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Riverbank hears CalPERS liability update; consultants urge reserve strategy to blunt rising pension costs
Summary
Consultants told Riverbank council the city's unfunded accrued liability (UAL) with CalPERS stands near $10.3 million and projected payments will peak over the next decade; staff and consultants recommended using a Section 115 trust or prepayment to reduce budget volatility.
City financial advisers updated the Riverbank City Council on the city’s CalPERS pension cost and unfunded accrued liability, saying the city faces a growing repayment schedule that will concentrate higher payments in the coming decade.
Mike Myers of NHA Advisors told the council the city’s unfunded accrued liability, or UAL, is about $10.3 million. "This debt is known as the unfunded accrued liability or UAL, and we'll define what that is on the next slide, but that debt is currently $10,300,000," Myers said. Myers and colleague Eric Skriven reviewed how investment returns, discount-rate assumptions and shorter amortization schedules have increased employer costs statewide.
The presentation explained two CalPERS cost components: the normal cost for current employees and the UAL, which represents a shortfall between assets and actuarial accrued liabilities. Myers showed the city’s projected amortization schedule and warned that payments are not level but backloaded into a mountain-peak shape concentrated over the next 10–12 years. The consultants demonstrated that if CalPERS reduces its assumed investment return (discount rate), the city’s near-term payments would rise further.
To blunt the impact, the consultants recommended several approaches used by other agencies: prepaying the UAL to obtain a discount, negotiating contract changes that alter amortization (a “fresh start”), or creating a Section 115 trust and topping up reserves. Staff said the city has approximately $750,000 earmarked for pension reserves and asked the council to consider whether a larger initial deposit (examples in the presentation included $1.5 million) would be appropriate. Consultants modeled scenarios where trust funds could smooth the peak payments and reduce annual budget pressure.
No council action was taken beyond receiving the presentation. Staff and consultants recommended revisiting the analysis after the upcoming CalPERS actuarial study and discount-rate announcement this fall.
