City uncovers $900K windfall
An unexpected reduction in retirement plan rates is leaving the city of South Lake Tahoe wondering what to do with an extra $900,000.
“We’re currently discussing possibilities with the City Council,” said Linda Swain, city human resources manager. “It will definitely be part of our budgetary process and negotiations with our employee associations.”
The Public Employees’ Retirement System, or PERS as it’s commonly referred to, is a retirement fund used by numerous local governments, small cities, counties, state college systems and classified employees in school districts, Swain explained.
Upon updating their actuarial studies concerning employee payments into the program, plan provider CalPERS determined that the city of South Lake Tahoe’s share of payments could be reduced this year.
“They take a look at things like the retirement pool and how long people are living and then adjust payments accordingly,” Swain said. “The notification this year was that we do not have to pay the employer share. That’s really good news, we’ll have money now that we would otherwise pay out to PERS.”
But just because PERS payments are severely reduced this year doesn’t mean it will be so next year, according to Bob Porfiri, city accounting manager.
“We calculated $900,000 this year in payments we don’t have to make, but in the next few years we don’t know what will happen,” Porfiri said. “It’s good news but we’re kind of skeptical – I don’t have anything official, just a letter saying they’ve revised the rates. It happened without notice and we could be all the way back at square one next year.”
Further discussion on the issue is tentatively scheduled for the July 20 City Council meeting.
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