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Rohnert Park outlines pension burden and trust funds used to smooth costs
Summary
Finance staff told council the city faces CalPERS unfunded actuarial liabilities (about $50 million) and has used trust funds (PARS, SERP) and one‑time payments to manage near‑term costs, while forecasting significant UAL payments ahead.
Finance staff told the council that Rohnert Park’s long‑term retirement obligations remain a significant budget driver and that the city is using a mix of trust funds and pay‑down strategies to limit short‑term budget impacts.
Finance Director Betsy Ho explained the components of CalPERS costs—normal cost (the payroll percentage collected each pay period) and the unfunded actuarial liability (UAL) that accumulates when investments, payroll or actuarial assumptions change. “When that happens, we end up with an unfunded actuarial liability,” Ho said, and described the city’s approach to make additional payments and avoid compounding interest costs where possible.
Mitigation tools: staff said the city set up a PARS trust in 2016 (fiscal year 15–16) and placed about $18.3 million into it, allowing investment outside the city’s more constrained portfolio; another trust (SERP) was funded for retiree medical obligations and has reduced general‑fund retiree costs. Ho said distributions from SERP are expected to reduce general‑fund retiree‑medical payments from roughly $1.7 million to about $1.0 million for 25–26.
Scale and outlook: staff reported an aggregate PERS UAL near $50 million (latest available data) and showed a payment schedule staff expects over the coming years, about $33 million in projected UAL payments in near‑term years, acknowledging actuarial assumptions and payroll changes can alter those numbers.
Implications: Councilors asked for clarification for residents; staff emphasized that UAL payments are long‑term liabilities and recommended continuing prudent use of trust funds and continuing to fund reserves where appropriate. No policy change was adopted at the session; staff said they will include pension‑cost dynamics in upcoming budget options.
