CalPERS discount rate impact revealed on city pension liability calculations

During the Ridgecrest City Council meeting on March 19, 2025, a significant discussion centered on the city's pension liability, particularly in relation to the discount rate set by the California Public Employees' Retirement System (CalPERS). Currently, CalPERS uses a discount rate of 6.9%, which plays a crucial role in calculating the city's net pension liability.

City officials highlighted the sensitivity of this liability to changes in the discount rate. For instance, if CalPERS were to lower the rate to 5.9%, the city's pension liability could surge to approximately $17 million, a stark increase from the current liability of about $6.2 million. Conversely, if the rate were to rise to 7.9%, the city could potentially see a pension asset of $3 million.

The discussion underscored the importance of monitoring CalPERS' decisions, as the organization has a history of lowering the discount rate over the past several years. City officials expressed concerns that any further reductions could significantly impact the city's financial obligations.

In addition to the pension liability discussion, the meeting included various other topics, but the implications of the pension calculations stood out as a critical issue for the city's financial future. As the council moves forward, the management of pension liabilities will remain a key focus, with potential impacts on the city's budget and services.