Budget Meeting Minutes 05/11/05 - Laserfiche WebLink

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Ms. Rygas asked when the SDC formula would be reviewed and whether it would take into account the needs that had arisen since last reviewed. Mr. Corey explained that the methodology for SDCs was strictly governed by State statute and did not allow a lot of flexibility. In response to a question from Mr. Pape, Mr. Corey clarified that out of $1 in gas tax collected by the State, 60 cents went to ODOT, 24 cents went to the Counties, and 16 cents was allocated to Oregon cities. Eugene's share of that was six percent of the 16 cents. Mr. Pape asked why the City of Eugene was receiving such a small portion. Mr. Corey responded that the State gas tax was one component of the State Road Trust Fund: Oregon cities' chief competitor for that money was the State public school system. Ms. Rygas asked Mr. Corey what he suggested the Budget Committee and City Council do for the Road Fund. Mr. Corey recommended the City use the balance available to sustain it through the fiscal year while looking for efficiency gains and revenue enhancements. V. .EMPLOYEE RETIREMENT AND BENEFITS COSTS Dee Ann Hardt, finance director for the Finance and Court Services Division of the Central Services Department, stated that the cost of retirement was the City's single largest benefit cost. She said that formerly the cost had been predictable, remaining at about 17 percent of payroll, but now had risen to 26.6 percent. She explained that the State decision to institute taxation of retirees' pensions had ultimately mandated that the employers absorb the cost of that decision since pensions were increased to allow the retiree to net the same amount of income. She' provided a brief overview of the Public Employees Retirement System (PERSj. She underscored that the system had been severely affected by market losses Ms. Hardt explained that the lawsuits against PERS had challenged the rate orders as illegal. She said a summary of the PERS lawsuits was in the back of the agenda packet. She said that the City was still collecting the "pre-reform" rate from departments, but. the 7% difference between the post-reform rate and the old rate was being placed in a reserve pending the outcome of litigation. She projected that the obligation for retiree benefits would increase by $6.6 million. She added that the specific rates for the City of Eugene were as yet unknown, but would be more evident by the time that the City Manager was' ready to present his-final budget recommendation to the Budget Committee in April. Ms. Hardt stated that returns had been adequate enough in 2003 and 2004 that the PERS Board was anticipating crediting earnings because they would have paid off their deficit reserve. She said the City of Eugene had contracted with an independent actuary to assess the PERS Board's calculations for the City for accuracy. She predicted the Board's figures were accurate, but felt it was due diligence to conduct such an assessment. Mr. Kelly asked if the seven percent of payroll kept in reserve in case the court overturned the reforms was part of the rates Ms. Hardt quoted. Ms. Hardt affirmed that it was incorporated into the 26.6 percent of payroll that the benefits currently cost. Mr. Kelly surmised that; should the Supreme Court uphold the reforms, the rate would drop from 26.6 percent to 19.6 percent. Mr. Kelly asked, regarding the anticipated increase, if this stood regardless of the Supreme Court's decision. Ms. Hardt indicated it was. Mr. Kelly ascertained that the City staff intended to recommend that the City retire some bonds should the seven percent reserve be returned. He requested that all departments compile a list of major unmet needs for the council to consider, should this "windfall" be realized. He suggested the list include such projects MINUTES-Eugene Budget Committee February 7, 2005 Page 12