CITY COUNCIL REGULAR MEETING AGENDA PACKET 3-17-26 (3)

1 City of Pleasanton Pension Funding Policy Effective March 17, 2026 Policy: It is the policy of the City to fulfill its obligation to maintain fiscally responsible management practices and to ensure that promised pension benefits are funded. To that end, the City will meet its pension funding obligations as follows: 1. Actuarially Determined Contributions: Each fiscal year, the City will contribute to CalPERS the amount determined by CalPERS actuaries to be the minimum required employer contribution for that year. The minimum contribution consists of two components, normal cost and unfunded accrued liability (“UAL”). The normal cost is expressed as a rate that is applied to pensionable payroll costs and reflects the cost of pension benefits earned by employees in the current fiscal year. The UAL payment is a flat dollar amount that represents a portion of the cost of past benefits earned by employees, but for which, because of deviations in actual experience and changes in assumptions about investment performance, the normal cost rates established for those prior years have been determined to be insufficient to provide the promised retirement benefit. The CalPERS actuaries recalculate the total UAL each year, and an updated multi-year amortization schedule is provided to show the projected annual minimum payments. 2. Annual UAL Prepayment: CalPERS offers the option to make monthly payments on the UAL or prepay the entire annual UAL amount at a discounted level by the end of July. Assuming the City’s current reserves meet their respective reserve policies, at that point, the City will prepay its annual UAL payment each July to achieve budgetary savings. 3. Funded Ratio Goal: The City’s goal is to achieve and maintain a funded ratio, for each of its pension plans, of 90%, with the ultimate goal of fully funding the obligations over time. A funded ratio of 100% signifies that the City’s assets held with CalPERS, in addition to assets held in other pension accounts, match its accrued liabilities for pension. If the City has assets in a Section 115 Trust, these assets should be included in the City’s funded ratio calculation. 4. Section 115 Pension Trust: The City will establish and maintain a pension stabilization fund in the form of a Section 115 Pension Trust (“Trust”). Assets in the Trust may be used only for pension-related costs and at the direction of the City Council. The City’s objective with the Trust is to accumulate assets to fund its CalPERS pension costs and mitigate the budget impact of future UAL costs. The City will strive to meet the following guidelines:  Investment Portfolio Selection: City staff will work with its advisory team, including the Trust’s investment advisor, to select investment portfolios based on the City’s risk tolerance and projected withdrawal schedule from the Trust.  Ongoing Deposits: In any fiscal year, the City can make annual contributions to the Trust with surplus remaining after all other City reserve policies have been met. The City will also consider depositing a portion of one-time/unexpected revenues into the trust.  Enterprise Funds: A portion of the City’s pension costs within its CalPERS Miscellaneous Plan is attributable to employees within the City’s Enterprise Funds. Therefore, the City will ensure that any deposits to the Trust and withdrawals from the Trust relevant to the General Fund and Non- General Funds are made in consideration of this fact to ensure equitable cost/benefit between City funds and CalPERS Plans. In years when Enterprise Funds have met their minimum reserve Attachment 1 Page 194 of 242