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1/15/2026 7 QUESTIONS? BACK-UP SLIDES BEYOND THIS POINT OBJECTIVES, POLICIES AND PRINCIPALS Objectives: •Mitigate budget impacts of increasing and fluctuating pension costs in a sustainable manner. •Use the pension resources judiciously to flatten the curve of rising pension costs. •Ensure the trust lasts at least until pension costs are projected to begin decreasing (estimated by CalPERS to be 2034 per Attachment 1) •Be mindful of using one-time funds for ongoing costs; minimize withdrawals with a long-term plan for the use of the trust. •Balance the use of the trust with other reserves during challenging economic conditions, when appropriate. OBJECTIVES, POLICIES AND PRINCIPALS (CONTINUED) Policies and Guiding Principles: •The Pension Resources may be utilized during fiscal years in which a structural deficit is present to ensure the continuation of existing service levels, and not to enhance or increase services. •The trust would not be used to offset pension costs in years in which there is a structural surplus. •Pension Resources will be used in a fiscally responsible manner. While the pension resources would be budgeted as a funding source, the amount withdrawn from the trust will be determined at year-end based on actual revenues compared to actual expenditures in the General Fund. To maximize investment earnings and ensure judicious use of the funding, only the amount budgeted, or actual amount needed to close the gap, whichever is less, would be withdrawn from the trust. •In any fiscal year in which there is a year-end surplus in the General Fund, Council may choose to deposit some or all of the year-end surplus in the trust. OBJECTIVES, POLICIES AND PRINCIPALS (CONTINUED) Policies and Guiding Principles: •The Pension Resources are intended to be used under this policy through FY2034, when pension costs are projected to begin to decrease. At that time, all remaining funds, if any, would remain in the trust to offset future pension costs or until the City Council provides further direction. •The City will continue to pre-pay the Unfunded Actuarial Liability (UAL) payment annually, when feasible, to achieve budgetary savings from the discount offered by CalPERS (half of the discount rate percentage). •In any fiscal year in which there is a year-end surplus in the General Fund, Council may choose to deposit some or all of the year-end surplus in the trust. •The Pension Resources are intended to be used under this policy through FY2034, when pension costs are projected to begin to decrease. At that time, all remaining funds, if any, would remain in the trust to offset future pension costs or until the City Council provides further direction. •The City will continue to pre-pay the Unfunded Actuarial Liability (UAL) payment annually, when feasible, to achieve budgetary savings from the discount offered by CalPERS (half of the discount rate percentage). APPENDIX – ADDITIONAL RESOURCES 37 38 39 40 41 42 Docusign Envelope ID: BB80A86F-2853-4F40-B02D-18F5B9DD615F