City Council
MEETING DATE: 11/8/2017
TITLE:
Title
California Public Employees Retirement System (CalPERS) Annual Lump Sum Payment
End
FROM:
Tami Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council authorize an allocation of $850,000 to make a lump sum payment to (CalPERS).
Body
BACKGROUND:
In 2017, the CalPERS board approved a reduction in investment rates of return from 7.5% to 7.375% on deposits of funds paid into CalPERS. As a result, this rate reduction increases the City’s estimated annual contribution to CalPERS. Over the next three fiscal years, CalPERS will lower their investment rate of return from 7.375% to 7.00%. As a result, there will be an impact on PERS contribution rates and Unfunded Actuarial Liability (UAL) for each of our retirement plans.
DISCUSSION:
The City of Cathedral City has eight (8) separate retirement plans with CalPERS. The three (3) primary plans are commonly referred to as the Tier 1 (Classic) plans for Fire, Miscellaneous and Police. As of June 30, 2016, these plans are funded at the levels of 77.5%, 76.6% and 76.8%, respectively. By authorizing an annual UAL payment, the City of Cathedral City can be proactive in increasing funding levels and reducing future interest costs. It is anticipated, this will result in a savings to the general fund of approximately $200,000 over the next 20 years (through FY 38/39).
FISCAL IMPACT:
$850,000 payment from the Insurance Fund (Fund 612)
ATTACHMENTS:
N/A