Fortuna City Council voted Dec. 1 to authorize the city manager to execute a $1,500,000 supplemental discretionary payment to CalPERS intended to reduce the city's pension liability and lower future interest costs.

City staff told the council the payment would be drawn from general fund reserves; staff estimated roughly $5 million in reserves before the transfer and said about $1 million of that had been set aside for an upcoming general plan update, leaving an available balance near $4 million. Making the $1.5 million payment directly would reduce available reserves below the council's adopted 180-day operating reserve target by approximately $200,000, so council voted to waive the reserve policy for fiscal year 25-26 to permit the payment.

An unnamed staff member explained the financial rationale: the additional payment would produce an estimated $1,250,000 in interest-payment savings and is expected to reduce ongoing annual interest costs by about $130,000 beginning next fiscal year. The staff presentation emphasized these savings are estimates provided by the CalPERS actuary and that the payment is intended to partially offset higher retirement costs associated with recent sworn-officer pay increases.

Council debated the timing briefly and asked whether the reserve shortfall reflected the planned general-plan set-aside; staff said the $1 million for the general plan had already been set aside and that spending patterns would determine when the projected dip below the 180-day threshold would occur.

A council member moved to authorize the city manager to execute the supplemental budget request and to make the payment; the motion included an explicit waiver of the 180-day operating-reserve policy for FY25-26. The motion passed on a voice vote with no recorded opposition.

The council did not adopt additional conditions or a repayment schedule tied to the general fund; staff said they would return with further budget detail as needed.