HomeMy WebLinkAbout06.a.1) (Handout) UAAL Financing Analysisb
Central Contra Costa Sanitary District
Unfunded Actuarial Accrued Liability
How much is the District's UAAL?
• $122.8 million at 7.75% interest
projected by Bartel and Associates.
• $159 million at 6% interest.
• $166 million at 5% interest.
1
e Have CCCERA finance at the 7.75%
assumed rate of return.
Raise rates and pay cash in excess of
the annual UAAL requirement.
c Debt finance all or a portion of the UAAL.
yCD
• The analysis confirmed what we hypothesized.
• The more and the sooner the District can pay on the
UAAL in excess of the annual requirement, the more
savings accrue from reduced interest expense.
• Cash payments generated from raising rates create
the greatest savings.
• Debt financing using Revenue Bonds at 3.25% saves
more interest expense than Pension Obligation Bonds
at 4.86% and more than at the 7.75 %, CCCERA's
Discount Rate.
0
Scenarios
• Scenario Analysis
VMS-
Fiscal Years
UAAL
Years
Amortized
Assumed
Rate
Annual
Payment
2010-11
$ 36,483,000
13
7.75%
$4,225,172
2011-12
$ 3,296,000
17
7.75%
$329,777
2012-13
$ 31,239,235
18
7.75%
$3,040,093
2013-14
$ 28,823,145
18
7.75%
$2,804,968
2014-15
$ 20,158,620
18
7.75%
$1,961,766
Total Projected
2013-14 UAAL
$120,000,000
$12,361,777
Total Cost= $201,056,351
Table 3 / Executive Summary
Sewer Service Charge Increase Analysis
Fl"
Year
Bass Una
$120 Miulon
+$10 Swr
Svc Cho
+$20 Swr
Svc Chg
+$30 Swr
Svc Cho
+S40 Swr
Svc Chg
+$60 Swr
Svc Chg
+$60 Swr
Svc Chg
MMIMUM
5.00%
$53,415,000
$11,560,000
4.00%
$41,895,000
i
3.00%
Rata
$5332
S6332
$73 32
$8332
$93.32
$10332
$11332
Increase
Savings
$0
$49,041,934
$75,366,956
$93,367,596
$107,756,514
$117,216,261
$124,326,250
Table 5 / Executive Summary
Interest Cost to Payoff $120M over 20 Years
Interest Rate
Total Interest
Cost
Average Annual
Debt Service
7.75%
$87,095,000
$13,805,000
6.00%
$65,330,000
$12,355,000
5.00%
$53,415,000
$11,560,000
4.00%
$41,895,000
$10,795,000
3.00%
$30,780,000
$10,050,000
4C�
J l._.
t
$120 Million 1
15 Years 2
20 Years 3
30 Years
Debt finance
all or a
portion of
the
Pension
Obligation $
Table 6 / Executive Summary
$233,686,777 $
Debt Cost for Revenue Bonds versus Pension Obligation Bonds
71
bonds
Difference $
$21,057,838 $
$34,967,969 $
$55,211,882
Average
Annual $
$1,403,856 $
$1,748,398 $
$1,840,396
Difference
$120 Million 1
15 Years 2
20 Years 3
30 Years
Revenue $
$172,400,739
$198,718,808 $
$257,665,717
Pension
Obligation $
$193,458,577 $
$233,686,777 $
$312,877,599
bonds
Difference $
$21,057,838 $
$34,967,969 $
$55,211,882
Average
Annual $
$1,403,856 $
$1,748,398 $
$1,840,396
Difference
Table 7 / Executive Summary
Revenue Bonds over Three Time Periods
Million
(Scenario 5) $160,280,908 $177,706,367 $221,279,021
$75 Million
(Scenario 5) $160,624,616 $180,255,066 $228,124,916
$75 Million
(Scenario 5) $166,379,583 $186,829,849 $231,731,458
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5
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5
Table 8 / Executive Summary
Financing Summary
Fiscal
$120 Mallon
$75 M101011 $10
$75 Mi0ion $30
$75 Motion S60
S75MISM Mon
585/535 Rev
Year
Bass Line
Sewer Service
Sewer Servioe
Sewer Service
Rov BondslPO
Bondslp0
3/8/2012 °
Updated Bond Interest Rates Scenario Analysis
Charge
Charge
charge
Bonds
Bonds
2012 -13
2.65%
�dt1 ,:�
= ^J
9'37i W
$37100
S"3 %1 i o
High
$ 419.43
5462.08
$46027
542112
$463.48
$468.97
Low
$354,74
$344,14
S34414
S34414
5344.14
5344,14
Average
$16.86
$16.86
$1686
$1686
$16.86
$16.86
Coat
$201,056,339
$156,132,932
$153,637328
$151 981 420
$160,280,908
$160,624,637
Savings
$0
544, 923,407
$47419011
549074919
$40,775,431
540,431,702
Current
Bond Interest
8/2012
1
3/8/2012 °
Updated Bond Interest Rates Scenario Analysis
Length of
Revenue
Pension
3.28%
2.65%
4.86%
Debt
Bonds
Current
Obligation
Current
5.75%
30 Years
Financing
11/21/2011
31
6.13%
8/2012
Bonds
3/8/2012 °
11/21/2012
15 Years
3.28%
2.65%
4.86%
5.13%
20 Years
3.89%
3.20%
5.63%
5.75%
30 Years
4.50%
3.60%
6.06%
6.13%
• Staff has done a preliminary analysis and believes that
the Board should give serious consideration to
adopting three $60 rate increases for fiscal years
2013 -2014, 2014 -2015 and 2015 -2016.
Current Fiscal Year
2011 -2012
UAAL $120 Million Payoff
2016 -2017
Compensated Absences Fully Funded
2022 -2023
GASB 45 Trust Fully Funded
2023 -2024
District Existing Debt Payoff
2027 -2028
UAAL Debt Payoff
2029 -2030
• Staff recommends requesting a written agreement from CCCERA
identifying how paying off the UAAL will work, the rules and
procedures for early payment, and that CCCERA will remain de-
pooled, allowing monies paid by the District to CCCERA be
credited only to the District's payoff of the UAAL. How CCCERA
would handle future over or under funding must also be
addressed.
• Staff recommends the Board should direct staff to start the
process to obtain $75 million Revenue Bond debt financing to pay
a portion of the UAAL. A SSC increase to pay the UAAL off more
rapidly can be considered during the financial planning process
for FY 2013 -2014.
INA