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Feb 13, 2023 •337 likes •650 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

  1. Pension Stabilization Plan Pension Prepayment & 115 Investment Plan Creation City of Sierra Madre

  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

  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

  4. 7/24/2018 WWW.CityOfSierraMadre.com 4

  5. 7/24/2018 WWW.CityOfSierraMadre.com 5

  6. 7/24/2018 WWW.CityOfSierraMadre.com 6

  7. Current UAL Structure, Negative Amortization Negative Amortization: Single Base, $1M Balance, 30 payments Negative amortization $1,200,000 • Payments are less than interest charged $1,000,000 • Difference increases total amount owed $800,000 • Currently we are paying negative principle $600,000 $400,000 $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 7/24/2018 WWW.CityOfSierraMadre.com 7

  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

  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

  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

  11. CalPERS Payments with UAL (Rocket Chart) $1,265,222 $1,265,222 $1,160,629 $1,160,629 $1,000,681 $1,000,681 $840,844 $840,844 $735,681 $735,681 $- $- 15-16 16-17 17-18 18-19 19-20 20-21 15-16 16-17 17-18 18-19 19-20 20-21 WWW.CityOfSierraMadre.com 11 7/24/2018

  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

  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

  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

  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

  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

  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

  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

  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

  20. $1,000,000 $1,000,000 $1,200,000 $1,200,000 $1,400,000 $1,400,000 $1,600,000 $1,600,000 $200,000 $200,000 $400,000 $400,000 $600,000 $600,000 $800,000 $800,000 7/24/2018 Amortization Schedule & Ability to Pay $- $- 16-17 16-17 17-18 17-18 18-19 18-19 19-20 19-20 20-21 20-21 21-22 21-22 22-23 22-23 23-24 23-24 24-25 24-25 25-26 25-26 26-27 26-27 WWW.CityOfSierraMadre.com 27-28 27-28 28-29 28-29 29-30 29-30 30-31 30-31 31-32 31-32 32-33 32-33 33-34 33-34 34-35 34-35 35-36 35-36 36-37 36-37 37-38 37-38 38-39 38-39 39-40 39-40 40-41 40-41 41-42 41-42 42-43 42-43 43-44 43-44 44-45 44-45 45-46 45-46 46-47 46-47 47-48 47-48 20

  21. Near Term Amortization Schedule & Ability to Pay $1,400,000 $1,400,000 $1,200,000 $1,200,000 $1,000,000 $1,000,000 $800,000 $800,000 $600,000 $600,000 $400,000 $400,000 $200,000 $200,000 $- $- 16-17 16-17 17-18 17-18 18-19 18-19 19-20 19-20 20-21 20-21 21-22 21-22 22-23 22-23 23-24 23-24 WWW.CityOfSierraMadre.com 21 7/24/2018

  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

  23. Amortization Schedule Without Stabilization Plan $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Total Before Prepayment Ability to pay $- 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 WWW.CityOfSierraMadre.com 23 7/24/2018

  24. $1,000,000 $1,000,000 $1,200,000 $1,200,000 $1,400,000 $1,400,000 $1,600,000 $1,600,000 $(200,000) $(200,000) $200,000 $200,000 $400,000 $400,000 $600,000 $600,000 $800,000 $800,000 7/24/2018 Amortization Schedule With Stabilization Plan $- $- 16-17 16-17 17-18 17-18 18-19 18-19 19-20 19-20 20-21 20-21 21-22 21-22 22-23 22-23 23-24 23-24 24-25 24-25 Total Before Prepayment 25-26 25-26 26-27 26-27 WWW.CityOfSierraMadre.com 27-28 27-28 28-29 28-29 29-30 29-30 30-31 30-31 31-32 31-32 Total After Prepayment 32-33 32-33 33-34 33-34 34-35 34-35 35-36 35-36 36-37 36-37 37-38 37-38 38-39 38-39 39-40 39-40 40-41 40-41 41-42 41-42 42-43 42-43 43-44 43-44 44-45 44-45 45-46 45-46 46-47 46-47 47-48 47-48 24

  25. Near Term Amortization Schedule With Stabilization Plan 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) WWW.CityOfSierraMadre.com 25 7/24/2018

  26. Ability to Pay UAL With Stabilization Plan 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 WWW.CityOfSierraMadre.com 26 7/24/2018

  27. Ability to Pay Without Stabilization $200,000 $100,000 $- 19-20 20-21 21-22 22-23 23-24 $(100,000) $(200,000) $(300,000) $(317,316) Avg. Deficit $(400,000) $(500,000) WWW.CityOfSierraMadre.com 27 7/24/2018

  28. Ability to Pay With Stabilization $200,000 Avg. Surplus $100,000 $38,641 $- 19-20 20-21 21-22 22-23 23-24 $(100,000) $(200,000) $(300,000) $(400,000) $(500,000) WWW.CityOfSierraMadre.com 28 7/24/2018

  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

  30. Thank you WWW.CityOfSierraMadre.com 30 7/24/2018

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