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Riverside finance director reviews CalPERS exposure and pension tools; city reports $447 million total unfunded liability
Summary
Finance Director Christy Thomas presented a CalPERS update showing a combined unfunded accrued liability of roughly $447 million across safety and miscellaneous plans, described the 2020 pension obligation bond and Section 115 trust strategy, and said the city remains fiscally healthy even as it manages long-term pension risk.
Finance Director Christy Thomas delivered a substantive CalPERS update to the Budget Engagement Commission, tracing the city's long history with CalPERS, explaining technical terms such as "normal cost" and "unfunded accrued liability (UAL)," and outlining the tools the city uses to manage pension risk.
Thomas recapped that CalPERS sets a discount rate ("currently set at 6.8%"), which factors into the actuarial calculations that determine employer contributions. She explained that if CalPERS investment returns fall short of that discount rate the city must cover the difference, driving up required payments.
Thomas gave plan-specific figures: the safety plan's UAL was described at about $207,000,000 and the plan was about 87% funded; the miscellaneous plan's UAL was described at about $240,000,000 and about 86% funded, for a combined UAL of roughly $447,000,000 as of the June 30, 2024 actuarial snapshot. She also described the city's 2020 pension obligation bond (POB) that refinanced roughly 67% of the UAL with a lower fixed rate (the presentation cited a target bond rate near 3.69%), noting those financings had produced about $45,000,000 in savings as of May 2025 and projected about $175,000,000 in savings through 2045 under certain return assumptions.
Thomas outlined the Section 115 pension trust the city created in 2018 and the use of a "smoothing strategy" to withdraw from that trust in years with spikes so the operating budget avoids sharp shocks. She said the trust held about $90,000,000 (market value) and that about 92% of that belongs to the general fund. Thomas also said the city budgeted $9,000,000 to contribute to the trust in the fiscal year and had an additional $18,000,000 available in set-aside reserves for potential contributions.
Commissioners asked technical questions. Commissioner Ira confirmed that level payments through 2039 cover both POB debt service and required CalPERS UAL payments. Commissioner Ward sought and received clarification that the CalPERS discount rate is CalPERS's investment return assumption and not the city's contribution rate, and Thomas reiterated that benefits already earned cannot be reduced retroactively. Commissioner Scott Coe asked about the POB mechanics; Assistant City Manager Edward Enriquez explained the delta between CalPERS's discount-rate calculation (6.8%) and the city's bond interest rate (about 3.8% cited in discussion) produces the anticipated savings.
Thomas closed by saying the city's actions — POBs, the Section 115 trust, employee cost-sharing and policy changes — create more predictable payments and that the measures demonstrate the city's commitment to fiscal stability. The item was presented as "receive and file."
