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REQUEST FOR PROPOSALS FOR PENSION FUNDING STRATEGY FOR EMPLOYEE RETIREMENT <br /> <br />Page 4 <br /> <br />Case Study: City of Sausalito <br />NHA is working with Sausalito on several projects, including a long-term General Fund <br />forecasting project. As part of these discussions, analyzing the best use of their Section 115 <br />Trust is a high priority and we’ve provided them with preliminary analysis for ADPs and Section <br />115 Trust smoothing that were used as part of their budget workshop last year. While a final <br />pension strategy will not be implemented until the results of the forecasting projects are completed this <br />Spring, we have had several meetings with staff and electeds in response to very specific questions related <br />to their Section 115 Trust: How are investments are performing? Comparison to other providers? Ability <br />to tailor investments instead of using stock portfolios? How can funds legally be used? A working draft of <br />a memo outlining some of these considerations, as well as the pension presentation from the City’s 2025 <br />budget workshop, can be found in Appendix E. <br />Brief Discussion of the City’s UAL, Policy, and Foster & Foster Study <br />The City’s CalPERS Unfunded Accrued Liability (UAL) is $289 million as of the latest CalPERS Actuarial <br />Valuation (6/30/2024). Reductions in the City’s UAL payment are projected (purple line) based on CalPERS’ <br />12.1% investment return in FY 2024-25, though that benefit could be tempered by the impact of recent <br />revisions to CalPERS’ inflation and salary assumptions based on their 2025 Asset Liability Management <br />(ALM) Study. While some of our clients are expected to experience 10%+ increases in UAL because of the <br />ALM assumption changes (due to large COLAs), our initial assessment indicates little impact on the City’s <br />UAL, and a minor increase (4%) in annual Normal Cost. <br /> <br /> <br /> <br />NHA has reviewed the Foster and Foster Memo as well as the City’s current PARS Section 115 Trust <br />Withdrawal Policy. Generally speaking, both are well written and have likely served the City well during <br />the brief period since the Section 115 Trust was established. However, we see significant room for <br />Docusign Envelope ID: BB80A86F-2853-4F40-B02D-18F5B9DD615F