HomeMy WebLinkAboutItem 9 - Presentation
City of Chula Vista February 2, 2021 2021 Taxable Pension Obligation Bonds
Summary* Estimated.2 savings (34% of par)>$175M of cash flow savings through first 15 years; $120M total PV extension (FY 2045)Enhanced payment affordability/smoothing with no maturity
Liability (“UAL”) with CalPERS (as of June 30, 2021)million of POBs to fund 100% of its Unfunded Accrued Recommend City of Chula Vista issue approximately $350
8%Catastrophic Event ReserveEconomic Contingency ReserveUnassigned/Unreserved ReservesGeneral Fund Unassigned & Contingency Millions2020201920182017201620152014201320122011201020092008
$40 $35 $30 $25 $20 $15 $10 $5 $-3 Unassigned balances have grown to $25.6M and comprise 23% of total General Fund balance Fund Balance History–General Fund Reserves $48.9M$28.7M$25.6M$9.3M
UnassignedAssignedCommittedNonspendable(2020)General Fund Balance Breakdown
New Operating Reserve Policy 50%50%SurplusReservePOB Bond Call (to 100% UAL)OPEB Fund Surplus FundsSurplusSurplus25%75%Reserves& Catastrophic Event Economic Contingency Fund Expenses)(Up
to 15% General Pension Reserve Fund Fund Expenses)Reserves (15% General General Fund Operating starting in 10 yearsand/or redeem 2021 POBs future pension/OPEB UAL Can be used to address
Funds the PRF and Bond Call years and then rapidly build all reserve targets within 4 generate funding to meet 2021 POBs are expected to As projected on slide 8, the reserves / fundsfunds
priority for 6 distinct mechanism and flow of Provides funding in November of 2020Policy revised and adopted Comprehensive Reserve 4 Approved November 2020
P TRATEGY POB S ANDIABILITIES L ENSION
$-6* UAL projected for June 30, 2021 based on June 30, 2019 valuation2019)-Source: CalPERS Annual Valuation Reports (2015 Funded Ratio 2019201820172016201590%85%80%75%70%65%60%55%50%70%70%71%69%75%M
arket Value of AssetsAccrued Liability Accrued Liability vs. Market Value of Assets Millions20192018201720162015 $-Funded Ratio 2019201820172016201590%85%80%75%70%65%60%55%50%67%67%67%64%68%Safety
Plan: $166.7M UAL*Miscellaneous Plan: $189.9M UAL*Funded Status of CalPERS Pension Plans Market Value of AssetsAccrued Liability Accrued Liability vs. Market Value of Assets Millions2019201820172016
2015
$-reservesbolster all years to in first 15 Utilize savings shocksabsorb future resiliency to savings with + long term Balance short shaperepayment escalating overall 1% debt to create
Wrap GF LRB Current UALMaturity as Same Maintain 7 Shaping of General Fund Debt-Strategic Re2021 POB as a Fiscal Sustainability Tool 1% Escalating General Fund Debt (24-Year)General
Fund Lease Bond Debt ServiceUAL PaymentsMillions205120502049204820472046204520442043204220412040203920382037203620352034203320322031203020292028202720262025202420232022 $45 $40 $35
$30 $25 $20 $15 $10 $5
$0% of Operating Budget desired to75% of POBs in 15 years if it sufficient funds to pay off over City projected to have combined with PFR (>$30M), bond call reserve by 2036; Projected
>$125M in the POB and OPEB by FY 2028 (100% funding of UAL) Funding Reserve (15% of Operating Budget) by FY 2024 City projected to fill up CER reserve by FY 2022, Pension Reserve
($8.35M) currently fully funded Operating Reserve ($25M) & Economic Contingency 100%200%8 Per City Planning Assumptions6% CalPERS ReturnsPolicy Driven Leveraging of POB Savings POB
Bond Call ReserveOPEB AccountPension Funding ReserveCatastrophic Emergency ReserveEconomic Contingency ReserveOperating ReserveMillions 36/3735/3634/3533/3432/3331/3230/3129/3028/2927/2826/2725/2624
/2523/2422/2321/22$250$225$200$175$150$125$100$75$50$25
Projected Annual Savings Figures shown are preliminary estimates. Assumes CalPERS earns 7.0% returns annually.:Note 9 121,627,187 129,682,913 592,165,782 532,049,921 721,848,696 60,115,862
661,732,834 Total0 0 893,703 0 893,703 893,703 0 20490 0 890,254 0 890,254 890,254 0 20480 0 885,096 0 885,096 885,096 0 20470 0 878,227 0 878,227 878,227 0 2046(11,559,767)(25,382,212)27,435,711
26,566,063 2,053,499 869,648 1,183,851 2045(8,080,305)(17,170,212)27,159,461 26,294,995 9,989,249 864,466 9,124,783 2044(4,354,686)(8,955,137)26,891,400 26,033,612 17,936,263 857,788
17,078,475 2043(4,056,278)(8,072,547)26,627,552 25,778,548 18,555,005 849,004 17,706,001 2042(2,049,589)(3,947,455)26,363,761 25,520,511 22,416,306 843,250 21,573,056 2041(1,546,841)(2,883,125)26,10
4,487 25,268,213 23,221,362 836,274 22,385,088 2040(1,029,669)(1,857,303)25,845,706 25,017,891 23,988,403 827,815 23,160,588 2039138,953 242,561 25,588,593 24,765,605 25,831,154 822,988
25,008,166 20381,315,822 2,222,888 25,334,758 24,517,590 27,557,646 817,168 26,740,478 20373,558,316 5,817,445 25,082,104 24,064,597 30,899,548 1,017,507 29,882,041 20364,931,516 7,802,535
24,836,540 23,828,094 32,639,075 1,008,446 31,630,629 20356,181,194 9,464,443 24,587,143 23,281,738 34,051,586 1,305,405 32,746,181 20349,889,720 14,654,608 24,347,929 20,754,000 39,002,536
3,593,928 35,408,608 203310,750,007 15,415,813 24,105,533 20,519,144 39,521,345 3,586,388 35,934,957 203212,391,878 17,197,381 23,867,845 19,940,091 41,065,225 3,927,753 37,137,472
203112,667,023 17,012,463 23,629,929 19,713,121 40,642,392 3,916,808 36,725,584 203012,502,909 16,250,667 23,397,632 19,500,354 39,648,299 3,897,278 35,751,021 202912,344,382 15,527,336
23,163,279 19,275,209 38,690,615 3,888,070 34,802,545 202812,175,805 14,821,521 22,932,363 19,057,932 37,753,884 3,874,431 33,879,453 202711,894,896 14,012,746 22,708,874 18,878,313
36,721,620 3,830,561 32,891,059 202612,399,092 14,135,786 22,485,232 18,667,709 36,621,018 3,817,523 32,803,495 202511,468,041 12,652,804 22,260,155 18,475,055 34,912,959 3,785,100
31,127,859 202410,719,703 11,445,843 22,039,168 18,268,246 33,485,011 3,770,922 29,714,089 20238,975,066 9,274,065 21,823,348 18,063,290 31,097,414 3,760,059 27,337,355 2022SavingsEstimated
PV SavingsEstimated PaymentsFund Debt New General Debt ServiceEstimated POB PaymentsFund Debt Current General Debt ServiceGeneral Fund PaymentsCurrent UAL FYGFEDCBAE)-(C (B + D)(A +
B)Year)-1% Escalating General Fund Debt (24
Comprehensive Actuarial Stress Testing** Estimated by NHA Advisorsasides in early years per policy-* Includes benefit of Section 115 set flexibilityincrease future financial strategically
deployed to Savings, per policy, will be assumptionsextremely conservative Generates savings under underperformanceCalPERS absorb future potential significant resiliency to Structure
provides stress testing analysisthrough comprehensive investment risk -reCity has addressed POB 10(0% PV Savings)Breakeven Analysis Market Crash no recovery; 7% thereafter immediate
after issuance with return ≈ Negative 30%** PERS •IssuanceImmediately After 2012 -Another 2008Great Recession: Refunded UAL)*(13% of $47 Million PV Savings •6% Annual ReturnsUnderperformance:
Term -Longrefunded UAL)*(24% of $83 Million PV Savings •outcomes)(1,000 potential Simulation Analysis Monte Carlo (28% of Refunded UAL)*Expected PV Savings $99 Million •earns 7%)Status
Quo (CalPERS Refunded UAL)PV Savings (34% of $120 Million •
Next Steps of February 22ndClosing the week th Pricing the week of February 8
Recommendation Approve the resolutions