PIEDMONT -- Voters will be asked in the Feb. 4 municipal election whether or not the city should refinance about $7.8 million in "side fund" pension obligations.
Measure A will need a simple majority (50 percent plus one) to pass. No argument against the ballot measure was submitted.
The city currently pays 7.5 percent interest on the Public Employees Retirement System (PERS) side fund over the next nine years.
It is estimated $600,000 to $700,000 would be saved in interest payments over those nine years if the side fund were refinanced at a lower interest rate, which appears market-favorable.
PERS in 2003 adopted a requirement that all pension plans with fewer than 100 active members be assigned to risk sharing pools. The city's miscellaneous and safety plans each had fewer than 100 members. Because the various plans joining these risk pools had different levels of unfunded liability, PERS established a "side fund" to address unfunded liability, according to an impartial analysis by the city attorney.
Piedmont's charter requires voters to give majority approval before the issuance of any bond indebtedness.
If the measure passes, the City Council has the authority to move ahead with bond refinancing, provided market conditions are favorable.
If it fails, the city will not be able to issue bonds to refinance the side fund. In May, the Budget Advisory and Financial Planning Committee recommended that the City Council consider refinancing the side fund to save taxpayers money.
Contracts recently negotiated with the various bargaining units in the city will benefit the city and its employees with regards to retirement contributions, City Administrator Geoff Grote said.