Attachment 6
April 24, 2018 61
PREFUNDING OPTIONS
Where Do You Get the Money?
One-Time Amount
Town resolution to use one-time funds
Annual Amounts
Earmark annual additional funding
Borrow from General Fund
Pay General Fund back like loan
Pension Obligation Bond
Often considered an interest arbitrage between expected pension fund earnings
and interest rate paid on bond
No guaranteed savings
PEPRA prevents contributions from falling below the normal cost
April 24, 2018 62
PREFUNDING OPTIONS
Where Do You Put the Money?
Payments Directly to CalPERS
Additional contribution
Immediate UAL and contribution impact
Retains contribution volatility
Request single shorter amortization period
Fresh start UAL amortization
Greater short-term payments
Less interest and smaller long-term payments
Target specific amortization bases
Pay off shorter period amortization bases, greater short-term contribution
reduction, less interest savings
Pay off longer amortization period bases, smaller short-term contribution
reduction, greater interest savings