HomeMy WebLinkAbout2019-04-09 e-packet@6:00Tuesday, April 9, 2019
6:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
City Hall, City Manager's Conference Room
400 Grand Avenue, South San Francisco, CA
Special City Council
Special Meeting Agenda
April 9, 2019Special City Council Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the City Council of the City of South San Francisco will hold a Special Meeting on Tuesday, April 9,
2019, at 6:00 p.m., at City Hall, City Manager's Conference Room, 400 Grand Avenue, South San Francisco,
California.
Purpose of the meeting:
Call to Order.
Roll Call.
Agenda Review.
Public Comments - comments are limited to items on the Special Meeting Agenda.
ADMINISTRATIVE BUSINESS
Report regarding Study Session on potential regulation of plastic straws. (Christina
Fernandez, City Manager’s Office)
1.
Study Session: Review and Analysis of Minimum Wage Increase for City of South
San Francisco Employees (Leah Lockhart, Human Resources Director)
2.
Report regarding a Study Session on the potential regulation of flavored tobacco,
including e-cigarettes in South San Francisco. (Christina Fernandez, City Manager’s
Office)
3.
Study session regarding a comprehensive financial review of the City of South San
Francisco, including pension costs (Christina Crosby, Interim Director of Finance)
4.
Adjournment.
Page 2 City of South San Francisco Printed on 6/6/2019
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:19-205 Agenda Date:4/9/2019
Version:1 Item #:1.
Report regarding Study Session on potential regulation of plastic straws.(Christina Fernandez,City
Manager’s Office)
RECOMMENDATION
It is recommended that City Council provide guidance and direction regarding the potential regulation
of plastic straws.
BACKGROUND/DISCUSSION
The United States uses over 500 million straws every day.Many of these straws end up in the landfill or ocean,
irreparably harming marine life and making its way into our water supplies.Plastic straws do not biodegrade,
rather they breakdown into small pieces known as “mircroplastics.”These microplastics never dissolve and are
present in sea salt,tap drinking water,and shellfish.New studies confirm that some microplastics are smaller
than dust particles or powdered sugar ingested by marine life,which threatens many species survival.Over
94% of tap water contains microplastics.
Plastic straws are the focus of many of the current efforts to ban plastic food service ware due to its prevalence
in the ocean.More than 8.3 billion straws pollute the world’s beaches,and if the current rate of usage
continues,by the year 2050 there will be more plastic (by weight)than fish in our oceans.Straws are in the top
10 of litter picked up during coastal cleanups.
Too lightweight to make it through mechanical recycling sorters,plastic straws drop through sorter screens and
mix with other materials too small to separate,contaminating recycling loads or getting disposed as garbage.
Many of these straws end up in the ocean due to human error or blown out of trash cans.
The City of South San Francisco is committed to sustainability,environmental preservation,and reducing
greenhouse gas emissions. Among the initiatives to keep South San Francisco “green” include:
·Adopted in 2008,the City’s Green Food Packaging ordinance prohibits food vendors from dispensing
prepared food to customers in disposable food service ware made from polystyrene.(SSFMC Chapter
8.60)
·Effective April 22,2013,the City adopted a reusable bag ordinance that prohibits the use of single use
carryout bags at retail stores.It requires retailers to charge customers for recycled paper bags and
reusable bags at point of sale. (SSFMC Chapter 8.64)
·Adopted in 2014,the City’s Climate Action Plan provided guidance in meeting the City’s goals to
reduce energy usage and greenhouse gas emissions communitywide.
·In 2016,the City joined Peninsula Clean Energy,which gives residents and businesses the option to
purchase energy from renewable sources.
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·South San Francisco currently encourages residents and businesses to participate in various transit
options including the Free South City Shuttle service and SCOOP, the commute app.
Current Municipal Code
The City’s Green Food Packaging ordinance defines the term “disposable food service ware”as “single or non-
durable use disposable products used by food vendors in the restaurant or food serving industry for serving or
transportation prepared,ready to consume food or beverages,”which “includes,but is not limited to,plates,
cups,bowls,utensils,cartons,trays,and hinged or lidded containers for takeout foods and/or leftover from
partially consumed meals prepared at food vendors.”(SSFMC §8.60.010)The City’s current definition of
“disposable food service ware”does not specifically include plastic straws or stirrers.Therefore,plastic
straws or stirrers are permitted in the City.
Furthermore,the City’s Green Food Packaging ordinance prohibits food vendors from dispensing prepared food
to customers in disposable food service ware made from polystyrene.(SSFMC §8.60.020)The City’s
definition of “food vendor”includes full service restaurants and fast food restaurants,as well as “any sales
outlet,store,shop,restaurant,grocery store,supermarket,vehicle or other places of business operating
primarily to sell or convey foods or beverages directly to the ultimate consumer,which foods or beverages are
predominantly contained, wrapped or held in or on packaging.”
Similarly,all city facilities,city sponsored events,and city permitted events are prohibited from using
disposable food service ware made from polystyrene.Instead,all food vendors must use disposable food
service ware that is biodegradable,compostable,reusable,or recyclable.(SSFMC §8.60.030)Additionally,all
city facilities must use biodegradable,reusable,or recyclable food service ware unless it can be shown that
there is not an alternative for a specific use.
However,there are several exemptions in the City’s Green Food Packaging ordinance.(SSFMC §8.60.040)
Prepared foods packaged outside of the City are exempt from the provisions.There may be situations unique to
a food vendor where a suitable alternative does not exist for a specific application.Food vendors may also
apply for an exemption due to significant economic hardship,but they must provide documentation that
factually supports their claim.All exemptions are subject to City Manager or designee approval.A food vendor
granted an exemption by the City must re-apply prior to the expiration of the one-year exemption period and
demonstrate continued undue hardship,the continued absence of a suitable biodegradable,compostable,
reusable, or recyclable alternative, if they wish to have the exemption extended.
Bioplastics
Bioplastics are plant based and are growing in popularity compared to petroleum-based plastics.Bioplastics are
composed of renewable resources such as corn,sugar,and soy protein and labeled as “compostable.”
Bioplastics take an average of 4-6 months to degrade.The South San Francisco Scavenger Company
(“Scavenber”)has the ability to compost some bioplastic materials if it is (1)received from industrial carts
(metal carts from businesses)and (2)sent to an industrial composting facility,such as Z Bust.Bioplastics
unable to be broken down at Z Bust are sent to a landfill.Bioplastics found in residential recycling bins are sent
to a landfill as the digesters are unable to break them down.
State Legislation
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Effective January 1, 2019, Assembly Bill 1884 (Calderon) prohibits a full service restaurant from providing
single use plastic straws to consumers unless requested by the consumer. The new law defines a “full-service
restaurant” as an “establishment with the primary business purpose of serving food, where food may be
consumed on the premises,” and where an employee (1) escorts or assigns a consumer to an assigned eating
area, (2) takes the consumer’s food and beverage orders after being seated, (3) directly delivers the food and
beverage orders to the consumer; (4) brings any requested items associated with the order to the consumer; and
(5) delivers the check directly to the consumer at the assigned eating area. (Pub. Res. Code § 42270(d).)
The bill specifies that the first and second violations of these provisions would result in a notice of violation
and any subsequent violation would be an infraction punishable by a fine of $25 for each day the full service
restaurant is in violation, but not to exceed an annual total of $300. The new law authorizes local enforcement
officers to enforce the California Retail Food Code provisions. The San Mateo County Environmental Health
Office is responsible for inspecting food facilities located in San Mateo County. Of note, the new bill does not
prevent a city from adopting and implementing an ordinance or rule that would further restrict a full-service
restaurant from providing a single-use plastic straw to a consumer. (Pub. Res. Code § 42271(c).)
Model Ordinances: City of Malibu
The City of Malibu passed Ordinance No.432 effective June 1,2018,which prohibits restaurants (including
fast food restaurants),beverage providers,or vendors from using,providing,distributing,or selling plastic
beverage straws,plastic stirrers,or plastic cutlery,including bioplastics.The use of non-plastic alternatives are
encouraged including those made from paper,sugar cane,or bamboo.In addition,non-plastic alternative
straws,stirrers,or cutlery will only be provided upon request by the customer (please see Attachment A).The
distribution of plastic or bioplastic beverage straws,plastic stirrers,or plastic cutlery at any city facility or any
city-sponsored event is prohibited.
Straws compliant under the City of Malibu’s Municipal Code Chapter 9.24 include:
·Paper Straws
·Bamboo Straws
·Glass Straws
·Stainless Steel Straws
·Seaweed based straws
·Sugar based straws
Cutlery compliant under the City of Malibu’s Municipal Code Chapter 9.24 include:
·Birchwood
·Aspen Wood
·Bamboo
·Wheat bran and corn starch or sugarcane
·Flours of jowar (sorghum), rice, and wheat
·Forest Stewardship Council (FSC) Certified Wood
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Local Efforts - City of Pacifica
The City of Pacifica held public meetings on August 13, 2018 and September 10, 2018 to discuss issues relating
to liter within the City and the potential to adopt stronger standards relating to certain types of liter including
plastic cutlery, plastic stirrers, and plastic beverage straws.
Modeled after the City of Malibu’s ban on disposable food service ware, the City of Pacifica became the first
(and only) city in San Mateo County to include the prohibition of plastic and bioplastic beverage straws,
stirrers, and cutlery in its disposable food service ware ordinance adopted on November 13, 2018 (Ordinance
No. 838-C.S.).
In addition to the prohibition of providing prepared food to customers in foam polystyrene or solid polystyrene
disposable food service ware,restaurants are also prohibited from using,distributing,or providing customers
with plastic cutlery,plastic beverage straws,or plastic stirrers.A restaurant or retail food vendor is not
precluded from offering non-plastic disposable food service ware such as those made from paper,sugar cane,or
bamboo to customers;or encouraging the non-use of plastic lids,cups,or plastic containers.Restaurants and
retail food vendors are strongly encouraged to use,distribute,or provide 100%compostable paper cups.Lastly,
all individuals,entities,or organizations that rent or use the City of Pacifica’s facilities are prohibited from
using plastic beverage straws,plastic stirrers,or plastic cutlery,and are strongly encouraged to use 100%
compostable paper cups.
The County of San Mateo
Over the past year, San Mateo County’s Office of Sustainability has been developing a Disposable Food
Service Ware Ordinance that will affect food facilities in the unincorporated areas of San Mateo County and
serve as a model for local governments. During this process, the County’s Office of Sustainability has led
efforts in order to help inform and prioritize any additional next steps in addressing food service ware. The
Office of Sustainability is currently drafting the Disposable Food Service Ware Ordinance and hopes to have
the draft adopted by the San Mateo County Board of Supervisors in late spring 2019 or early summer 2019.
Of note, the County of San Mateo currently prohibits food service providers from using disposable food service
ware when preparing food on property owned or leased by the County. While the County’s definition of
“disposable food service ware” includes plates, cups, bowls, trays and hinged or lidded containers, but
explicitly does not include single-use disposable items such as straws, cup lids, or utensils, nor does it include
single-use disposable packaging for unprepared foods. (SMCMC §§ 4.106.020(c), 4.107.020(a).) Additionally,
County departments are prohibited from purchasing or otherwise acquiring bottled water. Finally, the County
prohibits food vendors from using polystyrene-based disposable food service ware when providing prepared
food. (SMCMC § 4.107.030)
NextGen Food ware Ordinances: A Policy Lab for Local Government
On December 5, 2018, about 75 local government staff from the Bay Area participated in a daylong workshop
called the NextGen Foodware Ordinances: A Policy Lab for Local Government, which focused on policy
options for reducing single-use foodware items. As a result, local governments were able to share best practices
and experiences regarding disposable food service ware ordinances. The workshop was sponsored by the
County of San Mateo’s Office of Sustainability and UPSTREAM.
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Rethink Disposable Program with Clean Water Fund
The County of San Mateo’s Office of Sustainability is launching a door-to-door campaign targeting different
food facilities throughout the county, including businesses in South San Francisco in order to obtain a better
understanding of the needs, challenges, and opportunities for food service ware, especially around reusables.
The County will be working in partnership with the non-profit organization, the Clean Water Fund to reach out
to specific restaurants to learn if they might be interested in participating in their Rethink Disposable program,
where facilities swap out disposables with resuables. For those interested, Clean Water Fund will offer technical
assistance and grants up to $500 to help food facilities with this effort
Policy Alternatives
A.No Alternative: Do not adopt or amend any new ordinances relating to the prohibition of disposable
food service ware. The City would continue enforcing the existing Green Food Packaging ordinance
which prohibits the use of polystyrene disposable food service ware and encourages the use of
biodegradable, compostable, reusable, or recyclable food service ware. Plastic straws and stirrers would
continue to be permitted in the City.
B.San Mateo County Ordinance: Defer the drafting of an ordinance until the County completes its
Disposable Food Service Ware Ordinance. The Board of Supervisors is expected to review a proposed
ordinance in late spring or early summer 2019.
C.Draft an Ordinance: Direct staff to proceed in drafting a Disposable Food Service Ware Ordinance with
guidance on the scope, implementation, and timing. Plastic straws and stirrers could be prohibited in the
City.
Food Service Ware Guidance
Should Council elected to move forward with drafting an ordinance, staff will need guidance regarding the
scope, implementation, and timing of the draft ordinance.
The City’s current Green Food Packaging ordinance requires all food vendors - including full service
restaurants and fast food establishments - to adhere to the City’s ban of polystyrene food service ware and
disposable food service ware, which currently includes single use utensils. If the Council desires, the City may
similarly amend the Green Food Packaging ordinance and clarify that all food vendors are required to use
biodegradable, compostable, reusable, or recyclable plastic straws, stirrers, or lid plugs, the most prevalent
items found during coastal cleanups. Alternatively, the City could limit or exempt certain types of businesses
from this requirement.
An implementation framework must also include guidance regarding enforcement. The City’s Green Food
Packaging ordinance adopted in 2008 is enforced by the City Manager or designee to ensure that food vendors
are adhering to the ordinance. The City may also opt to adopt a complaint-based mechanism for enforcement.
Pending further discussions with the County, another option may be to utilize the County’s Environmental
Health Division, which is responsible for inspecting food vendors annually. For example, as of 2011, the
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County allows a city to authorize the County’s Environmental Health Division by ordinance or resolution to
enforce a city’s prohibition on the use of polystyrene based disposable food service ware by food vendors if a
city adopts the County’s ordinance. (SMCMC § 4.107.080) Similarly, the City authorized and directed the
County’s Environmental Health Division to enforce the City’s Reusable Bags ordinance in 2012 (SSFMC§
8.64.080).
As with the implementation of the polystyrene ban, the City provided food vendors with a phased-in period to
adopt new food service containers. Staff recommends including time for the City to conduct outreach to the
business community and other stakeholders.
ENVIRONMENTAL REVIEW
A proposed ordinance to regulate the use of plastic straws would be exempt from the requirements of the
California Environmental Quality Act (CEQA)because it can be seen with certainty that that such ordinance
would not have the potential for causing a significant effect on the environment under Section 15061(b)(3)of
the State CEQA guidelines.Additionally,a proposed ordinance would be exempt from the requirements of
CEQA pursuant to CEQA Guidelines Sections 15307 and 15308 as an action by a regulatory agency taken to
protect the environment and natural resources.
FISCAL IMPACT
There is no known current Fiscal Impact to the General Fund.
RELATIONSHIP TO STRATEGIC PLAN
The potential ban on food service ware adheres to the City’s strategic planning goals of building and
maintaining a sustainable city.
CONCLUSION
Staff recommends that City Council provide guidance and direction regarding the potential regulation of plastic
straws.
Attachments:
A.Alternative Food Service Ware
B.Disposable Food Service Ware Presentation
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Plastic Straws
South San Francisco City Council
Study Session
April 9, 2019
Plastic Straws
City Council
City of South San Francisco
April 9, 2019
Agenda
I.Problem & Need
II.Existing Legislation
III.Current Efforts
IV.Next Steps
Why is this a Problem?
Over 500 million straws every day
Microplastics are a problem for marine
life
Plastics are found in sea salt, U.S. tap
water, and shellfish
Existing Legislation – State Law
Assembly Bill 1884 (Calderon)
Prohibits full service restaurant from
providing single use plastic straws unless
requested
Violations
Enforcement
Existing SSF Ordinance
SSFMC 8.60.10 Green Food Packaging
Prohibits any food vendor from packaging food
in polystyrene
Disposable food service ware must be
biodegradable, compostable, reusable or
recyclable food service ware.
All city facilities will use biodegradable,
compostable, reusable, or recyclable food
service ware
Exemptions
Violations
Model Ordinance – City of Malibu
City of Malibu MMC 9.24.045
Effective June 1, 2018
Bans straws, plastic stirrers, plastic
cutlery (including bioplastics)
Alternatives encouraged
Non-plastic alternatives only by request
Distribution at any city facility or city
sponsored event is prohibited
Local Efforts – City of Pacifica
Effective November 13, 2018
Only city in San Mateo County to ban disposable
foodservice ware
All that rent or use City of Pacifica facilities are
prohibited from using plastic straws, plastic
stirrers, or plastic cutlery
Phased-in approach – “undue hardship”
Complaint basis enforcement
County-led Efforts
SMC Office of Sustainability developing a
Disposable Food Service Ware Ordinance
Serve as model for local governments
Draft to Board of Supervisors by late Spring
or Summer 2019
Events
NextGen Foodware Ordinance – December 2018
Rethink Disposable Program with Clean Water
Fund
Next Steps
Status Quo
Wait & See
Ordinance
Recommendation: Council provide direction on
guidelines for a draft ordinance.
Ordinance Guidance
Full Service and Fast Food
Only plastic straws?
Enforcement
Timeframe
Thank you!
Questions?
Christina Fernandez
Assistant to the City Manager
[email protected]
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:19-291 Agenda Date:4/9/2019
Version:1 Item #:2.
Study Session:Review and Analysis of Minimum Wage Increase for City of South San Francisco Employees
(Leah Lockhart, Human Resources Director)
RECOMMENDATION
It is recommended that Council review information pertaining to a possible internal minimum wage
increase for City employees and provide direction to staff.
BACKGROUND/DISCUSSION
As of January 1, 2019, the State of California’s minimum wage for employers with 26 or more employees is set at $12 per
hour. Pursuant to SB 3, which was enacted in 2016, the State minimum wage is scheduled to increase by one dollar each
year, reaching $15 per hour by January 1, 2022 (January 1, 2023 for employers with 25 or fewer employees). Thereafter,
the minimum wage will be adjusted annually based on the National Consumer Price Index (CPI-W). The minimum wage
schedule for the State of California is attached in Table 1. In addition to California state law, several California cities
have passed minimum wage ordinances that set forth a more aggressive schedule to raise the minimum wage to $15 per
hour. In San Mateo County, the Cities of Belmont, Daly City, Redwood City, and San Mateo have minimum wage
ordinances, and an additional 15 cities in the San Francisco Bay Area have minimum wage ordinances.Tables 2 and 3
include the current and scheduled minimum wage adjustments for Cities within the Bay Area.
The City of South San Francisco does not have a minimum wage ordinance, therefore minimum wage is set in accordance
with State law. However, given the increase in wages in the surrounding area, Council has expressed an interest in
increasing wages for City employees who are currently earning less than $15 per hour. This study session will focus on
the options and potential impacts of increasing the starting wage for City of South San Francisco employees to $15 per
hour.
Current City Wage Schedule
The City’s current wage schedule includes six job classifications with a starting step below $15 per hour, including two
positions with a maximum step that is below $15 per hour. These include both unrepresented hourly positions and regular
full-time or part-time positions represented by AFSCME Local 57. The full wage schedule for these classifications is
included in the attached table 4. These classifications include:
Recreation Instructors ($12.00 - $38.00 per hour)
Recreation Instructors teach a variety of City recreation classes and programs. The wage scale is a wide range due to the
varied nature of the class and skill levels required of instructions. Recreation Instructors typically work less than 10
hours per week and only for specific classes or programs.
Recreation Leader I-III ($12.00 - $17.71 per hour)
Recreation Leaders work in a variety of recreation, education, and community service programs including before and
after school programs, preschool, summer camps, and adult day care, sports and aquatics. Under supervision, Recreation
Leaders are responsible for planning or assisting with a variety of appropriate program activities, as well as supervising
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and providing guidance to participants. The three levels are distinguished by level of experience or education required for
the specific program and level of responsibility. Level I Recreation Leaders are frequently hired as high school students
with limited work experience. A high school diploma is required at the level II and III level. Recreation Leaders III
assigned to licensed childcare and pre-school programs are also required to have specific experience and education
requirements (12 college semester units in specified areas of study).
Library Page ($12.00 - $14.59 per hour)
Regular duties of a Library Page include: shelving library materials; check-in of library materials using automated
circulation system; maintaining shelf order; retrieving patron reserves and requests from the book or AV shelves;
performing minor repairs to damaged materials; assisting with the preparation of displays and exhibits; performing setup
and takedown of library program rooms and spaces; assisting with afterschool homework programs and summer reading
registration. No prior work experience is required.
Library Clerk ($14.62 - $17.77 per hour)
In addition to duties performed by Library Pages, Library Clerks perform a variety of clerical and customer service duties
in support of Library operations and programs. Regular duties of a Library Clerk include: typical service desk duties
including patron library card registration and account management; assisting patrons with fines and fees payments and
placing reserves; answering patron questions and requests; receiving and processing new library materials; supporting
library programs by working in a team environment to plan or lead programs; serving as a lead homework assistant in the
Community Learning Center. A high school diploma and one year of clerical or volunteer experience involving public
contact is required.
Estimated Cost Impacts
The estimated cost is based on the difference between the annual cost of the State’s Minimum Wage increase each year,
and the annual cost if the City were to raise its minimum wage to $15 per hour as of July, 2019.
If the City were to raise the internal minimum wage to $15.00 per hour, the increase would affect positions currently
below the $15 threshold. However, the impact on the relative wages of related positions within the same job series or
chain of command should also be considered. These positions may also need to be adjusted in order to avoid wage
compression among the various levels and supervisory relationships. For example, the classifications of Recreation
Leader IV, Recreation and Community Services Coordinator, Child Care Assistant Supervisor and Recreation Supervisor,
work within the same chain of command. Related positions such as Pre-School Teacher I/II, are considered to be within
the same job series and potential equity issues should also be considered. These positions are also represented by the
City’s labor groups, therefore any salary adjustments considered are subject to negotiation.
The cost impacts were calculated by applying an increase to current full-time equivalent positions over three years,
adjusted for the increases scheduled by State law in future years.Table 5 illustrates the cost impact if all positions within
the same job series or chain of command were adjusted by the same dollar amount in order to maintain the current pay
differentials among levels and among related positions.Table 6 shows the cost of adjusting only those classifications
with wages below $15 per hour. If Council directs staff to propose a wage adjustment resolution, Council may consider
additional options that would provide a more limited extent of equity adjustments at a cost greater than option B, but less
than option A.
FISCAL IMPACT
All positions considered in this discussion are general fund positions.A limited number of positions or hours are
subsidized by grant funding (Little Steps pre-school,adult day care,and ASES programs).No adjustments are
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subsidized by grant funding (Little Steps pre-school,adult day care,and ASES programs).No adjustments are
recommended for the current fiscal year.Estimated costs for future years are illustrated in Tables 5-6 and are contingent
upon Council direction and negotiations with labor groups where applicable.
RELATIONSHIP TO STRATEGIC PLAN
Consideration of appropriate wages for City employees supports City Council’s strategic goal of Workforce
Development -- Attract, train, Support and Retain a High Performance City Staff Team.
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Attachment 1
Study Session: Review and Analysis of Minimum Wage Increase for City of South San
Francisco Employees
Table 1 California State Minimum Wage Schedule
Date Minimum Wage for Employers with
25 Employees or Less
Minimum Wage for Employers with
26 Employees or More
January 1, 2017 $10.00/hour $10.50/hour
January 1, 2018 $10.50/hour $11.00/hour
January 1, 2019 $11.00/hour $12.00/hour
January 1, 2020 $12.00/hour $13.00/hour
January 1, 2021 $13.00/hour $14.00/hour
January 1, 2022 $14.00/hour $15.00/hour
January 1, 2023 $15.00/hour CPI Adjustment
Table 2 San Mateo County Cities With Minimum Wage Ordinances
San Mateo County 2019 2020 2021
Belmont $13.50 $15.00 CPI Adj.
Daly City $12.00 $13.75 $15.00
Redwood City $13.50 $15.00 CPI Adj.
San Mateo*$15.00 CPI Adj.CPI Adj.
*San Mateo – Minimum wage for non-profit organizations is $13.50 in 2019, and equal
to other employers in 2020 and beyond.
Attachment 1
Study Session: Review and Analysis of Minimum Wage Increase for City of South San
Francisco Employees
Table 3 Other San Francisco Bay Area Cities with Minimum Wage Ordinances
City 2019 2020 2021
Alameda $15.00 $15.00 $15.00
Berkeley $15.00 CPI Adj.CPI Adj.
Cupertino $15.00 CPI Adj.CPI Adj.
El Cerrito $15.00 CPI Adj.CPI Adj.
Emeryville*$15.69 CPI Adj.CPI Adj.
Fremont**$14.25 $15.00 CPI Adj.
Los Altos $15.00 CPI Adj.CPI Adj.
Milpitas $13.50 $15.00 (7/1/19)CPI Adj.
Mountain View $15.65 CPI Adj.CPI Adj.
Oakland $13.80 CPI Adj.CPI Adj.
Palo Alto $15.00 CPI Adj.CPI Adj.
Richmond $15.00 CPI Adj.CPI Adj.
San Francisco $15.00 CPI Adj.CPI Adj.
San Jose $15.00 CPI Adj.CPI Adj.
San Leandro $14.00 $15.00 CPI Adj.
*Emeryville - Minimum wage is $15.69 for 56 employees or more, $15 for 55 or fewer employees.
** Fremont - Employers with 25 or fewer increase to $15 by 2021. Employees under age 21 employed by non-
profit organization are exempted.
Table 4 City of South San Francisco Classifications with Steps below $15 per hour
Effective December 28, 2018 Pay Steps (Hourly)
Classification 1 2 3 4 5
Recreation Instructor - Hourly 12.00 38.00
Recreation Leader I – Hourly 12.00 12.60 13.23 13.90 14.59
Recreation Leader II – Hourly
and Regular (AFSCME)13.20 13.86 14.55 15.28 16.04
Recreation Leader III – Hourly
and Regular (AFSCME)14.57 15.29 16.06 16.86 17.71
Library Page - Hourly 12.00 12.60 13.23 13.90 14.59
Library Clerk - Hourly 14.62 15.35 16.12 16.92 17.77
Attachment 1
Study Session: Review and Analysis of Minimum Wage Increase for City of South San
Francisco Employees
Table 5 Estimated Cost to Increase City Employee Minimum Wage to $15 (With Equity
Adjustments for entire job series)
Calendar
Year
CA Minimum
Wage (26+
Employers)
Proposed
internal
Minimum Wage
Additional cost
Of Wages
Additional Cost of
Wages & Benefits
(CalPERS)
2019*$12.00 $15.00 $328,776 $366,911
2020 $13.00 $15.00 $494,083 $556,364
2021 $14.00 $15.00 $247,042 $279,892
2022 $15.00 $15.00 ----
*2019 costs are based on a July 1 effective date (6 months)
Table 6 Estimated Cost to Increase City Employee Minimum Wage to $15 with no
equity adjustments.
Calendar
Year
CA Minimum
Wage (26+
Employers)
Proposed
internal
Minimum Wage
Additional cost
Of Wages
Additional Cost of
Wages & Benefits
(CalPERS)
2019*$12.00 $15.00 $82,331 $83,432
2020 $13.00 $15.00 $120,682 $122,481
2021 $14.00 $15.00 $60,341 $61,290
2022 $15.00 $15.00 ----
*2019 costs are based on a July 1 effective date (6 months)
1CITY OF SOUTH SAN FRANCISCO| Human Resources
Study Session: Review and
Analysis of Minimum Wage
Increase for City Employees
City Council Special Meeting
April 9, 2019
Leah Lockhart
Human Resources Director
2CITY OF SOUTH SAN FRANCISCO| Human Resources
California Minimum Wage
(26+ Employees)
Date Minimum Wage
January 1, 2019 $12.00 / hour
January 1, 2020 $13.00 / hour
January 1, 2021 $14.00 / hour
January 1, 2022 $15.00 /hour
3CITY OF SOUTH SAN FRANCISCO| Human Resources
Minimum Wage Ordinances
San Mateo County Cities
City 2019 2020 2021
Belmont $13.50 $15.00 CPI Adj.
Daly City $12.00 $13.75 $15.00
Redwood City $13.50 $15.00 CPI Adj.
San Mateo $15.00 CPI Adj.CPI Adj.
4CITY OF SOUTH SAN FRANCISCO| Human Resources
Minimum Wage Ordinances
Other Bay Area
Alameda
Berkeley
Cupertino
El Cerrito
Emeryville
Fremont
Lost Altos
Milpitas
Mountain View
Oakland
Palo Alto
Richmond
San Francisco
San Jose
San Leandro
5CITY OF SOUTH SAN FRANCISCO| Human Resources
City of South San Francisco
Wages Below $15/hour
Classification Step I (Min)Step 5 (Max)
Recreation Instructor $12.00 $38.00
Recreation Leader I $12.00 $14.59
Recreation Leader II $13.20 $16.04
Recreation Leader III $14.57 $17.71
Library Page $12.00 $14.59
Library Clerk $14.62 $17.77
6CITY OF SOUTH SAN FRANCISCO| Human Resources
Library Job Series
Library Program Manager
Librarian II
Librarian I Supervising Library
Specialist
Library Assistant II
Library Assistant I
Library Clerk
Library Page
7CITY OF SOUTH SAN FRANCISCO| Human Resources
Recreation Job Series
Recreation Program Manager
Recreation Supervisor
Assistant Childcare Supervisor
Recreation & Community
Services Program Coordinator
Preschool Teacher II
Recreation Leader IV Preschool Teacher I
Recreation Leader III
Recreation Leader II
Recreation Leader I
8CITY OF SOUTH SAN FRANCISCO| Human Resources
Considerations for
Increasing Wages
Recruitment and Retention
Fiscal Impact
Internal Alignment / Wage
Compression
Other Equity Concerns
All adjustments for represented
positions subject to bargaining
9CITY OF SOUTH SAN FRANCISCO| Human Resources
Financial Impact
Increase to $15 minimum
With Equity Adjustments for Entire Job Series
Calendar Year
Estimated Net Cost
(Accounting for State
Minimum Wage Increase)
2019
(July 1 –December 31)
$366,911
2020 $556,364
2021 $279,892
2022 --
10CITY OF SOUTH SAN FRANCISCO| Human Resources
Financial Impact
Increase to $15 minimum
Only Job Classes with Steps Below $15/hour
Calendar Year
Estimated Net Cost
(Accounting for State
Minimum Wage Increase)
2019
(July 1 –December 31)
$83,432
2020 $122,481
2021 $61,290
2022 --
11CITY OF SOUTH SAN FRANCISCO| Human Resources
Wage Compression
Change in internal alignment if increase applied to only
those below $15/hour (top step to top step
Classification Comparison Current
Differential
New
Differential
Recreation Leader IV vs.
Recreation Leader III 30%10%
Library Assistant I vs.
Library Clerk 20%41%
Preschool Teacher I vs.
Recreation Leader III 43%22%
12CITY OF SOUTH SAN FRANCISCO| Human Resources
Council Direction
Option 1 Maintain status quo (comply with State
Minimum Wage)
Option 2 Pursue increase to classifications with steps
below $15 only
Could explore smaller increase or smaller
increments
Option 3 Pursue increase with equity adjustments
Could explore alternatives for limited equity
adjustments at a lower net cost.
Changes subject to bargaining
13CITY OF SOUTH SAN FRANCISCO| Human Resources
Study Session: Review and
Analysis of Minimum Wage
Increase for City Employees
City Council Special Meeting
April 9, 2019
Leah Lockhart
Human Resources Director
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:19-208 Agenda Date:4/9/2019
Version:1 Item #:3.
Report regarding a Study Session on the potential regulation of flavored tobacco,including e-cigarettes in
South San Francisco.(Christina Fernandez, City Manager’s Office)
RECOMMENDATION
Recommend City Council provide guidance and direction on the potential regulation of flavored
tobacco, including e-cigarettes in South San Francisco.
BACKGROUND/DISCUSSION
According to the California Department of Public Health,80%of young people who used tobacco started with
a flavored tobacco product.A majority of youth report flavoring as a leading reason for using tobacco products.
This includes 82%of e-cigarette users,79%of hookah users,74%of cigar users,and 69%of smokeless users.
Flavors such as watermelon,cherry,chocolate,mint,and gummy bear appeal to kids and teens.Flavorings
mask the taste of tobacco making it more palatable for youth to begin tobacco use.Flavored tobacco products
also use the same flavoring chemicals as Jolly Rancher,Kool-Aid,and Life Savers.Certain minority groups
also disproportionately use flavored tobacco products,including menthol cigarettes.In one survey,82.6%of
African American cigarette smokers reported smoking menthol cigarettes in the month prior.
Federal Guidance and Regulations
The U.S.Surgeon General warns that flavored tobacco products help new users establish habits that lead to
long-term addiction.Flavors like menthol in tobacco products make it more difficult for users to quit.All
nicotine products are addictive and increase the risk of developing serious health problems including cancer,
heart disease, and emphysema.
In 2009,the Federal Government passed the Family Smoking Prevention and Tobacco Control Act that banned
the manufacture of flavored cigarettes.Menthol cigarettes were exempted from this ban.The ban also does not
restrict non-cigarette tobacco products such as smokeless tobacco.
More recently,the Food and Drug Administration announced a new plan to protect youth by preventing access
to flavored tobacco and banning menthol in cigarettes.The proposed plan would ban menthol cigarettes finding
that menthol cigarettes are easier to smoke and harder to quit.It is also the choice combustible cigarette for
youth and underserved communities.
Flavored E-Cigarettes
Most commonly used among youth,e-cigarettes deliver flavorings,nicotine and other additives via an inhaled
aerosol.E-cigarettes entered the marketplace in 2007,and since 2014 have been the most commonly used
tobacco product among youth.E-cigarette use among U.S.middle and high school students have increased
900%between 2011-2015.During the past year,e-cigarette use has increased 78%among high school students.
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900%between 2011-2015.During the past year,e-cigarette use has increased 78%among high school students.
In 2018,more than 3.6 million U.S.youth,including 1 in 5 high school students and 1 in 20 middle school
students currently use e-cigarettes.The chemical Diacetyl is found in 75%of flavored e-liquids and is linked to
“popcorn lung” which causes irreversible lung damage.
South San Francisco Tobacco-Related Ordinances
In 2008, the City enacted South San Francisco Municipal Code (SSFMC) Section 6.46.010 “Authorization of
enforcement by San Mateo County personnel” which adopts by reference San Mateo County Ordinance Code
Chapter 4.98 “Tobacco Retailer Permit.”
San Mateo County Ordinance Chapter 4.98 requires all retailers to obtain and maintain a valid tobacco retailer’s
permit from San Mateo County for each location where tobacco products are sold. Further, Chapter 4.98
authorizes the County’s Environmental Health Division to hold hearings, suspend permits, and issue
administrative fines in enforcing the governing of tobacco retailer permits. The adoption of SSFMC Section
6.46.010 is significant as it serves as the mechanism for enforcement should the City Council decide to adopt a
Flavored Tobacco Ban.
In 2012, the City enacted SSFMC Chapter 20.420 “Prohibition on new significant tobacco retailers,” which
regulates a business whose principal or core is selling tobacco products and/or paraphernalia. Significant
tobacco retailers are defined as any tobacco retailer with 20 percent or more of floor area and display area
devoted to the sale or exchange of tobacco products, tobacco paraphernalia, or both; or 50 percent or more of
completed sales transactions include tobacco products or paraphernalia.
Locally Led Efforts
County of San Mateo
In June 2018, the County prohibited the sale of any flavored tobacco product, including flavored e-cigarettes.
(See San Mateo County Ordinance Code Chapter 4.99 “Sales of flavored tobacco products and pharmacy sales
of tobacco products.”) In addition, the County prohibits the sale of any tobacco products by a pharmacy. The
County prohibited menthol as a characterizing flavor and included electronic devices (i.e. e-cigarettes) in their
definition of “tobacco,” but duty-free retail stores at the San Francisco International Airport (SFO) are exempt.
The County authorizes its Health System Chief for enforcement pursuant to the administrative procedures set
forth in the Chapter 4.98 of the County’s Code.
In the fall of 2018, the Town of Portola Valley and City of Half Moon Bay have adopted flavored tobacco
ordinances, which also prohibit flavored e-cigarettes. Like tobacco retailers operating in unincorporated areas,
tobacco retailers in Portola Valley and Half Moon Bay will be prohibited from selling any flavored tobacco
products in their retail stores. On March 25, 2019, the City of San Carlos also introduced an ordinance to
prohibit the sale of flavored tobacco products and sale of tobacco products in pharmacies.
County of Santa Clara
In 2015, Santa Clara County became the first municipality in the west to ban the sale of flavored tobacco
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products. However, businesses that sell tobacco to adults only are exempted from the county’s ban. Such adult-
only tobacco businesses are defined as those generating more than 60% of their gross revenue from tobacco and
tobacco paraphernalia and do not allow minors enter the premises without a parent. In 2010, the County of
Santa Clara adopted its Tobacco Retailer Permit Ordinance that requires all retail outlets selling tobacco in
unincorporated areas to obtain an annual county permit to sell tobacco. The 2010 law banned artificial or
natural flavoring aside from menthol, but the county delayed its implementation until it could develop an
enforcement plan with the U.S. Food and Drug Administration. The County of Santa Clara provided retailers
with a 90-day implementation plan to sell their remaining flavored tobacco products. The county’s Department
of Environmental Health conducts annual inspections to ensure that flavored products are no longer being sold
except in adult-only tobacco businesses.
City and County of San Francisco
In June 2017, the City and County of San Francisco passed a citywide ban on the sale of flavored tobacco
products such as menthol cigarettes, fruit flavored vape liquids, and any other tobacco products with flavoring.
Local merchants gathered signatures for a referendum petition and launched a repeal campaign. The campaign
was supported by $700,000 from tobacco company R.J. Reynolds. The petition required the Board of
Supervisors to reconsider the ordinance in September 2017. The Board of Supervisors unanimously supported
upholding the ban. Per San Francisco law, the referendum was automatically placed on the June 2018 ballot as
Proposition E. Proposition E prohibited local tobacco retailers from selling flavored tobacco products and was
passed by San Francisco voters by 68.39%.
On March 19, 2019, the City and County of San Francisco in conjunction with the cities of Chicago and New
York sent a joint letter demanding that the U.S. Food and Drug Administration (FDA) evaluate the effect of e-
cigarettes on public health in a FDA review. Simultaneously, San Francisco County Supervisor Shamann
Walton introduced legislation banning the sale of e-cigarettes in San Francisco unless the FDA provides San
Francisco with an FDA review. Supervisor Walton also introduced legislation that prohibits making, selling, or
distributing tobacco on city property, namely aimed at the e-cigarette company Juul Labs located at Pier 70.
Challenges
Enforcement
Cities and counties nationwide are exploring legislation to curb youth access to e-cigarettes and flavored
tobacco. However, challenges around enforcement remain. The County of San Mateo enforces its ordinance by
relying on the Health System Chief to enforce Chapter 4.99 by suspending a tobacco retailer’s permit and/or
imposing administrative fines following enumerated procedures and amounts. Administrative fines range from
$100 for the first violation and range up to $500 for a third and subsequent violations. Each day that tobacco
products are offered for sale without a permit constitutes a separate violation.
Staff requests guidance on the appropriate penalties and whether enforcement should be complaint based.
Policy Alternatives
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A.Maintain and Enforce Existing Municipal Code
SSFMC Chapter 20.420 prohibits the establishment of new significant tobacco retailers in all zones throughout
the City.No permit or any other license will be approved or issued for the establishment of new significant
tobacco retailers.
Because the City adopted by reference the San Mateo County Ordinance prohibiting the sale of any tobacco
products without obtaining a permit,the San Mateo County’s Department of Environmental Health is
authorized to enforce current regulations regarding tobacco sale in the county. (SSFMC § 6.46.010)
Of note,the use of e-cigarettes is generally prohibited in City buildings,City-owned parking structures,City
vehicles,the City’s parks and recreations areas,within twenty feet of City buildings,all City-owned parking
lots,the City’s downtown core,any open-air public places on City-owned property,multi-unit residences,and
common areas of multi-unit residences.(SSFMC §8.50.090).However,the sale of flavored and unflavored e-
cigarettes is permitted within the City.
B.Ban Flavored Tobacco Products, Including Flavored E-Cigarettes but Not Unflavored E-
Cigarettes
Many cities have banned the sale of flavored tobacco products due to its prevalence among youth. The City
may choose to ban all flavored tobacco products including flavored vape liquids and flavored e-cigarettes, but
exempt unflavored e-cigarettes in order to make it available to adults who rely on unflavored e-cigarettes as an
alternative to smoking traditional cigarettes.
The FDA has proposed the ban on the sale of all e-cigarettes (with an exception of mint and menthol flavors) in
stores that do not have areas prohibiting kids under the age of 18. However, a 2018 Truth Initiative survey of
more than 1,000 people between the ages of 12-17 years old and more than 500 people between the ages of 18-
24 years old found that mint is a top three flavor among JUUL users only behind fruit and mango.
Similarly, on December 3, 2018, Senate Bill 38 (SB 38) was introduced in the California State Legislature to
prohibit the sale of flavored tobacco products, which includes e-cigarettes. A hearing on SB 38 is set for March
27, 2019.
C.Ban Flavored Tobacco Products and All E-Cigarettes
There has yet to be a city to ban the sale of all e-cigarettes. Recently, the County and City of San Francisco
introduced legislation to ban both flavored tobacco and all e-cigarettes if the FDA fails to provide them with a
review of its effects on public health. The City may choose to ban the use of flavored tobacco and all e-
cigarettes as the two products are frequently used together.
FISCAL IMPACT
There is no known fiscal impact, as enforcement will remain with the County of San Mateo.
RELATIONSHIP TO STRATEGIC PLAN
Prohibiting the sale of e-cigarettes and flavored tobacco meet the City’s strategic goals of providing a high
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Prohibiting the sale of e-cigarettes and flavored tobacco meet the City’s strategic goals of providing a high
quality of life for its residents and employees by building and maintaining a sustainable city.
CONCLUSION
There are opportunities to limit youth access to flavored tobacco and e-cigarettes by ordinance;however,
questions regarding scope, enforcement, and timing must be addressed.
Staff recommends City Council provide guidance and direction on the potential regulation of sale of e-
cigarettes and flavored tobacco in South San Francisco.
Attachment:
A.Matrix of Local Ordinances Restricting the Sale of Flavored Tobacco Products
B.Flavored Tobacco PowerPoint Presentation
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Flavored Tobacco and E-Cigarettes
Attachment 1
Page 1
Flavored Tobacco and E-Cigarettes
Attachment 1
Page 2
E-Cigarettes
&FlavoredTobacco
City of South San Francisco
City Council
April 9, 2019
WHY?
80% Youth started with
Flavored Tobacco
E-Cigarettes deliver flavorings,
nicotine, and other additives
E-Cigarette among middle
school & high schoolers
increase
Health problems associated
include cancer, heart disease,
and Emphysema
What do
we have on
the books?
SSFMC 6.46.010
Allows SMC Enforcement
SMC Ordinance Chapter 4.98
Tobacco Retailer Permit
SSFMC 20.420
Prohibits new significant tobacco retailers
What are
others doing?
Federal Government
County of San Mateo
County of Santa Clara
City and County of San Francisco
Challenges
Implementation
Enforcement
Scope
Policy
Alternatives
Maintain and Enforce Existing Municipal
Code
Ban Flavored Tobacco, not E-Cigarettes
Ban Flavored Tobacco and E-Cigarettes
Next Steps
Staff Recommends City Council
provide guidance and direction on the
potential regulation of sale of e-
cigarettes and flavored tobacco in
South San Francisco.
Thank You!
Christina Fernandez
City Manager’s Office
[email protected]
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:19-209 Agenda Date:4/9/2019
Version:1 Item #:4.
Study session regarding a comprehensive financial review of the City of South San Francisco,including
pension costs (Christina Crosby, Interim Director of Finance)
RECOMMENDATION
Staff recommends that the City Council receive this report.This is an information only item.No action is
requested at this time.
BACKGROUND/DISCUSSION
The purpose of this agenda item is to provide the City of South San Francisco City Council and the community
in general with financial context to better understand the issue of escalating pension costs.
Like other general law cities of its kind,the City of South San Francisco (City)obtains the majority of its
funding through taxes to provide services to the community.The City’s primary taxes are property tax,sales
tax,and transient occupancy tax (TOT),all of which are accounted for in the City’s General Fund.The General
Fund serves as the City’s primary operating fund, and as such, is the primary focus of the study session.
Major Revenues
Property Tax
Since 1978,the property tax framework has been guided by Proposition 13,which includes the following
principal tenets:
1.Annual property tax assessment is limited to one percent (1%)of the assessed value (AV)of land and
improvements.
2.Annual increase in assessed value is limited to no more than two percent (2%).
3.Allocation of the 1%property tax between public entities is largely static.In San Mateo County,on
average,school districts receive 43 percent,the County receives 26 percent,and local municipalities
receive 18 percent. In other words, for every dollar paid in property tax, local cities receive $0.18.
4.Property is reappraised to current full value immediately upon a change in ownership.
At 30 percent of total General Fund revenues,property tax is the City’s top revenue source.In Fiscal Year (FY)
2017-18,the City received $34.1 million in property tax,the majority of which came from current year secured
property tax ($17.4 million).
Sales Tax
The State of California began imposing sales tax on retailers for the privilege of selling tangible personal
property in 1933.In 1935,the state added “use tax”to protect retailers from then tax-free,out-of-state
competitors.Over the course of a decade,324 local cities established their own sales taxes.In an effort to
promote administrative efficiency and uniformity,the Legislature passed the Bradley-Burns Local Sales and
Use Tax Law in 1955 (Bradley-Burns).Of the current 9.25 percent sales tax rate in South San Francisco,the
City receives 1.0 percent,pursuant to Bradley-Burns,and 0.5 percent,pursuant to Measure W,which was
approved by South San Francisco voters in November 2015.
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In FY 2017-18,the City received $17.6 million in sales tax revenues,which represented 15 percent of total
General Fund revenues.Measure W revenues totaled $11 million.Since inception,the City has received $21.5
million in Measure W revenues.
Transient Occupancy Tax (TOT)
TOT is a general tax imposed on occupants for the privilege of occupying a room in a hotel,motel,inn,etc.The
City’s current TOT rate is 10 percent per transaction,plus the South San Francisco Conference Center tax of
$2.50 per night/room.FY 2017-18 TOT revenues were $14.0 million,or 12 percent of total General Fund
revenues.
On November 6,2018,South San Francisco voters approved Measure FF,which will increase the TOT rate
from 10 to 12 percent as of January 1,2019,13 percent as of January 1,2020,and finally,14 percent as of
January 1, 2021.
As illustrated in Attachment 1,tax revenues,including all of the aforementioned taxes,business license taxes,
and property transfer taxes,totaled $71.6 million,or 64 percent of total General Fund revenues in FY 2017-18.
Due to the reliance upon tax revenues for operational funding,local government entities,such as the City of
South San Francisco,are susceptible to the ebb and flow of the local,state,and national economy.Reliance
upon tax revenues poses a challenge to service delivery during periods of economic contractions,as employee
salaries and benefits comprise 77 percent of the City’s General Fund operating costs.
Major Expenditures
As indicated in Attachment 2,in FY 2017-18,excluding transfers,from a department perspective,the City’s
Fire and Police departments comprised 55 percent of total General Fund expenditures,which is common for
full service city government operations.Attachment 3 analyzes General Fund expenditures by type,where
employee salaries and benefits cost $74.7 million,or 77 percent of total General Fund expenditures in FY 2017-
18.Within that expenditure category,$46.3 million was spent on employee salaries,and the remaining $28.4
million was for employee benefits.Of the $28.4 million in employee benefits in FY 2017-18,$15.3 million,or
20 percent of total employee costs,reflected the City’s payment to CalPERS.Attachment 4 provides historical
and projected CalPERS pension contributions and the percentage of total General Fund expenditures.As
manifest in the data,pensions will continue to take on a greater proportional share of General Fund
expenditures each year, which warrants the discussion below to provide a clear understanding of pensions:
1.CalPERS background;
2.Key pension terms;
3.Pension liability primer; and
4.Options to address pension liabilities.
CalPERS Background
In 1932,the State Employees’Retirement System (SERS)was established.In 1939,the State Legislature
passed a bill that allowed counties,cities,and school districts to participate in SERS.The City of South San
Francisco joined SERS in 1945 to provide pension benefits to its employees.In 1992,SERS changed its name
to the California Public Employees’Retirement System (CalPERS).CalPERS is the largest pension trust in the
country, with $357 billion in assets and 1.9 million members.
Over the past two decades,CalPERS has endured significant investment return volatility,including the boom
and bust of the dot com era and the Great Recession.CalPERS’strategic actions to reduce its exposure to
economic fluctuation included changes in actuarial assumptions (discount rate,mortality rate),and changes in
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how gains and losses were amortized.
CalPERS’ Investment Earnings
For every dollar of pension benefits paid to retired annuitants over the past twenty years,59 cents is funded by
CalPERS investment earnings,while 28 cents comes from contributions from CalPERS employers,and the
remaining 13 cents comes from contributions from CalPERS members.CalPERS’dependence on its
investment earnings to pay pension benefits,when in contrast against the investment volatility it has
experienced, has played a major role in escalating pension costs.
The chart in Attachment 5 illustrates CalPERS’historical return on investment (ROI)in comparison to the
discount rate,which is the expected rate of return over a long period of time.In CalPERS’s case,the time
horizon for measuring long term investment returns is 30 years.Over the past 24 years,CalPERS’annual rate
of return has been as high as 20 percent in FY 1996-97 to as low as negative 23 percent in FY 2008-09.In order
to address the investment volatility while ensuring long term sustainability,CalPERS has implemented a
number of significant changes to its policies and actuarial assumptions.
Notable Changes to Policy and Actuarial Assumptions
In 2013,CalPERS shifted from a 30-year open amortization of its pension liabilities to a 30-year closed
amortization.In the former,the Unfunded Accrued Liability (UAL)was refinanced each year for another 30-
year period. In the latter, the UAL will be fully paid by the end of the amortization period.
Within the 30-year amortization,CalPERS implemented a ramping method to mitigate the impact of investment
gains/losses and changes in actuarial assumptions.Within the 30-year period,the amortized cost of the first five
years is gradually ramped up,20 percent each year.If the annual cost of a particular amortization base is
$100,000 per year,the then the cost in Year 1 would be $20,000.In Year 2,the cost would increase to $40,000,
and so on.While this methodology is favorable in the short term,it is more costly to the employer in the long
term,as there is less principal being paid than would be under normal amortization,and the total principal
balance to pay off ends up being higher than the actual UAL due to the cost of interest.This phenomenon is
known as negative amortization.At the tail end of the 30-year amortization period,the annual payment would
go through a “ramp down” process, which is a reverse of the 5-year ramp up process.
In 2015,CalPERS adopted a funding risk mitigation policy,which established investment-related events that
would be triggered if certain criteria were met.For example,if actual investment returns exceeded the discount
rate by 4.0 percent,the discount rate would be reduced by 5 basis points (0.05 percent).While higher
investment returns may be welcome by some,from CalPERS perspective,the deviation from expected outcome
is an indication that the investment portfolio’s risk profile (i.e.the proportion of CalPERS assets invested in
higher risk investment vehicles) is too high.
In December 2016,the CalPERS Board of Administration approved a reduction of the discount rate from 7.5 to
7.0 percent.The reduction reflects the impact of a relatively low interest rate market on CalPERS long-term
investment projections.While Governor Brown preferred to implement the accompanying increase in employer
contribution rate immediately,the sharp contribution increase would have put several CalPERS member
agencies into fiscal duress.As a compromise,CalPERS agreed to phase in the discount rate reduction over a
three year period.Factoring in the five-year ramp up method,the full impact of the discount rate reduction will
be not felt until seven years after implementation of the first amortization base.The CalPERS Board also
temporarily suspended the funding risk mitigation policy discussed above until further notice.
In February 2018,CalPERS reduced the period to amortize gains and losses from 30 to 20 years.While the
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In February 2018,CalPERS reduced the period to amortize gains and losses from 30 to 20 years.While the
long-term cost to member agencies will be lower,the contribution rates will be higher in the short term.A
similar analogy would be paying off a mortgage over 20 years rather than the traditional 30 years.The long-
term cost is lower due to higher principal payments, shorter amortization period, and reduced interest expense.
Key Pension Terms and Concepts
Defined Benefit
Public pensions,such as those available through CalPERS,are defined benefit plans,where an employee’s
pension earnings are calculated based on the length of service and the highest salary,which typically is at the
end of their career.As a general example,the annual pension benefit for a “Classic”member of CalPERS that
worked their entire career for the City of South San Francisco for 30 years as a Parks Maintenance Worker and
retired at the end of 2018 at the age of 55 would be calculated as follows:
Highest 12-month average salary: $66,414
Number of service years: 30
Pension plan: 2.7% @ 55
Benefit factor: (30 x 0.027) = 0.81
Annual pension benefit = $66,414 x 0.81 = $53,795
Member types
CalPERS members are identified as either “Classic”or “PEPRA”.Classic members were a member of
CalPERS before January 1,2013.Any new members hired on or after January 1,2013 are subject to a less rich
pension benefit pursuant to the Public Employees’Pension Reform Act (PEPRA).Prior to PEPRA,the City
Council adopted a second Classic tier for both the miscellaneous and safety pension plans to address the City’s
pension liabilities.As such,pension benefit tiers are as follows in the City of South San Francisco,where the
member earns a percent for every year of service,with the latter portion of the formula reflects the retirement
age.
Pension Plan Tier 1 Classic Tier 2 Classic PEPRA
Miscellaneous 2.7% @ 55 2.0% @ 60 2.0% @ 62
Safety 3.0% @ 50 3.0% @ 55 2.7% @ 57
Pension Liability Primer
A net pension liability exists when pension plan liabilities exceed pension plan assets.Pension plan assets
include investment earnings,employer pension contributions,and employee pension contributions.Pension
plan liabilities reflect investment losses and changes in actuarial assumptions.To avoid extreme volatility,the
above liabilities are amortized or spread over a long period of time,similar to a mortgage.Each year,any
investment deviation from the discount rate,whether a gain or loss,is recognized as an amortization base.Each
subsequent year over the 20-year amortization period,CalPERS assesses the annual amortized annual payment
for each of the existing amortization bases.Attachment 6 provides the amortization bases as reflected in
CalPERS’ annual actuarial valuation for the miscellaneous and safety pension plans.
San Mateo County Grand Jury Report
On July 17,2018 County of San Mateo Civil Grand Jury released a report entitled “Soaring City Pension Costs
-Time for Hard Choices.”There were multiple recommendations,including scheduling public hearings,
posting detailed pension obligations on the City website and have City staff prepare and post a plan to address
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posting detailed pension obligations on the City website and have City staff prepare and post a plan to address
pension costs by June 30,2019.The City has addressed the first two recommendations but has not adopted a
formal plan as of yet.
Options to Address Pension Liabilities
The City Council already implemented a number of options to address pension liabilities:
·In 2010,the City Council established a second pension tier for classic CalPERS members.Any
employee hired on or after April 25,2010 falls under the second pension tier.For any miscellaneous
members (non-public safety),the pension formula is 2.0%@ 60,as opposed to 2.7%@ 55 for tier 1
members. Any safety members earn 3.0% @ 55, as opposed to 3.0% @ 50.
·In FY 2015-16,the City established the CalPERS Stabilization Reserve to address pension contribution
volatility.
·In July 2017,the Council approved agreements with public safety employees,which include
International Association of Firefighters Local 1507 (IAFF),Police Officers Association (POA),Public
Safety Managers (PSM),and Executive Management.These agreements outlined provisions for
employee cost-sharing of City contributions to CalPERS as part of a long-term strategy to reduce the
City’s pension costs.The plan includes an increase in employee contributions to pension by 3%of
salary,for a total employee contribution of 12%of salary.This will,in turn,reduce the City’s costs by
the same amount.The increases are scheduled to occur in 1%increments in each fiscal year from 2017
to 2019.
·In FY 19-20 City Council moved forward with two ballot measures to increase the City’s tax base,
Measure FF and Measure LL.Measure FF increases hotel Transient Occupancy Tax (TOT)by 2%in
2019.The ballot measure also authorized an additional 1%each year to a maximum TOT rate of 14%.
Measure FF first increased the City's TOT rate to 12%effective January 1,2019.Subsequently,it will
then increase the City's TOT rate to 13%effective January 1,2020.Finally,Measure FF would increase
the City's TOT rate to a maximum of 14%effective January 1,2021.This is estimated to generate
approximately $5.9 million of additional revenue annually for the General Fund.In addition to Measure
FF,Measure LL set the business license tax for all types of commercial cannabis operations permitted
within the City at a minimum rate of 1%for gross receipts.Additionally,it established maximum rates
for permitted cannabis uses:a maximum of 2.5%of gross receipts for Testing,a maximum of 4%of
gross receipts for Cultivation;a maximum of 3%of gross receipts for Distribution,a maximum of 5%
of gross receipts for Manufacturing, and a maximum of 5% of gross receipts for Delivery Only.
There are additional options that the City Council can consider to address pension liabilities, including:
Contribute additional funds to CalPERS
The City could consider paying funds in addition to the required annual contribution to pay down existing
amortization bases.The additional funds would reduce the principal balance on the amortization base;shorten
the period of time that the amortization base is paid,thus reducing the accompanying interest expense.The
City’s 10-year financial forecast,included as Attachment 7,depicts the projected outcome with no additional
contributions to CalPERS.City staff projects operating outcomes that range from a deficit of $0.5M in FY 2028
-29 to a surplus of $3.5M in FY 2021-22.Page 2 of Attachment 7 projects the City’s reserves,including
General Fund Reserve,Infrastructure Reserve,and the CalPERS Stabilization Reserve,which is projected to
end FY 2028-29 with a balance of $13.3 million, and a projected pension liability of $130.0 million.
Attachment 8 provides a similar financial forecast where the City contributes $1.0 million additional funds per
year to CalPERS beginning in FY 2022-23.In this scenario,staff projects operating outcomes ranging from a
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year to CalPERS beginning in FY 2022-23.In this scenario,staff projects operating outcomes ranging from a
deficit of $0.7 million in FY 2028-29 to a surplus of $3.7 million in FY 2021-22.Page 2 of Attachment 8 notes
that the additional contributions to CalPERS reduce the pension liability by $6.8 million,from $130.0 million
to $123.2 million in FY 2028-29.
Contribute to a Section 115 Pension Trust Fund
In February 2014,the City Council authorized investment of $13.5 million in funds with the California
Employers’Retiree Benefit Trust (CERBT)that had accumulated over a number of years in an internal service
fund,intended to address the City’s Other Post-Employment Benefits (OPEB)liability.The trust fund assets
included in CERBT can be directly netted against the City’s OPEB liability on the City’s Comprehensive
Annual Financial Statement (CAFR).This figure is noted as the Net OPEB liability.Since that time,the City’s
operating budget has included budget appropriations to ensure ongoing contributions to CERBT.As of
September 30, 2018, the City’s CERBT balance is $22,526,702.
Similar to the above concept,as one viable option to address pension liabilities,the City Council could invest
funds into a Section 115 pension trust fund.However,there is one distinct accounting nuance with pension trust
funds.Any assets from a pension trust fund are not directly netted against pension liabilities.Instead,they are
reported as a restricted asset on the entity-wide financial statement in the CAFR.While the net position (the
bottom line)is still the same,for some agencies,this nuance is a deterrent.If the City invested the current
balance of $5.5 million in the CalPERS Stabilization Reserve,then beginning in FY 2022-23,$1.0 million on
an annual basis into a Section 115 pension trust fund with a discount rate of 5.0 percent,as illustrated in
Attachment 9,the City’s net pension liability would be reduced by $19.0 million,from $130.0 million to $111.0
million.
Continue to Use a Multi-Pronged Approach
As stated above the City Council has been proactive in the steps that have already been implemented.Most
consultants recommend using a combination of different approaches to address outstanding CalPERS
obligations. Below are some of the most recommended:
·Continue to explore ways to raise revenue and increase the tax base.In addition to the above ballot
measures the City is currently proactive in cost recovery and analyzes our Master Fee Schedule to
ensure that we are charging adequately for service delivery.
·Continue to explore potentially contributing a percentage of General Fund surplus at the end of the
fiscal year to the existing CalPERS Stabilization Reserve.
·Continue to work toward employee cost-sharing for the City’s contribution to CalPERS with additional
labor groups to lower the City’s contribution to CalPERS.
·Continue to explore the possibility of creating a 115 pension trust fund with the existing $5.5 million in
the CalPERS Stabilization Reserve.
FISCAL IMPACT
The City’s pension contributions are projected to increase by $10.2 million,or 59 percent over the next decade.
At this time there is no fiscal impact since staff is only seeking direction from City Council for future action.
RELATIONSHIP TO STRATEGIC PLAN
Developing a plan to fund the City’s CalPERS pension obligations is part of the Financial Stability priority area
of the strategic plan.
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CONCLUSION
Staff recommends continuing a multi-pronged approach to address the challenge of escalating pension
contributions and liabilities.This includes,continuing to explore increases in the tax base and charges for
service,funding the existing CalPERS Stabilization Reserve with potential surpluses in the General Fund at
fiscal year-end,and continuing to pursue cost sharing for the City’s pension obligation with additional labor
groups, and explore the potential of 115 pension trust.
Attachments
1.General Fund Revenues - Taxes
2.General Fund Expenditures by Department
3.General Fund Expenditures by Type
4.Historical and Projected Pension Contributions
5.CalPERS ROI 1994-95 to 2017-18
6.Schedule of Amortization Bases
7.General Fund 10-year Forecast - No Additional Contributions
8.General Fund 10-year Forecast - $1.0M Contribution to CalPERS
9.General Fund 10-year Forecast - $5.5M + $1.0M Contribution to Section 115 Pension Trust Fund
10.PowerPoint Presentation
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Tax revenues,
71,559,444, 64%
All other
revenues,
40,141,358, 36%
FY 2017-18
General Fund Revenues $111M
ATTACHMENT 1
PENSION STUDY
SESSION
City of South San Francisco
City Council Meeting
April 9, 2019
1
ATTACHMENT 10
GENERAL FINANCIAL OVERVIEW
2
Tax
revenues,
71,559,444,
64%
All other
revenues,
40,141,358,
36%
FY 2017-18
General Fund Revenues $111M
EXPENDITURES BY DEPARTMENT
3
Police & Fire
$52,698,073
55%
All other
Departments
$43,956,571
45%
General Fund Expenditures $96M
FY 2017-18
EXPENDITURES BY TYPE
$46M employee salaries
$28M employee benefits
$15M CalPERS (20%)
4
Employee Salaries
& Benefits
77%
Supplies &
Services
16%
Interdepartmental
Charges
7%
CALPERS BACKGROUND
Established in 1932 as SERS
SSF joined SERS in 1945
1992 SERS becomes CalPERS
Largest public pension system in the US
$357B in assets
1.9M members
5
THE CALPERS BUCK
6
CALPERS ROI
7
(30.00)
(25.00)
(20.00)
(15.00)
(10.00)
(5.00)
0.00
5.00
10.00
15.00
20.00
25.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Discount Rate Actual ROI
POLICY & ACTUARIAL CHANGES
2013 –Open to closed amortization
Ramp up/down
2015 –Funding Risk Mitigation Policy
If ROI > Discount Rate, then…
2016 –Discount Rate 7.5 to 7.0%
2018 –Amortization Period from 30 to
20 years
8
CALPERS FUNDED STATUS
9
IMPACT OF DISCOUNT RATE REDUCTION TO
SSF PENSION LIABILITY & FUNDED STATUS
AS OF JUNE 30, 2019 (IN MILLIONS)
Type Before After Change %
Change
Pension
Liability
$154.41 $189.20 $34.79 22.5%
Funded
Status
72%68%(4%)5.6%
10
11
SSF CONTRIBUTIONS TO CALPERS
Fiscal Year Contributions
(in millions)
% of Payroll %of GF
2018-19 $17.2 33.6 16.4
2019-20 $19.6 34.7 18.8
2020-21 $21.4 36.1 19.5
2021-22 $22.8 37.3 19.9
2022-23 $24.1 38.2 20.3
2023-24 $24.9 38.5 20.4
2024-25 $26.0 38.9 20.5
2025-26 $26.5 38.5 20.2
2026-27 $26.9 38.0 19.9
2027-28 $27.4 37.6 19.6
OPTIONS TO ADDRESS PENSION
LIABILITIES
Already implemented:
Second classic pension tier in 2010
2.0@60 for Miscellaneous
3.0@55 for Safety
CalPERS Stabilization Reserve -$5.5M
CalPERS Cost-Sharing with Employees by 3%
Increases in Revenue and Tax Base
TOT Rate
Cannabis Business License Tax
12
OPTIONS TO ADDRESS PENSION
LIABILITIES
1. Contribute additional funds to CalPERS
Reduce amortization bases
Shorten amortization period
Reduce interest expense
13
Scenario 2018-19
Pension
Liability
2027-28
Pension
Liability
Net Change
from Status
Quo
Status
Quo
$189.20 $130.00 N/A
$1M add’l
to PERS
$189.20 $123.33 $6.67
OPTIONS TO ADDRESS PENSION
LIABILITIES
2. Contribute funds to Section 115 Pension Trust
Feb 2014 $13.4M with CERBT (OPEB)
14
Scenario 2018-19
Pension
Liability
2027-28
Pension
Liability
Net Change
from Status
Quo
Status
Quo
$189.20 $130.00 N/A
$5.5M +
$1M to
Section
115
$189.20 $111.01 $18.99
OPTIONS TO ADDRESS PENSION
LIABILITIES
3. Continue Expand on Current Multi-Pronged Approach
Expand current revenue and tax base
Potential surplus of General Fund to CalPERS Stabilization
Reserve
Lower City’s CalPERS contribution through continued and
expanded cost-sharing with labor groups
Continue to explore the possibility of a 155 pension trust
fund
15
STAFF RECOMMENDATION –
OPTION 3
1.Continue Expand on Current Multi-Pronged
Approach
Expand current revenue and tax base
Potential surplus of General Fund to CalPERS
Stabilization Reserve
Lower City’s CalPERS contribution through continued
and expanded cost-sharing with labor groups
Continue to explore the possibility of a 155 pension
trust fund
16
DISCUSSION
17
PROPERTY TAX -PROPOSITION 13
Property tax limited to 1% of AV
Annual increase in AV limited to 2%
1% Property Tax levy allocation is in a solid state
Property AV reset upon sale
19
PROPERTY TAX
FY 2017-18 $34M
30% of General Fund operating revenue
20
$-
$5
$10
$15
$20
$25
$30
$35
$40
Sum of 2008-
09
Sum of 2009-
10
Sum of 2010-
11
Sum of 2011-
12
Sum of 2012-
13
Sum of 2014-
15
Sum of 2013-
14
Sum of 2015-
16
Sum of 2016-
17
Sum of 2017-
18Millions
SALES TAX
9.25% sales tax rate
1.0% Bradley Burns
0.5% Measure W
$17M in FY 2017-18
15% of General Fund operating revenues
21
TRANSIENT OCCUPANCY TAX
(TOT)
Current rate: 10%
Plus $2.50 per night/room SSFCC tax
Measure FF
Increase to 12% as of 1/1/19
13% as of 1/1/20
14% as of 1/1/21
$14M in FY 2017-18
12% of General Fund operating revenues
22
Police & Fire,
$52,698,073 ,
55%
All other
Departments,
$43,956,571 ,
45%
General Fund Expenditures $96M
FY 2017-18
ATTACHMENT 2
General Fund Expenditures $96M
FY 2017-18
By Type
Employee Salaries
& Benefits
77%
Supplies & Services
16%
Interdepartmental
Charges
7%
ATTACHMENT 3
City of South San Francisco
Pension Costs
Actual & Projected
Status Year Number Fiscal Year Miscellaneous Safety Total
Total
Covered Payroll
Pension Cost
as a % of
Covered
Payroll
General Fund
Expenditures*
Pension Cost
as a % of
GF Exp Miscellaneous Safety Total
Total
Covered
Payroll
Pension Cost
as a % of
Covered
Payroll
General Fund
Expenditures
Pension Cost
as a % of
GF Exp
Additional
Annual Cost
at 6.0%
Actual 1 2015-16 5,726,981 8,535,737 14,262,718$ 40,396,088$ 35.31%86,795,020$ 16.43%5,726,981 8,535,737 14,262,718$ 40,396,088$ 35.31%86,795,020$ 16.43%
Actual 2 2016-17 6,300,000 8,570,000 14,870,000$ 48,953,919$ 30.38%92,367,213$ 16.10%6,300,000 8,570,000 14,870,000$ 48,953,919$ 30.38%92,367,213$ 16.10%
Unaudited 3 2017-18 5,960,000 8,990,000 14,950,000$ 46,289,694$ 32.30%101,286,947$ 14.76%5,960,000 8,990,000 14,950,000$ 46,289,694$ 32.30%101,286,947$ 14.76%
Projected 1 2018-19 6,840,000 10,370,000 17,210,000$ 51,271,335$ 33.57%105,114,037$ 16.37%6,840,000 10,370,000 17,210,000$ 51,271,335$ 33.57%105,114,037$ 16.37%
Projected 2 2019-20 7,700,000 11,870,000 19,570,000$ 56,334,034$ 34.74%104,306,737$ 18.76%7,700,000 11,870,000 19,570,000$ 56,334,034$ 34.74%104,306,737$ 18.76%
Projected 3 2020-21 8,420,000 12,960,000 21,380,000$ 59,296,625$ 36.06%109,921,035$ 19.45%9,610,000 15,310,000 24,920,000$ 59,296,625$ 42.03%109,921,035$ 22.67%3,540,000$
Projected 4 2021-22 9,040,000 13,720,000 22,760,000$ 61,071,994$ 37.27%114,227,565$ 19.93%10,950,000 16,970,000 27,920,000$ 61,071,994$ 45.72%114,227,565$ 24.44%5,160,000$
Projected 5 2022-23 9,570,000 14,480,000 24,050,000$ 62,901,910$ 38.23%118,307,473$ 20.33%12,240,000 18,690,000 30,930,000$ 62,901,910$ 49.17%118,307,473$ 26.14%6,880,000$
Projected 6 2023-24 9,900,000 15,010,000 24,910,000$ 64,786,723$ 38.45%122,263,512$ 20.37%13,410,000 20,240,000 33,650,000$ 64,786,723$ 51.94%122,263,512$ 27.52%8,740,000$
Projected 7 2024-25 10,260,000 15,710,000 25,970,000$ 66,728,080$ 38.92%126,747,698$ 20.49%14,640,000 22,020,000 36,660,000$ 66,728,080$ 54.94%126,747,698$ 28.92%10,690,000$
Projected 8 2025-26 10,490,000 15,960,000 26,450,000$ 68,727,678$ 38.49%131,022,254$ 20.19%14,990,000 22,380,000 37,370,000$ 68,727,678$ 54.37%131,022,254$ 28.52%10,920,000$
Projected 9 2026-27 10,730,000 16,190,000 26,920,000$ 70,787,264$ 38.03%135,438,008$ 19.88%15,340,000 22,720,000 38,060,000$ 70,787,264$ 53.77%135,438,008$ 28.10%11,140,000$
Projected 10 2027-28 10,970,000 16,450,000 27,420,000$ 72,938,608$ 37.59%140,112,978$ 19.57%15,700,000 23,100,000 38,800,000$ 72,938,608$ 53.20%140,112,978$ 27.69%11,380,000$
*Note: Excludes transfers in, as they are reported as other financing sources on the income statement.68,450,000$
Discount Rate & ROI at 7.0%Discount Rate and ROI at 6.0%
ATTACHMENT 4
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Discount Rate 8.25 8.25 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 7.75 7.75 7.75 7.75 7.75 7.75 7.75 7.50 7.50 7.50 7.50 7.50 7.50 7.38
Actual ROI 16.30 15.30 20.10 19.50 12.50 10.50 (7.20)(6.10)3.70 16.60 12.20 11.90 18.80 (2.90)(23.60)11.10 20.70 1.00 12.50 18.40 2.40 0.61 11.20 8.60
(30.00)
(25.00)
(20.00)
(15.00)
(10.00)
(5.00)
0.00
5.00
10.00
15.00
20.00
25.00
CalPERS ROI vs. Discount Rate
1995 - 2018
ATTACHMENT 5
CalPERS Actuarial Valuation - June 30, 2017
Miscellaneous Plan of the City of South San Francisco
CalPERS ID: 7147827092
Page 16
Schedule of Amortization Bases
There is a two-year lag between the valuation date and the start of the contribution fiscal year.
•The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2017.
•The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: Fiscal Year 2019-20.
This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies
with their required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the
first day of the fiscal year for which the contribution is being determined. The UAL is r olled forward each year by subtracting the expected payment on the UAL for the
fiscal year and adjusting for interest. The expected payment on the UAL for a fiscal year is equal to the Expected Employer C ontribution for the fiscal year minus the
Expected Normal Cost for the year. The Employer Contribution for the first fiscal year is determined by the actuarial valuation two yea rs ago and the contribution for
the second year is from the actuarial valuation one year ago. Additional discretionary payments are reflected in the Expected Payments column in the fiscal year they
were made by the agency.
Reason for Base
Date
Established
Ramp
Up/Down
2019-20
Amorti-
zation
Period
Balance
6/30/17
Expected
Payment
2017-18
Balance
6/30/18
Expected
Payment
2018-19
Balance
6/30/19
Scheduled
Payment for
2019-20
FRESH START 06/30/04 No Ramp 17 $21,860,350 $1,707,760 $21,676,642 $1,738,565 $21,447,713 $1,785,781
ASSUMPTION CHANGE 06/30/09 No Ramp 12 $6,677,208 $644,141 $6,494,223 $657,227 $6,284,419 $674,970
SPECIAL (GAIN)/LOSS 06/30/09 No Ramp 22 $2,057,695 $139,349 $2,062,565 $141,570 $2,065,489 $145,433
SPECIAL (GAIN)/LOSS 06/30/10 No Ramp 23 $(627,444) $(41,520) $(629,935) $(42,166) $(631,937) $(43,317)
ASSUMPTION CHANGE 06/30/11 No Ramp 14 $3,645,762 $319,727 $3,578,966 $325,925 $3,500,908 $334,747
SPECIAL (GAIN)/LOSS 06/30/11 No Ramp 24 $(120,274) $(7,789) $(120,928) $(7,907) $(121,506) $(8,123)
PAYMENT (GAIN)/LOSS 06/30/12 No Ramp 25 $643,047 $40,804 $647,411 $41,407 $651,466 $42,539
(GAIN)/LOSS 06/30/12 No Ramp 25 $2,808,168 $178,191 $2,827,222 $180,822 $2,844,934 $185,767
(GAIN)/LOSS 06/30/13 100% 26 $21,402,499 $864,224 $22,059,176 $1,169,655 $22,447,153 $1,502,083
ASSUMPTION CHANGE 06/30/14 80% 17 $11,743,833 $437,193 $12,142,496 $668,012 $12,331,024 $914,913
(GAIN)/LOSS 06/30/14 80% 27 $(15,672,369) $(428,721) $(16,364,626) $(652,351) $(16,875,476) $(893,656)
(GAIN)/LOSS 06/30/15 60% 28 $7,516,537 $105,845 $7,951,871 $214,571 $8,306,169 $330,703
ASSUMPTION CHANGE 06/30/16 40% 19 $3,414,109 $(104,254) $3,769,599 $71,134 $3,969,227 $146,163
(GAIN)/LOSS 06/30/16 40% 29 $10,935,399 $0 $11,728,215 $162,749 $12,409,966 $334,466
ASSUMPTION CHANGE 06/30/17 20% 20 $2,678,180 $(169,450) $3,047,833 $(174,322) $3,449,332 $65,005
(GAIN)/LOSS 06/30/17 20% 30 $(4,354,362) $0 $(4,670,053) $0 $(5,008,632) $(69,423)
TOTAL $74,608,336 $3,685,500 $76,200,679 $4,494,891 $77,070,249 $5,448,051
ATTACHMENT 6
CalPERS Actuarial Valuation - June 30, 2017
Safety Plan of the City of South San Francisco
CalPERS ID: 7147827092
Page 16
Schedule of Amortization Bases
There is a two-year lag between the valuation date and the start of the contribution fiscal year.
• The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2017.
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: Fiscal Year 2019-20.
This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies
with their required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the
first day of the fiscal year for which the contribution is being determined. The UAL is r olled forward each year by subtracting the expected payment on the UAL for the
fiscal year and adjusting for interest. The expected payment on the UAL for a fiscal year is equal to the Expected Employer C ontribution for the fiscal year minus the
Expected Normal Cost for the year. The Employer Contribution for the first fiscal year is determined by the actuarial valuation two yea rs ago and the contribution for
the second year is from the actuarial valuation one year ago. Additional discretionary payments are reflected in the Expected Payments column in the fiscal year they
were made by the agency.
Reason for Base
Date
Established
Ramp
Up/Down
2019-20
Amorti-
zation
Period
Balance
6/30/17
Expected
Payment
2017-18
Balance
6/30/18
Expected
Payment
2018-19
Balance
6/30/19
Scheduled
Payment for
2019-20
FRESH START 06/30/04 No Ramp 17 $36,363,954 $2,840,802 $36,058,362 $2,892,045 $35,677,546 $2,970,587
ASSUMPTION CHANGE 06/30/09 No Ramp 12 $3,936,351 $379,734 $3,828,478 $387,449 $3,704,794 $397,909
SPECIAL (GAIN)/LOSS 06/30/09 No Ramp 22 $2,541,792 $172,133 $2,547,808 $174,876 $2,551,420 $179,647
SPECIAL (GAIN)/LOSS 06/30/10 No Ramp 23 $898,734 $59,473 $902,301 $60,397 $905,170 $62,046
ASSUMPTION CHANGE 06/30/11 No Ramp 14 $4,804,885 $421,380 $4,716,851 $429,548 $4,613,976 $441,175
SPECIAL (GAIN)/LOSS 06/30/11 No Ramp 24 $85,984 $5,568 $86,451 $5,652 $86,866 $5,807
PAYMENT (GAIN)/LOSS 06/30/12 No Ramp 25 $288,556 $18,310 $290,514 $18,581 $292,333 $19,089
(GAIN)/LOSS 06/30/12 No Ramp 25 $1,400,493 $88,867 $1,409,997 $90,180 $1,418,829 $92,646
(GAIN)/LOSS 06/30/13 100% 26 $30,298,399 $1,223,437 $31,228,022 $1,655,819 $31,777,262 $2,126,420
ASSUMPTION CHANGE 06/30/14 80% 17 $14,799,498 $550,948 $15,301,891 $841,824 $15,539,472 $1,152,968
(GAIN)/LOSS 06/30/14 80% 27 $(25,338,304) $(693,135) $(26,457,509) $(1,054,689) $(27,283,426) $(1,444,819)
(GAIN)/LOSS 06/30/15 60% 28 $10,281,385 $144,778 $10,876,851 $293,498 $11,361,471 $452,347
ASSUMPTION CHANGE 06/30/16 40% 19 $4,971,646 $(174,030) $5,512,319 $104,019 $5,804,238 $213,735
(GAIN)/LOSS 06/30/16 40% 29 $18,580,025 $0 $19,927,077 $276,522 $21,085,419 $568,282
ASSUMPTION CHANGE 06/30/17 20% 20 $5,621,487 $(231,610) $6,268,904 $(238,269) $6,970,155 $131,357
(GAIN)/LOSS 06/30/17 20% 30 $(6,587,158) $0 $(7,064,727) $0 $(7,576,920) $(105,022)
TOTAL $102,947,726 $4,806,655 $105,433,589 $5,937,452 $106,928,605 $7,264,174
2018-19
Adopted
2019-20
Projected
2020-21
Projected
2021-22
Projected
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Projected
2027-28
Projected
2028-29
Projected
Total Revenues 109,053,694 109,407,496 114,666,959 119,493,014 123,279,163 127,382,753 130,056,084 135,192,077 138,350,310 141,677,970 145,014,487
Total Expenditures 107,997,038 106,106,737 111,721,035 116,027,565 120,107,473 124,063,512 128,547,698 132,822,254 137,238,008 141,912,978 145,524,038
$100
$105
$110
$115
$120
$125
$130
$135
$140
$145
$150
Axis Title Millions City of South San Francisco
General Fund
10 Year Forecast
Most Likely Scenario
No additional contributions to CalPERS
Total Revenues and Expenditures
Page 1 of 2
ATTACHMENT 7
2018-19
Adopted
2019-20
Projected
2020-21
Projected
2021-22
Projected
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Projected
2027-28
Projected
2028-29
Projected
General Reserves 21,213,318 21,521,578 22,573,471 23,538,682 24,295,912 25,116,630 25,651,296 26,678,494 27,310,141 27,975,673 28,642,976
Infrastructure Reserve 12,396,850 15,389,348 17,283,379 19,783,618 3,646,722 3,646,722 3,646,722 3,646,722 3,646,722 2,746,181 1,569,326
CalPERS Stabilization Reserve 5,545,104 5,545,104 5,545,104 5,545,104 7,959,564 10,458,087 11,431,807 12,774,430 13,255,086 13,255,086 13,255,086
Net Pension Liability 189,200,000 188,540,000 188,350,000 188,570,000 183,750,000 177,790,000 170,370,000 161,970,000 152,510,000 141,880,000 129,980,000
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$-
$5
$10
$15
$20
$25
$30
$35
Millions Millions City of South San Francisco
Most Likely Scenario
No Additional Contributions to CalPERS
Reserves & Net Pension Liability
Page 2 of 2
2018-19
Adopted
2019-20
Projected
2020-21
Projected
2021-22
Projected
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Projected
2027-28
Projected
2028-29
Projected
Total Revenues $109,053,694 $109,407,496 $114,666,959 $119,493,014 $123,279,163 $127,382,753 $130,056,084 $135,192,077 $138,350,310 $141,677,970 $145,014,487
Total Expenditures $107,997,038 $106,201,508 $111,568,995 $115,837,289 $120,828,127 $124,594,297 $128,919,404 $133,143,000 $137,515,980 $142,149,782 $145,710,225
$100
$110
$120
$130
$140
$150
$160
Millions City of South San Francisco
General Fund
10-Year Forecast
Revenues and Expenditures
Most Likely Scenario
With $1M in Additional Annual Contributions to CalPERS
ATTACHMENT 8
Page 1 of 2
2018-19
Adopted
2019-20
Projected
2020-21
Projected
2021-22
Projected
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Projected
2027-28
Projected
2028-29
Projected
General Reserves 21,213,318 21,521,578 22,573,471 23,538,682 24,295,912 25,116,630 25,651,296 26,678,494 27,310,141 27,975,673 28,642,976
Infrastructure Reserve 12,396,850 15,294,577 17,340,649 20,031,163 5,588,074 7,555,812 8,157,825 9,179,703 9,382,386 8,245,042 6,882,000
CalPERS Stabilization Reserve 5,545,104 ----------
Net Pension Liability 189,200,000 188,540,000 188,350,000 181,330,000 176,000,000 169,600,000 162,410,000 154,280,000 145,120,000 134,840,000 123,330,000
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$-
$5
$10
$15
$20
$25
$30
$35
Millions Millions City of South San Francisco
10-Year Forecast
Reserves & Net Pension Liability
Most Likely Scenario
With $1M in Additional Annual Contributions to CalPERS
Page 2 of 2
2018-19
Adopted
2019-20
Projected
2020-21
Projected
2021-22
Projected
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Projected
2027-28
Projected
2028-29
Projected
Total Revenues 109,053,694 109,407,496 114,666,959 119,493,014 123,279,163 127,382,753 130,056,084 135,192,077 138,350,310 141,677,970 145,014,487
Total Expenditures 107,997,038 106,106,737 111,721,035 116,027,565 121,107,473 125,063,512 129,547,698 133,822,254 138,238,008 142,912,978 146,524,038
$100
$105
$110
$115
$120
$125
$130
$135
$140
$145
$150
Axis Title Millions City of South San Francisco
General Fund
10 Year Forecast
Most Likely Scenario
$1M to Section 115 Pension Trust Fund
Total Revenues and Expenditures
Page 1 of 2
ATTACHMENT 9
2018-19
Adopted
2019-20
Projected
2020-21
Projected
2021-22
Projected
2022-23
Projected
2023-24
Projected
2024-25
Projected
2025-26
Projected
2026-27
Projected
2027-28
Projected
2028-29
Projected
General Reserves 21,213,318 21,521,578 22,573,471 23,538,682 24,295,912 25,116,630 25,651,296 26,678,494 27,310,141 27,975,673 28,642,976
Infrastructure Reserve 12,396,850 15,389,348 17,283,379 19,783,618 5,061,182 6,559,704 6,533,424 6,876,048 6,356,703 4,456,162 2,279,307
CalPERS Stabilization Reserve 5,545,104 ----------
Net Pension Liability 183,570,000 182,620,000 182,140,000 181,020,000 174,800,000 167,360,000 158,400,000 148,380,000 137,210,000 124,790,000 111,010,000
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$-
$5
$10
$15
$20
$25
$30
$35
Millions Millions City of South San Francisco
Most Likely Scenario
$1M to Section 115 Pension Trust Fund
Reserves & Net Pension Liability
Page 2 of 2
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