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Board approves prefunding recommendation to present to city after staff notes city likely will not prefund this year
Summary
Following a staff presentation on the prefunding methodology and triggers that reduce the offered discount, trustees approved a prefunding recommendation for presentation to the city; staff said they had heard informally the city would not prefund in the coming year.
The Federated board voted to approve the retirement plan’s prefunding recommendation and to present the offer to the City of San Jose, after staff explained the discount methodology and recent triggers that reduce the prefunding discount.
Staff explained the plan’s methodology and said the board’s formula reduces the offered discount when specified triggers occur; because triggers were hit in consecutive years, the discount amount offered this cycle would be reduced by a cumulative 30 percent under the methodology. Staff also said they had heard informally that the city likely will not prefund this year, a factor the board acknowledged in its deliberations.
Trustees discussed the timing and drivers of the city’s prefunding decision and noted that municipal budget considerations—and not solely the discount—often guide the city’s choice to prefund. After a motion and second, trustees approved the prefunding recommendation in a unanimous roll-call vote.
The board directed staff to forward the approved recommendation to city officials and to include the prefunding methodology documentation and trigger determinations with that communication.
