RES 95012 - Laserfiche WebLink

Honorable Mayor and Members of the Council: BACKGROUND In November, staff presented Council with the 1993-94 Fiscal Year End Financial Report, which indicated that the General Fund had an undesignated balance of $961,782. Before making recommendations regarding the designated uses for this balance, staff wanted to complete two actuarial studies that were underway for the Workers' Comp Fund and the Retirees' Medical Insurance Fund. Those studies are now complete, and staff is not recommending that any of the Undesignated Fund Balance be utilized to increase reserves in those Funds. Staff is instead recommending other one-time uses for the money, and phased funding for the Workers' Comp and Retirees' Medical Insurance Funds. ACTUARIAL STUDIES Working with two actuarial consultants, studies have been completed to determined adequate annual funding and reserve levels for the City's Workers' Compensation Fund and the Retirees' Medical Insurance Fund. The Workers Comp Fund study indicated that current reserves are adequate, but that annual contributions need to be increased from the current 2% to 3% (based on salaries). Staff is recommending that this increase be phased in over the next couple of years and be incorporated into the annual operating budget costs. The Retirees' Medical study indicated that the City will need to continue to build reserves in the Fund and increase its annual contribution. In 1993-94, a transfer equivalent to a rate of 2% was transferred to the Fund. However, the recommended annual transfer is 4%. Therefore, staff is recommending that we continue to phase in funding over the next three to four years. Staff is also recommending that with each year end financial report, we make additional transfers to the Fund from savings in other employee benefit categories (accrued vacation, medical insurance, etc.). Furthermore, staff recommends that we perform another actuarial calculation in three to four years to determine our progress, and tO update the assumptions used in the current study. Trends in health care costs and interest earnings significantly impact the assumptions used in these calculations. Furthermore, any changes in national or state health care could also impact the City's obligation. ONE-TIME REVENUES IN 1993-94 The General Fund received $350,000 in one time "round about" revenues from the State transportation fund in 1993-94. In addition, the City received $50,000 from a PG&E franchise audit. SR95:32 2