HomeMy WebLinkAbout0296.094Hay ·19, 1994
HONORABLE CITY COUN~IL
Palo Alto, California
Attention: Finance Committee
Members of the Council:
The purpose of th.is report is to request an additional $6,000
appropriation in the Finance Department's 1994"95 bud<;,'ut, to alloy
Btaff to oontract 'With an actuarial firm in order to develop
answers to questions raised during t-he Financo C01l'Ullittefi revitlv of
AS 70~, regarding the City's unfunded liability for retiree health
benefit,,_
Backgrol.UlA
On April 12, 1994, the Finance Committee discussed a staff proposal
for the use of AS 702 funds to meet tho City's future retiree
health benefit qash outlays. Durinq that discuBs'ion, council
Membar Rosenbaum posed several questions which are boyond staft's
ability to a.nB"r1er 'and will require the assistance of the city's
actuaries. The questions were:
o Projectinq the retiree population for 30 yoaTs to
determine whsn it stabilizes, i.e., when new retiremonts
essentially replace deceased retirees.
o Projecting the City's per capita subsidy fUr 30 years.
o· Combining the population and per capita subsidy
projections into a cash flow projection.
CHR,296,94
o 141 o
stAff r$qu8sted a proposal from William H. Mercer, Inc. (Mercor),
the fi~ which last year porformed an aotuarial study of the City's
retiree bonefit obligation ••
pi'glJo,iOA
In order to adequately respond to questions raised in response to
staff's recommendation on the usc of AB 702 funds towards future
cash outlays in this eraa, ,an update of Mercer's original study
will be required. Mercer eBtimat~s a cost of $5,000 to $6,000 to
perform the work, exclusive of travel expensGs. The work would be
completed by June.' 30, 1994.
jt.OOll1l8l1datioD
staff recommends that Council direct staff to amend the 1994-95
Finance Department proposed budget to include $6,000 for additional
actuarial se.rvices related to ascertaining the Cityls liability for
retiree health benefits.
Rospactfully submitted,
c·· 0
( I"JJ~ f/.>cc.:,;"" .&"
Emily HarrisQn I
Fihance Director
~~ City lI.nagsr
CHR:296:94 2