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Newport Beach council backs one-time $5M test of Section 115 pension trust while keeping aggressive CalPERS paydown
Summary
After a study session on pension funding, the council voted a 7–0 straw approval to transfer $5 million of OPEB surplus into a Section 115 pension trust as a one-time pilot while continuing $45 million annual paydowns to CalPERS and re-evaluating results in 6–12 months.
Newport Beach City Council on Jan. 27 examined whether to continue heavy prepayments to the California Public Employees' Retirement System (CalPERS) or seed a locally controlled Section 115 pension trust with surplus OPEB funds. After presentations from staff and outside advisers, the council gave a unanimous straw vote to move $5 million from the overfunded OPEB trust into a Section 115 account as a one-time test and to revisit performance within the year.
Finance Director Jason Aleman opened the study session with the city's funding picture, saying the latest actuarial valuation showed a funded status of “75.9% as of 06/30/2024,” and that a projection incorporating CalPERS' 2024 returns raised the city’s funded status to about 82.4% with a $235 million pension liability. He told the council the finance committee had recommended targeting a 95% funded status, which would require continuing approximately $45 million per year in additional discretionary payments to CalPERS through 2031.
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