities. These payments have diverted money that could otherwise have been used to provide public services or to add to reserves.
F4
Page 75
Each City’s audited annual financial report for the fiscal year ending June 30, 2018 reported combined Funded Percentages (as defined in the prior report) for the City’s pension plans for each of FY 2014-15, FY 2015-16, FY 2016-17 and FY 2017-18 in the amounts set forth beside its name for that year in Appendix A.
F5
Page 75
Each City’s audited annual financial report for the fiscal years ending June 30, 2015, June 30, 2016, June 30, 2017, and June 30, 2018 reported what the combined Unfunded Liabilities (as defined in the prior report) for the City’s pension plans for each of FY 2014-15, FY 2015-16, FY 2016-17 and FY 2017-18 would have been if the applicable Discount Rate applied to calculate them had been one percentage point lower in the amount set forth beside its name for that year in Appendix A.
F6
Page 75
Each City’s audited annual financial report for the fiscal years ending June 30, 2015, June 30, 2016, June 30, 2017, and June 30, 2018 reported general fund total expenditures 650 Woodside, Proposed Budget Fiscal Years 2019-21, Budget Overview, p. 8. for each of FY 2014-15, FY 2015-16, FY 2016-17 and FY 2017-18 in the amounts set forth beside its name for that year in Appendix A.
F7
Page 76
In each of the fiscal years ending June 30, 2015, June 30, 2016, June 30, 2017 and June 30, 2018, each City’s combined contribution payments to CalPERS on the City’s pension plans represented the percentage of that City’s general fund total expenditures for that year set forth beside its name for that year in Appendix A in the column entitled “Contribution Payments as % of General Fund Total Expenditures.”
F8
Page 76
In each of the fiscal years ending June 30, 2015, June 30, 2016, June 30, 2017 and June 30, 2018, each City’s combined contribution payments to CalPERS on the City’s pension plans represented the percentage of that City’s combined covered payroll for the City’s pension plans in the amount set forth beside its name for that year in Appendix A in the column entitled “Contribution Rate (i.e., Contribution Payments as % of Covered Payroll).” Projections of Future City Pension Costs
F9
Page 76
Each of Colma, Daly City, Foster City, Hillsborough, and Redwood City includes in its annual, or bi-annual budgets published on its public website, projections showing the annual dollar amount of its projected pension contribution costs for the next five or more years. None of the other Cities do so.
F10
Page 76
Neither Atherton, Brisbane, nor Portola Valley have published, anywhere on their public website or their agenda packages for city council meetings, projections showing the annual dollar amount of their projected pension contribution costs for the next five or more years.
F11
Page 76
The only way to find projections showing the annual dollar amount of the following Cities’ projected pension contribution costs for the next five or more years on their public websites is by manually searching through agenda packages for their city council meetings: Belmont, Burlingame, East Palo Alto, Half Moon Bay, Menlo Park, Millbrae, Pacifica, San Bruno, San Carlos, San Mateo, South San Francisco and Woodside. Long-Term Financial Forecasts
F12
Page 76
Each of Colma, Daly City, Hillsborough, Menlo Park, Pacifica, Redwood City, San Mateo, South San Francisco and Woodside has a general fund operating budget forecast covering a ten-year period. Of those nine, only Colma, Hillsborough, Menlo Park, Redwood City, San Mateo, and Woodside make those forecasts accessible to the public in their most recent annual or bi-annual budgets or annual financial reports published on their public websites.
F13
Page 77
The only way to find the ten-year general fund operating budget forecasts on the public websites of Pacifica and South San Francisco is by manually searching through agenda packages for their City Council meetings.
F14
Page 77
Daly City’s ten-year general fund operating forecast is not accessible to the public through its public website.
F15
Page 77
Each of Atherton, Belmont, Brisbane, Burlingame, Foster City, Half Moon Bay, San Bruno and San Carlos has a general fund operating budget forecast covering only a five- year period. Of those eight, only Belmont, Foster City, Half Moon Bay, San Bruno and San Carlos make the forecasts available to the public in their most recent annual or bi- annual budgets or annual financial reports published on their public websites.
F16
Page 77
The only way to find the five-year general fund operating budget forecasts on the public websites of Atherton and Burlingame is by manually searching through agenda packages for their City Council meetings.
F17
Page 77
Brisbane’s five-year general fund operating forecast is not accessible to the public through its public website.
F18
Page 77
Neither East Palo Alto, Millbrae, nor Portola Valley has a general fund operating forecast that extends beyond the fiscal years covered in its most recent annual or bi-annual budget. Plans to Make Additional Payments to CalPERS Beyond Annual Required Contributions
F19
Page 77
Each of Belmont, Colma, Foster City, Menlo Park, Portola Valley, Redwood City, San Carlos, and San Mateo has made, or currently has a specific plan to make, additional pension contribution payments to CalPERS beyond its Annual Required Contribution.
F20
Page 77
Neither Atherton, Brisbane, Burlingame, Daly City, East Palo Alto, Half Moon Bay, Hillsborough, Millbrae, Pacifica, Portola Valley, San Bruno, South San Francisco nor Woodside currently has a specific plan recommended by staff to the City or Town Council (as applicable) to make additional pension contribution payments to CalPERS beyond its Annual Required Contribution. Establishment of Reserves or Section 115 Trusts for Future Pension Payments
F21
Page 77
Each of Brisbane, Burlingame, Colma, Daly City, Foster City, Half Moon Bay, Hillsborough, Menlo Park, Pacifica, Portola Valley, Redwood City, San Carlos, South San Francisco and Woodside has set aside internal reserves, or contributed funds to a Section 115 trust, specifically for the purpose of paying future pension contribution costs.
F22
Page 78
Neither Atherton, Belmont, East Palo Alto, Millbrae, San Bruno, nor San Mateo currently has a specific plan recommended by staff to the City or Town Council (as applicable) to set aside internal reserves, or to contribute funds to a Section 115 trust, specifically for the purpose of paying future pension contribution costs. Employee Cost-Sharing to Help Pay Cities’ Pension Costs
F23
Page 78
Each of Atherton, Belmont. Burlingame, Foster City, Hillsborough, Menlo Park, Millbrae, Pacifica, Redwood City, San Mateo and South San Francisco has, or currently intends to seek, one or more cost-sharing agreements with employees under which employees pay for a portion of the City’s Normal Cost pension payment obligations to CalPERS.
F24
Page 78
Neither Brisbane, Colma, Daly City, East Palo Alto, Half Moon Bay, Portola Valley, San Bruno, San Carlos nor Woodside has, or currently intends to seek, one or more cost- sharing agreements with employees under which employees pay for a portion of the City’s Normal Cost pension payment obligations to CalPERS. Revenue Enhancement Ballot Initiatives by Cities
F25
Page 78
Each of Belmont, Brisbane, Burlingame, Colma, Daly City, East Palo Alto, Foster City, Redwood City and South San Francisco have, since November 2016, sought and obtained voter approval for ballot measures intended to increase revenues.
F26
Page 78
Each of Half Moon Bay, Pacifica, Redwood City, and San Bruno are currently considering seeking approval of their voters for revenue enhancement measures in the near term.
F27
Page 78
Neither Atherton, Belmont, Brisbane, Burlingame, Colma, Daly City, East Palo Alto, Foster City, Hillsborough, Menlo Park, Millbrae, Portola Valley, San Carlos, San Mateo, South San Francisco, nor Woodside is currently considering seeking approval of its voters for revenue enhancement measures in the near term.
Recommendations 19
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R1Page 79Each City include in its published annual or bi-annual budgets a general fund operating budget forecast for the next ten fiscal years.
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R2Page 79Each City include a report in its published annual or bi-annual budgets specifically setting forth the dollar amounts of its annual pension costs paid to CalPERS. The report should include the following: a) The City’s total pension contribution costs under all plans, for each of the three preceding fiscal years as well as estimates for such costs in each of the following ten fiscal years (whether developed by City staff internally, or by outside consultants to the City), assuming CalPERS’ actuarial assumptions are met. b) The City’s total Unfunded Liabilities under all plans, for each of the three preceding fiscal years as well as estimates for such Unfunded Liabilities in each of the next ten fiscal years, (whether developed by City staff internally, or by outside consultants to the City), assuming CalPERS’ actuarial assumptions are met. c) The City’s Funded Percentage across all plans, for each of the three preceding fiscal years as well as estimates for such Funded Percentages in each of the next ten fiscal years, assuming CalPERS’ actuarial assumptions are met. d) The percentage of the City’s general fund expenditures, and the percentage of the City’s covered payroll, represented by the pension costs described in (a) above (using estimates of general fund expenditures in future fiscal years).
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R3Page 164With respect to the City of Millbrae, the City agrees with this finding but notes that the Amortization Cost is the cost of providing public sen'ices in prior years. The City agrees that it is important to reduce the interest expense on these liabilities, pay down the principal and control future increases in employee pensions. The City notes that many of these costs are based on agreements negotiated in prior years when investment returns were significantly higher and, therefore, the City's costs of these long term benefits was expected to be significantly lower.
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R4Page 164With respect to the City ofMillbrae, the City agrees with this finding. The City has not reviewed the audited financial reports for other Cities.
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R5Page 164With respect to the City ofMillbme, the City agrees with this finding. The City has not reviewed the audited financial reports for other Cities.
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R6Page 164With respect to the City ofMillbrae, the City agrees with this finding. The City has not reviewed the audited financial reports for other Cities.
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R7Page 164With respect to the City of Millbrae, the City of Millbrae agrees with this finding but notes that Contribution Payments are made from funds other than the General Fund. The City of Millbrae has not reviewed this infoiTnation for other Cities.
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R8Page 164With respect to the City ofMillbrae, the City ofMillbrae agrees with this finding but notes that Contribution Payments are made from funds other than the General Fund. The City ofMillbrae has not reviewed this information for other Cities. 14883674.1 Projections of Future City Pension Costs
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R9Page 165As noted in Explanatory Note, the City is not required to respond to this finding as the finding is not in regard to the City ofMillbrae.
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R12Page 165As noted in Explanatory' Note, the City is not required to respond to this finding as the finding is not in regard to the City ofMilIbrae.
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R14Page 165As noted in Explanator>' Note, the City is not required to respond to this finding as the finding is not in regard to the City ofMillbrae.
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R20Page 166The City agrees with this finding. The City Council has expressed an interest in discussing this item and will do so in context of the long range financial plan and other needs such as deferred infrastructure needs. Establishment of Reserves or Section 115 Trusts for Future Pension Payments
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R21Page 166As noted in Explanator}' Note, the City is not required to respond to this find as the finding is not in regard to the City ofMilIbrae. 14883674.1
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R22Page 167The City agrees with this finding. The City has placed funds into a Section 115 trust for the puipose of paying Other Post Employment Benefit (OPEB or retiree medical). To the extent that these funds are used for OPEB costs, the City has funds available for pension costs. Employee Cost-Sharing to Help Pay Cjtie_s'_Pension Costs
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R23Page 167The City agrees with this finding with the following correction: In addition to the employee contribution, employees pay 5.5% towards the employer share ofCalPERS.
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R24Page 167As noted in Explanatory Note, the City is not required to respond to this finding as the finding is not in regard to the City ofMillbrae. Revenue Enhancement Ballot Initiatives by Cities
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R25Page 167As noted in Explanatoty Note, the City is not required to respond to this finding as the finding is not in regard to the City ofMillbrae.
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R26Page 167As noted in Explanatory' Note, the City is not required to respond to this find as the finding is not in regard to the City ofMilIbrae.
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R27Page 167The City agrees with this finding and notes that revenue enhancement measures may be considered in the future. In addition, the City is evaluating other revenue enhancement options such as a master fee schedule update, development impact fees, and a business improvement district. t 14883674.1
No Responses Found 3
Government entities assigned to respond to this report. No response documents have been linked in our database.
San Mateo County Board of Supervisors
Elected County Office
San Mateo County District Attorney
Elected County Office
San Mateo County Sheriff
Elected County Office