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1/15/2026 <br />2 <br />7 <br />Today’s Discussion <br />I.Background on CalPERS Costs <br />II.Historical and Projected CalPERS Costs <br />III.Cost Management Strategy Overview <br />IV.City’s Section 115 Trust <br />I.Overview <br />II.Objectives <br />III.Analysis I. BACKGROUND ON CALPERS COSTS <br />9 <br />City of Walnut Creek CalPERS Summary <br />The City has a $155M CalPERS Unfunded Accrued Liability (UAL), as of <br />6/30/2024, per the CalPERS Pension Outlook Tool projections <br />Miscellaneous Plan: $82M | Safety Plan: $73M <br />City has been proactive in addressing rising pension costs <br />$28.7M in the Section 115 Trust as of 9/30/2024 <br />$1.9M in the General Fund Pension Reserve <br />Effective funded ratio increases when including these assets <br />The City makes two types of payments to CalPERS: Normal Cost & UAL <br />10 <br />Normal Cost = Annual Cost for Current Employees <br />Amount needed to fund <br />future retirement benefits <br />based on actuarial <br />calculations (life expectancy, <br />payroll increases, etc.) <br />Benefits are funded as they <br />are earned <br />Maintains the long-term <br />stability of the pension <br />system <br />Normal <br />Cost <br />Calculation <br />Employer <br />Contributions <br />Employee <br />Contributions <br />Assumptions <br />Used <br />11 <br />Unfunded Accrued Liability (UAL) <br />Shortfall between the promised <br />pension benefits and the funds <br />currently available in the CalPERS <br />system to pay for those benefits <br />Increases or decreases based on <br />CalPERS investment returns <br />Impacts amortized over 20 years <br />Irregular payment shape as UAL <br />comprised of over 30 layers; each with <br />its own term/shape <br />Funded Ratio <br />𝐿𝑎𝑟𝑘𝑎𝑟 𝑉𝑎𝑘𝑟𝑎 𝑜𝑎 𝐴𝑟𝑟𝑎𝑟𝑟 <br />𝐴𝑎𝑎𝑟𝑟𝑎𝑎 𝐿𝑖𝑎𝑎𝑖𝑘𝑖𝑟𝑦=70.3% <br />Market Value of <br />CalPERS Assets: <br />$367 Million <br />Accrued Liability: <br />$521 Million <br />Shortfall (UAL): <br />$155 Million <br />$0 <br />$50 <br />$100 <br />$150 <br />$200 <br />$250 <br />$300 <br />$350 <br />$400 <br />$450 <br />$500 <br />$550 <br />Mi <br />l <br />l <br />i <br />o <br />n <br />s <br />City of Walnut Creek <br />CalPERS Pension Funded Status <br />Source: CalPERS Pension Outlook Tool. Assumes 9.3% investment returns in FY 2023-24. <br />12 <br />Discount Rate & Asset Liability Management (“ALM”) <br />•An assumed rate of return; a way to assess the risk of <br />CalPERS’ investment portfolio <br />•The interest rate charged on the City’s UAL debt <br />Discount Rate <br />•Occurs every four years to balance the expected cost of <br />pension payments with the expected investment returns <br />•Review of CalPERS’ investment portfolios and retirement <br />plan liabilities (based on demographic & economic <br />factors, including membership, payroll growth, <br />retirement ages, inflation, and life expectancy) <br />Asset Liability <br />Management <br />2025 ALM Study in progress <br />7 8 <br />9 10 <br />11 12 <br />Docusign Envelope ID: BB80A86F-2853-4F40-B02D-18F5B9DD615F