HomeMy WebLinkAboutTransfer of Public Employee Retirement System - PERS - RefunL.
Council/Agency Meeting Held: -)L3%7
Deferred/Continued to:�G
epproved ❑ Conditional y Approved El
City Clerk's Sig ature
Council Meeting Date: February 3, 1997
Department ID Number: AS 97-004
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBE
SUBMITTED BY: MICHAEL T. UBERUAGA, City Administrato
PREPARED BY: ROBERT J. FRANZ, Deputy City Administra r
SUBJECT: TRANSFER OF PERS REFUND
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, EnvjV9!1mental Status,
Statement of Issue: The City received a refund of $1.7 million from the Public Employees'
Retirement System (PERS) during the prior fiscal year (1995/96) and anticipates an
additional refund from PERS of $1.1 million in 1996/97. Due to unfunded liabilities in the
City's Retirement Supplement Program and potential unfunded liabilities to PERS, a transfer
of these funds to the Retirement Supplement Fund is appropriate.
Funding Source: General Fund Reserve.
Recommended Action: Authorize the Finance Director to transfer all funds received from
PERS in 1995/96 ($1.7 million) to the Retirement Supplement Fund and authorize the
Finance Director to deposit any refunds received from PERS in 1996/97 to the same
Retirement Supplement Fund.
Alternative Action():
1. Leave the PERS refunds in the General Fund Reserve.
2. Transfer only a portion of the refunds to the Retirement Supplement Fund.
Anal: Annually, the Public Employees' Retirement System conducts an actuarial
valuation to determine adequacy of funds held by PERS for the payment of future retirement
benefits for City employees. PERS has notified the City that significant unfunded liabilities
may exist due to the conversion of benefits to salaries prior to 1994. In addition, the City's
auditors annually conduct an actuarial valuation of the City's Self Funded Retirement
Supplement Program. The June 30, 1995 unfunded liability for the Retirement Supplement
Program was $13.6 million.
E- 7
4WREQUEST FOR COUNCIL ACTIO
MEETING DATE: February 3, 1997
DEPARTMENT ID NUMBER: AS 97-004
The City has adopted a three year phase -in program to fund, on a current basis the
Retirement Supplement Program. The final phase of this program will be implemented in
1997/98. This will not eliminate the existing unfunded liability, but will begin the process of
gradually reducing the unfunded liability.
Regarding the PERS potential unfunded liability to PERS, the Retirement System has
notified the City that a rate adjustment may be imposed on the City effective July 1, 1999 to
pay for the unfunded cost of the conversion of benefits to salary during years prior to 1994.
In view of the above documented and potential unfunded liabilities for retirement benefits, it
is recommended that the refunds received from PERS since July 1, 1995 be transferred to
the Retirement Supplement Fund. This will enable the City to reduce the documented and
potential unfunded liabilities. Without the transfer to the Retirement Supplement Fund, the
one-time refunds would be a part of the General Fund reserve and would be available for
allocation for any purpose. Under City policies, the refunds could be used only for one-time
costs since they are one-time revenues.
Environmental Status: Not applicable.
AttachmentUl: List attachment(s) below.
No. Description
Fund Balance Analysis - General Fund
0023402.01 -2- 01 /23/97 8:10 AM
Fund Balance Analysis - General Fund
Current
Fund Balance - General Fund Estimate
Beginning Fund Balance
$ 6,699,000
Estimated Budget Surplus
1,267,831
Less Approved One -Time Expenses
(712,242)
Plus 1996/97 PERS Refund
1,140,000
Estimated 9/30/97 Balance
$ 8,394,589
Less Recommended Transfer to
Retirement Supplement Fund
(2,889,627)
Revised Fund Balance Estimate
$ 5,504,962
Fund Balance - General Fund
$5,504,962
$6,000,000
$5,000,000
8-7,456
I14
$4,000,000
�a
$3,000,000
$2,000,000
_
q_
F a
$1,000,000
Adopted Budget
Revised Estimate
G:\BOB\BU DGET\GE NERALIFI S FB.XLS]RetS u p
1 /23/97