The City contributes to the California Public Employee Retirement System (PERS). A pension is a retirement account that an employer maintains to give employees a fixed payout when they retire. PERS is a defined benefit plan. The payout typically depends on how long the employee works for the employer and the employee’s salary. Investment income, employee contributions and employer contributions fund the total pension cost, including benefits and expenses. To learn more about the City’s Pension expenses, visit here.
Current California law establishes that public employee retirement benefits are a form of deferred compensation and part of the employment contract. The Courts have established that the vested rights of public employees prevent not only a reduction in the benefits that have already been earned, but also a reduction in the benefits that a member is eligible to earn during future service. As such, changes to the employees’ retirement benefits are considered a negotiable item and must go through the meet and confer process.
Over the years, the City has taken several steps to control pension costs – refunding the side fund, establishing second tiers for new classic members, implementing the Public Employees’ Pension Retirement Act (“PEPRA”), establishing and funding a Pension Stabilization Fund, and adopting a Pension Liability Funding Policy.
- On September 7, 2012, the City issued Pension Obligation Bonds with the proceeds used to pay off the CalPERS side funds which were accruing interest at rate of 7.5%. The bonds carry interest rates of 4.25% and 4.37%, with final maturities in June 2020 and June 2023.
- Effective December 16, 2012, the City established second tiers for classic members. The second tiers have a less generous set of benefits and reduce the base contract portion of the employer contribution rate.
- Effective January 1, 2013, the State adopted, and the City implemented the California Public Employees’ Pension Reform Act (“PEPRA”). PEPRA changed the way CalPERS retirement benefits are applied, and places compensation limits on members.
- Effective July 21, 2015 the Council adopted the PARS Public Agencies Post-Employment Benefits trust, better known as the Pension Stabilization Fund. The Trust Fund is a Section 115 irrevocable trust designed to prefund pension costs and address pension liabilities. The Fund works to mitigate long-term pension investment volatility while at the same time providing the City with more control of assets and investment flexibility to create a more actuarially sound retirement system.
- From 2015-2018, the City contributed $5,899,000 into the Trust Fund.
- To view the City's 2020 Fiscal year Pension Stabilization Fund Summary, visit here.
- Effective April 15, 2019, the Council adopted a Pension Liability Funding Policy to guide use of the Pension Stabilization Fund and other actions to reduce pension liability.
- To view the City’s current Pension Liability Funding Policy, visit here.
Annually, CalPERS provides Actuarial Valuation Reports for the City. Reports are completed for each of the active Pension Funds. Actuarial Reports for the Fiscal Year Ending June 30, 2020 were released in July 2021, and can be found below.
- Miscellaneous Employees - Classic
- Miscellaneous Employees - Second Tier
- Miscellaneous Employees - PEPRA
- Safety Employees - Classic
- Safety Employees - Second Tier
- Fire - PEPRA
- Police - PEPRA