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Big drop in Rohnert Park retiree health-plan debt


An actuary on Tuesday painted an improving picture of Rohnert Park’s financial ability to continue providing medical benefits for retired employees.

Rohnert Park City Hall.

The city’s unfunded liability has been cut from $53.2 million in February 2011 to $40.7 million now, said Marilyn Oliver, vice president of San Mateo-based Bartel Associates.

The unfunded liability is the difference between what the city owes for future medical benefits for retired and existing employees and what it has paid into a trust fund run by the state public employees’ retirement system, CalPERS.

“Overall you had a really good experience,” Oliver said Tuesday.

Mayor Jake Mackenzie agreed. “We’ve made progress,” he said.

That came about because the city started doing last year what it was supposed to but didn’t begin in 2007: setting aside money to cover its future obligations in addition to paying its current costs.

“We’re contributing to it, pre-funding it, making annual contributions, whereas before we were doing pay-as-go,” City Manager Gabe Gonzalez said before the meeting.

Since July 2011, the city has contributed $1,831,694 toward its current and future obligations. That, in combination with unexpected decreases in medical premiums, lowered the unfunded liability significantly because it altered the actuarial calculations that are based on assumed rates of investment return.

However, councilmembers received the good news cautiously Tuesday, expressing concerns that included the sluggish economy and that CalPERS investment returns have been lower than projected.

“My concern is we’re not investing in the right instruments,” said Mackenzie.

The council asked Gonzalez and Oliver to run the numbers again using a lower rate of return than the 6.5 percent used in the report. That will increase the unfunded liability again, but councilmembers said it was necessary.

“We have to tighten it up a little bit, going on the conservative side,” Councilman Amy Ahanotu said.

The unfunded liability is connected to a retiree medical plan that covers employees hired before 2007 and their families. There are 111 retirees already getting benefits and 110 others who qualify to eventually receive them.

Employees hired after 2007 are on a separate, defined-contribution plan.

One Response to “Big drop in Rohnert Park retiree health-plan debt”

  1. bear says:

    No comments?

    It seems that “planning ahead” works?

    What would more “planning ahead” do for other retiree programs?

    Thumb up 0 Thumb down 1

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