On the agenda: Richmond eyes early pension payoff using Chevron settlement funds
The Richmond City Council will meet on March 25 to discuss major financial decisions, including a proposal to use Chevron settlement funds for early pension debt payments, as well as updates on school district challenges, economic development initiatives, and police military equipment reports.
Richmond weighs early pension debt payment using Chevron settlement funds
City officials are considering using a $550 million tax settlement from Chevron to pay down Richmond's long-term pension liabilities, a move that could save the city an estimated $117 million in interest payments over the next two decades.
The proposal, on the March 25 City Council agenda, involves applying most of the Chevron funds to Richmond's $392 million in unfunded liabilities under the California Public Employees' Retirement System (CalPERS). Under the city's current payment plan, these liabilities would be paid off by 2044 at a total cost of $652 million, including $260 million in interest.
Last year, the City of Richmond, California, reached a $550 million settlement with Chevron, resolving disputes over a proposed tax measure targeting the company's Richmond refinery. The proposed ballot initiative sought to impose a $1 per barrel tax on feedstock refined at Chevron's Richmond refinery to invest in clean air and water treatment, fund parks, repair streets, improve public health access, and improve youth services.
However, facing potential litigation and drawn-out legal battles, the city opted for a settlement. Under the agreement, Chevron will pay Richmond $50 million annually for the first five years, starting July 1, 2025, followed by $60 million annually for the subsequent five years, totaling $550 million over a decade.
Soren Hemmila
The agenda item, sponsored by Councilmembers Claudia Jimenez, Doria Robinson, and Sue Wilson, proposes an early payoff over 10 years to reduce overall costs to $535.7 million. This would allow the city to redirect the $33 million currently allocated for annual pension payments toward staffing and infrastructure improvements.
The city is also exploring the feasibility of using bonds to pay off liabilities in a single lump sum, which, depending on interest rates, could generate additional savings.
Members of IFPTE Local 21, representing Richmond municipal employees, proposed the early payoff plan, emphasizing its potential to stabilize the city's finances and free up funds for critical services.
According to the agenda report, Richmond's reliance on Chevron, which accounts for 15 percent of the city's annual revenue, has raised concerns about long-term fiscal stability.
In addition to pension liabilities, Richmond is also considering using settlement funds to address its $74 million in unfunded retiree healthcare costs, known as Other Post-Employment Benefits (OPEB). According to city estimates, paying off these obligations early could generate $5 million to $8 million in annual savings.
The item would direct staff to work with an IFPTE Local 21 researcher and the sponsors of this item to bring a detailed analysis of the following issues and bring it back to the council within 45 days.
West Contra Costa Unified School District presentation
The West Contra Costa Unified School District's Interim Superintendent, Kim Moses, will give a presentation about the district's enrollment, attendance, budget projections, and data on students', teachers', and school accomplishments.
The presentation shows that the district faces a significant enrollment decline and persistent budget deficits. Moses said the district has lost 9.5 percent of its student population over the past five years, with enrollment dropping by 2,671 students since 2019. This decline has reduced Average Daily Attendance (ADA), a key factor in state funding, resulting in a potential revenue loss of approximately $35 million. Most WCCUSD students reside in Richmond, where chronic absenteeism rates are notably high at 44.5 percent.
Data from the California Assessment of Student Performance and Progress (CAASPP) shows that only 32.53 percent of the district's students meet or exceed English Language Arts standards and 23.34 percent in math.
The district is also grappling with a structural budget deficit, with expenses outpacing revenues for four of the last six years. WCCUSD is required to maintain a three percent reserve to meet state mandates, but projections indicate that its internal 6 percent reserve fund, known as Fund 17, could be depleted within the next four years. Despite implementing fiscal reductions, the district faces a projected $5.3 million deficit for the 2024-25 fiscal year, which is expected to grow to $13.3 million by 2026-27.
The district is working to address these issues through initiatives like the 2024-29 Strategic Plan, which emphasizes student-centered decisions, quality instruction, and community engagement.
Proclamations, recognitions, and consent calendar items
- April 2025 will be declared National Second Chance Month to honor reentry organizations.
- Richmond Police Department will be recognized for its efforts in child protection.
- Sisters in Solidarity Planning Committee will be recognized for organizing the 18th Annual Sisters in Solidarity— Hermanas en Solidaridad event.
- Sanctuary City Ordinance set for final approval, limiting Richmond's role in federal immigration enforcement.
- Legal Services Agreement with Maloney Employment Law increased by $150,000 to $500,000.
- Tiny Home Village Project receives a $300,000 grant for development and supportive services.
Economic & community initiatives:
- Cannabis Equity Program receives $600,000 in grant funding through 2027.
Soren Hemmila
- Finance Department will present an update on State Audit corrective actions.
Human resources & staffing adjustments:
- Contract amendments increasing limits for staffing agencies AppleOne ($60K) and Century Group ($100K).
- City Attorney salary revision.
Public safety & infrastructure:
- Richmond Police Department's Military Equipment Report is under review for compliance.
- Fire Station 68 roof repair contract for $92,419.
- Biohazard removal services contract amendment increases total funding to $115,000.
Transportation & housing:
- Housing Incentive Pool Grant Application to support transit and pedestrian projects.
- Keller Beach Sewer Line Report outlines "urgency ordinance" actions.
- February 2025 Abatement Report to review city code enforcement efforts.
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