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Finance committee forwards plan to transfer PARS Section 115 funds to CalPERS to address pension liabilities
Summary
Facing an estimated $8'$9 million sales-tax shortfall in FY26, the committee unanimously forwarded staff's recommendation to begin phased transfers from the city's Section 115 (PARS) trust to CalPERS to pay down unfunded liabilities and reduce employer pension costs.
The Palo Alto Finance Committee unanimously forwarded to City Council staff's recommendation to begin phased transfers from the city's Section 115 (PARS) pension trust to CalPERS to both reduce unfunded liability and improve long-term funded status.
Chief Financial Officer Lauren Lai presented the General Fund major tax revenue update and a retiree benefit funding recommendation. Lai said staff projects a roughly 20% decline in sales tax for fiscal year 2026 (approximately $8'$9 million), driven primarily by a 41.6% decline in business-to-business leasing revenue (a sector representing about 12.7% of the city's sales tax base) and a 32.2% decline in new-auto sales (about 11.7% of sales tax). Staff modeled a continued ongoing reduction of roughly $4 million in…
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