Pension Stabilization Plan Pension Prepayment & 115 Investment - - PowerPoint PPT Presentation

▶
pension stabilization plan
SMART_READER_LITE
LIVE PREVIEW

Pension Stabilization Plan Pension Prepayment & 115 Investment - - PowerPoint PPT Presentation

Feb 13, 2023 337 likes •652 views

Pension Stabilization Plan Pension Prepayment & 115 Investment Plan Creation City of Sierra Madre Presentation Agenda 1. UAL Primer 2. Current Obligations to CalPERS 3. Pension Stabilization Plan 4. Current Amortization Schedule and

slide-1
SLIDE 1

Pension Stabilization Plan

Pension Prepayment & 115 Investment Plan Creation

City of Sierra Madre

slide-2
SLIDE 2

Presentation Agenda

  • 1. UAL Primer
  • 2. Current Obligations to CalPERS
  • 3. Pension Stabilization Plan
  • 4. Current Amortization Schedule and Ability to Pay
  • 5. Amortization Schedule with Stabilization and Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 2

slide-3
SLIDE 3

“[Y]ou would expect an agency to be able to tolerate (higher payments) based on…revenue growth and whatnot.”--CalPERS on managing UAL (5/31/18)

7/24/2018 WWW.CityOfSierraMadre.com 3

slide-4
SLIDE 4

7/24/2018 WWW.CityOfSierraMadre.com 4

slide-5
SLIDE 5

7/24/2018 WWW.CityOfSierraMadre.com 5

slide-6
SLIDE 6

7/24/2018 WWW.CityOfSierraMadre.com 6

slide-7
SLIDE 7

Current UAL Structure, Negative Amortization

Negative amortization

  • Payments are less than interest charged
  • Difference increases total amount owed
  • Currently we are paying negative principle

7/24/2018 WWW.CityOfSierraMadre.com 7

$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Negative Amortization: Single Base, $1M Balance, 30 payments

slide-8
SLIDE 8

Presentation Agenda

  • 1. UAL Primer
  • 2. Current Obligations to CalPERS
  • 3. Pension Stabilization Plan
  • 4. Current Amortization Schedule and Ability to Pay
  • 5. Amortization Schedule with Stabilization and Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 8

slide-9
SLIDE 9

CalPERS Obligations

Amortization Schedule Without Stabilization Plan:

  • Payments increased from $0 in 15/16 to $1,000,000 in 18/19
  • Will increase an additional 32% in the next five years
  • Pension will equal more than 10% of GF expenditures in 2020/21

7/24/2018 WWW.CityOfSierraMadre.com 9

slide-10
SLIDE 10

CalPERS Obligations

Government Response in SGV:

  • SGV cities have: sold significant bond debt, raised taxes, created new

taxes, created new taxing districts

  • Sierra Madre reduced spending and is proposing a plan that will not

increase costs to taxpayers

7/24/2018 WWW.CityOfSierraMadre.com 10

slide-11
SLIDE 11

CalPERS Payments with UAL (Rocket Chart)

7/24/2018 WWW.CityOfSierraMadre.com 11 $- $735,681 $840,844 $1,000,681 $1,160,629 $1,265,222 15-16 16-17 17-18 18-19 19-20 20-21 $- $735,681 $840,844 $1,000,681 $1,160,629 $1,265,222 15-16 16-17 17-18 18-19 19-20 20-21

slide-12
SLIDE 12

Current Schedule of UAL Payments

Current due CalPERS: $27.9M

  • UAL Payments, Current Schedule
  • 17-18:

$841,000

  • 18-19:

$1,001,000

  • 19-20:

$1,161,000

  • 20-21:

$1,265,000

  • Annual payments exceed $1M from 18/19 to 35/36
  • “Ability to Pay” exceeded in 17/18 through 35/36

7/24/2018 WWW.CityOfSierraMadre.com 12

slide-13
SLIDE 13

CalPERS Stabilization Plan

UAL Payments

  • $200k-$300k projected savings in 19/20
  • Increased projected annual savings from 19/20 through 40/41
  • “Ability to pay” achieved in 19/20
  • Reduces total due CalPERS from $27.9M to $15.9M (42.7%)
  • $6.9M in total savings (25% of total bill)

7/24/2018 WWW.CityOfSierraMadre.com 13

slide-14
SLIDE 14

Presentation Agenda

  • 1. UAL Primer
  • 2. Current Obligations to CalPERS
  • 3. Pension Stabilization Plan
  • 4. Current Amortization Schedule and Ability to Pay
  • 5. Amortization Schedule with Stabilization and Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 14

slide-15
SLIDE 15

Pension Stabilization Plan

Part 1: $5M UAL Prepayment:

  • $6.9M savings
  • $12M reduction due to CalPERS from $27.9M to $15.9M (42.7% reduction)
  • Significant annual cash flow increase (est. $250,000 in 19/20)
  • Short-term and long-term benefits for budget stabilization

7/24/2018 WWW.CityOfSierraMadre.com 15

slide-16
SLIDE 16

Pension Stabilization Plan

Part 2: Establish a 115 investment plan ($600,000 funding):

  • Flexible investment with greater return potential, 10.9% (1 year) 7.9% (5 year)
  • Available for use in emergencies
  • Available for payment of UAL or normal CalPERS payments
  • Long-term benefits for budget stabilization (solves the next CalPERS crisis)

7/24/2018 WWW.CityOfSierraMadre.com 16

slide-17
SLIDE 17

Pension Stabilization Plan

  • 1. Prepay CalPERS $5M towards UAL
  • Sources of Funding
  • Apply current General Fund balance above 50%

($1.8M)

  • Apply sale of SCE underground credits

($628,000)

  • Apply funding from close out of accounts/transfers($800,000)
  • Revise minimum GF balance from 50% to 25%

($2.5M)

  • 2. Establish a 115 Plan and “earmark” $600,000 for funding (from above)
  • Provide future direction on 115 Plan Management:
  • Fund Administrator, Fund Administrator with Citizen Panel oversight, Fund Administrator with

Treasurer and Staff oversight

7/24/2018 WWW.CityOfSierraMadre.com 17

slide-18
SLIDE 18

Pension Prepayment vs. 115 Investment

  • 1. Returns over time
  • 2. Risk vs. Benefit
  • 3. Use in emergencies
  • 4. Can only spend on pension

7/24/2018 WWW.CityOfSierraMadre.com 18

slide-19
SLIDE 19

Presentation Agenda

  • 1. UAL Primer
  • 2. Current Obligations to CalPERS
  • 3. Pension Stabilization Plan
  • 4. Current Amortization Schedule and Ability to Pay
  • 5. Amortization Schedule with Stabilization and Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 19

slide-20
SLIDE 20

Amortization Schedule & Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 20

$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35 35-36 36-37 37-38 38-39 39-40 40-41 41-42 42-43 43-44 44-45 45-46 46-47 47-48 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35 35-36 36-37 37-38 38-39 39-40 40-41 41-42 42-43 43-44 44-45 45-46 46-47 47-48

slide-21
SLIDE 21

Near Term Amortization Schedule & Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 21

$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24

slide-22
SLIDE 22

Presentation Agenda

  • 1. UAL Primer
  • 2. Current Obligations to CalPERS
  • 3. Pension Stabilization Plan
  • 4. Current Amortization Schedule and Ability to Pay
  • 5. Amortization Schedule with Stabilization and Ability to Pay

7/24/2018 WWW.CityOfSierraMadre.com 22

slide-23
SLIDE 23

Amortization Schedule Without Stabilization Plan

7/24/2018 WWW.CityOfSierraMadre.com 23

$- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35 35-36 36-37 37-38 38-39 39-40 40-41 41-42 42-43 43-44 44-45 45-46 46-47 47-48

Total Before Prepayment Ability to pay

slide-24
SLIDE 24

Amortization Schedule With Stabilization Plan

7/24/2018 WWW.CityOfSierraMadre.com 24

$(200,000) $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35 35-36 36-37 37-38 38-39 39-40 40-41 41-42 42-43 43-44 44-45 45-46 46-47 47-48

Total Before Prepayment Total After Prepayment

$(200,000) $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35 35-36 36-37 37-38 38-39 39-40 40-41 41-42 42-43 43-44 44-45 45-46 46-47 47-48

slide-25
SLIDE 25

Near Term Amortization Schedule With Stabilization Plan

7/24/2018 WWW.CityOfSierraMadre.com 25

16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24

Total Before Prepayment Total After Prepayment Linear (Total Before Prepayment) Linear (Total After Prepayment)

slide-26
SLIDE 26

Ability to Pay UAL With Stabilization Plan

7/24/2018 WWW.CityOfSierraMadre.com 26

16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24

slide-27
SLIDE 27

Ability to Pay Without Stabilization

7/24/2018 WWW.CityOfSierraMadre.com 27

$(317,316) $(500,000) $(400,000) $(300,000) $(200,000) $(100,000) $- $100,000 $200,000 19-20 20-21 21-22 22-23 23-24

  • Avg. Deficit
slide-28
SLIDE 28

Ability to Pay With Stabilization

7/24/2018 WWW.CityOfSierraMadre.com 28

$38,641 $(500,000) $(400,000) $(300,000) $(200,000) $(100,000) $- $100,000 $200,000 19-20 20-21 21-22 22-23 23-24

  • Avg. Surplus
slide-29
SLIDE 29

CalPERS Stabilization Plan Recap

  • $200k-$300k projected savings in 19/20
  • Increased projected annual savings from 19/20 through 40/41
  • “Ability to pay” achieved in 19/20
  • Reduces total due CalPERS from $27.9M to $15.9M (42.7%)
  • $6.9M in total savings (25% of total bill)

7/24/2018 WWW.CityOfSierraMadre.com 29

slide-30
SLIDE 30

Thank you

7/24/2018 WWW.CityOfSierraMadre.com 30