Yorba Linda grapples with unfunded pension, post-retirement employee benefit liabilities

Yorba Linda – along with the many other governmental agencies in California– is grappling with unfunded liabilities related to pensions and other post-employment employee benefits.

And – as is the case with some of the other public bodies – this city is working on solutions to the problem, with an array of answers scheduled to be presented for discussion and potential action at a City Council meeting in June during a mid-point review of a two-year budget.

Yorba Linda has an unfunded pension liability of $14.9 million, according to the most recent actuarial study from the state Public Employees Retirement System, Finance Director Scott Catlett stated in a report to council members earlier this month.

The CalPERS study pegs the city's pension plan as 75.1 percent funded, representing a drop in the unfunded liability by $952,000 and a boost in the funded percentage from 71.2 per cent from just a year ago, Catlett reported.

“CalPERS has completed a multi-year process of mitigating various risks inherent in the actuarial factors that influence rates,” Catlett noted. The changes increased what would have been a $12.5 million unfunded liability and dropped a 78.3 percent funded ratio to the current figures.

The changes “account for anticipated increases in employee and retiree mortality in the years ahead, lower anticipated investment earnings and amortizing losses in a more direct and accelerated fashion,” Catlett stated.

He added: “All of these changes will increase the health of the city's pension plan in the long-term and over time decrease the likelihood of a repeat of the challenges experienced by CalPERS during the last decade.”

Another result of the changes will be to increase the current rate of 20.1 percent of the city's payroll paid to CalPERS to a projected 26.6 percent by 2020-21. The higher rate will lead to the city's plan reaching 100 percent funding in about 30 years, Catlett noted.

Catlett also indicated the city is studying methods of targeting the unfunded liability “at an accelerated rate” by shortening amortization to 20 or 15 years, “which would increase the city's costs during the repayment period but could save as much as $7.9 million in total.”

Other options would be for the city to make larger, elective payments in city-selected years or start paying the higher rates now rather than phasing them in during the next five-year period.

An unfunded liability for post-employment benefits stands at $15.3 million, and “is the result of the city's current practice of funding medical contributions for retirees on a pay-as-you go basis,” Catlett stated.

Financing alternatives scheduled to be presented to the council in June include establishing city-funded trust or reserve accounts, modifying benefits for future employees to reduce city contributions and/or adding a vesting period for employees to be eligible for city contributions to retiree medical insurance. 

Water conservation, landscape costs, 'black box' theater, contentious petition draw Y.L. attention

Water conservation, landscaping costs, a “black box” theater facility and a contentious petition drive merit attention from Yorba Linda residents this week.

--The city's Landscape Maintenance Assessment District and landscape areas maintained by the Parks and Recreation Department have met the 36 percent conservation goals for the six months since a sustained effort began in late July 2015, according to a recent city staff report.

And, noted Public Works Director Mike Wolfe, the city is testing water-saving granules at two 3,000-square-foot locations, near the intersection of Camino de Bryant and Kodiak Mountain Drive and off Via Del Coyote. They'll be watered twice weekly to evaluate granule benefits.

The bid process has started on a $207,100 project for upgrades to 66 irrigation controllers in 19 of the city's landscape maintenance zones that have reserves to fund the “smart” devices.

--Property owner votes in the last of three rounds of balloting on increasing annual fees to maintain deficit-ridden Landscape Maintenance Assessment zones will be announced at a May 17 City Council meeting. Proposed increases range from $161 to $754 (61percent to 846 percent).

This time, three zones, with 361 single-family homes, are in the city's central area, and one zone, with 745 homes, is in the northwest. The hikes would include a yearly consumer price index increase and be added to 2016-17 property tax bills.

Three zones with 1,930 residences approved increases in January, and five zones with 1,847 residences rejected hikes earlier this month. Of the city's 21,142 single-family and 1,083 multi-family residences, 12,149 and 624, some 58 percent, are in a total 32 local landscape zones.

--One of the facilities proposed for a 15,000-square-foot arts and community center under consideration to be built alongside a 50,000-square-foot library on the vacant “strawberry field” site near Lakeview Avenue and Lemon Drive is a 125- to 225-seat “black box” theater.

Black-box theaters are often painted black because the absence of color can give audiences “a sense of being anywhere,” according to a city staff report. Lighting is critical in creating atmosphere, since props and background scenery are limited.

Primary uses would be for theater, dance and musical performances. Other uses: classes; rehearsals; film festivals; training sessions; and corporate, fund-raising and special events.

--Dueling political action committees, “robo” phone calls and roadway signs are dominating a drive to gather 9,520 signatures on each of two petitions to qualify recalls for water board directors Bob Kiley and Gary Melton for a future ballot.

Citizens to Protect Our Water, organized last month by Ric Collett, a director since 2004, opposes the effort, and Yorba Linda Taxpayers Association, active since June 2015 and chaired by Jeff Decker, a recall and regular election council candidate in 2014, is in favor.    

Bank doesn't want Yorba Linda's business, so city chooses another institution; change saves money

What would you do if officials at the bank with your millions of dollars in deposits told you they didn't want your business? That's the word Yorba Linda received, when Bank of America said it was going to sever its relationship with the city by an April 30 deadline.

But – happily – the change in the city's banking will result in more interest paid on the city's funds and other favorable financial terms under a newly negotiated agreement with Bank of the West that goes into full effect May 15.

The new pact is for five years with one optional five-year extension and includes all services now provided by Bank of America, as well as accounts related to the Black Gold golf course, including credit card processing, currently housed at Wells Fargo Bank.

Deposits to nine city accounts at the bank are expected to total more than $50 million annually.

“Housing all of these banking services in a single relationship is anticipated to result in greater monetary and staff time savings in the long term than just transitioning the city's current Bank of America services,” according to a recent report by Finance Director-Treasurer Scott Catlett.

One big difference will be the interest paid on city funds. Bank of the West will pay a 0.55 percent rate, up 0.30 percent from the 0.25 percent now paid by Bank of America. Catlett's report says this will add $19,500 per year to city coffers.

And a reduction in other banking and credit card fees will save $48,000 for a total annual boost of $67,500 to the city's bottom line. Bank of the West also is waiving fees for three months and will provide transition services and required materials free of charge.

The city-hired consultant involved in the changeover, Procure America, will be paid $15,000 and 50 percent of the savings above that amount for three years, during which time the firm will monitor the banking contract, fees, services and savings, Catlett reported.

The city's some 200 employees will be eligible for “discounted/enhanced consumer banking products and services” under the contract. The nearest branch is 2.2 miles from city hall on La Palma Avenue in Anaheim. Other nearby branches are in East Fullerton and Brea.

“Bank of America has been exiting a portion of the government services market in California due to changes in banking regulations, with a shifting focus to larger and more profitable government clients in lieu of small and medium-sized agencies, such as the city,” Catlett noted.

The city sent “requests for proposals” to five banks, with Bank of the West selected from three that responded. One factor was involvement in community events and charities, with the bank noting $236,650 in donations to 51 county organizations in the past three years.

However, none of the groups were based in Yorba Linda, so local non-profits should sharpen their pencils and submit requests to the bank, now that the institution has won a city contract.

Yorba Linda's growing number of independent voters have limited choice in presidential race

Yorba Linda's growing number of independent voters – who register as “no party preference” in California – will have limited choices if they want to cast ballots in the presidential contests in the June 7 primary election.

At last count, nearly 20 percent of this city's 38,461 registered voters selected the “no party preference” label, a designation that will allow them to make choices just in the Democratic, American-Independent or Libertarian presidential contests.

They can't vote in the Republican, Green or Peace and Freedom presidential contests, the only other parties qualified for ballot positions under state election rules. Decisions on allowing “no preference” registrants to cast presidential ballots are made by the respective parties, not state or county election officials.

“No party preference” individuals who are permanent “vote-by-mail” voters will receive a post card on which they can choose to receive a ballot listing presidential candidates in the Democratic or American-Independent or Libertarian parties.

If they aren't permanent “vote-by-mail” voters, they'd have to return a vote-by-mail application on which they'd could select one of the three allowed party ballots for the June 7 election only.

To vote in Republican, Green or Peace and Freedom races, they'd have to change their registration to the specific party and – if desired – change back after the election. Otherwise, they'll only vote in non-partisan races, voter-nominated legislative contests and on ballot measures.

Last day to register to vote is May 23, although new citizens can register through election day. Vote-by-mail applications are available May 9-31. Full information on registration and voting is available at ocvote.com. The site allows an individual to check his or her registration status.

Other Yorba Linda-related election highlights:

--In the 16 years since the 2000 primary, the percentage of this city's “independent” voters jumped from 11.9 percent to 19.3 percent, from 3,904 registered as “non-affiliated” out of a 32,936 total to the current 7,399 registered as “no party preference” out of the 38,461 total.

During the same period, Democratic registration dropped from 24.3 percent to 21.6 percent of the city's total, while Republican registration declined from 60.4 percent to 55.3 percent. Now, the Democratic registration stands at 8,292 and the GOP total at 21,273.

--As mentioned in my March 25 column,12 of the 15 candidates running for the six positions representing Yorba Linda, Placentia, Brea and La Habra on the county's Republican Central Committee are from Yorba Linda, including five of the six incumbents.

But Yorba Linda's Democrats won't be casting ballots for the Democratic Central Committee, since only three candidates signed up to run. Molly Muro from Placentia and Greg Diamond and Jeff LeTourneau from Brea and three others selected by the committee will be appointed. 

Economic recovery has positive YL impacts

The steadied post-recession economic environment is having positive impacts on the community, as evidenced by the following updates to some topics from past columns:

--A detailed analysis of Yorba Linda's long-term infrastructure, facilities and equipment needs now underway by city management staff is expected to result in recommendations submitted to City Council members, probably at a June meeting, for potential future action.

The study will build on a report prepared about two years ago recommending amounts to be contributed to specific reserve funds focusing on the city's physical needs, contributions that had been suspended for a few years due to economic hits to the city's tax revenue.

The forthcoming analysis will include “a refinement of the city's needs relative to street infrastructure,” according to a recent report prepared by Finance Director Scott Catlett.

In addition to analyzing an appropriate level of contributions to the special reserve funds, Catlett noted the staff is working on recommendations regarding the city's General Fund operating reserve levels, now set at 50 percent of expenditures under council policy.

“These recommendations would distinguish between emergency reserves and 'rainy day' reserves and establish guidelines for the usage of and additions to the reserves,” Catlett stated in his report.

Council last month approved transferring $860,843 to facilities reserves, $475,702 to equipment reserves and $366,605 to infrastructure reserves over a three-year period, dollars to come from actual and projected budget surpluses from 2014 to 2017.

--A state-approved Educator Effectiveness Block Grant will bring $1.75 million in new, one-time funds to the Placentia-Yorba Linda Unified School District, according to a report to the district's trustees from Candy Plahy, assistant superintendent of educational services.

The money will be spent over a three-year period to support the professional development of certificated teachers, administrators and paraprofessional educators. Most, some 64 percent, will go to programs providing support and mentoring to beginning teachers.

Funding also will support coaching for teachers identified as needing improvement, “leader-ship academies” for managers, mentoring for new administrators and other program needs.

--Interesting per-pupil target spending levels for the current school year for Placentia-Yorba Linda campuses, based on average daily attendance figures, are noted in a financial report prepared for trustees by James Pham, fiscal services director.

Individual spending levels are $8,398 for kindergarten through third grade students; $7,720 fourth through sixth grades; $7,950 seventh and eighth grades; and $9,452 9^th through 12^th grades.

Average daily attendance this year, including county education programs, is expected to be (rounded) 25,150, anticipated to drop slightly to 25,017 next year and 24,867 the year after.