Foster City council directs staff to pursue $15M CalPERS discretionary payment after debate over priorities

Finance Director Nate Cruz presented a proposal the council had discussed at retreat to make an additional discretionary payment of $20 million to CalPERS to reduce Foster City’s unfunded accrued liability. Cruz described the allocation exercise with the city’s actuary and said allocating some costs to enterprise funds reduces the general‑fund share to roughly $18.5 million; he said the payment would target portfolio losses from 2022 and that an upfront payment would generate estimated ongoing savings (about $1.2M–$2.0M annually over later years).

Councilors raised competing near‑term priorities, including conditions at the police station and other facilities that may require capital funds. Several council members asked staff to model smaller payment scenarios; staff noted a $15M or $10M payment would produce proportionate reductions in the projected savings. Council discussion ranged across funding trade‑offs and the mechanics of applying funds through the general fund and enterprise allocations.

After discussion the council did not adopt the $20M resolution. Instead the mayor asked for direction; the council agreed (by direction recorded in the minutes rather than by final vote on the resolution) to proceed with a $15 million payment scenario and asked staff to revise the resolution and arithmetic for the next meeting’s consent calendar.

Staff noted there is no prepayment penalty for CalPERS discretionary payments and that the estimated interest avoided would be about 6.8% on the amount targeted. Council asked staff to return a revised resolution reflecting the new amount.