Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Approval of a First Amendment to Services Agreement with Phase II Systems for the Section 115 Post Employment Benefit Trust Administered by Public Agency Retirement Services (PARS) to Fund the City's Pension Benefits
REPORT IN BRIEF
Requests approval of a First Amendment to Services Agreement with Phase II Systems, doing business as "Public Agency Retirement Services" and "PARS" for administrative services as Trust Administrator for pre-funding pension obligations.
RECOMMENDATION
City Council - Adopt a motion approving the First Amendment to Services Agreement with Phase II Systems, doing business as "Public Agency Retirement Services" and "PARS" for administrative services as Trust Administrator for pre-funding pension obligations and authorizing the City Manager or designee to execute the necessary documents.
Body
ALTERNATIVES
1. Adopt as recommended by staff; or
2. Refer back to staff with specific direction, or
3. Deny
AUTHORITY
City of Merced Charter Section 405
CITY COUNCIL PRIORITIES
On January 7, 2019, the City Council approved Resolution 2019-04 to establish a Post-Employment Benefit Trust to mitigate the increasing pension obligation and unfunded accrued liability.
DISCUSSION
In 2012, the Government Accounting Standards Board (GASB) issued Statement No. 68, Accounting and Financial Reporting for Pensions. GASB 68 requires that governmental employers that sponsor Defined Benefit plans (i.e., CalPERS) must recognize a net pension liability or unfunded accrued liability (UAL) on their balance sheet. This is the difference between the City's total pension liability, or actuarial accrued liability (AAL) and actual plan assets. GASB 68 became effective for fiscal years starting after June 15, 2014.
In addition, CalPERS has made changes that significantly increased the City's UAL. On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50...
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