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Commission approves up to $1.2M contribution to defined-benefit pension, files waiver under state law
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Summary
To comply with state funding requirements for the city's defined-benefit pension, the commission approved filing for a waiver and authorized a budget amendment to contribute up to $1.2 million from fund balance to increase the city's plan funding level.
The commission voted to authorize the city manager to execute the Protecting Local Government and Retirement Benefit Act application for a waiver and to adopt a resolution authorizing an additional contribution to the municipal employees' retirement system (MERS) of up to $1,200,000 in the 2025 fiscal year. The action follows staff briefing from the finance director on state funding targets for the general-employee pension plan.
Heidi Sheppey, the city treasurer/finance director, explained the payment would move the plan toward a 60% funded target and noted the city could reduce the contribution if the commission chose a smaller amount. Sheppey said this is the third consecutive year the city would make an extra contribution to address unfunded liabilities and that the aim is to show trajectory toward the state's minimum funding threshold.
Commissioner Jackie asked whether the larger payment would accelerate long-term cost savings; staff replied MERS can achieve better returns on invested funds than ad hoc municipal holdings and that fund-balance policy informed the recommendation. A motion by Commissioner Heather Shaw to authorize the manager to file for the waiver and to approve the up-to-$1.2M budget adjustment passed on voice vote.
What happens next: Staff will file the waiver application and process a budget amendment to transfer funds from fund balance to the pension account as authorized. Further annual contributions will be required until the plan reaches the state's minimum funding standard.
