Fountain Valley tries to stay ahead of pension interest with midyear budget amendment
Fountain Valley plans to sock away another $4 million this year toward unfunded pension and other post-retirement liabilities.
At the midway point in the budget year, city officials said they plan to transfer $2.2 million out of the general fund to pay down pensions and $1.7 million to the city’s Other Post-Employment Benefits trust fund, which covers retiree medical benefits.
Fountain Valley’s total unfunded pension liability is $79.2 million. The $2.2 million toward pensions is an interest payment on top of the city’s compulsory $3.6 million expense for the year.
“If the city simply pays the minimum payment the city’s liability will increase by the difference, which is the $2.2 million figure,” city Finance Director Jason Al-Imam told the City Council in February before it approved the transfers and other midyear budget adjustments. “So we’re recommending that we send the $2.2 million difference to CalPERS to pay down the pension liability, or at least keep it from growing.”
The transfer to the retiree medical trust brings that account’s balance to $10.6 million. The trust would be fully funded at $46.5 million.
Overall, the city netted about $5.5 million more in general fund revenue amendments and about the same in general fund expenditure amendments. The bulk of the revenue boost, about $4.5 million, came from the first two quarters of Measure HH sales tax collections. The voter approved 1-cent tax went into effect in April 2017.
In other significant expenditure amendments, aside from chipping away at retirement costs, the city added $879,000 to the fire department’s expenditure budget. This is largely to cover overtime. However, an anticipated mutual aid reimbursement from the California Governor’s Office of Emergency Services will offset about $346,000 of that amount.
In non-general fund adjustments, the police department could be looking at getting a new SWAT vehicle. The current vehicle is 29 years old and “we’re having difficulty getting it past smog” checks, Al-Imam said. It will store equipment when not on the road.
The city had originally set aside $130,000 from the equipment internal service fund and federal asset seizures to purchase a police training simulator.
But the new police academy at Golden West College will have a simulator available to local agencies, so the city will reallocate the funds toward a new SWAT vehicle. Fountain Valley is part of the regional West County SWAT Team, which also covers Cypress, Los Alamitos, Westminster and Seal Beach.
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