Minutes 03/22/2021 - Laserfiche WebLink

Home Browse Search

March 22, 2021 Public Education According to the Code of Virginia §22.1-89 Management of funds, “each school board shall manage and control the funds made available to the school board for public schools and may incur costs and expenses.” Although City Council has the authority to appropriate funding by major classifications, it does not have the authority to dictate how the Portsmouth School Board allocates its funding for expenses within said classifications. In February 2021, Dr. Elie Bracy, III, Division Superintendent, presented to City Council his proposed “needs-based” budget for FY 2021-22. As part of his presentation, Dr. Bracy requested an additional $2.5 million above the FY 2021 local share appropriation of $56 million proposing to use for educational initiatives and support for the school division's employee raises. The city was able to provide a portion of this request. The “American Rescue Plan” Act funding during FY21 is proposing to provide an estimated allocation to schools of $43M in assistance to be used to prepare schools for reopening in Fy22. General Employee Compensation During FY 2022, we are proposing a 3% General Wage Increase effective November 1, 2021, for General and Sworn employees, who were hired on or before July 1, 2021, excluding employees of constitutional officers and courts, judges, grant-funded positions, part-time, temporary, and seasonal employees. This action continues to invest in employees while also attracting and retaining qualified and experienced personnel. In addition, hiring employees at a salary that is commensurate with experience further solidifies that the City of Portsmouth in actively paying salaries that reflect the living wage. With transparency and collaboration at the forefront, Human Resource Management will partner with key staff and other employee groups to recommend compensation strategies to the City Manager. City staff and its financial advisors have reviewed the city’s financial policies and compliance with these policies to ensure alignment with our guiding principles. The focus has been in the areas of pension and other post-employment benefits (OPEB) management, debt limitations; and cash reserves (fund balance), as these areas have specifically been mentioned by the rating agencies as critical factors considered when rating the city’s long-term debt. Pension and OPEB The city has complied with its retirement system funding policy, which states that the city will fund the actuarial contribution (ADC) for the city plan. The FY 2022 proposed budget includes $11.3 million ADC contributions, $10.0 million debt service on the pension obligation bonds, and an additional $500,000 retirement fund contribution. The $21.8 million one-year budget impact to the plan with approximately 959 total participants poses significant fiscal challenges to the city. It is imperative that we analyze discretionary benefits that have been added in years past, and refocus those funds towards ensuring the long-term viability of the plan so that all retirees receive their benefits and the system remains solvent. On June 30, 2020, the combined net pension liability for the city’s legacy plans was $102.3 million (the net pension liability for VRS is $29.2 million). Excess funds, should they become available, should be transferred to the retirement systems. The city’s OPEB liability of the city’s Retired Employees Health Care Program has declined substantially in recent years. In addition to paying retiree health care claims as incurred, in 2018 the city established an OPEB Trust Fund with an initial $3 million contribution. Since the establishment of the trust, the City has contributed $2 million during 2019 and 2021. The FY2022 budget also includes a $500,000 contribution. The net OPEB liability on June 30, 2020, was $18.8 million. City staff and our financial advisors recommend formalizing a policy to build upon this funding stream until there is no unfunded liability.