CITY COUNCIL AGENDA PACKET - Laserfiche WebLink

Date:February 25, 2025 To:Susan Hsieh From:Doug Pryor Page:4 411 Borel Avenue, Suite 620 San Mateo, CA 94402 · (650) 377-1600 · www.foster-foster.com The green line represents expected future contributions required to CalPERS without the Supplemental Trust, and the orange line represents total City contributions after Supplemental Trust transfers. The Supplemental Trust facilitates City pension costs moving from the green line to the orange line. The trust withdrawals are depicted by the blue boxes: Commencing 2025/26, money is withdrawn from the Supplemental Trust. The City pays CalPERS $24.7 million, with $4.1 million paid by the Supplemental Trust. This moves the total City cost down from the green line to the orange line. In 2037/38, the trust is depleted and full CalPERS contributions are once again paid by the City. After 2037/38, contributions are at or below $36.0 million in all years. Scenario 2 Scenario 2 provides the same projection as Scenario 1 but assumes CalPERS falls short of their investment return assumption. The assumed returns in Scenario 2 are at the 25th percentile of likely returns. So while we consider the returns below expectations, there is still a significant (25%) likelihood that returns are at or below this level and the corresponding contributions are at or above the levels projected. Following is the combined (Miscellaneous and Safety) projection. The trust withdrawals are structured to target a level percent of payroll overall cost to the City over the projection period. Note that data labels are shown for 2024/25, 2025/26, and then every 2 years thereafter. Scenario 2 (amounts in $millions) The purple line represents expected future contributions required to CalPERS without the Supplemental Trust, and the orange line represents total City contributions after Supplemental Trust transfers. The Supplemental Trust facilitates City pension costs moving from the purple line to the orange line. The trust withdrawals are depicted by the blue boxes: Commencing 2025/26, money is withdrawn from the Supplemental Trust. The City pays CalPERS $24.7 million, with $4.1 million paid by the Supplemental Trust. This moves the total City cost down from the purple line to the orange line. In 2033/34, the trust is depleted and full CalPERS contributions are once again paid by the City After 2033/34, contributions are reaching highs and expected to continue increasing. The trust is exhausted much sooner (4 years earlier) than under Scenario 1. Page 49 of 56