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Committee hears CalPERS actuarial update; staff to return with payoff scenarios and options for pension funding
Summary
Staff reported updated CalPERS valuations and a funded status shortfall for the classic plan; committee asked for amortization-payoff scenarios and staff recommended evaluating a Section 115 trust contribution at the October meeting.
The Financial Review Committee reviewed updated actuarial valuations from CalPERS on Sept. 13 and requested additional modeling before making funding decisions.
Staff reported the updated valuation as of June 30, 2021, included a 21.3% investment return and a CalPERS discount-rate change from 7% to 6.8. Staff said the classic plan’s funded status was ‘‘about 87.4%’’ with an unfunded liability cited as ‘‘4,400,000’’ in the presentation; staff said the PEPRA plan was ‘‘superfunded’’ in the transcript remarks.
Given a negative return in the most recent fiscal year (staff cited a reported -6.1% return elsewhere in the discussion), staff recommended bringing a more detailed analysis and payoff scenarios to the October FRC meeting to evaluate options including contributions to a Section 115 trust and paying down older amortization bases. Staff highlighted some older amortization bases remaining on the books (transcript example: a $2,100,000 balance with a 22-year amortization period) and noted the effective interest cost staff attributed to those bases (described in the meeting as roughly 6.8% per year) and the long remaining amortization periods.
Committee members requested an amortization-schedule comparison that shows estimated interest savings under different payoff scenarios and whether the city should maintain current contribution levels while accelerating payoff of longer-term bases. Staff agreed to prepare that analysis for the October meeting.
The committee did not take a formal vote on pension-paydown measures at this meeting; staff said they will return with model outputs and recommendations.
