Pension Side Fund Refinance

By Tim Rood

I strongly support Measure A on the February 4, 2014 ballot. This measure would give the City Council the authority to refinance approximately $8,000,000 in existing employee pension obligations at a lower rate of interest.

This measure would give the City Council the authority to refinance approximately $8,000,000 in existing employee pension obligations (technically, the "side fund" owed to CalPERS and currently accruing 7.5% interest).

This refinance is currently projected to save the City between $600,000 and $700,000 over the 9-year period. If voters approve the measure, the City completes the refinance, and the Council negotiates a correspondingly lower cap on City pension contributions in its new labor contracts, both the City and staff will benefit: the City benefits by reducing the rate of growth of its pension expenditures, and staff benefits by freezing a currently uncontrollable out-of-pocket cost that is otherwise likely to rise significantly.

The measure will satisfy the requirements of Piedmont's Charter with a simple majority vote; however, if it passes by more than 50% but less than 2/3, a court validation process will be required, which would introduce additional costs, a 4-6 month delay, and interest rate risk.

I urge Piedmonters to support this measure and am hoping for greater than 2/3 approval.

Additional detail is provided in the 2013 BAFPC report, beginning on page 16