HomeMy WebLinkAbout2007-12-03 Ordinance 4982ORDINANCE NO. 4982
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING
THE BUDGET FOR FISCAL YEAR 2007-08 TO AUTHORIZE THE
TRANSFER OF FUNDS IN THE AMOUNT OF $30,000,000 CURRENTLY
SET ASIDE IN THE RETIREE HEALTH BENEFITS INTERNAL SERVICE
FUND TO CalPERS TO ESTABLISH AN IRREVOCABLE TRUST FOR
RETIREE BENEFITS.
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION 1. The Council of the City of Palo Alto finds and
determines as follows:
A. Pursuant to the prov~s~ons of Section 12 of Article III
ofmtlieCharter of the City Of Palo Alto, the Council on June 11,
2007 did adopt a budget for fiscal year 2007-08; and
B. Per Governmental Accounting Standards Boards (GASB)
Statement No. 45, 1 Reporting for Retiree Medical
Benefits, the City of Palo Alto is required to recognize in its
financial statements any unfunded, earned retiree medical costs,
including those for current active employees; and
C. On May 1, 2007, staff was directed by the Finance
Committee to proceed with establishing an irrevocable trust with
CalPERS and to transfer funds to establish the trust; and
D. There are significant financial benefits of
establishing an irrevocable trust with CalPERS and prefunding
retiree medical benefits. CalPERS has significant experience in
administering employer-sponsored plans. Earnings from trust
the new trust fund for medical benefits will generate
significant revenues to apply to benefit costs. Additionally,
pre-funding agencies report lower liabilities and lower annual
required contribution than non-pre-funding agencies. Further,
administrative costs are lower with CalPERS than with private
industry. Finally, establishing the trust will contribute to
maintaining a positive credit rating, resulting in more
favorable debt issuance rates in the future; and
E. The City's unfunded retiree medical liability is valued
at $82.6 million. By depositing $30.0 million into the trust,
the unfunded liability will decline to $52.6 m~llion.
SECTION 2. The sum of Thirty Million Dollars ($30 1 000 1 000)
is hereby transferred from the Employee Health Benefits Internal
Service Fund to CalPERS to establish an irrevocable trust for
retiree benefits.
SECTION 3. The Employee Health Benefits Internal Service
Fund is hereby reduced by the sum of Thirty Million Dollars
($30 1 000 1 000) to Seven Hundred Nineteen Thousand Three Hundred
Forty Five Dollars ($719 1 345).
SECTION 4. The Council of the City of Palo Alto hereby
finds that this appropriation is exempt under the California
Environmental Quality Act and 1 thereforel no environmental
impact assessment is necessary.
-........ -------ESH:!:EG'l'-IHN---5--;--A.g.--.spee ified~in-----.se€-1;-i0n--2-.28A).8~-(a~ ·······-Q-f-:t;.h@....--Pa-I-G---....... --
Alto Municipal Code 1 a two-thirds vote of the City Council is
··········required to adopt this-ordinariCe-.---~--....... -------
SECTION 6. As provided in Section 2.04.330 of the Palo
Alto Municipal Code 1 this ordinance shall become fective upon
adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:
City Clerk
APPROVED AS TO FORM:
"f" City Attorney
December 03 1 2007
BARTON 1 BEECHAM 1 CORDELL 1 DREKMEIERI
KISHIMOT0 1 KLEINI KLEINBERG 1 MORTON,
MOSSAR
APPROVED:
\lIef-Mayor