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Lakewood council approves $1 million transfer from earmarked reserves to reduce CalPERS pension liability
Summary
The council voted unanimously to authorize staff to send $1,000,000 in earmarked reserves to CalPERS and to direct staff to review the city's capacity for additional discretionary CalPERS payments on at least an annual basis.
The Lakewood City Council voted unanimously to adopt staff recommendations to begin sending additional discretionary payments to CalPERS, authorizing an initial transfer of $1,000,000 from earmarked reserves to reduce the city’s unfunded accrued pension liability.
Director Gomez presented the proposal, saying the city’s pension funding level stands above the statewide average and that targeted additional payments can reduce long-term costs. Gomez told the council the city’s CalPERS funding ratio is about 76.3 percent, CalPERS’ assumed investment return is 6.8 percent, and the city currently faces an unfunded accrued liability (UAL) of roughly $39.5 million. Gomez said the city’s typical short‑term investment returns are lower than CalPERS’ assumed return, and that sending additional discretionary payments to CalPERS can produce budgetary savings over the long term.
Gomez recommended using $1,000,000 that had been earmarked in the city’s reserves as a starting point and directing staff to review the city’s capacity to make additional discretionary payments at least annually. He told the council the approach is intended to be surgical—targeting specific bases of the UAL to maximize interest savings and reduce future pension costs while preserving reserves for operations and capital needs tied to Measure L commitments.
Mayor Rogers described the action as a continuation of long-standing fiscal discipline and noted the benefit of reducing pension obligations to protect future budgets. A council member who participated in the preceding study session said applying the earmarked funds to the CalPERS UAL was “where we get the most bang for the buck” in terms of long‑term savings.
Council members moved to adopt staff’s recommendation; the motion passed by unanimous roll call vote (Council Member Wood; Council Member Croft; Council Member Arellano; Vice Mayor Cassandra Chase; Mayor Rogers). The action authorizes staff to transfer the earmarked $1,000,000 to CalPERS and directs an annual review of capacity for future discretionary payments, with staff reporting back as needed.
