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Consultant outlines $137 million CalPERS shortfall, urges active liability management
Summary
A consultant told the Tracy Finance Committee the city faces roughly $137 million in CalPERS unfunded liabilities (73.5% funded as of 6/30/2024) and outlined strategies — prepayments, targeted layer paydowns, capital financing and eliminating negative amortization — to reduce long-term interest costs.
Dimitri Simonov, principal of Bridgeline Municipal Strategies, told the Tracy Finance Committee on April 13 that the city’s two CalPERS pension plans had a combined accrued liability of about $520,000,000 and market assets near $382,000,000 as of June 30, 2024 — leaving an unfunded accrued liability (UAL) of roughly $137,000,000 and a funded ratio of about 73.5 percent.
Simonov said CalPERS issues an annual minimum payment schedule and that, under current amortization, the city will pay not only the UAL but about $81,000,000 in interest over the repayment period. “At that interest rate, that’s pretty much the city’s most expensive debt,” he said, urging the committee to view UAL as a form of long-term debt that can be actively managed.
The presentation traced drivers of rising UAL: benefit increases enacted in state bills that raised…
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