2009-06-02 5-A Submittal
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Mayor Beverly Johnson and
Members of the Alameda City Council
City of Alameda
2263 Santa Clara Avenue
Alameda, CA 94501
RE: Fiscal Sustainablity f2eport
Dear Mayor Johnson and Members of the City Council:
Thank you for the opportunity to serve on the city's Fiscal Sustainability Committee
(FSC). As you know tonight. the committee's report will be submitted to council.
I have asked City Treasurer Kennedy to remove my name fxorn the report. While I have
concerns in several areas none where of sufficient magnitude to lead me to seek to have
my name taken off the document. However, the recommendation on Other Post
Employment Benefits (OPEB) motivated me to make the request...
The recommendation from the FSC regarding OPEB is to begin. pre-funding its seventy
five million dollar accrued liability. All things being equal, I believe pre-funding is a
laudable goal. But, when the city is in the midst of the worst economic meltdown since
the Great Depression. the time to begin a funding scheme that is not required, arguably, in
fact and certainly nat. by law is not now. The primary reason given for beginning pre-
funding now is to avoid a reduction in the city's bond rating. Based on the last statistics
available around twenty percent of entities covered by GASB 45 have begun pre-funding.
That means around eighty percent have not.. I would hope this eighty percent are not all
going to have their bond rating reduced. The argument for beginning immediate
prefundng includes the assumption that all participants will reach retirement and no
changes in benefits (funding, design or delivery) I find. both of these assumptions to be
highly unlikely.
I am a strong proponent of viable pensions and retiree medical.. The city can. continue to
deliver these benefits without jeopardizing its budget.
Re: Agenda Item #5-A
06-02-09
The city should monitor the OPEB issue closely, but unless there is a viable funding.
stream (bonds have been suggested) then the city should wait until the economic picture
improves to begin pre-funding. The city should establish a committee to Look at all
aspects of OPBB which would include representatives of the unions and management
personnel who are recipients of the benefits.. I understand the recently negotiated Police
Off cers' Association (POA) memorandum includes such a provision. It shouldn't be
difficult to expand this to the rest of the bargaining. units.
Thank you for your attention to this matter. Should you have any questions I am available
at (510) 719-7691 (cell) or (~ 10) 523-752$ (home).
Very Sincerely Yours,
Michael K.Henneberry
2$11 Otis Drive
Alameda, CA 94501