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Finance director reports strong reserves, explains pension obligation bond impact on Corona’s debt picture
Summary
Finance Director Kim Sitton told the City Council that Corona’s bond rating and reserves are healthy, outlined debt-per-capita trends after the city issued pension obligation bonds, and said staff will provide a more detailed pension update before the annual trust report in January.
Finance Director Kim Sitton told the Corona City Council at the spring financial workshop that the city meets most of its financial policy targets, while also explaining how the 2022 pension obligation bond (POB) changes the city’s reported debt figures.
“We will definitely strive for that triple A rating,” Sitton said of the city’s credit goals, noting recent issuance earned a double-A-plus rating and that the city is “only one notch below it.”
Sitton walked council members through multiple performance metrics used by the city, including debt per capita, debt as a percent of legal limits and debt payments as a percent of operating budget. She said outstanding debt per capita temporarily increased when the city issued POBs but that the underlying liabilities are being paid down and that, after removing the bond issuance, debt-per-capita figures are comparable to peer agencies.
On the pension unfunded accrued liability (UAL) and the relationship to the POBs, Sitton and council members discussed timing in actuarial reports. Sitton said the POBs were applied between fiscal-year reporting periods, creating timing artifacts in the published actuarial tables; as of the workshop Sitton reported an 89.8% funded ratio that incorporates the POBs. Council members requested a more granular follow-up presentation showing the counterfactual (what the UAL would look like without the POB), future-year scenarios and how CalPERS returns affect the city’s liabilities.
Other finance highlights Sitton reported: - The city’s general fund contingency reserve meets the policy target of 25% (three months) of operating expenditures. - The city has set aside reserves in utility funds (water, sewer, electric) with a combined target of $41.5 million; three-year contributions totaled about $5.2 million to date and the funds are trending toward target levels. - Sales tax represented 41% of general fund revenues in FY24; the city’s target is less than 50% reliance on sales tax.
Council requests and next steps: multiple council members asked for a more detailed pension-status update sooner than the January trust board report; staff agreed to provide additional analysis and scenario graphs showing the POB effect, assumed returns, employer contribution trajectories and the projected payoff timeframe. Sitton said the POBs are callable in 2034 and the administration’s goal is to shorten the payoff using pension stabilization contributions if feasible.
What it means for voters and taxpayers: Sitton emphasized the city is meeting most policy targets but that long-term pension funding and infrastructure shortfalls will remain items for council attention as the city finalizes the FY26 budget.
