Committee recommends targeting income-tax revenue rules to reduce $11.2M OPEB liability

Committee members reviewed an outside actuarys summary stating the citys OPEB (other post-employment benefits) unfunded liability at approximately $11.2 million in the most recent calculation cited. The committee discussed benefits of fully funding the trust: once fully funded, plan earnings could pay future retiree health costs and reduce annual budget pressure; presenters estimated potential annual savings on the order of several hundred thousand to about $1 million depending on assumptions.

The committee recommended revising the income-tax allocation language (currently requiring 60% of net revenue be used to reduce pension liability) to direct income-tax net revenue toward reducing long-term liabilities more broadly, which would permit using dedicated revenue to fund OPEB. Members also encouraged the city to identify annual or one-time funding opportunities to accelerate OPEB funding and to report back on the fiscal impact of such a change.

Next steps: staff to produce scenario analyses showing the budget impact of redirecting income-tax allocations to long-term-liability reduction, and to estimate annual savings if OPEB were fully funded.