STRATEGIC BUSINESS PLAN
inflation. These changes negatively affect the planned timing of the Pay Down Plan. The table below summarizes the projected rates for the Miscellaneous and Safety Plans anticipated from the additional payments. The drop in rates in FY 2021-22 is due to the City’s Pay Down Plan and the complete payment of the unfunded liability created when the City joined CalPERS.
PROJECTED EMPLOYER RATES
Fiscal Year
2019-20
2020-21
2021-22
2022-23
2023-24
Safety Rate
42.459%
46.072%
38.348%
38.871%
38.530%
Miscellaneous Rate
28.008%
29.699%
21.794%
22.145%
21.902%
In June 2013, the Irvine City Council adopted a plan to reduce its unfunded pension liability. The goal to attain a funding level of 98 percent utilizes funds from the City’s Asset Management Plan (AMP) of $5 million per year to make accelerated funding payments. This plan leverages the City’s AMP funding, currently earning less than two percent, to reduce its unfunded pension liability growing at 7.00 percent per year. With the accelerated payment plan, savings resulting from lower pension rates will be used to repay the AMP over time. The FY’s 2019-21 contributions from the AMP is recommended as part of budget adoption process. Since adoption of the City Council’s plan, $48.2 million to-date has been used to accelerate payment of the City’s unfunded pension liability ($35 million from the AMP, $13.2 million from General Fund surplus). In FY 2017-18, the City Council took action to include an additional $2 million from the General Fund each year to maintain the plan following CalPERS adjustments.
The Pension Scorecard graphic below was presented to the City Council in January 2019 as a component of the City’s Assumptions and Baseline Projections.
PENSION PAY DOWN HISTORY
Fiscal Year
From AMP to CalPERS
General Fund to CalPERS
AMP Repayment
FY 2012-13
$5M
$3
$1M
FY 2013-14
$5M
$1.5M
FY 2014-15
$5M
$2.1M
FY 2015-16
$5M
$2
$2.8M
FY 2016-17
$5M
$4.3M
FY 2017-18
$5M
$6.2M
$4.5M
FY 2018-19
$5M
$2M
$2M
TOTALS:
$35M
$13.2M
$16.2M
One of the elements of the City Council adopted plan calls for the City to capture rate savings in the annual budget to repay the AMP over time. The City has realized nearly $10.2 million in prepayment and rate savings to date from the effects of extra payments made in decreasing its unfunded liability and a decrease in employer contribution rates. Prepayment savings are estimated to be substantially lower than prior years due to CalPERS changing the payment structure of the unfunded liabilities. The payment towards the unfunded liability portion is expressed as a dollar amount instead of a rate that fluctuated with staffing
FY 2019-21 Proposed Budget
461
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