Last week, the Glendale City Council voted to establish a pension trust fund and a new General Fund Reserve policy in an attempt to quell the growing costs of contributions from the city's General Fund toward the California Public Employees' Retirement System, or CalPERS.
Council members will establish the trust fund by shifting $26.5 million from the General Fund into a new Pension Rate Stabilization Program Trust Fund to help offset rising CalPERS costs.
According to data from the government firm Bartel & Associates, roughly 2,200 safety and miscellaneous retirees who have served 12 to 14 years with the city of Glendale receive pension benefits. The average annual pension benefit from CalPERS ranges from $35,000 to $74,000 annually.
Although the market value of the assets that CalPERS has on behalf of Glendale and its current and future participants is roughly $1.2 billion, the city's total unfunded actuarial liability — the values of assets versus the accrued liabilities of a plan — is sitting at nearly $450 million.
"It's that thing that we struggle with on a going-forward basis," said City Manager Scott Ochoa. "The goal for us is that we need to pay down and ultimately extinguish that [unfunded actuarial liability]."
The trust fund money and its returns cannot be used for operations outside of repaying the city's CalPERS obligations. However, the trust fund can be liquidated.
The City Council also agreed to adopt a minimum General Fund Reserve level of 25% to account for the fact that the pension trust fund allocation will move the city out of compliance with its current reserve policy of 35%.
The Government Finance Officers Assn. recommends that a city's General Fund maintain, "at a minimum, no less than two months of operating expenditures," according to a staff report.
Glendale's 30% minimum reserve policy is nearly double the 15% average among 10 similar-sized area cities, according to a study by city officials looking at General Fund Reserve policies The city will still target a 35% reserve of the General Fund.
"Our main goal is for the residents and to keep Glendale sustainable, to keep our city [financially] exactly where we are now," said Councilwoman Paula Devine.