Compton hears plan to use roughly $65 million to cut CalPERS unfunded liability, city staff says levy could fall about $7.2 million

A consultant presented a staff plan at the Oct. 28 City of Compton workshop to pay down a large portion of the city’s CalPERS unfunded actuarial liability, saying a one‑time prepayment could reduce the city’s pension levy and lower costs for residents in the near term.

Dan Matu Chevich, the consultant retained to model the city’s pension options, told the council that CalPERS has sent the city supplemental bills tied to actuarial shortfalls and that the total supplemental amount across plans is about $152 million. He said staff was discussing paying off a substantial portion of the miscellaneous plan’s unfunded liability and gave illustrative figures: paying about $65–75 million now could avoid roughly $42.7 million in interest and would reduce the city’s required payment to CalPERS by about $7.2 million per year — about a 20% reduction from a levy the presenter said last year was roughly $35 million.

"It's a choice — pay now or pay more later," Chevich said, summarizing the trade-off between prepaying principal now to reduce long-term interest versus retaining liquidity to manage market volatility.

Why it matters: City staff and the presenter framed the proposal as a way to lower annual pension costs that are assessed to property owners as a pension levy. Council members pressed staff on whether the city has the cash available, what residents would see on their property tax bills and what trade-offs the city would make between savings and liquidity.

Council members asked whether the city treasurer has already invested funds that could be used for this purpose; a staff representative said his understanding was that there is "in excess of $100 million" in the relevant fund but that staff was still verifying exact balances. Chevich warned that because of state investment rules (citing limits on how local governments may invest under the Government Code), the interest the city can earn on short-term instruments is far below the assumed CalPERS discount rate (presented as 6.8%). That difference, the consultant said, is what generates the interest savings from prepayment.

Council member questions focused on mechanics and resident impact. Chevich showed slide scenarios in which paying 90% of one miscellaneous-plan liability would require a payment in the mid‑$60 million range depending on timing; paying earlier slightly reduced the principal amount and lowered projected interest expenses. He also recommended maintaining some reserves to protect the city against market volatility so that service cuts would not be necessary during market downturns.

Public comment at the workshop repeatedly urged caution. Charles Davis, a longtime former city clerk who reviewed the proposed 2025–26 budget, told the council: "Madame mayor and city council, I beg you, do not approve this resolution. Have another workshop, but take into consideration all the components, all the variables." Other residents urged the council to provide more specific data — including exact fund balances and how any levy reduction would be translated into permanent property tax relief.

Next steps: Staff told the council this is one of several discretionary options to manage pension costs and that the matter can return to the council for further workshops or a formal action item. No final prepayment was authorized during the Oct. 28 meeting; councilmembers voted on procedural items and then moved to the regular agenda.