May 13 2013

Budget Advisory Committee To Review City Budget, Pensions, And More on May 14

The Piedmont Budget Advisory and Financial Planning Committee (BAFPC) will meet Tuesday, May 14, 2013, at 7:00 p.m. in the Council Chambers, City Hall.

The agenda includes:

1. Review Fiscal Year 2013-14 Budget 
2. Review 5 year projections 
3. Review recommendation to City Council on refinancing the CalPERS Side Fund 
4. Discuss Long Term Pension and Retiree Healthcare costs
5. Date of future meetings
6. Consideration of future agenda items and deliverables

At its May 8 meeting, the BAFPC heard presentations from two bond counseling firms on how Piedmont could save an estimated $1.5  million over the next 7 to 9 years by refinancing its “side fund,” i.e. its unfunded employee pension obligations.

Currently, Piedmont pays CalPERS 7.5% interest on a $10.3 million loan to pay its unfunded pension obligations.   The CalPERS loan dates back to  2003 when the state’s giant public employee pension fund merged all of its member agencies with less than 100 employees into “risk pools.”  The goal was to reduce the contribution rate volatility for employers with a small population base (such as Piedmont).  CalPERS then assigned each member agency a share of the then-existing unfunded liability, which it identified as the “side fund,” and set a fixed 7.5% interest. Piedmont’s side fund payments to CalPERS for its retired public safety employees for the next 7 years now total $7.1 million. For retired miscellaneous employees, for the next 9 years, the payments total $3.2 million.

In the meantime, short-term interest rates have dropped significantly, giving cities an opportunity to save a lot of money by refinancing their side funds with private loans from institutions or through offering publicly traded pension obligation bonds. Many cities up and down the state have already done this, and, although the BAFPC recommended the City do it last year, Piedmont is coming late to the party.

Last week, the BAFPC Committee heard from the bond counselors the pluses and minuses of obtaining a private loan from a bank versus offering publicly traded bonds. The committee did not decide which avenue to take, but voted to recommend that the Council begin a course of action.

At a separate, joint meeting of the BAFPC and Capital Improvement Program committees on May 9, the two committees recommended the City Council implement Police Chief Ricki Goede’s plan to install License Plate Readers at 15 entry/exit points in Piedmont.

The BAFPC is responsible for assessing financial information and providing in depth analysis of Piedmont’s financial stability, including five-year projections.   The Committee members are selected for their financial experience and expertise and make recommendations to the City Council.

The public can attend the meeting and provide input to the Committee.  Plans to broadcast or record the proceedings have not been announced.

One Response to “Budget Advisory Committee To Review City Budget, Pensions, And More on May 14”

  1. Why in the world are we paying 7.5% interest these days?
    Should have been re-financed long ago.

    Jack Follick

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