The City does not participate in social security, which equals a savings of 6.2%
The City contracts with the Public Employees’ Retirement System (PERS) to provide retirement benefits to its employees. The City’s PERS costs are projected to increase compared to current costs, but the City has actively planned prepayment which will decrease these future costs. The savings to the City from interest costs are likely to be similar to the amount of the prepayments over time.
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71.4%
PERS overall funded
86%
City overall funded
As of June 2023
When investment earnings are less than PERS expected, a liability is created. If there is no unfunded liability the funded status would be 100%.
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Percentage of City Employees in Most Costly Tier 1 Plans
Since both the City and State implemented Pension Reform, the City has realized a decrease in the number of employees enrolled in the more expensive Tier 1 plan.
Highest normal cost
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Two Types of Payments to PERS
Normal Cost
Percent of payroll that funds the benefit earned in the current year.
Fix Annual Payments
Payment applied to any unfunded liability
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City has issued accelerated prepayments to the unfunded liability of over $13.5 million since fiscal year 2016.
- Fixed Fiscal Year (FY) 2025 Required Unfunded Liability Payment $1,595,078
- PERS currently projects the City’s Annual Payment to continue to increase annually.
Pension Trust Established in Fiscal Year 2024
- Prefund obligations with more control over prepayment use.
- Adopted Pension Funding Policy to generate earnings for City’s Unfunded Accrued Liability payment to CalPERS.
- Contributed $7.7 million to the pension trust fund.