2024 Pension
Liability Analysis
December 10, 2024
Municipal Advisory | Pension Optimization | Financial Planning City of Cotati – UAL Update with 2024 Results 12/10/2024 2 CalPERS UAL Refunding Overview
• Jan 2022 – City closed on Pension Obligation and Street Improvement Loans • The closing took place right before an unprecedented run up in interest rates • Loan proceeds provided funds (incl. freed up reserves) to pay down CalPERS UAL by $6M and saved the City ≈ $2.25M
• Recent CalPERS Performance:
• FYE 2022 investment loss of 7%
• FYE 2023 investment gain of 5.8% (1% below 6.8% discount rate) • FYE 2024 estimated investment gain of 9.3% (2.5% above 6.8% discount rate) City of Cotati – UAL Update with 2024 Results 12/10/2024 3 06/30/2023 Pension Plans Overview
Source: 06/30/2023
CalPERS Actuarial
Reports
Pension Plan
Total
Accrued
Liability
Market Value
of Assets
Unfunded
Accrued
Liability
%
Funded
Miscellaneous $21,890,933 $18,174,505 $3,716,428 83.0%
Safety $17,385,012 $14,246,820 $3,138,192 81.9%
Safety 2nd Tier $1,158,739 $999,177 $159,562 86.2%
Misc 2nd Tier $1,568,922 $1,347,802 $221,120 85.9%
PEPRA Safety $1,825,557 $1,564,410 $261,147 85.7%
PEPRA Misc $1,688,177 $1,476,552 $211,625 87.5%
TOTAL $45,517,340 $37,809,266 $7,708,074 83.1%
City of Cotati – UAL Update with 2024 Results 12/10/2024 4 2024 Funded Level Estimate (Rounded)
All 2024 numbers are
estimates and may vary
Source: 06/30/2023
CalPERS Actuarial
Reports
Description Misc Plan Safety Plan Total
Market Value of Assets
2023 Balance $18,175,000 $14,247,000 $32,422,000
Normal Cost Contribution $139,000 $81,000 $220,000
UAL Payment $193,000 $171,000 $364,000
ADP $159,000 $131,000 $290,000
Investment Gain / (Loss) $1,690,000 $1,325,000 $3,015,000 Benefit Payments ($1,310,000) ($1,050,000) ($2,360,000) Estimated 2024 Balance $19,046,000 $14,905,000 $33,951,000 Unfunded Accrued Liability
2023 Balance $3,716,000 $3,138,000 $6,854,000
UAL Payment ($193,000) ($171,000) ($364,000)
Interest $253,000 $213,000 $466,000
ADP ($159,000) ($131,000) ($290,000)
Investment (Gain) / Loss ($454,000) ($356,000) ($810,000) Estimated 2024 Balance $3,163,000 $2,693,000 $5,856,000 Pension Plan 2024 Funded Level 85.8% 84.7% 85.3%
City of Cotati – UAL Update with 2024 Results 12/10/2024 5 2023 UAL + POB Amortization Schedule
Historical Payments
Sources: 06/30/2023
CalPERS Actuarial
Reports and Loan
Amortization Schedules
UAL and Debt Service
Payments only – no
normal cost
City of Cotati – UAL Update with 2024 Results 12/10/2024 6 2024 CalPERS Performance
• Estimated investment gain of 9.3% (Aug 2024)
• Funding surplus of 2.5% (after discount rate)
• FY2025 results are too early to tell
UAL reduction is estimated based on CalPERS preliminary returns (9.3% gain) and does not include any other possible adjustments. Actual UAL change may vary.
Pension Plan Estimated 2024
UAL Credit
Miscellaneous ($454,000)
Safety ($356,000)
Safety 2nd Tier ($25,000)
Misc 2nd Tier ($34,000)
PEPRA Safety ($39,000)
PEPRA Misc ($37,000)
TOTAL ($945,000)
City of Cotati – UAL Update with 2024 Results 12/10/2024 7 2024 Investment Impact Estimate
Historical Payments
Sources: 06/30/2023
CalPERS Actuarial
Reports, Loan
Amortization Schedules,
CalPERS, and UAL
estimates
UAL and Debt Service
Payments only – no
normal cost
Safety & Misc Tier 1 only
City of Cotati – UAL Update with 2024 Results 12/10/2024 8 UAL Policy Implementation:
Eliminate 2023 Negative Amortization
• Additional Discretionary Payments to cover interest on 2023 UAL:
• ≈ $62,000 – pay this fiscal year
• ≈ $62,000 – pay in July 2025
• Estimated cash flow savings of ≈ $77,000
City of Cotati – UAL Update with 2024 Results 12/10/2024 9 UAL Policy Implementation Strategies:
90% Funded Level Target
• Estimated FYE 2024 Funded Level – 85.3%
• FYE 2025 ADPs ($290K, already made) raise funded level to 86% • Estimated gap to 90% - $1.6M
• Proposed ADPs will help reduce gap further
• Based on budget outlook, staff may recommend additional ADPs and reamortization of 2022 UAL bases in the future
12/10/2024 10
Questions?
Dmitry Semenov
Ridgeline Municipal Strategies, LLC
(916) 250-1590
[email protected]
RidgelineMuni.com