City of Vacaville Response to 2020-2021 Grand Jury Report Entitled: City Of

R1a

– The City of Vacaville establish an annual contribution schedule to retire the unfunded liabilities over a 10- to 15-year period.

R1b

– The City of Vacaville apply for American Rescue Plan Act funds to make additional contributions towards reducing pension and OPEB liabilities. Response to Finding 1 and Recommendations 1a and 1b: The City of Vacaville disagrees partially with Finding 1, specifically the statement that the OPEB liability exceeded $80 million at June 30, 2019. The OPEB liability was $78.2 per the June 30, 2019, OPEB actuarial valuation.

R2a

– The City of Vacaville use an independent facilitator to negotiate all labor contracts.

R2b

– All labor negotiations should address unfunded pension and OPEB liabilities. Response to Finding 2 and Recommendations 2a and 2b: The City disagrees with Finding 2, specifically that the benefit packages are unsustainable. As will be explained in the response to Finding and Recommendation 3, the City and labor unions have continuously worked over the last 15 years to work toward a sustainable model. Additionally, the City’s Five Year General Fund forecast projects the City being able to maintain reserves above policy levels throughout the life of the forecast while fully funding the projected annual contributions towards pension and OPEB. Recommendations 2a and 2b have been implemented. The City utilizes independent consultants to study comparable agencies including pay and benefits packages. These studies are utilized as one of several pieces of data presented to Council when entering labor contract negotiations. Council direction is given based on several factors including but not limited to comparison to other agencies, city budget, and recruitment and retention data. An independent labor negotiator is also retained as Chief Negotiator for labor contracts and takes direction from the Council and City Manager throughout the process.

R3

– In future labor negotiations with Tier 1 and Tier 2 employees, the City of Vacaville convert to a defined contribution healthcare benefits model. Response to Finding and Recommendation 3: The City agrees with Finding 3 that it doesn’t control the healthcare premium rates set by CalPERS.

R4

– The Vacaville City Council re-establish the OPEB advisory committee and act on the recommendations made by the prior committee. Response to Finding and Recommendation 4: The City disagrees with Finding 4 regarding the effectiveness of the oversight process. The process allowed 4 members of the public to study the subject and direct access to internal and external professionals to gain a better understanding of the topic.

R5

– The Vacaville City Council take actions to ensure that issues affecting pensions and OPEB liabilities continue to be reviewed regularly and publicly. Response to Finding and Recommendation 5: While the City agrees that unfunded liabilities are a challenge for many government agencies – the City of Vacaville included – with the potential to affect the financial stability of a city if ignored, the City has and will continue to monitor and address its unfunded liabilities so that services aren’t crowded out and the City’s General Fund reserves stay within policy.