20-Year Resource Allocation Plan - City of Sunnyvale

expenditures, but instead are recovered on claims experience
and City property valuations.
Employee benefi ts costs continue to be a fi scal challenge
for the City, particularly with respect to sharply rising costs
for retirement and medical premiums. For FY 2011/2012
medical premiums are expected to rise 10%, an additional 2%
over the originally projected increase of 8%. Retirement costs
are also projected to increase signifi cantly in FY 2011/2012,
up 15.6% over FY 2010/2011 expenditures. This is the
result of the rate increases required due to the impact of the
signifi cant CalPERS investment losses in FY 2008/2009. The
increases from these losses, as well as from the most recent
experience study, will be phased in over the next three fi scal
years, resulting in a signifi cant increase to the City’s cost of
retirement benefi ts over that time. This will be discussed in
more detail in the Retirement Benefi t Sub-Fund section below.
Details of the changes in each of the Benefi ts Sub-Funds are
discussed in the sections below.
Leaves Sub-Fund
The Leaves program accounts for all City employees’ leave
time, including accrual of leave benefi ts earned but not taken.
The additive rate is calculated by determining the amount of
leave benefi ts to be accrued, adjusted for estimated salary
increases. The budget for leave benefi ts for FY 2011/2012 is
up 2.6% as a result of the increase in employee salary rates.
The interest income in this Sub-Fund is generated from the
leave earned, which is expensed at the time it is earned and
held as a liability in our General Ledger until it is taken.
Retirement Benefi ts Sub-Fund
The Retirement Benefi ts Sub-Fund contains the costs for
the City’s retirement plans. Sunnyvale contributes to two
California Public Employees Retirement System (CalPERS)
plans for and on behalf of its employees: Safety (3% @ 50
Plan) and Miscellaneous (2.7% @ 55 Plan). For the Safety
Plan, the City had paid the entire employee contribution of
11.25% up through FY 2009/2010. During FY 2010/2011,
both the Public Safety Managers’ Association (PSMA) and
the Public Safety Offi cers’ Association (PSOA) came to
agreements with the City to pay 3% towards the employee
contribution to CalPERS. PSMA’s contribution began in FY
2010/2011 and is being phased in over a 12-month period,
reaching the agreed upon 3% in July of 2011. PSOA’s
contribution will begin in July of 2011 and will increase to the
agreed upon 3% in January of 2013. For the Miscellaneous
Plan, the City currently pays the 7% of the 8% employee
contribution, with the employees paying the other 1%. The
Sunnyvale Managers Association (SMA) has agreed to pay an
additional 2% beginning July 2012, and the recommended FY
2011/2012 Budget assumes the entire Miscellaneous group
will do the same.
While the employee contribution rate is set by law, the
employer contribution rate is adjusted annually by CalPERS
through an actuarial analysis which takes into account
demographic information and investment earnings on the asset
portfolio. The contribution rates are applied against employee