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RFP No. 21-025 <br />EXHIBIT B <br />causes of growing pension liabilities, but very few, if any, had a plan to fund increasing UAL <br />payments. This next section is a focus on UAI funding options including the following: <br />1. Targeting Strategies <br />2. Use of Reserves & One -Time Monies for Addition Discretionary Payments (ADPs) <br />3. Leveraged Refunding <br />4. Tax -Exempt Exchange <br />5. Ponsinn nhligatinn Ronds <br />Targeting Strategies <br />Before we commence the discussion regarding funding options, it is important to understanding <br />the impact of using "targeting strategies". When making Additional Discretionary Payments <br />(ADPs), assuming the City has available cash to do so, CalPERS requires each agency to specify <br />the Amortization Bases to apply payments. <br />Pw prirri ary purpose of develvpiog <br />u a.i olrnzed fwrosiorr model o> to <br />deterrypirte, viMh prl ci,,iol7, fhc <br />'tYSP),ppp <br />jitpunr7G4l mpp(ect of e(Ech I'vildim'] <br />a�4�1Ar.10 <br />so tut ion, <br />gig, a�a,rbon <br />Making Additional Discretionary <br />Sixaa ooa <br />Payments (ADPs), the City is <br />3a°u,00n <br />principally prepaying a loan. <br />5rsln,noc� <br />;:f3f� 6110 <br />The City has a total of 46 <br />5u nnu <br />Amortization Bases (totaling $710 <br />52rlGx) <br />million UAL), with terms ranging <br />so <br />from 6 years to 29 years. <br />11 ARGII Ili. iNGi Sf R All II::GI 11 S <br />�IMllu tlA._10Y my lO YcoaF .n ro0on <br />■ I�1Vvi =$1; 1I:4,9gQ I';ayrrlenxs <br />�1 10 y<.x-:y:B,Ara L,Ebfb(1 Payrr,"M, <br />The City should consider applying additional monies toward its UAL based on its financial <br />objectives: <br />2�iza.r;m r• G,LaI r,tvr ,;t: GF , ^„ na n,, -target long-term Bases (e.g., 30year). <br />• Maxiinize Shout -Term Cash Flow Savings - target short term Bases (e.g., 5-1S year). <br />All future funding decisions will utilize the concept of targeting strategies to tailor the application <br />of additional payments Lo meeL Lhe Cily's financial objectives. <br />Use of Reserves & One Time Monies for Additional Discretionary Payments (ADPs) <br />The unfunded liability is comprised of 46 Amortization Bases, which are effectively loan payments <br />to CaIPERS @7.0%. The City should always consider the "opportunity cost" of its <br />financial/investment decision in context of this ever-growing pension liability. <br />City Council 23 — 47 5/18/2021 <br />