2026 Pension
Liability Update
September 8, 2026
Municipal Advisory | Pension Optimization | Financial Planning City of Cotati – 2026 Pension Liability Update 09/08/2026 2 CalPERS UAL Refunding Overview
• Jan 2022 – City closed on Pension Obligation and Street Improvement Loans • The closing took place right before interest rates run up and locked in low rates for the City • 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 2024 investment gain of 9.3% (2.5% above 6.8% discount rate) • FYE 2025 investment gain of 12.1% (5.3% above 6.8% discount rate) • FYE 2026 estimated investment gain of 14.8% (8.0% above 6.8% discount rate) City of Cotati – 2026 Pension Liability Update 09/08/2026 3 06/30/2025 Pension Plans Overview
Source: 06/30/2025
CalPERS Actuarial
Reports
Definitions:
Total Accrued Liability = What You Need
Market Value of Assets = What You Have
Unfunded Accrued Liability = What You Owe
Pension Plan Total Accrued
Liability
Market Value
of Assets
Unfunded
Accrued
Liability
%
Funded
Safety - Police $21,669,029 $19,241,357 $2,427,672 88.8% Miscellaneous $27,642,706 $24,907,534 $2,735,172 90.1%
TOTAL $49,311,735 $44,148,891 $5,162,844 89.5%
City of Cotati – 2026 Pension Liability Update 09/08/2026 4 2026 Funded Level Estimate (Rounded)
All 2026 numbers are
estimates and may vary
Source: 06/30/2025
CalPERS Actuarial
Reports & Ridgeline
Description Misc Plans Safety Plans Total
Market Value of Assets
2025 Balance $24,908,000 $19,241,000 $44,149,000
Normal Cost Contribution $555,000 $376,000 $931,000
UAL Payment $301,000 $267,000 $568,000
ADP $0 $0 $0
Investment Gain / (Loss) $3,686,000 $2,848,000 $6,534,000 Benefit Payments ($1,380,000) ($1,114,000) ($2,494,000) Estimated 2026 Balance $28,070,000 $21,618,000 $49,688,000 Unfunded Accrued Liability
2025 Balance $2,735,000 $2,428,000 $5,163,000
UAL Payment ($301,000) ($267,000) ($568,000)
Interest $186,000 $165,000 $351,000
ADP $0 $0 $0
Investment (Gain) / Loss ($1,993,000) ($1,539,000) ($3,532,000) Estimated 2026 Balance $627,000 $787,000 $1,414,000
Pension Plan 2026 Funded Level 97.8% 96.5% 97.2%
City of Cotati – 2026 Pension Liability Update 09/08/2026 5 2025 UAL + POB Amortization Schedule
Historical Payments
Sources: 06/30/2025
CalPERS Actuarial Reports
and Loan Amortization
Schedules
UAL and Debt Service
Payments only – no
normal cost
City of Cotati – 2026 Pension Liability Update 09/08/2026 6 2026 CalPERS Performance
• Estimated gain of 14.8% (Aug 2026)
• Funding surplus of 8.0% (after discount rate)
• FY2027 results are too early to tell
• Assuming no other adjustments by CalPERS &
continuing CalPERS investment earnings of at
least 6.8% per year-
UAL will be fully paid off in FYE 2029.
UAL reduction is estimated based on CalPERS preliminary returns (14.8% gain) and does not include any other
possible adjustments. Actual UAL change will be different.
Pension Plan Estimated 2026
UAL Change
Safety - Police ($1,539,000)
Miscellaneous ($1,993,000)
TOTAL ($3,532,000)
City of Cotati – 2026 Pension Liability Update 09/08/2026 7 2026 Investment Impact Estimate
Historical Payments
Sources: 06/30/2025 CalPERS
Actuarial Reports, Loan
Amortization Schedules,
CalPERS, and UAL estimates
UAL and Debt Service
Payments only – no
normal cost
City of Cotati – 2026 Pension Liability Update 09/08/2026 8 UAL Policy Implementation
• FYE 2024: ≈$335,000 ADP (negative amortization)
• FYE 2025: ≈$400,000 ADP (negative amortization)
• With ADPs and market performance, FYE 2026 pension plan funded level is estimated at ≈97% => no new ADPs are needed at this time City of Cotati – 2026 Pension Liability Update 09/08/2026 9 AB 1383: Public Employees’ Retirement Benefits
• What we know
• Applies to PEPRA employees and goes into effect on Jan 1, 2027, if approved • Not retroactive
• Increases Safety employee benefit formulas:
• Maximum benefit percentage 2 years earlier (55 vs 57) - automatic • New top tier (3% at 55, capped at 90% of final pay) – only if bargained City of Cotati – 2026 Pension Liability Update 09/08/2026 10 AB 1383: Public Employees’ Retirement Benefits
• What it could cost the City in year one*
• Higher Normal Cost: Rates increase by up to 5.5% of pensionable payroll (shared by City and employees).
• Higher UAL: Projected total increase of up to $135,000 * Ridgeline Estimate – Based on CalPERS’ methodology using FYE 2025 payroll data, subject to change 09/08/2026 11
Questions?
Dmitry Semenov
Ridgeline Municipal Strategies, LLC
(916) 250-1590
[email protected]
RidgelineMuni.com