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Page 1 of 3 <br />Item #8 <br /> CITY COUNCIL AGENDA REPORT <br /> <br />March 4, 2025 <br />Finance <br /> <br />TITLE: RECEIVE REPORT AND PRESENTATION ON CITY’S CALPERS AND OTHER <br />POST-EMPLOYMENT BENEFITS (OPEB) FUNDING ACTUARIAL ANALYSIS <br />AND PROVIDE FEEDBACK TO STAFF <br /> <br />SUMMARY <br />The City’s independent actuary has prepared an analysis and recommendations on the City’s <br />CalPERS and OPEB retirement plans. Ideally, the City would not draw down the Supplemental <br />Trust for making CalPERS payments and would be continuing the full OPEB Actuarial <br />Determined Contributions; however, the City’s current overall budget situation may reasonably <br />lead to an alternative path without drastically risking the benefits of the plans. <br /> <br />RECOMMENDATION <br />Receive report and presentation on the City’s CalPERS and the OPEB retirement plans and <br />provide feedback to staff. <br /> <br />BACKGROUND <br />Like many agencies, the City has been proactive in implementing strategies for paying down <br />pension and OPEB liabilities. To this end, the City established the Section 115 Supplemental <br />Pension Trust, which enables the City to set aside funds and earn greater returns than the <br />City’s General Fund. These assets are set aside to stabilize pension costs in future years. In <br />addition, the OPEB Plans are separately funded with assets in CalPERS’ OPEB trust; there is <br />no supplemental trust for OPEB. The presentation by Foster & Foster Actuaries and <br />Consultants on the City Council’s March 4, 2025, agenda will provide analysis and <br />recommendations for the City’s CalPERS and OPEB retirement plans. <br /> <br />DISCUSSION <br />Foster & Foster’s actuarial analysis included the following general observations: <br />• The OPEB plans are better funded than CalPERS plans despite 1) OPEB funding <br />started relatively recently (FY 2010/11) compared to CalPERS, and 2) Supplemental <br />Trust assets are included for CalPERS. <br />• Without the Supplemental Trust, the overall CalPERS plans funded ratio would be <br />68.2% ($506 million/$742 million). <br />• Less than 10% of the total unfunded liability is with the OPEB plans. <br /> <br />Ideally, the City would not draw down the Supplemental Trust to make CalPERS payments <br />and would continue with the full OPEB Actuarial Determined Contribution (ADC) based on the <br />following reasons: <br />• Keep the plans on their current path to achieve 100% funding (over approximately 20 <br />Page 43 of 56