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Committee reviews CalPERS actuarial update; staff to run further analysis on discretionary payments
Summary
Finance staff presented CalPERS valuation results showing a combined unfunded actuarial liability of about $8.2 million and modeling that could reduce it to an estimated $5.7 million using preliminary 9.3% returns; staff said the city has already made a $1.85M discretionary payment and has another $1.85M available for possible additional payments.
Finance staff provided a preliminary actuarial review of the city's CalPERS liabilities at the Nov. 10 Financial Review Committee meeting. According to staff, the combined unfunded actuarial liability (UAL) for the PEPRA and miscellaneous accounts was about $8.2 million (approximately 80% funded) based on CalPERS valuations through 06/30/2023. Staff said CalPERS reported a preliminary investment return of 9.3%, and staff's modeling using that figure lowered the city's estimated combined UAL to about $5.7 million.
Staff reported the city already has approximately $4.5 million in a Section 115 trust and made a $1.85 million discretionary payment to CalPERS in March; staff noted another $1.85 million discretionary payment remains available in the current fiscal year. "We did some modeling and plugged in the 9.3% preliminary returns, and that brought our estimated combined UAL to about $5,700,000, which is headed in the right direction," a finance presenter said.
Committee members asked how the city compares to peers and whether a higher-than-assumed return might prompt CalPERS to adjust its discount rate, potentially increasing liabilities on paper for some jurisdictions. Staff replied that although returns may reduce amortization bases for some loss years, any discount-rate change would be determined by CalPERS policies and board action; staff emphasized more detailed analysis will be provided at a future committee meeting as required by policy.
The committee did not take action on the pension payments at this meeting; staff will return with additional modeling and recommendations.
