Roseville staff brief council on pensions and retiree health liabilities; no action required

City staff provided an informational update on April 2 to the Roseville City Council on long‑term retirement liabilities tied to pensions and other post‑employment benefits (OPEB). No council action was requested; staff said the briefing informs budget development for FY 2025–26.

Dennis Kaufman, assistant city manager and chief financial officer, reviewed the city’s pension exposure under the California Public Employees’ Retirement System (CalPERS). Kaufman reported the total CalPERS unfunded liability reported in the most recent actuarial valuation is approximately $506 million and said the funded ratio improved slightly year over year. Staff noted the Public Employees’ Pension Reform Act (PEPRA) for employees hired on or after Jan. 1, 2013 continues to reduce normal cost rates for new hires and that, over time, Classic employee rolls are shrinking while PEPRA employees increase.

Kaufman briefed the council on CalPERS actuarial processes and recent changes: CalPERS lowered its discount rate in 2021 (from 7.0% to 6.8% per staff) and now phases new actuarial losses over 20 years rather than 30, which accelerates employer payments but reduces long‑term smoothing. Staff presented forecasts showing employer contribution rates rising over the next several years (staff estimated a total contribution increase in the coming fiscal year of roughly $5.6 million, with about $3.2 million in the general fund) and projected peaks in required UAL payments near fiscal year 2030–31 under current assumptions.

Staff also described the city’s Section 115 pension trust — an irrevocably restricted tax‑exempt trust the city uses to set aside funds for future pension contributions and to stabilize rates during years with large required contributions. Kaufman said the city will continue to target transfers into the pension trust and make discretionary payments to CalPERS with one‑time funds when possible.

Scott Pettingill, finance director, presented the OPEB (retiree medical) update. Based on the most recent actuarial information cited by staff (through June 2024), the city’s total OPEB liability is $233 million, fiduciary net position in the OPEB trust is $159 million, producing a net OPEB obligation of about $74 million and a funded ratio of roughly 68 percent. Staff reported an investment return for the OPEB trust of just over 12% in the referenced fiscal year, and said the city’s OPEB funding policy calls for paying the actuarially determined contribution and for the OPEB trust to begin covering a portion of pay‑as‑you‑go costs starting next year.

Council members asked questions about the CalPERS discount rate process; staff said CalPERS is conducting an asset‑liability management review this year and the CalPERS board is expected to act on assumption changes in November. Staff reiterated that actuarial assumptions are long‑term and that the city monitors the process closely. The item was informational; staff said the proposed FY 2025–26 budget will reflect the council’s pension and OPEB funding policies and that the council will consider the budget at a May workshop and a June adoption hearing.