ADMINISTRATIVE REPORT
MEETING DATE: June 24, 2026 AGENDA CATEGORY: Consent - Miscellaneous TO: Honorable Mayor and City Council
FROM: Randy McKeegan, Finance Director
DATE: June 12, 2026
SUBJECT: Appropriate $1,687,000 Pension Rate Stabilization Contribution to Section 115 Trust
[Document Description]
RECOMMENDATION:
Staff recommends the approval of the appropriation for the required trust contribution.
BACKGROUND:
In March 2022, the City Council established a supplemental Section 115 Trust under the Pension Rate Stabilization Program administered by Public Agency Retirement Services (PARS). This trust was created as an additional subaccount associated with the City’s Other Post -Employment Benefits (OPEB) Trust, which was initially established in 2007 to help fund the retiree medical benefit program offered to employees.
In October 2022, the City Council approved Resolution No. 172 -2022, establishing a City Reserve Policy that provides guidelines for funding the three reserve accounts: Rainy Day, Facility Replacement, and Pension Rate Stabilization. The policy includes a specific requirement to contribute the savings generated from the annual advance payment of the CalPERS Unfunded Accrued Liability (UAL).
The current actuarial reports indicate that the advance payment made in July 2025 generated more than $1.6 million in interest savings. Because this amount was not included in the initial Fiscal Year 2025 –26 budget, an appropriation of $1,687,000 is required in accordance with the Reserve Policy. The appropriation will be allocated among City funds based on the pen sion cost allocation between the proprietary funds and the General Fund. The required amounts will be drawn from the available fund balance within each respective fund. There is sufficient fund balance in each fund for this appropriation.
It should be noted that the reserve policy also designates policies for other contributions to both the Rainy Day and Pension Stabilization reserves based on available funds. Due to lack of General Fund (inclusive of PSVS), fund balance surplus, additional contributions cannot be made. Per the attached reserve policy staff will develop a plan to meet the required reserves in subsequent years when funds are available.
FISCAL IMPACT:
Use of available fund balance totaling $1,687,000, including $1.5 million from the General Fund.
COUNCIL GOAL:
Innovative and Efficient City Government
ATTACHMENTS:
1. City Reserve Policy
2. Reserve Appropriation Split