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Pleasant Hill staff warn preliminary budget projects deficits and reserves below policy in coming years
Summary
Staff told the Budget Committee the preliminary biennial general-fund budget shows a near-term deficit (~$1.9M) and projects the general-fund balance could fall below the $10M reserve policy to about $9.8M and down to $4.8M in later years unless further actions are taken; rising CalPERS UAL and insurance costs are primary drivers.
City staff told the Pleasant Hill Budget Committee on April 4 that preliminary estimates for the general-fund biennial budget show the city facing a multi-year funding gap driven primarily by rising CalPERS unfunded actuarial liability (UAL) and higher insurance costs.
Staff presented near-term revenue estimates of roughly $32'$33 million and noted a projected deficit in the neighborhood of $1.9 million for the current biennial period. "That deficit is about $1,900,000 with general fund dropping to about $14.3 million," staff said, and warned that under the baseline assumptions the general fund could drop to about $9.8 million (below the $10 million council reserve policy) and, in a later projection window, to about $4.8 million.
The committee was shown latest CalPERS valuation figures: staff reported an actuarial liability of about $187.2 million and assets of about $128.6 million, leaving an unfunded liability of about $58.6 million and a funded ratio described as just under 70%. Staff noted employer contribution amounts have risen in recent valuations and are projected to increase further in coming years, putting pressure on operating budgets.
During the discussion staff offered an illustrative example of the scale involved in exiting CalPERS: "We would just need to write a check for somewhere between $83,000,000 to $150,000,000," a staff member said, adding that such a move would require replacement retirement arrangements and could risk losing employees to other jurisdictions. Committee members asked staff to return to council with a menu of options and scenarios for how to address the projected gaps rather than waiting for next year's long-term financial plan.
The committee did not adopt budget changes at the meeting; staff said the full budget book will be presented to council in May and that a final budget must be adopted by June 30.
