Laguna Woods council adopts updates to administrative policies and sets $670,000 pension-prefunding goal; treasurer's report filed

The City of Laguna Woods City Council on Tuesday adopted revisions to two administrative policies and set an initial pension prefunding trust goal intended to build a dedicated balance for future CalPERS-related payments.

Council voted unanimously to adopt proposed amendments to Administrative Policy 1.1 (councilmember administrative support) and Administrative Policy 2.9 (budgeting, reporting and reserves). The council also set an initial pension prefunding trust target of $670,000 and received and filed the City Treasurer's Report for December 2024.

The policy changes formalize several long-standing practices and add clarifying language. Staff described three principal changes to Administrative Policy 1.1: deadlines for councilmembers to request agenda items (with an urgency exception), a deadline for written materials to be included in packets, and a standardized approach for recurring proclamations and mayoral commendations so staff can process them more consistently.

On Administrative Policy 2.9, staff proposed clarifying the intended use of the city's self-insurance contingency reserve and recommended an initial goal for the city's pension prefunding trust (a prefunding vehicle to help meet future CalPERS obligations). Staff said the $670,000 figure is a rounded amount derived from the five-year average of the city's historical lump-sum pension payments, and recommended using 50% of any general-fund surplus at year-end (after audited financials) to contribute to the prefunding trust until the target is reached. Staff said the trust has generated returns materially above what the city earns in conventional short-term investments during its first months of operation; council members discussed investment risk and governance at length during the public discussion period.

During public comment, Vicki Johnson and another resident raised concerns about CalPERS and prefunding options administered by CalPERS (the California Employer's Pension Prefunding Trust). Johnson urged caution, noting relatively few cities participate in that prefunding vehicle and questioning risk and investment mix; staff responded that staff had evaluated alternative providers and concluded the selected option provided higher expected returns and lower fees, while also committing to continued monitoring.

Finance/treasurer's report: staff reported that the city had about $13.2 million in cash and investments at the end of December, with approximately $6.2 million in the general fund, roughly $3.8 million in reserves and $3.3 million in restricted or committed special revenue funds. Staff noted a $4.5 million transfer from the Orange County investment pool to the state Local Agency Investment Fund (LAIF) in December to capture higher interest rates and described short-term CD maturities and trust balances. The council received and filed the report by unanimous vote.

Votes at a glance - Receive and file: City Treasurer's Report for December 2024 — motion moved and seconded; outcome: unanimous approval (yes:5). - Adopt resolution: Amend Administrative Policy 1.1 (councilmember administrative support) — motion moved and seconded; outcome: unanimous approval (yes:5). - Adopt resolution: Amend Administrative Policy 2.9 (budgeting, reporting and reserves) including initial pension prefunding target of $670,000 — motion moved and seconded; outcome: unanimous approval (yes:5).

Ending: Council members asked staff to continue monitoring the prefunding trust's performance, to reevaluate alternative providers if warranted, and to return with a proposal for a secondary goal once the initial $670,000 target is reached.