Raincross Group on 115 Trust

RE: Additions to the 115 Trust

I am writing on behalf of The Raincross Group, the long-standing Riverside support group of experienced community leaders.

We have heard numerous presentations and read articles about the impending financial challenges due to PERS. We understand the city's unfunded liability is about $627 million. We congratulate the city for establishing the 115 Irrevocable Trust for the purpose of setting aside funds to help pay the PERS unfunded liability.

At the present time the city has $4 million General Fund reserve funds in excess of the city's aspirational reserve goal of 20%. We endorse the proposal to put this $4 million into the 115 Trust.

We recommend that the City Council take this one step further. The city established the 20%, Aspirational General Fund Reserve goal before the PERS unfunded liability was clearly defined. Reserves are designed to provide a contingency against catastrophic events. We believe the PERS unfunded liability qualifies as a possible catastrophic event. Thus, we recommend that the city add an additional $10 million to the 115 Trust. We believe this action will leave the General Fund reserves at about 17%. This is still above the 15% reserve level that is considered a Best Practice by California Cities.

Using $10 million from the 20% Aspirational reserve goal will be definitive step in addressing the PERS unfunded liability and will remove the temptation to spend it on something else that does not constitute a pending catastrophe.