Title
Library Department recommending the Board:
1) Approve payment of past due NorthNet Library System invoice in the amount of $2,425 related to El Dorado County's portion of the Fiscal Year (FY) 2024-25 CalPERS Unfunded Accrued Liability (UAL) for former employees of the Mountain Valley Library System, a cooperative library system that the County is a part of; and
2) Authorize the Director of Library Services to approve payment of El Dorado County’s share of the CalPERS UAL cost for former Mountain Valley Library System employees for future fiscal years in an amount not to exceed of $5,000 per fiscal year.
FUNDING: 52% Library Taxes and 48% General Fund.
Body
DISCUSSION / BACKGROUND
El Dorado County is a member of the Mountain Valley Library system ("MVLS"), a cooperative library system established in 1969 by joint resolutions adopted by the County along with Placer County, City of Roseville, Sacramento City-County Library System, Sutter County Library, and Marysville City Library. MVLS currently has 17 member libraries. MVLS entered into a contract with CalPERS to provide retirement benefits for its employees effective March 21, 1992. Since July 1, 2006, MVLS has not employed any staff, instead contracting out with North Bay and subsequently with NorthNet Library System (“NorthNet”). NorthNet provides account services to MVLS.
El Dorado County Library has membership in the NorthNet Library System via Memorandum of Understanding 8793 and includes Link+ services, Library to Go, and eligibility for state grants under the California Library Services Act ("CSLA").
The Link+ resource sharing system is a product of Innovative Interfaces, Inc. Link+ allows library patrons who are logged onto their library account to request a book and other materials from any of the over seventy participating public and academic libraries in California and have it delivered to their home library for checkout. Libraries in our region as big as Sacramento Public Library and as small as Amador County Library are members of Link+. Libraries using Link+ are able to serve the unique needs of their users without incurring the cost of purchasing and processing library items.
Through the NorthNet partnership El Dorado County Library cardholders borrowed approximately 63,000 audiobooks, 61,000 ebooks, 25,000 digital magazines, and 5,100 print books during Fiscal Year 2023-24.
NorthNet is not a successor agency to MVLS. As part of NorthNet’s account services, it acts as the custodian of funds including making payments to CalPERS on behalf of the member library systems. MVLS has a CalPERS UAL for six former employees (one transferred and five retired employees). At the October 29, 2019, MVLS Council meeting, Agenda item #8, question #5 discusses factors that can increase the unfunded liability balance going forward. As stated,
"Actuarial assumptions can change. We do an experience study every four years and update our mortality table and our inflation assumption, which affects the value of retiree Cost of Living Adjustments ("COLAs"). The most likely assumption change that could create an unfunded liability would be if CalPERS reduced the discount rate. The additional liability created in that case would be the same regardless of whether you pay off the unfunded liability now. The least expensive thing to do in the long run is to pay off the unfunded accrued liability as quickly as possible, and if a new unfunded liability should emerge, pay that off as quickly as possible."
At the October 29, 2019, meeting, the MVLS Council approved the payoff of the UAL amount of $360,952 to help reduce the annual CalPERS accrued liability from an average cost of $29,000 before the payoff to less than $3,600 for the following years. On April 14, 2020, the Board approved a one-time payment in the amount of $14,452 for the NorthNet invoice representing El Dorado County’s portion of the CalPERS UAL for former MVLS employees (Legistar 20-0503). For FY 2024-25 the UAL increased to $11,768 for the prepayment option (due July 31, 2024) as a result of lower CalPERS overall investment returns. El Dorado County’s portion of the CalPERS unfunded liability for FY 2024-25 is $2,425. The FY 2025-26 UAL was announced as $8,665 for the prepayment option, per the as of June 30, 2023, Actuarial Valuation.
The Library Department is requesting that the Board authorize the Library to pay the El Dorado County portion of the MVLS CalPERS UAL up to an annual amount of $5,000. If the annual amount is above $5,000, the Library will return to the Board for approval of the payment. It is anticipated that the annual amounts will decrease as the number of retired beneficiaries decreases; the most recent Valuation Report shows the number of retirees has lowered to five from six in the prior year.
ALTERNATIVES
The Board could choose not to approve and authorize payment of past due and future NorthNet Library System invoices related to El Dorado County's portion of the CalPERS UAL for former Mountain Valley Library System employees and El Dorado would potentially lose its membership in the NorthNet system, including access to Link+ services and state funding.
PRIOR BOARD ACTION
04/14/2020 Legistar item 20-0503 Closed Session approval of payment.
OTHER DEPARTMENT / AGENCY INVOLVEMENT
County Counsel.
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
Annual CalPERS UAL costs would be paid from 52% Library Taxes and 48% General Fund. The invoice for FY 2023-24 is $2,425.
CLERK OF THE BOARD FOLLOW UP ACTIONS
N/A
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Bryce Lovell, Director of Library Services