Palo Alto City Council
January 20, 2026

Service Retirement (continued)

Public Agency Police 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.124 0.103 0.113 0.143 0.244 0.376
51 0.060 0.081 0.087 0.125 0.207 0.294
52 0.016 0.055 0.111 0.148 0.192 0.235
53 0.072 0.074 0.098 0.142 0.189 0.237
54 0.018 0.049 0.105 0.123 0.187 0.271
55 0.069 0.074 0.081 0.113 0.209 0.305
56 0.064 0.108 0.113 0.125 0.190 0.288
57 0.056 0.109 0.160 0.182 0.210 0.210
58 0.108 0.129 0.173 0.189 0.214 0.214
59 0.093 0.144 0.204 0.229 0.262 0.262
60 0.343 0.180 0.159 0.188 0.247 0.247
61 0.221 0.221 0.221 0.221 0.221 0.221
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.233 0.233 0.233 0.233 0.233 0.233
64 0.234 0.234 0.234 0.234 0.234 0.234
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.095 0.048 0.053 0.093 0.134 0.175
51 0.016 0.032 0.053 0.085 0.117 0.149
52 0.013 0.032 0.054 0.087 0.120 0.154
53 0.085 0.044 0.049 0.089 0.129 0.170
54 0.038 0.065 0.074 0.105 0.136 0.167
55 0.042 0.043 0.049 0.085 0.132 0.215
56 0.133 0.103 0.075 0.113 0.151 0.209
57 0.062 0.048 0.060 0.124 0.172 0.213
58 0.124 0.097 0.092 0.153 0.194 0.227
59 0.092 0.071 0.078 0.144 0.192 0.233
60 0.056 0.044 0.061 0.131 0.186 0.233
61 0.282 0.219 0.158 0.198 0.233 0.260
62 0.292 0.227 0.164 0.205 0.241 0.269
63 0.196 0.196 0.196 0.196 0.196 0.196
64 0.197 0.197 0.197 0.197 0.197 0.197
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
73 Packet Pg. 271 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.040 0.040 0.040 0.040 0.040 0.080
51 0.028 0.028 0.028 0.028 0.040 0.066
52 0.028 0.028 0.028 0.028 0.043 0.061
53 0.028 0.028 0.028 0.028 0.057 0.086
54 0.028 0.028 0.028 0.032 0.069 0.110
55 0.050 0.050 0.050 0.067 0.099 0.179
56 0.046 0.046 0.046 0.062 0.090 0.160
57 0.054 0.054 0.054 0.072 0.106 0.191
58 0.060 0.060 0.060 0.066 0.103 0.171
59 0.060 0.060 0.060 0.069 0.105 0.171
60 0.113 0.113 0.113 0.113 0.113 0.171
61 0.108 0.108 0.108 0.108 0.108 0.128
62 0.113 0.113 0.113 0.113 0.113 0.159
63 0.113 0.113 0.113 0.113 0.113 0.159
64 0.113 0.113 0.113 0.113 0.113 0.239
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.005 0.005 0.005 0.005 0.008 0.012
51 0.006 0.006 0.006 0.006 0.009 0.013
52 0.012 0.012 0.012 0.012 0.019 0.028
53 0.033 0.033 0.033 0.033 0.050 0.075
54 0.045 0.045 0.045 0.045 0.069 0.103
55 0.061 0.061 0.061 0.061 0.094 0.140
56 0.055 0.055 0.055 0.055 0.084 0.126
57 0.081 0.081 0.081 0.081 0.125 0.187
58 0.059 0.059 0.059 0.059 0.091 0.137
59 0.055 0.055 0.055 0.055 0.084 0.126
60 0.085 0.085 0.085 0.085 0.131 0.196
61 0.085 0.085 0.085 0.085 0.131 0.196
62 0.085 0.085 0.085 0.085 0.131 0.196
63 0.085 0.085 0.085 0.085 0.131 0.196
64 0.085 0.085 0.085 0.085 0.131 0.196
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
74 Packet Pg. 272 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.038 0.038 0.038 0.038 0.055 0.089
52 0.038 0.038 0.038 0.038 0.058 0.082
53 0.036 0.036 0.036 0.036 0.073 0.111
54 0.036 0.036 0.036 0.041 0.088 0.142
55 0.061 0.061 0.061 0.082 0.120 0.217
56 0.056 0.056 0.056 0.075 0.110 0.194
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.072 0.072 0.072 0.079 0.124 0.205
59 0.072 0.072 0.072 0.083 0.126 0.205
60 0.135 0.135 0.135 0.135 0.135 0.205
61 0.130 0.130 0.130 0.130 0.130 0.153
62 0.135 0.135 0.135 0.135 0.135 0.191
63 0.135 0.135 0.135 0.135 0.135 0.191
64 0.135 0.135 0.135 0.135 0.135 0.287
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.012 0.018
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.042 0.042 0.042 0.042 0.064 0.096
54 0.057 0.057 0.057 0.057 0.088 0.132
55 0.074 0.074 0.074 0.074 0.114 0.170
56 0.066 0.066 0.066 0.066 0.102 0.153
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.071 0.071 0.071 0.071 0.110 0.164
59 0.066 0.066 0.066 0.066 0.101 0.151
60 0.102 0.102 0.102 0.102 0.157 0.235
61 0.102 0.102 0.102 0.102 0.157 0.236
62 0.102 0.102 0.102 0.102 0.157 0.236
63 0.102 0.102 0.102 0.102 0.157 0.236
64 0.102 0.102 0.102 0.102 0.157 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
75 Packet Pg. 273 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.040 0.040 0.040 0.040 0.058 0.094
52 0.038 0.038 0.038 0.038 0.058 0.083
53 0.038 0.038 0.038 0.038 0.077 0.117
54 0.038 0.038 0.038 0.044 0.093 0.150
55 0.068 0.068 0.068 0.091 0.134 0.242
56 0.063 0.063 0.063 0.084 0.123 0.217
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.080 0.080 0.080 0.088 0.138 0.228
59 0.080 0.080 0.080 0.092 0.140 0.228
60 0.150 0.150 0.150 0.150 0.150 0.228
61 0.144 0.144 0.144 0.144 0.144 0.170
62 0.150 0.150 0.150 0.150 0.150 0.213
63 0.150 0.150 0.150 0.150 0.150 0.213
64 0.150 0.150 0.150 0.150 0.150 0.319
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.044 0.044 0.044 0.044 0.068 0.102
54 0.061 0.061 0.061 0.061 0.093 0.140
55 0.083 0.083 0.083 0.083 0.127 0.190
56 0.074 0.074 0.074 0.074 0.114 0.171
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
76 Packet Pg. 274 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Schools 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.003 0.004 0.006 0.007 0.010 0.010
51 0.004 0.005 0.007 0.008 0.011 0.011
52 0.005 0.007 0.008 0.009 0.012 0.012
53 0.007 0.008 0.010 0.012 0.015 0.015
54 0.006 0.009 0.012 0.015 0.020 0.021
55 0.011 0.023 0.034 0.057 0.070 0.090
56 0.012 0.027 0.036 0.056 0.073 0.095
57 0.016 0.027 0.036 0.055 0.068 0.087
58 0.019 0.030 0.040 0.062 0.078 0.103
59 0.023 0.034 0.046 0.070 0.085 0.109
60 0.022 0.043 0.062 0.095 0.113 0.141
61 0.030 0.051 0.071 0.103 0.124 0.154
62 0.065 0.098 0.128 0.188 0.216 0.248
63 0.075 0.112 0.144 0.197 0.222 0.268
64 0.091 0.116 0.138 0.180 0.196 0.231
65 0.163 0.164 0.197 0.232 0.250 0.271
66 0.208 0.204 0.243 0.282 0.301 0.315
67 0.189 0.185 0.221 0.257 0.274 0.287
68 0.127 0.158 0.200 0.227 0.241 0.244
69 0.168 0.162 0.189 0.217 0.229 0.238
70 0.191 0.190 0.237 0.250 0.246 0.254

Schools 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.004 0.007 0.010 0.011 0.013 0.015
53 0.004 0.008 0.010 0.013 0.014 0.016
54 0.005 0.011 0.015 0.018 0.020 0.022
55 0.014 0.027 0.038 0.045 0.050 0.056
56 0.013 0.026 0.037 0.043 0.048 0.055
57 0.013 0.027 0.038 0.045 0.050 0.055
58 0.017 0.034 0.047 0.056 0.062 0.069
59 0.019 0.037 0.052 0.062 0.068 0.076
60 0.026 0.053 0.074 0.087 0.097 0.108
61 0.030 0.058 0.081 0.095 0.106 0.119
62 0.053 0.105 0.147 0.174 0.194 0.217
63 0.054 0.107 0.151 0.178 0.198 0.222
64 0.053 0.105 0.147 0.174 0.194 0.216
65 0.072 0.142 0.199 0.235 0.262 0.293
66 0.077 0.152 0.213 0.252 0.281 0.314
67 0.070 0.139 0.194 0.229 0.255 0.286
68 0.063 0.124 0.173 0.205 0.228 0.255
69 0.066 0.130 0.183 0.216 0.241 0.270
70 0.071 0.140 0.196 0.231 0.258 0.289

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
77 Packet Pg. 275 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Miscellaneous

Models

The valuation results are based on proprietary actuarial valuation models. The models are centralized and maintained by a specialized team to achieve a high degree of accuracy and consistency. The Actuarial Office is responsible for confirming the appropriateness of the inputs (such as part icipant data, actuarial methods and assumptions, and plan provisions) as well as performing tests and validating the reasonableness of the output. The results of our models are independently confirmed by parallel valuations performed by outside actuaries o n a periodic basis using their models. In our professional judgment, our actuarial valuation models produce comprehensive pension funding information consistent with the purposes of the valuation and have no material limitations or known weaknesses.

Internal Revenue Code Section 415(b)

The limitations on benefits imposed by Internal Revenue Code section 415(b) are taken into account in this valuation. Each year, the impact of any changes in this limitation other than assumed since the prior valuation is included and amortized as part of the non-investment gain or loss base. This results in lower contributions for those employers contributing to the Replacement Benefit Fund and protects CalPERS from prefunding expected benefits in excess of limits imposed by federal tax law. The Section 415(b) dollar limit for the 2024 calendar year is $275,000.

Internal Revenue Code Section 401(a)(17)

The limitations on compensation imposed by Internal Revenue Code section 401(a)(17) are taken into account in this valuation.

Each year, the impact of any changes in the compensation limitation other than assumed since the prior valuation is included and amortized as part of the non-investment gain or loss base. The compensation limit for classic members for the 2024 calendar year is $345,000.

PEPRA Compensation Limits

The limitations on compensation for PEPRA members imposed by Government Code section 7522.10 are taken into account in this valuation. Each year, the impact of any changes in the comp ensation limitation other than assumed since the prior valuation is included and amortized as part of the non-investment gain or loss base. The PEPRA compensation limit for 2024 is $151,446 for members who participate in Social Security and $181,734 for those who do not. The limits are adjusted annually based on changes to the CPI for all urban consumers.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
78 Packet Pg. 276 of 510

Appendix B - Principal Plan Provisions

• Service Retirement 65
• Vested Deferred Retirement 67
• Non-Industrial Disability Retirement 67
• Industrial Disability Retirement 68
• Post-Retirement Death Benefit 69
• Form of Payment for Retirement Allowance 69
• Pre-Retirement Death Benefits 70
• Cost-of-Living Adjustments (COLA) 72
• Purchasing Power Protection Allowance (PPPA) 72
• Employee Contributions 73
• Refund of Employee Contributions 73
• 1959 Survivor Benefit 74

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
79 Packet Pg. 277 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

The following is a description of the principal plan pr ovisions used in calculating costs and liabilities. We have indicated whether a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits vary among employers. Optional benefits that apply to a single p eriod of time, such as Golden Handshakes, have not been included. Many of the statements in this summary are general in nature, and are intended to provide an easily understood summary of the Public Employees’ Retirement Law and the California Public Emplo yees’ Pension Reform Act of 2013. The law itself governs in all situations.

Service Retirement

Eligibility

A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of age 50 with at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). For employees hired into a plan with the 1.5% at age 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA Miscellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service.

Benefit

The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. The benefit factor depends on the benefit formula specified in the agency’s contract. The table below shows the factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors for retire ment at whole year ages:

Miscellaneo us Plan Formulas

Retirement
Age

1.5% at
age 65
2% at
age 60
2% at
age 55

2.5% at
age 55

2.7% at
age 55
3% at
age 60
PEPRA
2% at
age 62
50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A
51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A
52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000%
53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100%
54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200%
55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300%
56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400%
57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500%
58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600%
59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700%
60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800%
61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900%
62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000%
63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100%
64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200%
65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300%
66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400%
67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500%

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
80 Packet Pg. 278 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Classic Safety Plan Formulas

Retirement Age Half Pay at
age 55* 2% at age 55 2% at age 50 3% at age 55 3% at age 50 50 1.783% 1.426% 2.000% 2.400% 3.000%
51 1.903% 1.522% 2.140% 2.520% 3.000%
52 2.035% 1.628% 2.280% 2.640% 3.000%
53 2.178% 1.742% 2.420% 2.760% 3.000%
54 2.333% 1.866% 2.560% 2.880% 3.000%
55 & Up 2.500% 2.000% 2.700% 3.000% 3.000%

* For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of 35 or greater. If entry age is less than 35, then the age 55 benefit factor is 50% divided by the difference between age 55 and entry age. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in the above table.

PEPRA Safety Plan Formulas

Retirement Age 2% at age 57 2.5% at age 57 2.7% at age 57 50 1.426% 2.000% 2.000%
51 1.508% 2.071% 2.100%
52 1.590% 2.143% 2.200%
53 1.672% 2.214% 2.300%
54 1.754% 2.286% 2.400%
55 1.836% 2.357% 2.500%
56 1.918% 2.429% 2.600%
57 & Up 2.000% 2.500% 2.700%

• The years of service is the amount credited by CalPERS to a member while he or she is employed in this group (or for other periods that are recognized under the employer’s contract with CalPERS). For a member who has earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s contract, and then added together for the total allowance. An agency may contract for an optional benefit where any unused sick leave accumulated at the time of retirement will be converted to credited service at a rate of 0.004 years of service for each day of sick leave.

• The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full-time equivalent monthly pay (no matter which CalPERS emplo yer paid this compensation). The standard benefit is 36 months. Employers had the option of providing a final compensation equal to the highest 12 consecutive months for classic plans only. Final compensation must be defined by the highest 36 consecutive m onths’ pay under the 1.5% at age 65 formula. PEPRA members have a limit on the annual compensation that can be used to calculate final compensation. The limits are adjusted annually based on changes to the CPI for all urban consumers.

• PEPRA benefit formulas have no Social Security offsets and Social Security coverage is optional. For Classic benefit formulas, e mployees must be covered by Social Security with the 1.5% at age 65 formula. Social Security is optional for all other Classic benefit formulas. For employees covered by Social Security, the modified formula is the standard benefit.

Under this type of formula, the final compensation is offset by $133.33 (or by one third if the final compensation is less th an $400). Employers may contract for the full benefit with Social Security that will eliminate the offset applicable to the final compensation. For employees not covered by Social Security, the full benefit is paid with no offsets. Auxiliary organizations of the CSUC system may elect reduced contribut ion rates, in which case the offset is $317 if members are not covered by Social Security or $513 if members are covered by Social Security.

• The Miscellaneous and PEPRA Safety service retirement benefit is not capped. The Classic Safety service retirement benefit is capped at 90% of final compensation.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
81 Packet Pg. 279 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Vested Deferred Retirement

Eligibility for Deferred Status

CalPERS member s becomes eligible for a deferred vested retirement benefit when they leave employment , keep their contribution account balance on deposit with CalPERS, and have earned at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements).

Eligibility to Start Receiving Benefits

The CalPERS classic members and PEPRA Safety members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired into a 1.5% at age 65 plan). PEPRA Miscellaneous members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 52.

Benefit

The vested deferred retirement benefit is the same as the service retirement benefit, where the benefit factor is based on the member’s age at allowance commencement. For members who have earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s contract, and then added together for the total allowance.

Non-Industrial Disability Retirement

Eligibility

A CalPERS member is eligible for Non-Industrial (non-job related) Disability Retirement if he or she becomes disabled and has at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems w ith which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to perform their job because of an illness or injury, which is expected to be permanent or to last indefinitely. The illness or injury does not have to be job related. A CalPERS member must be actively employed by any CalPERS employer at the time of disability in order to be eligible for this benefit.

Standard Benefit

The standard Non -Industrial Disability Retirement benefit is a monthly allowance equal to 1.8% of final compensation, multiplied by service, which is determined as follows:

• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of service; or

• Service is CalPERS credited service plus the additional number of years that the member would have worked until age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in this case is 33⅓% of final compensation.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
82 Packet Pg. 280 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Improved Benefit

Employers have the option of providing the improved Non -Industrial Disability Retirement benefit. This benefit provides a monthly allowance equal to 30% of final compensation for the first 5 years of service, plus 1% for eac h additional year of service to a maximum of 50% of final compensation.

Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability b enefit.

Members eligible to retire, and who have attained the normal retirement age determined by their service retirement benefit formula, will receive the same dollar amount for disability retirement as that payable for service retirement. For members wh o have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a particular employer to the total CalPERS service.

Industrial Disability Retirement

This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all Miscellaneous members, employers have the option of providing this benefit. An employer may choose to provide the increased benefit option or the improved benefit option.

Eligibility

An employee is eligible for Industrial (job related) Disability Retirement if he or she becomes disabled while working, where disabled means the member is unable to perform the duties of the job because of a work-related illness or injury, which is expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group is not eligible for this benefit, except to the extent described below.

Standard Benefit

The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50% of final compensation.

Increased Benefit (75% of Final Compensation)

The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75% of final com pensation for total disability.

Improved Benefit (50% to 90% of Final Compensation)

The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation Appeals Board permanent disability rate percentage (if 50% or greater, with a maximum of 90%) times the final compensation.

For a CalPERS member not actively employed in this group who became disabled while employed by some other CalPERS employer, the benefit is a return of accumulated member contributions wit h respect to employment in this group. With the standard or increased benefit, a member may also choose to receive the annuitization of the accumulated member contributions.

If a member is eligible for service retirement and if the service retirement bene fit is more than the industrial disability retirement benefit, the member may choose to receive the larger benefit.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
83 Packet Pg. 281 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Post-Retirement Death Benefit

Standard Lump Sum Payment

Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated survivor(s), or to the retiree’s estate. The lump sum payment amount increases to $2,000 for any death occurring on or after July 1, 2023, due to SB 1168.

Optional Lump Sum Payment

In lieu of the standard lump sum death benefit, employers have the option of providing a lump sum death benefit of $600, $3,000, $4,000 or $5,000.

Form of Payment for Retirement Allowance

Standard Form of Payment

Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The retiree may choose to provide for a portion of their allowance to be paid to any designated ben eficiary after the retiree’s death.

CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction in their retirement allowance. Such reduction takes into account the amount to be provided to the beneficiary and the probable duration of payments (based on the ages of the member and beneficiary) made subsequent to the member’s death.

Improved Form of Payment (Post-Retirement Survivor Allowance)

Employers have the option to contract for the post-retirement survivor allowance.

For retirement allowances with respect to service subject to a modified Classic formula, 25% of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. For retirement allowances with respect to service subject to a PEPRA formula or a full or supplemental Classic formula, 50% of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the deat h of the retiree, without a reduction in the retiree’s allowance. This additional benefit is referred to as post -retirement survivor allowance (PRSA) or simply as survivor continuance.

In other words, 25% or 50% of the allowance, the continuance portion , is paid to the retiree for as long as he or she is alive, and that same amount is continued to the retiree’s spouse (or if no eligible spouse, to unmarried child(ren) until they attain ag e 18; or, if no eligible child(ren), to a qualifying dependent pare nt) for the rest of their lifetime. This benefit will not be discontinued in the event the spouse remarries.

The remaining 75% or 50% of the retirement allowance, which may be referred to as the option portion of the benefit, is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for some of this option portion to be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the sam e as those offered with the standard form. The reduction is calculated in the same manner but is applied only to the option portion.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
84 Packet Pg. 282 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Pre-Retirement Death Benefits

Basic Death Benefit

This is a standard benef it.

Eligibility

An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed. A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit.

Benefit

The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where interest is credited annually at the greater of 6% or the prevailing discount rate through the date of death, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months ' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full -time rate of compensation during the 12 months preceding death.

1957 Survivor Benefit

This is a standard benefit.

Eligibility

An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed, has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has at least 5 years of credited service (total service across all CalPERS employers and with certain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death or, if there is no eligible spouse, to the member's unmarried child(ren) under age 18. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this 1957 Survivor benefit.

Benefit

The 1957 Survivor benefit is a monthly allowance equal to one-half of the unmodified service retirement benefit that the member would have been entitled to receive if the member had retired on the date of their death. If the benefit is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent child(ren), the benefit will be discontinued upon death or attainment of age 18, unless the child(ren) is disa bled. The total amount paid will be at least equal to the basic death benefit.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
85 Packet Pg. 283 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Optional Settlement 2 Death Benefit

This is an optional benefit.

Eligibility

An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively employed, has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has at least 5 years of credited service (total service across all CalPERS employers and with cert ain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this Optional Settlement 2 Death benefit.

Benefit

The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member would have received had the member retired on the date of their death and elected 100% to continue to the eligible survivor after the mem ber’s death. The allowance is payable to the surviving spouse until death, at which time it is continued to any unmarried child(ren), if applicable. The total amount paid will be at least equal to the basic death benefit.

Special Death Benefit

This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all Miscellaneous members, employers have the option of providing this benefit.

Eligibility

An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed and the death is job-related. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 22. An eligible survivor who chooses to receive this benefit will not receive any other death benefit.

Benefit

The special death benefit is a monthly allowance equal to 50% of final compensation and will be increased whenever the compensation paid to active employees is increased but ceasing to increase wh en the member would have attained age 50. The allowance is payable to the surviving spouse until death , at which time the allowance is continued to any unmarried child(ren) under age 22. There is a guarantee that the total amount paid will at least equal the basic death benefit.

If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried child(ren) under age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following:

• if 1 eligible child: 12.5% of final compensation
• if 2 eligible children: 20.0% of final compensation
• if 3 or more eligible children: 25.0% of final compensation Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
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CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Alternate Death Benefit for Local Fire Members

This is an optional benefit available only to local fire members.

Eligibility

An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957 Survivor benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 18.

Benefit

The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have receive d had the member retired on the date of their death and elected Optional Settlement 2. (A retiree who elects Optional Settlement 2 receives an allowance that has been reduced so that it will continue to be paid after their death to a surviving beneficiary.) If the member has not yet attained age 50, the benefit is equal to that which would be payable if the member had retired at age 50, based on service credited at the time of death. The allowance is payable to the surviving spouse until death, at which time it is continued to any unmarried child(ren), if applicable. The total amount paid will be at least equal to the basic death benefit.

Cost-of-Living Adjustments (COLA)

Standard Benefit

Retirement and survivor allowances are adjusted each year in May for cost of living, beginning the second calendar year after the year of retirement. The standard cost -of-living adjustment (COLA) is 2%. Annual adjustments are calculated by first determining the lesser of 1) 2% compounded from the end of the year of retirement or 2) actual rate of price inflation. The resulting increase is divided by the total increase provided in prior years. For any given year, the COLA adjustment may be less than 2% (when the rate of price inflation is low), may be greater than the rate of price inflation (when the rate of price inflation is low after several years of high price inflation) or may even be greater than 2% (when price inflation is high after several years of low price inflation).

Improved Benefit

Employers have the option of providing a COLA of 3%, 4%, or 5%, determined in the same manner as described above for the standard 2% COLA. An improved COLA is not available with the 1.5% at age 65 formula.

Purchasing Power Protection Allowance (PPPA)

Retirement and survivor allowances are protected against price inflation by PPPA. PPPA benefits are cost-of-living adjustments that are intended to maintain an individual’s allowance at 80 % of the initial allowance at retirement adjusted for price inflation since retirement. The PPPA benefit will be coordinated with other cost-of-living adjustments provided under the plan.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
87 Packet Pg. 285 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Employee Contributions

Each employee contributes toward their retirement based upon the retirement formula. The standard employee contribution is as described below.

• The percent contributed below the monthly compensation breakpoint is 0 %.

• The monthly compensation breakpoint is $0 for all PEPRA members and Classic members covered by a full or supplemental formula and $133.33 for Classic members covered by a modified formula.

• The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as shown in the table below.

Benefit Formula Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Miscellaneous, 2% at age 62 50% of the Total Normal Cost Miscellaneous, 1.5% at age 65 50% of the Total Normal Cost Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
Safety, 2% at age 57 50% of the Total Normal Cost
Safety, 2.5% at age 57 50% of the Total Normal Cost
Safety, 2.7% at age 57 50% of the Total Normal Cost

The employer may choose to “pick-up” these contributions for classic members (Employer Paid Member Contributions or EPMC). EPMC is prohibited for new PEPRA members.

An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the employer contribution. These contributions are paid in addition to the member contribution.

Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and the contribution rate is 6% if members are not covered by Social Security. If members are covered by Social Security, the offset is $513 and the contribution rate is 5%.

Refund of Employee Contributions

If the member’s service with the employer ends, and if the member does not sa tisfy the eligibility conditions for any of the retirement benefits above, the member may elect to receive a refund of their employee contributions, which are credited with 6% interest compounded annually.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
88 Packet Pg. 286 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

1959 Survivor Benefit

This is a pre-retirement death benefit available only to members not covered by Social Security. Any agency joining CalPERS subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2, and 3 are now closed. Any new agency or any agency wishing to add this benefit or increase the current level may only choose the 4th or Indexed Level.

This benefit is not included in the results presented in this valuation. More information on this benefit is available on the CalPERS website.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
89 Packet Pg. 287 of 510

Appendix C - Participant Data

• Active Members 76
• Transferred and Separated Members 77
• Retired Members and Beneficiaries 78

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
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90 Packet Pg. 288 of 510

CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Active Members

Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities.

Distribution of Active Members by Age and Service

Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 21 0 0 0 0 0 21
25-29 60 5 0 0 0 0 65
30-34 70 41 2 0 0 0 113
35-39 54 42 12 1 0 0 109
40-44 35 25 24 14 5 1 104
45-49 38 26 18 17 21 8 128
50-54 29 14 11 12 15 16 97
55-59 23 13 17 11 14 18 96
60-64 11 12 6 17 5 20 71
65 and Over 6 3 5 7 3 5 29
All Ages 347 181 95 79 63 68 833

Distribution of Average Annual Salaries by Age and Service

Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+
Average
Salary
15-24 $85,114 $0 $0 $0 $0 $0 $85,114
25-29 106,368 112,343 0 0 0 0 106,828
30-34 103,541 118,880 157,450 0 0 0 110,061
35-39 113,202 139,208 121,507 164,905 0 0 124,611
40-44 109,623 133,070 157,097 157,711 133,462 119,850 133,933 45-49 117,930 147,706 149,826 135,113 159,975 155,220 139,974 50-54 122,533 175,127 136,335 149,946 144,666 176,825 147,458 55-59 111,185 137,611 147,760 137,941 130,410 164,542 137,114 60-64 143,348 152,667 135,397 148,996 147,498 131,449 142,544 65 and Over 97,489 95,451 104,023 171,062 99,656 147,199 124,959 Average $109,858 $137,065 $142,992 $148,315 $143,79 3 $154,670 $129,421

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
Pg.
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CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Transferred and Separated Members

Distribution of Transfers to Other CalPERS Plans by Age, Service, and average Salary

Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 2 0 0 0 0 0 2 $116,890
25-29 10 0 0 0 0 0 10 117,748
30-34 41 6 0 0 0 0 47 115,736
35-39 47 9 1 0 0 0 57 136,817
40-44 47 12 7 0 2 0 68 155,809
45-49 57 12 5 2 1 2 79 148,598
50-54 31 12 2 5 0 0 50 161,893
55-59 28 9 1 2 0 0 40 164,890
60-64 23 6 3 0 0 0 32 143,809
65 and Over 7 1 0 0 0 0 8 140,924
All Ages 293 67 19 9 3 2 393 $146,064

Distribution of Separated Participants with Funds on Deposit by Age, Service, and average Salary

Years of Service at Valuation Date
Attained Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 1 0 0 0 0 0 1 $39,990
25-29 13 0 0 0 0 0 13 74,591
30-34 48 6 0 0 0 0 54 87,119
35-39 55 10 4 0 0 0 69 94,119
40-44 64 11 4 2 1 0 82 83,724
45-49 65 7 5 0 0 1 78 84,472
50-54 47 16 2 0 1 0 66 80,125
55-59 51 12 2 0 0 2 67 72,714
60-64 38 7 1 1 0 0 47 65,439
65 and Over 24 3 0 0 0 0 27 63,090
All Ages 406 72 18 3 2 3 504 $80,559

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Retired Members and Beneficiaries

Distribution of Retirees and Beneficiaries by Age and Retirement Type*

Attained Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 30 0 0 0 0 0 1 1
30-34 0 0 1 0 0 1 2
35-39 0 0 0 0 0 4 4
40-44 0 0 2 0 0 1 3
45-49 0 0 3 0 0 1 4
50-54 34 2 3 0 0 0 39
55-59 86 4 0 1 0 1 92
60-64 197 11 4 0 0 12 224
65-69 227 10 1 0 0 12 250
70-74 215 7 0 0 0 20 242
75-79 195 9 1 0 0 20 225
80-84 132 2 1 0 0 30 165
85 and Over 76 4 0 0 0 33 113
All Ages 1,162 49 16 1 0 136 1,364

Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type*

Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $0 $0 $0 $39,748 $39,748
30-34 0 0 222 0 0 16,026 8,124
35-39 0 0 0 0 0 7,543 7,543
40-44 0 0 310 0 0 13,556 4,725
45-49 0 0 726 0 0 119,243 30,355
50-54 29,410 6,241 1,010 0 0 0 26,037
55-59 39,696 16,035 0 19,000 0 11,350 38,134
60-64 46,450 14,819 934 0 0 21,849 42,766
65-69 46,837 16,075 13,545 0 0 21,814 44,272
70-74 49,368 20,396 0 0 0 28,036 46,767
75-79 45,898 19,918 20,965 0 0 26,777 43,049
80-84 36,597 21,071 2,252 0 0 36,827 36,242
85 and Over 37,229 21,058 0 0 0 26,641 33,564
All Ages $44,252 $17,322 $2,909 $19,000 $0 $28,193 $41,180

* Counts of members do not include alternate payees receiving benefits while the member is still w orking. Therefore, the total counts may not match information on C-1 of the report. Multiple records may exist for those w ho have service in more than one coverage group. This does not result in double counting of liabilities.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Retired Members and Beneficiaries (continued)

Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*

Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 5 Yrs 266 1 5 0 0 46 318
5-9 253 2 1 1 0 31 288
10-14 233 6 5 0 0 19 263
15-19 214 13 3 0 0 21 251
20-24 114 8 1 0 0 8 131
25-29 46 8 1 0 0 6 61
30 and Over 36 11 0 0 0 5 52
All Years 1,162 49 16 1 0 136 1,364

Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement Type*

Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 5 Yrs $43,468 $17,302 $959 $0 $0 $30,071 $40,779 5-9 43,682 14,357 345 19,000 0 27,855 41,539
10-14 49,283 12,520 317 0 0 32,743 46,319
15-19 51,157 18,091 11,895 0 0 24,053 46,708
20-24 38,316 20,916 1,890 0 0 22,916 36,035
25-29 31,304 21,788 2,252 0 0 17,327 28,205
30 and Over 15,784 13,711 0 0 0 34,604 17,155
All Years $44,252 $17,322 $2,909 $19,000 $0 $28,193 $41,180

* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total counts may not match information on C-1 of the report. Multiple records may exist for those who have service in more than one coverage group. This does not result in double counting of liabilities .

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

Item 4: Staff Report
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Appendix D - Glossary

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Glossary

Accrued Liability (Actuarial Accrued Liability)
The portion of the Present Value of Benefits allocated to prior years. It can also be expressed as the Present Value of Benefits minus the present value of future Normal Cost . Different actuarial cost methods and different assumptions will lead to different measures of Accrued Liability.

Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two categories: demographic and economic. Demographic assumptions include such things as mortality, disability , and retirement rates. Economic assumptions include discount rate, wage inflation , and price inflation.

Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include an actuarial cost method, an amortization policy, and an asset valuation method.

Actuarial Valuation
The determination as of a valuation date of the Normal Cost, Accrued Liability, and related actuarial present values for a pension plan. These valuations are performed annually or when an employer is contemplating a change in plan provisions.

Actuary
A business professional proficient in mathematics and statistics who measures and manages risk. A public retirement system actuary in California perform s actuarial valuations necessary to properly fund a pension plan and disclose its liabilities and must satisfy the qualification standards for actuaries issuing statements of actuarial opinion in the United States with regard to pensions.

Amortization Bases
Separate payment schedules for different portions of the Unfunded Accrued Liability (UAL). The total UAL of a rate plan can be segregated by cause. The impact of such individual causes on the UAL are quantified at the time of their occurrence, resulting in new amortization bases. Each base is separately amortized and paid for over a specific period of time.

Generally, in an actuarial valuation, the separate bases consist of changes in UAL due to contract amendments, actuarial assumption changes, method changes, and/or experience gains and losses.

Amortization Period
The number of years required to pay off an Amortization Base.

Classic Member (under PEPRA)
A member who joined a public retirement system prior to January 1, 2013 , and who is not defined as a new member under PEPRA. (See definition of New Member below.)

Discount Rate
The rate used to discount the expected future benefit payments to the valuation date to determine the Projected Value of Benefits. Different discount rates will produce different measures of the Projected Value of Benefits. The discount rate for funding purposes is based on the assumed long-term rate of return on plan assets, net of investment and administrative expenses. This rate is called the “actuarial interest rate” in Section 20014 of the California Public Employees’ Retirement Law.

Entry Age
The earliest age at which a plan mem ber begins to accrue benefits under a defined benefit pension plan. In most cases, this is the age of the member on their date of hire.

Entry Age Actuarial Cost Method
An actuarial cost method that allocates the cost of the projected benefits on an individual basis as a level percent of earnings for the individual between entry age and retirement age. This method yields a total normal cost rate, expressed as a percentage of payroll, which is designed to remain level throughout the member’s career.

Fresh Start
A Fresh Start is when multiple amortization bases are combined into a single base and amortized over a new Amortization Period.

Item 4
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857

Glossary (continued)

Funded Ratio
Defined as the Market Value of Assets divided by the Accrued Liability. Different actuarial cost methods and different assumptions will lead to different measures of Funded Ratio. The Funded Ratio with the Accrued Liability equal to the funding target is a measure of how well funded a rate plan is. A ratio greater than 100% means the rate plan has more assets than the funding target and the employer need only contribute the Normal Cost . A ratio less than 100% means assets are less than the funding target and contributions in addition to Normal Cost are required.

Funded Status
Any comparison of a particular measure of plan assets to a particular measure of pension obligations. The methods and assumptions used to calculate a funded status should be consistent with the purpose of the measurement.

Funding Target
The Accrued Liability measure upon which the funding requirements are based. The funding target is the Accrued Liability under the Entry Age Actuarial Cost Method using the assumptions adopted by the board.

GASB 68
Statement No. 68 of the Governmental Accounting Standards Board ; the accounting standard governing a state or local governmental employer’s accounting and financial reporting for pensions.

New Member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system for the first time on or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject to reciprocity with another public retirement system.

Normal Cost
The portion of the Present Value of Benefits allocated to the upcoming fiscal year for active employees. Different actuarial cost methods and different assumptions will lead to different measures of Normal Cost. The Normal Cost under the Entry Age Actuarial Cost Method, using the assum ptions adopted by the board, plus the required amortization of the UAL, if any, make up the required contributions.

PEPRA
The California Public Employees’ Pension Reform Act of 2013.

Present Value of Benefits (PVB)
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned in the future for current members.

Traditional Unit Credit Actuarial Cost Method
An actuarial cost method that sets the Accrued Liability equal to the Present Value of Benefits as suming no future pay increases or service accruals. The Traditional Unit Credit Cost Method is used to measure the accrued liability on a termination basis .

Unfunded Accrued Liability (UAL)
The Accrued Liability minus the Market Value of Assets. If the UAL for a rate plan is positive, the employer is required to make contributions in excess of the Normal Cost.

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Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024

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California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795-3000 | Fax: (916) 795-2744 888 CalPERS (or 888-225-7377) | TTY: (877) 249-7442 | www.calpers.ca.gov

July 2025

Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857 ) Annual Valuation Report as of June 30, 2024

Dear Employer,

Attached to this letter is the June 30, 2024 , actuarial valuation report for the plan noted above. Provided in this report is the determination of the minimum required employer contributions for fiscal year (FY) 2026-27. In addition, the report contains important information regarding the current financial status of the plan as well as projections and risk measures to aid in planning for the future.

Required Contributions

The table below shows the minimum required employer contributions and the PEPRA member contribution rates for FY 2026-27 along with an estimate of the employer contribution requirements for FY 2027-28. The required employer and member contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.

Fiscal Year Employer Normal
Cost Rate
Employer Amortization of
Unfunded Accrued Liability
PEPRA Member
Contribution Rate
2026-27 19.64% $20,548,215 11.75%

Projected Results
2027-28 19.0% $21,254,000 TBD

The actual investment return for FY 2024-25 was not known at the time this report was prepared. The projection UAL payment above assume s the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2024-25 differs from 6.8%, the actual UAL contribution requirement for FY 2027-28 will differ from that shown above. For additional information on future contribution requirements , please refer to Projected Employer Contributions . This section also contains projected required contributions through FY 2031-32.

PEPRA Member Contribution Rate

The employee contribution rate for PEPRA members can change based on the result s of the actuarial valuation. See Member Contribution Rates for more information.

Report Navigation Features

The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly.

The tables of contents are “clickable .” This is true for the main table of contents that follows the title page and the intermediate tables of contents at the beginning of sections. The Adobe navigation pane on the left can also be used to skip to specific exhibits.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined, while underlined links will take you to the CalPERS website. Examples are shown be low.

Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool Member Contribution Rates Public Agency PEPRA Member Contribution Rates Summary of Key Valuation Results Pension Outlook Overview Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results Projected Employer Contributions Public Agency Actuarial Valuation Reports

Further descriptions of general changes are included in the Highlights and Executive Summary section and in Appendix A - Actuarial Methods and Assumptions . The effects of any changes on the required contributions are included in the Reconciliation of Required Employer Contributions section.

Questions

A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer Contact Center at 888 CalPERS (or 888-225-7377).

Sincerely,

Matthew Biggart, ASA, MAAA
Actuary, CalPERS

Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS

Scott Terando , ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS

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Safety Valuation as of June
30, 2024

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California Public Employees’ Retirement System

Actuarial Valuation for the
Safety Plan
of the City of Palo Alto
as of June 30, 2024

(CalPERS ID: 6373437857 )
(Rate Plan ID: 5080)

Required Contributions for Fiscal Year

July 1, 2026 — June 30, 2027
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Safety Valuation as of June
30, 2024

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CY Fin Job Instance ID: 472008 PY Fin Job Instance ID: 440173 Report ID: 476601

Table of Contents

Actuarial Certification.......................................................................................................................................................................................1 Highlights and Executive Summary .............................................................................................................................................................2 Introduction .......................................................................................................................................................................................................3 Purpose .............................................................................................................................................................................................................3 Summary of Key Valuation Results ..............................................................................................................................................................4 Changes Since the Prior Year’s Valuation ..................................................................................................................................................5 Subsequent Events .........................................................................................................................................................................................5 Assets ...................................................................................................................................................................................................................6 Reconciliation of the Market Value of Assets..............................................................................................................................................7 Asset Allocation................................................................................................................................................................................................8 CalPERS History of Investment Returns .....................................................................................................................................................9 Liabilities and Contributions ....................................................................................................................................................................... 10 Determination of Required Contributions.................................................................................................................................................. 11 Development of Accrued and Unfunded Liabilities ................................................................................................................................. 12 Required Employer Contributions .............................................................................................................................................................. 13 Member Contribution Rates ........................................................................................................................................................................ 14 Funded Status – Funding Policy Basis ..................................................................................................................................................... 15 Additional Employer Contributions............................................................................................................................................................. 16 Projected Employer Contributions ............................................................................................................................................................. 17 (Gain)/Loss Analysis 6/30/23 – 6/30/24 .................................................................................................................................................... 18 Schedule of Amortization Bases ................................................................................................................................................................ 19 Amortization Schedule and Alternatives ................................................................................................................................................... 21 Reconciliation of Required Employer Contributions................................................................................................................................ 23 Employer Contribution History .................................................................................................................................................................... 24 Funding History ............................................................................................................................................................................................. 24 Risk Analysis ................................................................................................................................................................................................... 25 Future Investment Return Scenarios......................................................................................................................................................... 26 Discount Rate Sensitivity............................................................................................................................................................................. 27 Mortality Rate Sensitivity ............................................................................................................................................................................. 27 Maturity Measures ........................................................................................................................................................................................ 28 Maturity Measures History........................................................................................................................................................................... 29 Funded Status – Termination Basis .......................................................................................................................................................... 30 Funded Status – Low-Default-Risk Basis ................................................................................................................................................. 31 Supplementary Information ......................................................................................................................................................................... 32 Normal Cost by Benefit Group.................................................................................................................................................................... 33 Summary of Valuation Data ........................................................................................................................................................................ 34 Status of PEPRA Transition ........................................................................................................................................................................ 35 Plan's Major Benefit Options....................................................................................................................................................................... 36 Appendix A - Actuarial Methods and Assumptions .............................................................................................................................. 39 Appendix B - Principal Plan Provisions.................................................................................................................................................... 65 Appendix C - Participant Data ..................................................................................................................................................................... 76 Appendix D - Glossary .................................................................................................................................................................................. 81

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Safety Valuation as of June
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Actuarial Certification

It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the applicable Standards of Practice promulgated by the Actuarial Standards Board. While this report is intended to be complete, our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with regard to pension s.

Actuarial Methods and Assumptions

It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board of Administration, are internally consistent and reasonable for this plan.

Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS

Scott Terando , ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS

Actuarial Data and Rate Plan Results

To the best of my knowledge and having relied upon the attestation above that the actuarial methods and assumptions are reasonable , this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded condition of the Safety Plan of the City of Palo Alto and satisfies the actuarial valuation requirements of Government Code section 7504. This valuation and related validation work was performed by the CalPERS Actuarial Office. The valuation was based on the member and financial data as of June 30, 2024, provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this report was produced.

Matthew Biggart, ASA, MAAA
Actuary, CalPERS

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Safety Valuation as of June
30, 2024

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Highlights and Executive Summary

• Introduction 3
• Purpose 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5

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Safety Valuation as of June
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Introduction

This report presents the results of the June 30, 2024 , actuarial valuation of the Safety Plan of the City of Palo Alto of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required contributions for fiscal year (FY) 2026-27.

Purpose

This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using data as of June 30, 2024. This report contains actuarial information for the following rate plan(s). • 5080, Safety Police First Level
• 30705, Safety Fire First Level
• 30706, Safety Fire Second Level
• 30707, Safety Fire Third Level
• 30708, Safety Police Second Level
• 25006, Safety Fire PEPRA Level
• 25007, Safety Police PEPRA Level
The purpose of the valuation is to:

• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2024; • Determine the minimum required employer contributions for this rate plan for FY July 1, 2026, through June 30, 2027; • Determine the required member contribution rate for FY July 1, 2026, through June 30, 2027, for employees subject to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and • Provide actuarial information as of June 30, 2024, to the CalPERS Board of Administration (board) and other interested parties.

The pension funding in formation presented in this report should not be used in financial reports subject to Governmental Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit Pension Plan. A separate accounting valuation report for such purpos es is available from CalPERS and details for ordering are available on the CalPERS website (www.calpers.ca.gov).

The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency should contact a CalPERS actuary before disseminating any portion of this report for any reason that is not explicitly described above.

Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies; changes in plan provisions or applicable law; and differences between the required contributio ns determined by the valuation and the actual contributions made by the agency.

Assessment and Disclosure of Risk

This report includes the following risk disclosures consistent with the guidance of the Actuarial Standards of Practice:

• A “Scenario Test,” projecting future results under different investment income returns. • A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 5.8% and

7.8%.
• A “Sensitivity Analysis,” showing the impact on current valuation results assuming rates of mortality are 10% lower or 10% higher than our current post-retirement mortality assumptions adopted in 2021. • Plan maturity measures indicating how sensitive a plan may be to the risks noted above. • The funded status on a termination basis .
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Summary of Key Valuation Results

Below is a brief summary of key valuation resu lts along with page references where more detailed information can be found.

Required Employer Contributions — page 13

Fiscal Year
2025-26
Fiscal Year
2026-27
Employer Normal Cost Rate 20.61% 19.64%
Unfunded Accrued Liability (UAL) Contribution Amount $18,545,666 $20,548,215 Paid either as
Option 1) 12 Monthly Payments of $1,545,472 $1,712,351 Option 2) Annual Prepayment in July $17,945,551 $19,883,300

Member Contribution Rates — page 14

Fiscal Year
2025-26
Fiscal Year
2026-27
Classic Member Contribution Rate 9.00% 9.00%
PEPRA Member Contribution Rate 11.75% 11.75%

Projected Employer Contributions — page 17

Fiscal Year Normal Cost
(% of payroll)
Annual
UAL Payment
2027-28 19.0% $21,254,000
2028-29 18.3% $22,813,000
2029-30 17.7% $23,128,000
2030-31 17.1% $23,397,000
2031-32 16.5% $22,907,000

Funded Status – Funding Policy Basis — page 15

June 30, 2023 June 30, 2024
Entry Age Accrued Liability (AL) $555,403,195 $582,389,782 Market Value of Assets (MVA) 331,696,065 355,816,276 Unfunded Accrued Liability (UAL) [AL – MVA] $223,707,130 $226,573,506 Funded Ratio [MVA ÷ AL] 59.7% 61.1%

Summary of Valuation Data — page 34

June 30, 2023 June 30, 2024
Active Member Count 164 159
Annual Covered Payroll $27,941,899 $30,132,343
Transferred Member Count 61 63
Separated Member Count 65 72
Retired Members and Beneficiaries Count 458 464

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Changes Since the Prior Year’s Valuation

Benefits

The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. For rate plans that are not in a risk pool (non-pooled), benefit changes by contract amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the effective date of the amendment is after the valuation date.

Please refer to the Plan’s Major Benefit Options and Appendix B - Principal Plan Provisions for a summary of the plan provisions used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in the (Gain)/Loss Analysis 6/30/ 23 – 6/30/24 and the effect on the employer contribution is shown in the Reconciliation of Required Employer Contributions . It should be noted that no change in liability or contribution is shown for any plan changes which were already included in the prior year’s valuation.

Board Policy

On April 16, 2024, the board took action to modify the Funding Risk Mitigation Policy to remove the automatic change to the discount rate when the investment return exceeds various thresholds. Rather than an automatic change to the discount rate, a board discussion would be placed on the calendar. The 95 th percentile return in the Future Investment Return Scenarios exhibit in this report, which include s returns high enough to trigger a board discussion, does not reflect any change in the discount rate.

Actuarial Methods and Assumptions

There are no significant changes to the actuarial methods or assumptions for the June 30, 2024, actuarial valuation.

Subsequent Events

This actuarial valuation report reflects fund investment return through June 30, 2024, as well as statutory changes, regulatory changes and board actions through January 2025.

CalPERS will be completing an Asset Liability Management (ALM) review process in November 2025 that will review the capital market assumptions and the CalPERS Total Fund Investment Policy and ascertain whether a change in the discount is warranted. In addition, the Actuarial Office will be presenting the findings of its Experience Study which reviews economic assumptions other than the discount rate as well as all demographic assumptions and makes recommendations to modify actuarial assumptions where appropriate. Any changes in actuarial assumptions will be reflected in the June 30, 2025, actuarial valuations.

The 2024 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IR C section 401(a)(17) and Government Code section 7522.10 were use d for this valuation and are assumed to increase 2.3% per year based on the price inflation assumption. The actual 2025 limits , determined in October 2024, are not reflected.

To the best of our knowledge, there have been no other subsequent events that could materially affect current or future certifications rendered in this report.

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Safety Valuation as of June
30, 2024

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Assets

• Reconciliation of the Market Value of Assets 7
• Asset Allocation 8
• CalPERS History of Investment Returns 9

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Reconciliation of the Market Value of Assets

1. Market Value of Assets as of 6/30/23 including Receivables $331,696,065

2. Change in Receivables for Service Buybacks (20,121)

3. Employer Contributions 19,635,105

4. Employee Contributions 4,193,857

5. Benefit Payments to Retirees and Beneficiaries (31,278,872)

6. Refunds (4,638)

7. Transfers 0

8. Service Credit Purchase (SCP) Payments and Interest 29,298

9. Administrative Expenses (242,412)

10. Miscellaneous Adjustments 0

11. Investment Return (Net of Investment Expenses) 31,807,995

12. Market Value of Assets as of 6/30/24 including Receivables $355,816,276

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Asset Allocation

CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges and manages those asset class allocations within their policy ranges . CalPERS Investment Belief No. 6 recognizes that strategic asset allocation is the dominant determinant of portfolio risk and return.

The asset allocation shown below reflect s the allocation of the Public Employees’ Retirement Fund (PERF) in its entirety. The assets for City of Palo Alto Safety Plan are a subset of the PERF and are invested accordingly.

On March 20, 2024 , the board adopted changes to the strategic asset allocation . The new allocation was effective July 1, 2024.

The asset allocation as of June 30, 2024, is shown below, along with the strategic asset allocation targets.

For more information s ee the Trust Level Review as of June 30, 2024, which is available on the CalPERS website.

31.8%

10.0%

7.3%

5.3%

6.4%

5.3%

5.3%

15.5%

13.2%

2.8%
(3.0%)
27%
10%
7%
5%
6%
5%
5%
17%
15%
8%
(5%)
(10%) 0% 10% 20% 30% 40%
Public Equities - Cap Weighted
Public Equities - Factor Weighted
Treasury
Mortgage-Backed Securities
Investment Grade Corporates
High Yield
Emerging Market Sovereign Bonds
Private Equity
Real Assets
Private Debt
Strategic Financing
Current Allocation Strategic Asset Allocation Target
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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

CalPERS History of Investment Returns

The following is a chart with 20 years of historical annual returns of the PERF for each fiscal year ending on June 30 as reported by the Investment Office. Investment returns reported are net of investment expenses but without reduction for administrative expenses. The assumed rate of return, however, is net of both investment and administrative expenses. Also, the Investment Office uses lag ged private asset valuations for investment performance reporting purposes. This can lead to a timing difference in private asset influence on performance in the returns below and those used for financial reporting purposes. The investment gain or loss calculation in this report relies on final assets that have been audited and are appropriate for financial reporting.

Because of these differences, the effective investment return for funding purposes in a single year can be higher or lower than the return reported by the Investment Office shown here.

History of Investment Returns (2005 through 2024)

* As reported by the Investment Office w ith lagged private valuations and w ithout any reduction for administrative expenses.

The table below shows annualized investment returns of the PERF for various time periods ending on June 30, 2024. These returns are the annual rates that if compounded over the indicated number of years would equate to the actual time -weighted investment performance of the PERF. It should be recognized that the annual rate of return is volatile, as the chart above illustrates, so when looking at investment returns, it is informative to look at average returns over longer time horizons.

PERF Realized Rates of Return as of June 30, 2024
1 year 3 year 5 year 10 year 20 year 30 year

9.3% 2.8% 6.6% 6.2% 6.7% 7.7%

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Safety Valuation as of June
30, 2024

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Liabilities and Contributions

• Determination of Required Contributions 11
• Development of Accrued and Unfunded Liabilities 12
• Required Employer Contributions 13
• Member Contribution Rates 14
• Funded Status – Funding Policy Basis 15
• Additional Employer Contributions 16
• Projected Employer Contributions 17
• (Gain)/Loss Analysis 6/30/23 – 6/30/24 18
• Schedule of Amortization Bases 19
• Amortization Schedule and Alternatives 21
• Reconciliation of Required Employer Contributions 23
• Employer Contribution History 24
• Funding History 24

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Determination of Required Contributions

Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex calculations based on a set of actuarial assumptions and methods. See Appendix A for information on the assumptions and methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required contributions for the fiscal year that begins two years after the valuation date.

Contribution Components

Two components comprise required contributions:

• Normal Cost — expressed as a percentage of pensionable payroll • Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount

Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exactly matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The employer and employees each pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total normal cost.

When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL over time. This is called the UAL Contribution component . There is an option to prepay this amount during July of each fiscal year, otherwise it is paid monthly.

In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience different than expected, non-investment experience different than expected, assumption changes , and benefit changes. Each source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordan ce with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A for more information on the amortization policy.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Development of Accrued and Unfunded Liabilities

June 30, 2023 June 30, 2024

1. Present Value of Projected Benefits
a) Active Members $208,285,143 $222,706,736
b) Transferred Members 13,177,758 14,412,580
c) Separated Members 6,467,049 8,092,929
d) Members and Beneficiaries Receiving Payments 402,806,352 413,652,979 e) Total $630,736,302 $658,865,224

2. Present Value of Future Employer Normal Costs $46,631,408 $46,330,486

3. Present Value of Future Employee Contributions $28,701,699 $30,144,956

4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $132,952,036 $146,231,294 b) Transferred Members (1b) 13,177,758 14,412,580
c) Separated Members (1c) 6,467,049 8,092,929
d) Members and Beneficiaries Receiving Payments (1d) 402,806,352 413,652,979 e) Total $555,403,195 $582,389,782

5. Market Value of Assets (MVA) $331,696,065 $355,816,276

6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $223,707,130 $226,573,506

7. Funded Ratio [(5) ÷ (4e)] 59.7% 61.1%

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Required Employer Contributions

The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.

Fiscal Year
Required Employer Contributions 2026-27
Employer Normal Cost Rate 19.64%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount $20,548,215 Paid either as
1) Monthly Payment $1,712,351
Or
2) Annual Prepayment Option* $19,883,300
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate (expressed as a percentage of payroll and paid as payroll is reported) and the Unfunded Accrued Liability (UAL) Contribution Amount (billed monthly (1) or prepaid annually (2) in dollars). * Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later than July 31).

For Member Contribution Rates see the following page.

Fiscal Year Fiscal Year
2025-26 2026-27
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost 1 30.76% 29.88%
Offset due to Employee Contribution s2 (10.15%) (10.24%) Employer Normal Cost 20.61% 19.64%

Projected Annual Payroll for Contribution Year $30,355,352 $32,734,993

Estimated Employer Contributions Based on Projected Payroll Total Normal Cost $9,337,306 $9,781,216
Expected Employee Contribution s (3,081,068) (3,352,063) Employer Normal Cost $6,256,238 $6,429,153
Unfunded Liability Contribution

$18,545,666 $20,548,215
% of Projected Payroll (illustrative only) 61.10% 62.77% Estimated Total Employer Contribution

$24,801,904 $26,977,368
% of Projected Payroll (illustrative only) 81.71% 82.41%

1 The Total Normal Cost is a blended rate for all benefit groups in the plan. For a breakout of normal cost by benefit group, see Normal Cost by Benefit Group.
2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each benefit formula, see Member Contribution Rates.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Member Contribution Rates

The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.

Classic Members

Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution rate above the breakpoint, if any, is as described below.

Benefit Formula
Percent Contributed
above the Breakpoint
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%

PEPRA Members

The California Public Employees’ P ension Reform Act of 2013 (“PEPRA”) established new benefit formulas, final compensation period, and contribution requirements for “new” employees (generally those first hired into a CalPERS -covered position on or after January 1, 2013). In accordance with Government Code Section 7522.30(b), “new members … shall have an initial contribution rate of at least 50% of the normal cost rate.” The normal cost rate for the plan is dependent on the benefit levels, actuarial assumptions, and demographics of the plan, particularly members’ entry age into the plan. Should the total normal cost rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate shall be 50% of the new normal cost rate rounded to the nearest quarter percent.

The table below shows the determination of the PEPRA member contribution rates effective July 1, 2026, based on 50% of the total normal cost rate for each respective rate plan as of the June 30, 2024, valuation.

Basis for Current Rate Rates Effective July 1, 2026 Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in
Normal
Cost
Adj.

Needed
Member
Rate
25006 Safety Fire PEPRA
Level 23.540% 11.75% 23.16% (0.380%) No 11.75%
25007 Safety Police PEPRA
Level 23.540% 11.75% 23.16% (0.380%) No 11.75%

For a description of the methodology used to determine the Total Normal Cost for this purpose, see PEPRA Normal Cost Rate Methodology in Appendix A.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Funded Status – Funding Policy Basis

The table below provides information on the current funded status of the plan under the funding policy. The funded status for this purpose is based on the market value of assets relative to the funding target produced by the entry age actuarial cost method and actuarial assumptions adopted by the board. The actuarial cost method allocates the total expected cost of a member’s projected benefit (Present Value of Benefits) to individual years of service (the Normal Cost). The value of the projected benefit that is not allocated to future service is referred to as the Accrued Liability and is the plan’s funding target on the valuation date. The Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute measure of funded status and can be viewed as employer debt. The Funded Ratio equals the assets divided by the funding target. The funded ratio is a relative measure of the funded status and allows for comparisons between plans of different sizes.

June 30, 2023 June 30, 2024

1. Present Value of Benefits $630,736,302 $658,865,224

2. Entry Age Accrued Liability 555,403,195 582,389,782

3. Market Value of Assets (MVA) 331,696,065 355,816,276

4. Unfunded Accrued Liability (UAL) [(2) – (3)] $223,707,130 $226,573,506

5. Funded Ratio [(3) ÷ (2)] 59.7% 61.1%

A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to the normal cost of the active plan members will be sufficient to fully fund all retirement benefits if future experience matches the actuarial assumptions. A funded ratio of less than 100% (positive UAL) implies that in addition to normal costs, payments toward the UAL will be required. Plans with a funded ratio greater than 100% have a negative UAL (or surplus) but are required under current law to continue contributing the normal cost in most cases, preserving the surplus for future contingencies.

Calculations for the funding target reflect the expected long -term investment return of 6.8%. If it were known on the valuation date that future investment returns wi ll average something greater/less than the expected return, calculated normal costs and accrued liabilities provided in this report would be less/greater than the results shown. Therefore, for example, if actual a verage future returns are less than the expected return, calculated normal costs and UAL contributions will not be sufficient to fully fund all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those provided in this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative purposes, funded status es based on a 1% lower and higher average future investment return (discount rate) are as follows:

1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%

1. Present Value of Benefits $761,638,929 $658,865,224 $577,517,101

2. Entry Age Accrued Liability 657,358,512 582,389,782 520,576,724

3. Market Value of Assets (MVA) 355,816,276 355,816,276 355,816,276

4. Unfunded Accrued Liability (UAL) [(2) – (3)] $301,542,236 $226,573,506 $164,760,448

5. Funded Ratio [(3) ÷ (2)] 54.1% 61.1% 68.4%

The Risk Analysis section of the report provides additional information regarding the sensitivity of valuation results to the expected investment return and other factors. Also provided in that section are measures of funded status that are appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Additional Employer Contributions

The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL) over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is provided in Amortization Schedule and Alternatives. Certain aspects of the policy such as 1) layered amortization bases (positive and negative) with different remaining payoff periods, and 2) the phase-in of required payments toward investment gains and losses, can result in volatility in year-to-year projected UAL payments. Provided below is information on how an Additional Discretionary Payment (ADP), together with your required UAL payment of $20,548,215 for FY 2026-27, may better accomplish your agency’s specific objectives with regard to either smoothing out projected future payments or achieving a greater reduction in UAL than would otherwise occur when making only the minimum required payment. Such additional payments are allowed at any time and can also result in significant long -term savings.

Fiscal Year 2026-27 Employer Contribution Versus Agency Funding Objectives

The interest -to-payment ratio for the FY 2026-27 minimum required UAL payment is 70%, which means the required payment of $20,548,215 includes $14,340,930 of interest cost and results in a $6,207,285 reduction in the UAL, as can be seen in Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If the interest -to-payment ratio is close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming years, which would be shown in Projected Employer Contributions . Another measure that can be used to evaluate how well the FY 2026-27 required UAL payment meets the agency’s specific funding objectives is the number o f years required to pay off the existing UAL if the annual payment were held constant in future years. With an annual payment of $20,548,215 it would take

18.7 years to pay off the current UAL. A result that is longer than the agency’s target funding period suggest s that the option of supplementing the minimum payment with an ADP should be weighed against the agency’s budget constraints.

Provided below are select ADP options for consideration. Making such an ADP during FY 2026-27 does not require an ADP be made in any future year, nor does it change the remaining amortization period of any portion of unfunded liability. For information on permanent changes to amortization periods, see Amortization Schedule and Alternatives. Agencies considering making an ADP should contact CalPERS for additional information.

Fiscal Year 2026-27 Employer Contributions — Illustrative Scenarios

If the Annual UAL
Payment Each
Year Were…
The Current
UAL Would be
Paid Off in…
This Would
Require an ADP1
in FY 2026-27 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$20,548,215 18.7 years $0 $6,429,153 $26,977,368
23,183,833 15 years 2,635,618 6,429,153 29,612,986
30,166,532 10 years 9,618,317 6,429,153 36,595,685
51,876,996 5 years 31,328,781 6,429,153 58,306,149

1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal year w ould have to be less or more than the amount show n to have the same effect on the UAL amortization.

The calculations above are based on the projected UAL as of June 30, 2026, as determined in the June 30, 2024, actuarial valuation. New unfunded liabilities can emerge in future years due to assumption or method changes, changes in plan provisions, and actuarial experience different than assumed. Making an ADP illustrated above for the indicated number of years will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one year to the next and can diverge significantly from projections over a period of several years.

Additional Discretionary Payment History

The following table provides a recent history of actual ADPs made to the plan.

Fiscal
Year ADP Fiscal
Year ADP
2017-18 N/A 2021-22 $0
2018-19 $0 2022-23 0
2019-20 0 2023-24 0
2020-21 0 2024-25 0

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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117

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Projected Employer Contributions

The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. The projection assumes that all actuarial assumptions will b e realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2024-25 is assumed to be 6.80% per year, net of investment and administrative expenses. The actual long -term cost of the plan will depend on the actual benefits and expenses paid and the actual investment experience of the fund.

The projected normal cost percentages below reflect that the normal cost is expected to continue to decline over time as new employees are hired into lower cost benefit tiers. Future contribution requirements may differ significantly from those shown below. The actuarial valuation does not include payroll beyond the valuation date. For the most realistic projections, the employer should apply projected payroll amounts to the rates below based on the most recent information available, such as current payroll as well as any plans to fill vacancies or add or remove positions.

Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2024-25 and Beyond) 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
Normal Cost % 19.64% 19.0% 18.3% 17.7% 17.1% 16.5%
UAL Payment $20,548,215 $21,254,000 $22,813,000 $23,128,000 $23,397,000 $22,907,000

Total as a % of Payroll* 82.41% 82.2% 84.3% 82.8% 81.1% 77.5% Projected Payroll $32,734,993 $33,651,573 $34,593,816 $35,562,444 $36,558,192 $37,581,822

*Illustrative only and based on the projected payroll shown.

The required UAL payments are expected to vary significantly from the projections above due to experience, particularly investment experience. For projected contributions under alternate investment return scenarios, please see the Future Investment Return Scenarios exhibit. Our online pension plan projection tool, Pension Outlook , is available in the Employers section of the CalPERS website. Pension Outlook can help plan and budget pension costs under various scenarios.

For ongoing plans, investment gains and losses are amortized using an initial 5-year ramp. For more information, please see Amortization of Unfunded Actuarial Accrued Liability in Appendix A. This method phases in the impact of the change in UAL over a 5-year period in order to reduce employer cost volatility from year to year. As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. However, required contributions can change gradually and significantly over the next five years. In years when there is a large investment loss, the relatively small amortization payments during the initial ramp period could result in contributions that are less than interest on the UAL (i.e. negative amortization) while the contribution impact of the increase in the UAL is phased in.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

(Gain)/Loss Analysis 6/30/ 23 – 6/30/24

To calculate the cost requirements of the plan, assumptions are made about future events that affect the amount and timing of benefits to be paid and assets to be accumulated. Each year, actual experience is comp ared to the expected experience based on the actuarial assumptions. This results in actuarial gains or losses, as shown below.

1. Total (Gain)/Loss for the Year
a) Unfunded Accrued Liability (UAL) as of 6/30/23 $223,707,130 b) Expected payment on the UAL during 2023-24 14,376,181 c) Interest through 6/30/24 [0.068 x (1a) - ((1.068)½ - 1) x (1b)] 14,731,332 d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 224,062,281 e) Change due to plan changes 0
f) Change due to AL Significant Increase 0
g) Change due to assumption change s 0
h) Change due to method change s 0
i) Change due to discount rate change with Funding Risk Mitigation 0 j) Expected UAL after all other changes [(1d) + (1e) + (1f) + (1g) + (1h) + (1i)] 224,062,281 k) Actual UAL as of 6/30/24 226,573,506
l) Total (Gain)/Loss for 2023-24 [(1k) - (1j)] $2,511,225

2. Investment (Gain)/Loss for the Year
a) Market Value of Assets as of 6/30/23 $331,696,065
b) Prior fiscal year receivables (134,737)
c) Current fiscal year receivables 114,617
d) Contributions received 23,828,961
e) Benefits and refunds paid (31,283,509)
f) Transfers, SCP payments and interest, and miscellaneous adjustments 29,298 g) Expected return at 6.8% per year 22,778,616
h) Expected assets as of 6/30/24 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 347,029,310 i) Actual Market Value of Assets as of 6/30/24 355,816,276 j) Investment (Gain)/Loss [(2h) - (2i)] ($8,786,966)

3. Non-Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss ( 1l) $2,511,225
b) Investment (Gain)/Loss ( 2j) (8,786,966)
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $11,298,191

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
119

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Schedule of Amortization Bases

Below is the schedule of the plan’s amortization bases. Note that there is a two-year lag between the valuation date and the start of the contribution year.

• The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2024. • The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: FY 2026-27.

This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their required employer contribution well in advance of the start of the fiscal year.

The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for the fiscal year and adjusting for interest. The expected payment on the UAL for FY 2024-25 is based on the actuarial valuation two years ago, adjusted for additional discretionary payments, if necessary , and the expected payment for FY 2025-26 is based on the actuarial valuation one year ago.

Reason for Base
Date
Est.

Ramp
Level
2026-27
Ramp
Shape
Escala-
tion
Rate
Amort.

Period
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Minimum
Required
Payment
2026-27
Fresh Start 6/30/04 No Ramp 2.80% 10 (796,981) (83,940) (764,429) (86,290) (727,235) (88,706) Benefit Change 6/30/05 No Ramp 2.80% 0 40,915 21,545 21,432 22,149 0 0 Assumption Change 6/30/09 No Ramp 2.80% 5 4,936,384 814,828 4,429,982 837,643 3,865,566 861,098 Special (Gain)/Loss 6/30/09 No Ramp 2.80% 15 8,614,890 698,464 8,478,881 718,021 8,313,413 738,126 Special (Gain)/Loss 6/30/10 No Ramp 2.80% 16 4,170,938 324,846 4,118,853 333,942 4,053,826 343,292 Assumption Change 6/30/11 No Ramp 2.80% 7 4,690,845 624,453 4,364,487 641,937 3,997,868 659,911 Special (Gain)/Loss 6/30/11 No Ramp 2.80% 17 2,399,398 180,047 2,376,489 185,089 2,346,812 190,271 (Gain)/Loss 6/30/12 No Ramp 2.80% 18 44,929,090 3,256,908 44,618,446 3,348,102 44,192,435 3,441,848 Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 18 1,569,767 113,792 1,558,914 116,979 1,544,029 120,254 (Gain)/Loss 6/30/13 100% Up/Dn 2.80% 19 44,627,249 3,353,351 44,196,412 3,447,245 43,639,244 3,543,768 (Gain)/Loss 6/30/14 100% Up/Dn 2.80% 20 (30,112,795) (2,185,657) (29,901,718) (2,246,855) (29,613,043) (2,309,767) Assumption Change 6/30/14 100% Up/Dn 2.80% 10 18,443,073 2,256,719 17,365,016 2,319,907 16,148,350 2,384,864 (Gain)/Loss 6/30/15 100% Up/Dn 2.80% 21 16,708,808 1,174,271 16,631,467 1,207,150 16,514,889 1,240,951 (Gain)/Loss 6/30/16 100% Up/Dn 2.80% 22 19,861,109 1,354,431 19,811,940 1,392,355 19,720,235 1,431,340 Assumption Change 6/30/16 100% Up/Dn 2.80% 12 6,961,491 735,044 6,675,248 755,625 6,348,271 776,783 (Gain)/Loss 6/30/17 100% Up/Dn 2.80% 23 (1,220,309) (80,910) (1,219,674) (83,176) (1,216,654) (85,505) Assumption Change 6/30/17 100% Up/Dn 2.80% 13 9,717,004 963,628 9,381,908 990,609 8,996,142 1,018,346 (Gain)/Loss 6/30/18 100% Up/Dn 2.80% 24 (3,481,572) (224,835) (3,485,965) (231,130) (3,484,151) (237,602) Assumption Change 6/30/18 100% Up/Dn 2.80% 14 15,685,317 1,469,523 15,233,253 1,510,670 14,707,926 1,552,968 Method Change 6/30/18 100% Up/Dn 2.80% 14 3,617,061 338,875 3,512,814 348,363 3,391,673 358,117

Item 4
Attachment C - CalPERS Safety
Valuation as of June 30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.

Ramp
Level
2026-27
Ramp
Shape
Escala-
tion
Rate
Amort.

Period
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Minimum
Required
Payment
2026-27
Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 15 1,730,521 137,925 1,705,659 172,406 1,643,472 172,406 Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 15 6,523,586 637,630 6,308,237 637,630 6,078,244 637,630 Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 16 8,570,801 515,333 8,621,049 687,110 8,497,193 858,888 Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 16 1,457,904 138,226 1,414,193 138,226 1,367,510 138,227 Assumption Change 6/30/21 No Ramp 0.00% 17 2,619,493 241,577 2,547,963 241,577 2,471,569 241,577 Net Investment (Gain) 6/30/21 80% Up Only 0.00% 17 (40,853,663) (1,679,381) (41,896,171) (2,519,071) (42,141,800) (3,358,762) Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 17 (6,879,285) (634,426) (6,691,435) (634,427) (6,490,810) (634,426) Benefit Change 6/30/22 No Ramp 0.00% 18 289,298 26,015 282,085 26,015 274,382 26,015 Investment (Gain)/Loss 6/30/22 60% Up Only 0.00% 18 58,445,876 1,256,276 61,121,909 2,512,552 62,681,625 3,768,829 Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 18 8,973,858 806,961 8,750,134 806,961 8,511,197 806,961 Investment (Gain)/Loss 6/30/23 40% Up Only 0.00% 19 2,559,236 0 2,733,264 58,751 2,858,410 117,501 Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 19 9,262,974 0 9,892,856 889,601 9,646,220 889,601 Investment (Gain)/Loss 6/30/24 20% Up Only 0.00% 20 (8,786,966) 0 (9,384,480) 0 (10,022,625) (215,433) Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 20 11,298,191 0 12,066,468 0 12,886,988 1,158,844 Total 226,573,506 16,551,519 224,875,487 18,545,666 221,001,171 20,548,215

Item 4
Attachment C - CalPERS Safety
Valuation as of June 30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Amortization Schedule and Alternatives

The amortization schedule on the previous pag e(s) shows the minimum contributions required according to the CalPERS amortization policy. Each year, many agencies express a desire for a more stable pattern of payments or indicate interest in paying off the unfunded accrued liabilities more quickly than required. As such, we have provided alternative amortization schedules to help analyze the current amortization schedule and illustrate the potential savings of accelerating unfunded lia bility payments.

Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting th e individual bases and remaining periods shown on the previous page, and 2) alternative “fresh start” amortization schedules using two sample periods that would both result in interest savings relative to the current amortization schedule. To initiate a fresh start, please contact a CalPERS actuary.

The current amortization schedule typically contains both positive and negative bases . Positive bases result from plan changes, assumption changes, method changes , or plan experience that increase unfunded liability. Negative bases result from plan changes, assumption changes, method changes, or plan experience that decrease unfunded liabi lity. The combination of positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future years, such as:

• When a negative payment would be required on a positive unfunded actuarial liability; or • When the payment would completely amortize the total unfunded liability in a very short time period, and results in a large change in the employer contribution requirement.

In any year when one of the above scenarios occurs, the actuary will consider correcti ve action such as replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.

The current amortization schedule on the following page may appear to show that, based on the current amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact arise since there will be additional bases added to the amortization schedule in each future year. Should su ch a scenario arise in any future year, the actuary will take appropriate action based on guidelines in the CalPERS Actuarial Amortization Policy.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Amortization Schedule and Alternatives (continued)

Alternative Schedules
Current Amortization
Schedule 15 Year Amortization 10 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2026 221,001,171 20,548,215 221,001,171 23,183,833 221,001,171 30,166,532 6/30/2027 214,793,886 21,254,444 212,070,130 23,183,833 204,853,924 30,166,532 6/30/2028 207,434,660 22,812,869 202,531,779 23,183,834 187,608,664 30,166,532 6/30/2029 197,964,46 6 23,127,862 192,344,819 23,183,834 169,190,727 30,166,532 6/30/2030 187,524,773 23,397,304 181,465,145 23,183,833 149,520,370 30,166,532 6/30/2031 176,096,728 22,907,173 169,845,655 23,183,833 128,512,429 30,166,532 6/30/2032 164,398,100 22,828,981 157,436,039 23,183,834 106,075,948 30,166,532 6/30/2033 151,984,768 21,932,194 144,182,568 23,183,833 82,113,786 30,166,532 6/30/2034 139,654,106 21,600,970 130,027,862 23,183,833 56,522,197 30,166,532 6/30/2035 126,827,258 20,977,258 114,910,636 23,183,833 29,190,380 30,166,531 6/30/2036 113,772,757 19,919,208 98,765,439 23,183,833 6/30/2037 100,923,983 19,315,927 81,522,369 23,183,834 6/30/2038 87,824,945 18,667,641 63,106,769 23,183,834 6/30/2039 74,505,139 18,194,742 43,438,908 23,183,833 6/30/2040 60,768,300 17,984,907 22,433,634 23,183,834 6/30/2041 46,314,204 15,332,357
6/30/2042 33,618,486 13,712,638
6/30/2043 21,733,342 17,486,006
6/30/2044 5,140,458 3,486,570
6/30/2045 1,886,844 1,074,049
6/30/2046 905,183 935,453
6/30/2047
6/30/2048
6/30/2049

Total 367,496,768 347,757,501 301,665,319
Interest Paid 146,495,597 126,756,330 80,664,148
Estimated Savings 19,739,267 65,831,449
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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Reconciliation of Required Employer Contributions

Normal Cost (% of Payroll)

1. For Period 7/1/25 – 6/30/26
a) Employer Normal Cost 20.61%
b) Employee contribution 10.15%
c) Total Normal Cost 30.76%

2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.88%)
b) Effect of plan changes 0.00%
c) Effect of discount rate change due to Funding Risk Mitigation 0.00% d) Effect of assumption changes 0.00%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.88%)

3. For Period 7/1/26 – 6/30/27
a) Employer Normal Cost 19.64%
b) Employee contribution 10.24%
c) Total Normal Cost 29.88%
Employer Normal Cost Change [(3a) – (1a)] (0.97%)
Employee Contribution Change [(3b) – (1b)] 0.09%

Unfunded Liability Contribution ($)

1. For Period 7/1/25 – 6/30/26 18,545,666

2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule 0 b) Effect of elimination of amortization bases (22,149) c) Effect of progression of amortization bases 1 1,081,287 d) Effect of investment (gain) /loss during prior year2 (215,433) e) Effect of non-investment (gain)/loss during prior year 1,158,844 f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0 g) Effect of Golden Handshake 0
h) Effect of plan changes 0
i) Effect of AL Significant Increase (Government Code section 20791) 0 j) Effect of assumption changes 0
k) Effect of adjustments to the amortization schedule (e.g., Fresh Start) 0 l) Effect of method change 0
m) Net effect of the changes above [sum of (a) through (l)] 2,002,549

3. For Period 7/1/26 – 6/30/27 [(1) + (2m)] 20,548,215

The amounts shown for the period 7/1/25 – 6/30/26 may be different if a prepayment of unfunded actuarial liability is made or a plan change became effective after the prior year’s actuarial valuation was performed.

1 Includes scheduled escalation in individual amortization base payments due to the 5-year ramp and payroll grow th assumption used in the pre-2019 amortization policy.
2 The unfunded liability contribution for the investment (gain)/loss during the year prior to the valuation date is 20% of the “full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period w ill be included in line c) for each of the next four years.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Employer Contribution History

The table below provides a 10-year history of the employer contribution requirements for the plan, as determined by the annual actuarial valuation. Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.

Valuation
Date
Contribution
Year
Employer
Normal Cost Rate
Unfunded Liability
Payment
06/30/2015 2017-18 18.900% $7,127,885
06/30/2016 2018-19 19.397% 8,421,191
06/30/2017 2019-20 20.194% 10,019,332
06/30/2018 2020-21 21.566% 11,210,740
06/30/2019 2021-22 21.52% 13,282,515
06/30/2020 2022-23 20.58% 14,860,807
06/30/2021 2023-24 22.59% 14,376,181
06/30/2022 2024-25 22.21% 16,551,519
06/30/2023 2025-26 20.61% 18,545,666
06/30/2024 2026-27 19.64% 20,548,215

Funding History

The table below shows the recent history of the actuarial accrued liability, market value of assets, unfunded accrued liability, funded ratio and annual covered payroll.

Valuation
Date

Accrued
Liability
(AL)
Market Value of
Assets (MVA)
Unfunded
Accrued
Liability (UAL)

Funded
Ratio

Annual
Covered
Payroll
6/30/2015 $377,934,524 $259,169,591 $118,764,933 68.6% $21,186,275 6/30/2016 392,911,774 249,886,581 143,025,193 63.6% 21,268,028 6/30/2017 422,062,152 267,871,162 154,190,990 63.5% 23,485,510 6/30/2018 451,111,924 280,399,741 170,712,183 62.2% 23,613,222 6/30/2019 471,338,133 289,117,004 182,221,129 61.3% 25,488,331 6/30/2020 487,159,688 293,857,975 193,301,713 60.3% 27,097,526 6/30/2021 509,225,515 353,339,674 155,885,841 69.4% 25,745,571 6/30/2022 531,613,942 318,801,170 212,812,772 60.0% 25,004,764 6/30/2023 555,403,195 331,696,065 223,707,130 59.7% 27,941,899 6/30/2024 582,389,782 355,816,276 226,573,506 61.1% 30,132,343 Item 4
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Safety Valuation as of June
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Risk Analysis

• Future Investment Return Scenarios 26
• Discount Rate Sensitivity 27
• Mortality Rate Sensitivity 27
• Maturity Measures 28
• Maturity Measures History 29
• Funded Status – Termination Basis 30
• Funded Status – Low-Default-Risk Basis 31
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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Future Investment Return Scenarios

Analysis using the investment return scenarios from the Asset Liability Management process completed in 2021 was performed to determine the effects of various future investment returns on required employ er UAL contributions. The CalPERS Funding Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2% , the board will consider adjustments to the discount rate. The projection s below use a discount rate of 6.8% for all scenarios even though an annual return of 10.8% is high enough to trigger a board discussion on the discount rate. The projections also assume that all other actuarial assumptions will be realized and that no further changes in assumptions, contributions, benefits , or funding will occur.

The employer normal cost rates are not affected by investment returns, and since no future assumption changes are being reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.

The first table shows projected UAL contribution requirements if the fund were to earn either 3.0% or 10.8% annually. These alternate investment returns were chosen because 90% of long-term average returns are expected to fall between them over the 20-year period ending June 30, 2044.

Assumed Annual Return
FY 2024-25
through FY 2043-44
Projected Employer UAL Contributions
2027-28 2028-29 2029-30 2030-31 2031-32

3.0% (5th percentile) $21,583,000 $23,805,000 $25,124,000 $26,746,000 $27,966,000

10.8% (95th percentile ) $20,908,000 $21,741,000 $20,915,000 $19,585,000 $16,991,000

Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns will average less than 3.0% or greater than 10.8% over a 20-year period, the likelihood of a single investment return less than

3.0% or greater than 10.8% in any given year is much greater. The following analysis illustrates the effect of an extreme, single year investment return.

The portfolio has an expected volatility (or standard deviation) of 12.0% per year. Accordingly, in any given year there is a 16% probability that the annual return will be -5.2% or less and a 2.5% probability that the annual return will be -17.2% or less. These returns represent one and two standard deviations below the expected return of 6.8%.

The following table shows the effect of one and two standard deviation investment loss es in FY 2024-25 on the FY 2027-28 contribution requirements. Note that a single -year investment gain or loss decreases or increases the required UAL contribution amount incrementally for each of the next five years, not just one, due to the 5-year ramp in the amortization policy. However, the contribution requirements beyond the first year are also impacted by investment returns beyond the first year. Historically, significant downturns in the market are often followed by higher than average returns. Such investment gains would offset the impact of these single year negative returns in years beyond FY 2027-28.

Assumed Annual Return for
Fiscal Year 2024-25
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2026-27 2027-28
(17.2%) (2 standard deviation loss) $20,548,215 $23,331,000 (5.2%) (1 standard deviation loss ) $20,548,215 $22,293,000

• Without investment gains (returns higher than 6.8%) in FY 2025-26 or later, projected contributions rates would continue to rise over the next four years due to the continued phase -in of the impact of the illustrated investment loss in FY 2024-25.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2027-28 as well as to model other investment return scenarios .

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Discount Rate Sensitivity

The discount rate assumption is calculated as the sum of the assumed real rate of return and the assumed annual price inflation, currently 4.5% and 2.3%, respectively. Changing either the price inflation assumption or the real rate of return assumption will change the discount rate. The sensitivity of the valuation results to the discount rate assumption depends on which component of the discount rate is changed. Shown below are various valuation results as of June 30, 2024, assuming alternate discount rates by changing the two components independently. Results are shown using the current discount rate of

6.8% as well as alternate discount rates of 5.8% and 7.8%. The rates of 5.8% and 7.8% were selected since they illustrate the impact of a 1.0% increase or decrease to the 6.8% assumption.

Sensitivity to the Discount Rate Due to Varying the Real Rate of Return Assumption

As of June 30, 2024
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.3% 2.3% 2.3%
Real Rate of Return 3.5% 4.5% 5.5%
a) Total Normal Cost 37.86% 29.88% 23.83%
b) Accrued Liability $657,358,512 $582,389,782 $520,576,724 c) Market Value of Assets $355,816,276 $355,816,276 $355,816,276 d) Unfunded Liability/(Surplus) [(b) - (c)] $301,542,236 $226,573,506 $164,760,448 e) Funded Ratio 54.1% 61.1% 68.4%

Sensitivity to the Discount Rate Due to Varying the Price Inflation Assumption

As of June 30, 2024
1% Lower
Price Inflation
Current
Assumptions
1% Higher
Price Inflation
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.3% 2.3% 3.3%
Real Rate of Return 4.5% 4.5% 4.5%
a) Total Normal Cost 31.36% 29.88% 27.13%
b) Accrued Liability $601,525,118 $582,389,782 $544,993,912 c) Market Value of Assets $355,816,276 $355,816,276 $355,816,276 d) Unfunded Liability/(Surplus) [(b) - (c)] $245,708,842 $226,573,506 $189,177,636 e) Funded Ratio 59.2% 61.1% 65.3%

Mortality Rate Sensitivity

The following table looks at the change in the June 30, 2024, plan costs and funded status under two differe nt longevity scenarios, namely assuming rates of post-retirement mortality are 10% lower or 10% higher than our current mortality assumptions adopted in 2021. This type of analysis highlights the impact on the plan of a change in the mortality assumption .

As of June 30, 2024
10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 30.30% 29.88% 29.49%
b) Accrued Liability $593,824,269 $582,389,782 $571,869,278 c) Market Value of Assets $355,816,276 $355,816,276 $355,816,276 d) Unfunded Liability/(Surplus) [(b) - (c)] $238,007,993 $226,573,506 $216,053,002 e) Funded Ratio 59.9% 61.1% 62.2%

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Maturity Measures

As pension plans mature , they become more sensitive to risks. Understanding plan maturity and how it affects the ability of a pension plan sponsor to tolerate risk is important in understanding how the pension plan is impacted by investment return volatility, other economic variables , and changes in longevity or other demographic assumptions.

One way to look at the maturity level of CalPERS and its plans is to look at the ratio of a plan’s retiree liability to its total liability.

A pension plan in its infancy will have a very low ratio of retiree liability to total liability. As the plan matures, the ratio increases.

A mature plan will often have a ratio above 60%-65%.

Ratio of Retiree Accrued Liability to
Total Accrued Liability June 30, 2023 June 30, 2024

1. Retiree Accrued Liability $402,806,352 $413,652,979

2. Total Accrued Liability $555,403,195 $582,389,782

3. Ratio of Retiree AL to Total AL [(1) ÷ (2)] 73% 71%

Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called the support ratio. A pension plan in its infancy will have a very high ratio of active to retired members. As the plan matures and members retir e, the ratio declines. A mature plan will often have a ratio near or below one.

To calculate the support ratio for the rate plan, retirees and beneficiaries receiving a continuance are each counted as one, even though they may have only worked a portion of their careers as an active member of this rate plan. For this reason, the support ratio, while intuitive, may be less informative than the ratio of retiree liability to total accrued liability above.

For comparison, the support ratio for all CalPERS public agency plans as of June 30, 2023, was 0.78 and was calculated consistently with how it is for the individual rate plan. Note that to calculate the support ratio for all public agency plan s, a retiree with service from more than one CalPERS agency is counted as a retiree more than once.

Support Ratio June 30, 2023 June 30, 2024

1. Number of Actives 164 159

2. Number of Retirees 458 464

3. Support Ratio [(1) ÷ (2)] 0.36 0.34

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Maturity Measures (continued)

The actuarial calculations supplied in this communication are based on various assumptions about long -term demographic and economic behavior. Unless these assumptions (e.g., terminations, deaths, disabilities, retirements, salary increases , investment return) are exactly realized each year, there will be differences on a year-to-year basis. The year-to-year differences between actual experience and the assumptions are called actuarial gains and losses and serve to lower or raise required employer contributions from one year to the next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and downs of investment returns.

Asset Volatility Ratio

Shown in the table below is the asset volatility ratio (AVR), which is the ratio of market value of assets to payroll. Plans that have a higher AVR experience more volatile employer contributions (as a percentage of payroll) due to investment return. For example, a plan with an AVR of 8 may experience twice the contribution volatility due to investment return volatility than a plan with an AVR of 4. It should be noted that this ratio is a measure of the current situation. It increases over time but generally tends to stabilize as a plan matures.

Liability Volatility Ratio

Also shown in the table below is the liability volatility ratio (LVR), which is the ratio of accrued liability to payroll. Plans that have a higher LVR experience more volatile employer contributions (as a percentage of payroll) due to changes in liability. For example, a plan with an LVR of 8 is expected to have twice the contribution volatility of a plan with an LVR of 4 when there is a change in accrued liability, such as when there is a change in actuarial assumptions . It should be noted that this ratio indicates a longer -term potential for contribution volatility, since the AVR, described above, will tend to move closer to the LVR as the funded ratio approaches 10 0%.

Contribution Volatility June 30, 2023 June 30, 2024

1. Market Value of Assets without Receivables $331,561,327 $355,701,659

2. Payroll 27,941,899 30,132,343

3. Asset Volatility Ratio (AVR) [(1) ÷ (2)] 11.9 11.8

4. Accrued Liability $555,403,195 $582,389,782

5. Liability Volatility Ratio (LVR) [(4) ÷ (2)] 19.9 19.3

Maturity Measures History

Valuation Date
Ratio of
Retiree Accrued Liability
to
Total Accrued Liability Support Ratio
Asset
Volatility
Ratio
Liability
Volatility
Ratio

6/30/2017

72%

0.40 11.4

18.0 6/30/2018

74%

0.39 11.9

19.1 6/30/2019

71%

0.39 11.3

18.5 6/30/2020

71%

0.40 10.8

18.0 6/30/2021

71%

0.37 13.7

19.8 6/30/2022

72%

0.34 12.7

21.3 6/30/2023

73%

0.36 11.9

19.9 6/30/2024

71%

0.34 11.8

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Safety Valuation as of June
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Funded Status – Termination Basis

The funded status measured on a termination basis is an estimated range for the financial position of the plan had the contract with CalPERS been terminated as of June 30, 2024 . The accrued liability on a termination basis (termination liability) is calculated differently from the plan’s ongoing funding liability. For the termination liability calculation, both compensation and service are frozen as of the valuation date and no future pay increases or service accruals are assumed. This measure of funded status is not appropriate for assessing the need for future employer contributions in the case of an ongoing plan, that is, for an employer that continues to provide CalPERS retirement benefits to active employees. Unlike the actuarial cost method used for ongoing plans, the terminatio n liability is the present value of the benefits earned through the valuation date.

A more conservative investment policy and asset allocation strategy was adopted by the board for the Terminated Agency Pool.

The Terminated Agency Pool has limited funding sources since no future employer contributions will be made. Therefore, expected benefit payments are secured by risk-free assets and benefit security for members is increased while limiting the funding risk. However, this asset allocation has a lower expected rate of return than the remainder of the PERF and consequently, a lower discoun t rate assumption. The lower discount rate for the Terminated Agency Pool results in higher liabilities for terminated plans.

The discount rate used for actual termination valuations is a weighted average of the 10-year and 30-year Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the following analysis is based on 20-year Treasury bonds, which is a good proxy for most plans. The discount rate upon contract terminat ion will depend on actual Treasury rates on the date of termination , which varies over time, as demonstrated below.

Valuation 20-Year Valuation 20-Year
Date Treasury Rate Date Treasury Rate
06/30/2015 2.83% 06/30/2020 1.18%
06/30/2016 1.86% 06/30/2021 2.00%
06/30/2017 2.61% 06/30/2022 3.38%
06/30/2018 2.91% 06/30/2023 4.06%
06/30/2019 2.31% 06/30/2024 4.61%

As Treasury rates are variable, the table below shows a range for the termination liability using discount rates 1% below and above the 20-year Treasury rate on the valuation date. The price inflation assumption is the 20 -year Treasury breakeven inflation rate, that is, the difference between the 20-year inflation indexed bond and the 20-year fixed-rate bond.

The Market Value of Assets (MVA) also varies with interest rates and will fluctuate depending on other market conditions on the date of termination . Since it is not possible to approximate how the MVA will change in different interest rate environments, th e results below use the MVA as of the valuation date.

Discount Rate: 3.61%
Price Inflation: 2.45%
Discount Rate: 5.61%
Price Inflation: 2.45%

1. Termination Liability 1 $874,060,922 $661,766,866

2. Market Value of Assets (MVA) 355,816,276 355,816,276

3. Unfunded Termination Liability [(1) – (2)] $518,244,646 $305,950,590

4. Funded Ratio [(2) ÷ (1)] 40.7% 53.8%

1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial assumptions can be found in Appendix A.

In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent to Termin ate. The completed Resolution will allow a CalPERS actuary to provide a preliminary termination valuation with a more up-to-date estimate of the plan’s assets and liabilities. Before beginning this process, please consult with a CalPERS actuary.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Funded Status – Low-Default-Risk Basis

Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions , requires the disclosure of a low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date using a discount rate based on the yields of high quality fixed income securities with cash flows that replicate expected benefit payments. Conceptually, this measure represents the level at which financial markets would value the accrued plan costs, and would be approximately equal to the cost of a portfolio of low -default-risk bonds with similar financial characteristics to accrued plan costs.

As permitted in ASOP No. 4, the Actuarial Office uses the Entry Age Actuarial Cost Method to calculate the LDROM. This methodology is in line with the measure of “benefit entitlements” calculated by the Bureau of Economic Analysis and used by the Federal Reserve to report the indebtedness due to pensions of plan sponsors and, conversely, the household wealth due to pensions of plan members.

As shown bel ow, the discount rate used for the LDROM is 5.35%, which is the Standard FTSE Pension Liability Index1 discount rate as of June 30, 2024 .

Selected Measures on a Low-Default-Risk Basis June 30, 2024 Discount Rate 5.35%

1. Accrued Liability – Low-Default-Risk Basis (LDROM)
a) Active Members $184,413,772
b) Transferred Members 19,661,697
c) Separated Members 10,340,281
d) Members and Beneficiaries Receiving Payments 481,944,422 e) Total $696,360,172

2. Market Value of Assets (MVA) 355,816,276

3. Unfunded Accrued Liability – Low-Default-Risk Basis [(1e) – (2)] $340,543,896

4. Unfunded Accrued Liability – Funding Policy Basis 226,573,506

5. Present Value of Unearned Investment Risk Premium [(3) – (4)] $113,970,390

The difference between the unfunded liabilities on a low -default-risk basis and on the funding policy basis represents the present value of the investment risk premium that must be earned in future years to keep future contributions for currently accrued plan costs at the levels anticipated by the funding policy.

Benefit security for members of the plan relies on a combination of the assets in the plan, the investment income generated f rom those assets and the ability of the plan sponsor to make necessary future contributions. If future returns fall short of 6.8%, benefit security could be at risk without higher than currently anticipated future contributions.

The funded status on a low-default-risk basis is not appropriate for assessing the sufficiency of plan assets to cover the cost of settling the plan’s benefit obligations (see Funded Status – Termination Basis ), nor is it appropriate for assessing the need for future contributions (see Funded Status – Funding Policy Basis ).

1 This index is based on a yield curve of hypothetical AA-rated zero-coupon corporate bonds whose maturities range from 6 months to 30 years. The index represents the single discount rate that w ould produce the same present value as discounting a standardized set of liability cash flow s for a fully open pension plan using the yield curve. The liability cash flows are reasonably consistent with the pattern of benefits expected to be paid from the entire Public Employees’ Retirement Fund for current and former plan members. A different index, hence a different discount rate, may be needed to measure the LDROM for a subset of the fund, such as a single rate plan or a group of retirees.

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Safety Valuation as of June
30, 2024

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Supplementary Information

• Normal Cost by Benefit Group 33
• Summary of Valuation Data 34
• Status of PEPRA Transition 35
• Plan's Major Benefit Options 36
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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Normal Cost by Benefit Group

The table below displays the Total Normal Cost broken out by benefit group for FY 2026-27. The Total Normal Cost is the annual cost of service accrual for the fiscal year for active employees and can be viewed as the long -term contribution rate for the benefits contracted. Generally, the normal cost for a benefit group subject to more generous benefit provisions will exceed the normal cost for a group with less generous benefits. However, based on the characteristics of the members (particularly when the number of actives is small), this may not be the case. Future measurements of the Total Normal Cost for each group may differ significantly from the current values due to such factors as: changes in the demographics of the group, changes in economic and demographic assumptions, changes in plan be nefits or applicable law.

Rate
Plan
Identifier Benefit Group Name
Total
Normal
Cost
FY 2026-27
Offset due to
Employee
Contributions
FY 2026-27
Employer
Normal
Cost1
FY 2026-27
Number
of
Actives
Payroll on
6/30/2024
5080 Safety Police First Level 38.31% 9.00% 29.31% 27 $6,405,272 30705 Safety Fire First Level N/A N/A N/A 0 0
30706 Safety Fire Second Level 34.07% 9.00% 25.07% 38 8,321,401 30707 Safety Fire Third Level 30.79% 9.00% 21.79% 8 1,585,152 30708 Safety Police Second Level 35.42% 9.00% 26.42% 2 533,933 25006 Safety Fire PEPRA Level 20.54% 11.75% 8.79% 41 6,373,891 25007 Safety Police PEPRA Level 25.65% 11.75% 13.90% 43 6,912,695 Plan Total 29.88% 10.24% 19.64% 159 $30,132,344

1 The employer normal cost for individual rate plans is provided for illustrative purposes only. The employer normal cost rate for contribution purposes is the blended rate show n in the Plan Total row and is the employer normal cost contribution rate that applies to the covered payroll of members in every rate plan show n above.

Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benef its such as Employer Paid Member Contributions, then the Normal Cost shown for the respective benefit level does not reflect those differences. Additionally, if a Second Level Benefit Group amended to the same benefit formula as a First Level Benefit Group, their Normal Costs may be diss imilar due to demographic or other population differences. For questions in these situations, please contact a CalPERS actuary.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Summary of Valuation Data

June 30, 2023 June 30, 2024

1. Active Members
a) Counts 164 159
b) Average Attained Age

40.02 40.28
c) Average Entry Age to Rate Plan 29.65 29.43
d) Average Years of Credited Service 10.46 10.93
e) Average Annual Covered Payroll $170,377 $189,512
f) Annual Covered Payroll $27,941,899 $30,132,343
g) Projected Annual Payroll for Contribution Year $30,355,352 $32,734,993 h) Present Value of Future Payroll $271,205,520 $282,440,619

2. Transferred Members
a) Counts 61 63
b) Average Attained Age 42.23 42.48
c) Average Years of Credited Service 4.08 4.08
d) Average Annual Covered Payroll $147,916 $155,381

3. Separated Members
a) Counts 65 72
b) Average Attained Age 42.84 43.69
c) Average Years of Credited Service 3.07 2.88
d) Average Annual Covered Payroll $99,985 $102,686

4. Retired Members and Beneficiaries Receiving Payments a) Counts 458 464
b) Average Attained Age 69.26 69.61
c) Average Annual Benefits $67,186 $68,805
d) Total Annual Benefits $30,771,193 $31,925,393

5. Active to Retired Ratio [(1a) ÷ (4a)] 0.36 0.34

Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities.

Average Annual Benefits represe nts benefit amounts payable by this plan only. Some members may have service with another agency and would therefore have a larger total benefit than would be included as part of the average shown here.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Status of PEPRA Transition
The California Public Employees' Pension Reform Act of 2013 (PEPRA), which took effect in January 2013, changed CalPERS retirement benefits and placed compensation limits on new members joining CalPERS o n or after January 1, 2013.

One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their members. While such changes can reduce future benefit costs in a meaningful way, the full impact on empl oyer contributions will not occur until all active members are subject to the rules and provisions of PEPRA. The table below illustrates the sta tus of this transition as of June 30, 2024.

Classic PEPRA
PEPRA
as a Percent
of Total
Active Members
Count 75 84 52.8%
Average Attained Age 47.66 33.70
Average Entry Age 29.32 29.52
Average Years of Credited Service 18.46 4.21
Average Annual Covered Payroll $224,610 $158,174
Annual Covered Payroll $16,845,758 $13,286,585 44.1%
Present Value of Future Payroll $110,611,521 $171,829,098 60.8%

Transferred Members
Count 37 26 41.3%

Separated Members
Count 45 27 37.5%

Retired Members and Beneficiaries Receiving Payments
Count 461 3 0.6%
Average Annual Benefit $68,962 $44,597
Total Annual Benefits $31,791,603 $133,790 0.4%

Accrued Liabilities
Active Members $132,629,111 $13,602,183 9.3%
Transferred Members 12,172,033 2,240,547 15.5%
Separated Members 7,345,114 747,815 9.2%
Retired Members and Beneficiaries 411,245,222 2,407,757 0.6% Total $563,391,480 $18,998,302 3.3%

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Plan's Major Benefit Options
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in Appendix B.

Benefit Group
Member Category Police Fire Fire Police Fire Fire Police Demographics
Actives Yes Yes No No No Yes Yes
Transfers/Separated Yes Yes Yes Yes No Yes Yes
Receiving Yes Yes Yes No Yes Yes Yes
Benefit Group Key 105397 105398 105400 111263 111265 111268 111269 Benefit Provision

Benefit Formula 3% @ 50 3% @ 50 3% @ 50 2.7% @ 57 3% @ 55 3% @ 55 Social Security Coverage No No No No No No
Full/Modified Full Full Full Full Full Full

Employee Contribution Rate 9.00% 9.00% 9.00% 9.00%

Final Average Compensation Period One Year One Year One Year Three Year Three Year Three Year

Sick Leave Credit No No No No No No

Non-Industrial Disability Standard Standard Standard Standard Standard Standard

Industrial Disability Standard Standard Standard Standard Standard Standard

Pre-Retirement Death Benefits
Optional Settlement 2 No Yes Yes No Yes No
1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Level 1 Level 1 Special Yes Yes Yes Yes Yes Yes
Alternate (firefighters) No No No No No No

Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Survivor Allowance (PRSA) No No No No No No No

COLA 2% 2% 2% 2% 2% 2% 2%
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Attachment C - CalPERS Safety
Valuation as of June 30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and op tional plan provisions is in Appendix B.

Benefit Group
Member Category Fire Police Fire Fire Fire Fire Police
Demographics
Actives Yes Yes No No No No No
Transfers/Separated Yes Yes No No No No No
Receiving No Yes Yes Yes Yes Yes Yes
112653 217220 217221 217224 217225 217226 217231
Benefit Provision

Benefit Formula 2.7% @ 57 2.7% @ 57
Social Security Coverage No No
Full/Modified Full Full

Employee Contribution Rate 11.75% 11.75%

Final Average Compensation Period Three Year Three Year

Sick Leave Credit No No

Non-Industrial Disability Standard Standard

Industrial Disability Standard Standard

Pre-Retirement Death Benefits
Optional Settlement 2 Yes No
1959 Survivor Benefit Level Level 1 Level 1
Special Yes Yes
Alternate (firefighters) No No

Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Survivor Allowance (PRSA) No No No No No No No

COLA 2% 2% 2% 2% 2% 2% 2%
Item 4
Attachment C - CalPERS Safety
Valuation as of June 30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal stand ard and optional plan provisions is in Appendix B.

Benefit Group
Member Category Police Police Police
Demographics
Actives No No No
Transfers/Separated No No No
Receiving Yes Yes Yes
217234 217235 217236
Benefit Provision

Benefit Formula
Social Security Coverage
Full/Modified

Employee Contribution Rate

Final Average Compensation Period

Sick Leave Credit

Non-Industrial Disa bility

Industrial Disability

Pre-Retirement Death Benefits
Optional Settlement 2
1959 Survivor Benefit Level
Special
Alternate (firefighters)

Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No

COLA 2% 2% 2%

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Attachment C - CalPERS Safety
Valuation as of June 30, 2024

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Appendix A - Actuarial Methods and Assumptions

• Actuarial Data 40
• Actuarial Methods 40
• Actuarial Assumptions 44
• Miscellaneous 64

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Actuarial Data

As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and appropriate in aggregate. We are unaware of any potential data issues that would have a material effect on the results of this valuation, except that data does not always contain the latest salary information for former members now in reciprocal systems and does not recognize the potential for unusually large salary deviation in certain cases such as elected officials. Therefore, salary information in these cases may not be accurate. These situations are relatively infrequent, however, and generally do not have a material impact o n the required employer contributions.

Actuarial Methods

Actuarial Cost Method

With one exception, the actuarial cost method use d in this valuation is the Entry Age Actuarial Cost Method. This method is used to calculate the required employer contributions and the PEPRA member contribution rate. Under this method, the cost of the projected benefits is allocated on an individual basis as a level percent of earnings for the individual between entry age and retirement age. The portion allocated to the year following the valuation date is the normal cost. This method yields a total normal cost rate, expressed as a percentage of payroll, which is designed to remain level throughout the member’s career.

The actuarial accrued liability for active members is then calculated as the present value of benefits minus the present value of future normal cost , or the portion of the total present value of benefits allocated to prior years. The actuarial accrued liability for members currently receiving benefits and for members entitled to deferred benefits is equal to the present value of the benef its expected to be paid. No normal costs are applicable for these pa rticipants.

To calculate the accrued liability on termination basis, this valuation use d the Traditional Unit Credit Actuarial Cost Method. This method differs from the entry age method only for active members where the accrued liability is the present value of benefits assuming no future pay increases or service accruals.

Amortization of Unfunded Actuarial Accrued Liability

The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded actuarial acc rued liability (UAL). Funding requirements are determined by adding the normal cost and a payment toward the UAL. The UAL payment is equal to the sum of individual amortization payments, each representing a different source of UAL for a given measurement period.

Amortization payments are determined according to the CalPERS Actuarial Amortization Policy. The board adopted a new policy effective for the June 30, 2019 , actuarial valuation. The new policy applies prospectively only; amortization bases (sources of UAL) established prior to the June 30, 2019 , valuation will continue to be amortized according to the prior policy.

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Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Amortization of Unfunded Actuarial Accrued Liability (continued)

Prior Policy (Bases Established on or after June 30, 2013, and prior to June 30, 2019)

Amortization payments are determined as a level percentage of payroll whereby the payment increases each year at an escalation rate. Gains or losses are amorti zed over a fixed 30-year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden handshakes) are amortized over a 20-year period with no ramp. Changes in actuarial assumptions or changes in actuarial methodology are amortized over a 20-year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five years (20 years prior to June 30, 2014). A summary is provided in the following table:

Driver
Source
(Gain)/Loss
Assumption/Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 30 Years 30 Years 20 Years
20 Years 5 Years
Escalation Rate
- Active Plans
- Inactive Plans

2.80%
0%

2.80%
0%

2.80%
0%

2.80%
0%

2.80%
0%
Ramp Up 5 5 5 0 0
Ramp Down 5 5 5 0 0

The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of the “full” payment which begins in year five. The 5-year ramp down means that the reverse is true in the final four years of the amortization period.

Current Policy (Bases Es tablished on or after June 30, 2019)

Amortization payments are determined as a level dollar amount. Investment gains or losses are amortized over a fixed 20 -year period with a 5-year ramp up at the beginning of the amortization period. Non-investment gain s or losses are amortized over a fixed 20-year period with no ramps. All changes in liability due to plan amendments (other than golden handshakes) are amortized over a 20-year period with no ramps. Changes in actuarial assumptions or changes in actuarial methodology are amortized over a 20-year period with no ramps. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five years. A summary is provided in the table below:

Driver
Source
(Gain)/Loss
Assumption/
Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 20 Years 20 Years 20 Years 20 Years 5 Years
Escalation Rate 0% 0% 0% 0% 0%
Ramp Up 5 0 0 0 0
Ramp Down 0 0 0 0 0

The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of the “full” payment which begins in year five.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Amortization of Unfunded Actuarial Accrued Liability (continued)

Exceptions for Inconsistencies

An exception to the amortization rules above is used whenever their application results in inconsistencies. In these cases, a “fresh start” approach is used. This means that the current unfunded actuarial liability is projected and amortized over a se t number of years. For example, a fresh start is needed in the following situations:

• When a negative payment would be required on a positive unfunded actuarial liability; or • When the payment would completely amortize the total unfunded liability in a very short time period, and results in a large change in the employer contribution requirement .

It should be noted that the actuary may determine that a fresh start is necessary under other circumstances. In all cases of a fresh start, the period is set by the actuary at what is deemed appropriate; however, the period will not be greater than 20 years.

Exceptions for Plans in Surplus

If a surplus exists (i.e. , the Market Value of Assets exceeds the plan’s accrued liability) any prior amortization layers shall be considered full y amortized, and the surplus shall not be amortized.

In the event of any subsequent unfunded liability, a Fresh Start shall be used with an amortization period of 20 years or les s.

Exceptions for Small Amounts

Where small unfunded liabilities are identi fied in annual valuations which result in small payment amounts, the actuary may shorten the remaining period for these bases.

• When the balance of a single amortization base has an absolute value less than $250, the amortization period is reduced to one year.
• When the entire unfunded liability is a small amount , the actuary may perform a Fresh Start and use an appropriate amortization period.

Exceptions for Inactive Plans

The following exceptions apply to plans classified as Inactive. These plans have no active members and no expectation to have active members in the future.

• Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay” basis. For amortization layers, which utilize a ramp up and ramp down, the “ultimate” payment is constant. • Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods that are deemed too long given the duration of the liability. The specific demographics of the plan will be used to deter mine if shorter periods may be more appropriate.

Exceptions for Inactive Agencies

For a public agency with no active members in any CalPERS rate plan, the unfunded liability shall be amortized over a closed amortization period of no more than 15 years.

Asset Valuation Method

The Actuarial Value of Assets is set equal to the market value of assets. Asset values include accounts receivable.

PEPRA Normal Cost Rate Methodology

Per Government Code section 7522.30(b), the “normal cost rate” shall mean the annual actuarially determined normal cost for the plan of retirement benefits provided to the new member and shall be established based on actuarial assumptions used to determine the liabilities and costs as part of the annual actuarial valuation. The plan of retirement benefits shall include any elements that would impact the actuarial determination of the normal cost, including, but not limited to, the retirement form ula, eligibility and vesting criteria, ancillary benefit provisions, and any automatic co st-of-living adjustments as determined by the public retirement system.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

PEPRA Normal Cost Rate Methodology (continued)

For purposes of setting member rates, it is preferable to determine total normal cost using a large active population so that the rate remains relatively stable. While each CalPERS non-pooled plan has a sufficiently large active population for this purpose, the PEPRA active population by itself may not be sufficiently large enough yet. The total PEPRA normal cost for each PEPRA benefit tier will be determined based on the entire active plan population (both PEPRA and Classic) only until the number of members covered under the PEPRA formula meets either:

1. 50% of the active population, or

2. 25% of the active population and 100 or more PEPRA members

Once one of these conditions is met , the total PEPRA normal cost for each PEPRA benefit tier will be determined using the entire active PEPRA population.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Actuarial Assumptions

In 2021, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic asset allocation. In November 2021, the board adopted changes to the asset allocation that increased the expec ted volatility of returns. The adopted asset allocation was expected to have a long-term blended return that continued to support a discount rate assumption of 6.80%. The board also approved several changes to the demographic assumptions that more closely aligned wit h actual experience.

For more details and additional rationale for the selection of the actuarial assumptions, please refer to the 2021 CalPERS Experience Study and Review of Actuarial Assumptions that can be found on the CalPERS website under: Forms and Publications. Click on “View All” and search for Experience Study.

All actuarial assumptions (except the discount rates and price inflation ass umption used for the accrued liability on a termination basis and the interest rate used for the low-default-risk obligation measure ) represent an estimate of future experience rather than observations of the estimates inherent in market data.

Economic Assumptions

Discount Rate
The prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80% compounded annually (net of investment and administrative expenses) as of June 30, 2024. The discou nt rate is based on the long-term expected rate of return on assets using a building -block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. The current assumption, originally based on capital market assumptions developed by the Investment Office in 2021, has been reviewed for this valuation based on capital market assumptions developed by the Investment Office in 2023.

Termination Liabilit y Discount Rate
The current discount rate assumption used for termination valuations is a weighted average of the 10 -year and 30-year U.S.

Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The accrued liabilities on a termination basis in this report use discount rates that are based on the 20-year Treasury rate on the valuation date.

To illustrate the impact of the variability of interest rates, the accrued liabilities on a termination basis in this report use discount rates 1% below and 1% above the 20-year Treasury rate on the valuation date. The 20-year Treasury rate was 4.61% on June 30, 2024.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Salary Increases
Annual increases vary by category, entry age, and duration of service. A sample of assumed increases due to seniority, merit and promotion are shown below. Assumed wage inflation is combined with these factors to develop the total expected salary increase s.

Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.0764 0.0621 0.0521
1 0.0663 0.0528 0.0424
2 0.0576 0.0449 0.0346
3 0.0501 0.0381 0.0282
4 0.0435 0.0324 0.0229
5 0.0378 0.0276 0.0187
10 0.0201 0.0126 0.0108
15 0.0155 0.0102 0.0071
20 0.0119 0.0083 0.0047
25 0.0091 0.0067 0.0031
30 0.0070 0.0054 0.0020

Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1517 0.1549 0.0631
1 0.1191 0.1138 0.0517
2 0.0936 0.0835 0.0423
3 0.0735 0.0613 0.0346
4 0.0577 0.0451 0.0284
5 0.0453 0.0331 0.0232
10 0.0188 0.0143 0.0077
15 0.0165 0.0124 0.0088
20 0.0145 0.0108 0.0101
25 0.0127 0.0094 0.0115
30 0.0112 0.0082 0.0132

Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1181 0.1051 0.0653
1 0.0934 0.0812 0.0532
2 0.0738 0.0628 0.0434
3 0.0584 0.0485 0.0353
4 0.0462 0.0375 0.0288
5 0.0365 0.0290 0.0235
10 0.0185 0.0155 0.0118
15 0.0183 0.0150 0.0131
20 0.0181 0.0145 0.0145
25 0.0179 0.0141 0.0161
30 0.0178 0.0136 0.0179

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Salary Increases (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1238 0.1053 0.0890
1 0.0941 0.0805 0.0674
2 0.0715 0.0616 0.0510
3 0.0544 0.0471 0.0387
4 0.0413 0.0360 0.0293
5 0.0314 0.0276 0.0222
10 0.0184 0.0142 0.0072
15 0.0174 0.0124 0.0073
20 0.0164 0.0108 0.0074
25 0.0155 0.0094 0.0075
30 0.0147 0.0083 0.0077

Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.0275 0.0275 0.0200
1 0.0422 0.0373 0.0298
2 0.0422 0.0373 0.0298
3 0.0422 0.0373 0.0298
4 0.0388 0.0314 0.0245
5 0.0308 0.0239 0.0179
10 0.0236 0.0160 0.0121
15 0.0182 0.0135 0.0103
20 0.0145 0.0109 0.0085
25 0.0124 0.0102 0.0058
30 0.0075 0.0053 0.0019

• The Miscellaneous salary scale is used for Local Prosecutors. • The Police salary scale is used for Other Safety, Local Sheriff, and School Police.

Price Inflation

2.30% compounded annually.

Termination Liability Price Inflation
The breakeven inflation rate for 20 -year Treasuries on the valuation date, 2.45%.

Wage Inflation

2.80% compounded annually . This is used in projecting individual salary increases.

Payroll Growth

2.80% compounded annu ally. This is used as the escalation rate of the amortization payments on level percent of payroll amortization bases , that is, on any amortization bases established prior to 2019 for plans that currently have active members.

Miscellaneous Loading Factors

Credit for Unused Sick Leave
Total years of service is increased by 1% for those plans that have adopted the provision of providing Credit for Unused Sick Leave.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Conversion of Employer Paid Member Contributions (EPMC) Total years of service is increase d by the Employee Contribution Rate for those plans with the provision providing for the Conversion of Employer Paid Member Contributions (EPMC) during the final compensation period.

Norris Decision (Best Factors)
Employees hired prior to July 1, 1982, have projected benefit amounts increased in order to reflect the use of “Best Factors” in the calculation of optional benefit forms. This is due to a 1983 Supreme Court decision, known as the Norris decision, which required males and females to be treated equally in the determination of benefit amounts. Consequently, anyone already employed at that time is given the best possible conversion factor when optional benefits are determined. No loading is necessary for employees hired after July 1, 1982.

Termin ation Liability
The termination liabilities include a 5% contingency load. This load is for unforeseen improvements in mortality.

Demographic Assumptions

Pre-Retirement Mortality
The mortality assumptions are based on mortality rates resulting from the m ost recent CalPERS Experience Study adopted by the CalPERS Board in November 2021. For purposes of the mortality rates, the rates incorporate generational mortality to capture ongoing mor tality improvement. Generational mortality explicitly assumes that members born more recently will live longer than the members born before them thereby capturing the mortality improvement seen in the past and expected continued improvement. For more details, please refer to the 2021 CalPERS Experience Study and Review of Actuarial Assumptions report that can be found on the CalPERS website.

Rates vary by age and gender. This table only contains a sample of the 2017 base tab le rates for illustrative purposes. The non- industrial death rates are used for all plans. The industrial death rates are used for Safety plans , except for local Safety members described in Government Code section 20423.6 where the agency has not specifically contracted for industrial death benefits.

Miscellaneous Safety
Non-Industrial Death Non-Industrial Death Industrial Death (Not Job-Related) (Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
20 0.00039 0.00014 0.00038 0.00014 0.00004 0.00002
25 0.00033 0.00013 0.00034 0.00018 0.00004 0.00002
30 0.00044 0.00019 0.00042 0.00025 0.00005 0.00003
35 0.00058 0.00029 0.00048 0.00034 0.00005 0.00004
40 0.00075 0.00039 0.00055 0.00042 0.00006 0.00005
45 0.00093 0.00054 0.00066 0.00053 0.00007 0.00006
50 0.00134 0.00081 0.00092 0.00073 0.00010 0.00008
55 0.00198 0.00123 0.00138 0.00106 0.00015 0.00012
60 0.00287 0.00179 0.00221 0.00151 0.00025 0.00017
65 0.00403 0.00250 0.00346 0.00194 0.00038 0.00022
70 0.00594 0.00404 0.00606 0.00358 0.00067 0.00040
75 0.00933 0.00688 0.01099 0.00699 0.00122 0.00078
80 0.01515 0.01149 0.02027 0.01410 0.00225 0.00157

• The pre-retirement mortality rates above are for 2017 and are projected generationally for future years using 80% of the Society of Actuaries’ Scale MP-2020.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for industrial death benefits. If so, each non-industrial death rate shown above will be split into two components : 99% will become the non-industrial death rate and 1% will become the industrial death rate.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
148

Packet Pg. 346 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Post-Retirement Mortality
Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are used for all plans.

Service Retirement
Non-Industrial Disability Industrial Disability
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00267 0.00199 0.01701 0.01439 0.00430 0.00311
55 0.00390 0.00325 0.02210 0.01734 0.00621 0.00550
60 0.00578 0.00455 0.02708 0.01962 0.00944 0.00868
65 0.00857 0.00612 0.03334 0.02276 0.01394 0.01190
70 0.01333 0.00996 0.04001 0.02910 0.02163 0.01858
75 0.02391 0.01783 0.05376 0.04160 0.03446 0.03134
80 0.04371 0.03403 0.07936 0.06112 0.05853 0.05183
85 0.08274 0.06166 0.11561 0.09385 0.10137 0.08045
90 0.14539 0.11086 0.16608 0.14396 0.16584 0.12434
95 0.24665 0.20364 0.24665 0.20364 0.24665 0.20364
100 0.36198 0.31582 0.36198 0.31582 0.36198 0.31582
105 0.52229 0.44679 0.52229 0.44679 0.52229 0.44679
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000

• The post-retirement mortality rates above are for 2017 and are projected generationally for future years using 80% of the Society of Actuaries’ Scale MP-2020.

Marital Status
For active members, a percentage who are married upon retirement is assumed according to the member category as shown in the following table.

Member Category Percent Married
Miscellaneous Member 70%
Local Police 85%
Local Fire 85%
Other Local Safety 70%
School Police 85%
Local County Peace Officers 75%

Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all plans.

Separated Members
It is assumed that separ ated members refund immediately if non-vested. Separated members who are vested are assumed to retire at age 59 for Miscellaneous members and age 54 for Safety members.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
149

Packet Pg. 347 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tables below.

Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45 Male Female Male Female Male Female Male Female Male Female Male Female 0 0.1851 0.1944 0.1769 0.1899 0.1631 0.1824 0.1493 0.1749 0.1490 0.1731 0.1487 0.1713 1 0.1531 0.1673 0.1432 0.1602 0.1266 0.1484 0.1101 0.1366 0.1069 0.1323 0.1037 0.1280 2 0.1218 0.1381 0.1125 0.1307 0.0970 0.1183 0.0815 0.1058 0.0771 0.0998 0.0726 0.0938 3 0.0927 0.1085 0.0852 0.1020 0.0727 0.0912 0.0601 0.0804 0.0556 0.0737 0.0511 0.0669 4 0.0672 0.0801 0.0616 0.0752 0.0524 0.0670 0.0431 0.0587 0.0392 0.0523 0.0352 0.0459 5 0.0463 0.0551 0.0423 0.0517 0.0358 0.0461 0.0292 0.0404 0.0261 0.0350 0.0230 0.0296 10 0.0112 0.0140 0.0101 0.0129 0.0083 0.0112 0.0064 0.0094 0.0048 0.0071 0.0033 0.0049 15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1022 0.1317 0.1298 0.1389 0.1086 0.1284
1 0.0686 0.1007 0.0789 0.0904 0.0777 0.0998
2 0.0441 0.0743 0.0464 0.0566 0.0549 0.0759
3 0.0272 0.0524 0.0274 0.0343 0.0385 0.0562
4 0.0161 0.0349 0.0170 0.0206 0.0268 0.0402
5 0.0092 0.0214 0.0113 0.0128 0.0186 0.0276
10 0.0015 0.0000 0.0032 0.0047 0.0046 0.0038
15 0.0000 0.0000 0.0000 0.0000 0.0023 0.0036
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

• The police termination and refund rates are also used for Public Agency Local Prosecutors, Other Safety, Local Sheriff, and School Police.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
150

Packet Pg. 348 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Termination with Refund (continued)

Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45 Male Female Male Female Male Female Male Female Male Female Male Female 0 0.2054 0.2120 0.1933 0.1952 0.1730 0.1672 0.1527 0.1392 0.1423 0.1212 0.1318 0.1032 1 0.1922 0.2069 0.1778 0.1883 0.1539 0.1573 0.1300 0.1264 0.1191 0.1087 0.1083 0.0910 2 0.1678 0.1859 0.1536 0.1681 0.1298 0.1383 0.1060 0.1086 0.0957 0.0934 0.0853 0.0782 3 0.1384 0.1575 0.1256 0.1417 0.1042 0.1155 0.0829 0.0893 0.0736 0.0774 0.0643 0.0656 4 0.1085 0.1274 0.0978 0.1143 0.0800 0.0925 0.0622 0.0707 0.0542 0.0620 0.0462 0.0533 5 0.0816 0.0991 0.0732 0.0887 0.0590 0.0713 0.0449 0.0539 0.0383 0.0476 0.0317 0.0413 10 0.0222 0.0248 0.0200 0.0221 0.0163 0.0174 0.0125 0.0128 0.0094 0.0100 0.0063 0.0072 15 0.0106 0.0132 0.0095 0.0113 0.0077 0.0083 0.0058 0.0052 0.0040 0.0039 0.0021 0.0026 20 0.0059 0.0065 0.0050 0.0054 0.0035 0.0036 0.0021 0.0019 0.0010 0.0009 0.0000 0.0000 25 0.0029 0.0034 0.0025 0.0029 0.0018 0.0020 0.0010 0.0012 0.0005 0.0006 0.0000 0.0000 30 0.0012 0.0015 0.0011 0.0013 0.0011 0.0011 0.0010 0.0009 0.0005 0.0005 0.0000 0.0000 35 0.0006 0.0007 0.0006 0.0007 0.0005 0.0006 0.0005 0.0005 0.0003 0.0002 0.0000 0.0000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
151

Packet Pg. 349 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tables below.

Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Male Female Male Female Male Female Male Female Male Female 5 0.0381 0.0524 0.0381 0.0524 0.0358 0.0464 0.0334 0.0405 0.0301 0.0380 10 0.0265 0.0362 0.0265 0.0362 0.0254 0.0334 0.0244 0.0307 0.0197 0.0236 15 0.0180 0.0252 0.0180 0.0252 0.0166 0.0213 0.0152 0.0174 0.0119 0.0132 20 0.0141 0.0175 0.0141 0.0175 0.0110 0.0131 0.0079 0.0087 0.0000 0.0000 25 0.0084 0.0108 0.0084 0.0108 0.0064 0.0076 0.0000 0.0000 0.0000 0.0000 30 0.0047 0.0056 0.0047 0.0056 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 35 0.0038 0.0041 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0272 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0198 0.0126 0.0189
15 0.0048 0.0120 0.0083 0.0144 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0105 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0073 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0037 0.0021 0.0031
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

• After termination with vested benefits, a Miscellaneous member is assumed to retire at age 59 and a Safety member at age 54.
• The Police termination with vested benefits rates are also used for Public Agency Local Prosecutors, Other Safety, Local Sheriff, and School Police.

Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Male Female Male Female Male Female Male Female Male Female 5 0.0359 0.0501 0.0359 0.0501 0.0332 0.0402 0.0305 0.0304 0.0266 0.0272 10 0.0311 0.0417 0.0311 0.0417 0.0269 0.0341 0.0228 0.0265 0.0193 0.0233 15 0.0193 0.0264 0.0193 0.0264 0.0172 0.0220 0.0151 0.0175 0.0123 0.0142 20 0.0145 0.0185 0.0145 0.0185 0.0113 0.0141 0.0080 0.0097 0.0000 0.0000 25 0.0089 0.0123 0.0089 0.0123 0.0074 0.0093 0.0000 0.0000 0.0000 0.0000 30 0.0057 0.0064 0.0057 0.0064 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 35 0.0040 0.0049 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
152

Packet Pg. 350 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Non-Industrial (Not Job-Related) Disability
Rates vary by age and gender for Miscellaneous plans. Rates vary by age and category for Safety plans.

Miscellaneous Fire Police County Peace Officer Schools
Age Male Female All All All Male Female
20 0.0001 0.0000 0.0001 0.0001 0.0001 0.0000 0.0002
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0002
30 0.0002 0.0003 0.0001 0.0001 0.0001 0.0002 0.0002
35 0.0004 0.0007 0.0001 0.0002 0.0003 0.0005 0.0004
40 0.0009 0.0012 0.0001 0.0002 0.0006 0.0010 0.0008
45 0.0015 0.0019 0.0002 0.0003 0.0011 0.0019 0.0015
50 0.0015 0.0019 0.0004 0.0005 0.0016 0.0027 0.0021
55 0.0014 0.0013 0.0006 0.0007 0.0009 0.0024 0.0017
60 0.0012 0.0009 0.0006 0.0011 0.0005 0.0020 0.0010

• The Miscellaneous non -industrial disability rates are used for Local Prosecutors. • The police non-industrial disability rates are also used for Other Safety, Local Sheriff, and School Police.

Industrial (Job -Related) Disability
Rates vary by age and category.

Age Fire Police County Peace Officer
20 0.0001 0.0000 0.0004
25 0.0002 0.0017 0.0013
30 0.0006 0.0048 0.0025
35 0.0012 0.0079 0.0037
40 0.0023 0.0110 0.0051
45 0.0040 0.0141 0.0067
50 0.0208 0.0185 0.0092
55 0.0307 0.0479 0.0151
60 0.0438 0.0602 0.0174

• The police industrial disability rates are also used for Local Sheriff and Other Safety. • 50% of the police industrial disability rates are used for School Police. • 1% of the police industrial disability rates are used for Local Prosecutors. • Normally, rates are zero for Miscellaneous plans unless the agency has specifically contracted for industrial disability benefits. If so, each Miscellaneous non -industrial disability rate will be split into two compone nts: 50% will become the non-industrial disability rate and 50% will become the industrial disability rate.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
153

Packet Pg. 351 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement
Retirement rates vary by age, service, and formula, except for the Safety Half Pay at 55 and 2% at 55 formulas, where retirement rates vary by age only.

Public Agency Miscellaneous 1.5% at age 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248

Public Agency Miscellaneous 2% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.010 0.011 0.014 0.014 0.017 0.017
51 0.017 0.013 0.014 0.010 0.010 0.010
52 0.014 0.014 0.018 0.015 0.016 0.016
53 0.015 0.012 0.013 0.010 0.011 0.011
54 0.006 0.010 0.017 0.016 0.018 0.018
55 0.012 0.016 0.024 0.032 0.036 0.036
56 0.010 0.014 0.023 0.030 0.034 0.034
57 0.006 0.018 0.030 0.040 0.044 0.044
58 0.022 0.023 0.033 0.042 0.046 0.046
59 0.039 0.033 0.040 0.047 0.050 0.050
60 0.063 0.069 0.074 0.090 0.137 0.116
61 0.044 0.058 0.066 0.083 0.131 0.113
62 0.084 0.107 0.121 0.153 0.238 0.205
63 0.173 0.166 0.165 0.191 0.283 0.235
64 0.120 0.145 0.164 0.147 0.160 0.172
65 0.138 0.160 0.214 0.216 0.237 0.283
66 0.198 0.228 0.249 0.216 0.228 0.239
67 0.207 0.242 0.230 0.233 0.233 0.233
68 0.201 0.234 0.225 0.231 0.231 0.231
69 0.152 0.173 0.164 0.166 0.166 0.166
70 0.200 0.200 0.200 0.200 0.200 0.200
Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
154

Packet Pg. 352 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Miscellaneous 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.014 0.014 0.017 0.021 0.023 0.024
51 0.013 0.017 0.017 0.018 0.018 0.019
52 0.013 0.018 0.018 0.020 0.020 0.021
53 0.013 0.019 0.021 0.024 0.025 0.026
54 0.017 0.025 0.028 0.032 0.033 0.035
55 0.045 0.042 0.053 0.086 0.098 0.123
56 0.018 0.036 0.056 0.086 0.102 0.119
57 0.041 0.046 0.056 0.076 0.094 0.120
58 0.052 0.044 0.048 0.074 0.106 0.123
59 0.043 0.058 0.073 0.092 0.105 0.126
60 0.059 0.064 0.083 0.115 0.154 0.170
61 0.087 0.074 0.087 0.107 0.147 0.168
62 0.115 0.123 0.151 0.180 0.227 0.237
63 0.116 0.127 0.164 0.202 0.252 0.261
64 0.084 0.138 0.153 0.190 0.227 0.228
65 0.167 0.187 0.210 0.262 0.288 0.291
66 0.187 0.258 0.280 0.308 0.318 0.319
67 0.195 0.235 0.244 0.277 0.269 0.280
68 0.228 0.248 0.250 0.241 0.245 0.245
69 0.188 0.201 0.209 0.219 0.231 0.231
70 0.229 0.229 0.229 0.229 0.229 0.229

Public Agency Miscellaneous 2.5% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.014 0.017 0.027 0.035 0.046 0.050
51 0.019 0.021 0.025 0.030 0.038 0.040
52 0.018 0.020 0.026 0.034 0.038 0.037
53 0.013 0.021 0.031 0.045 0.052 0.053
54 0.025 0.025 0.030 0.046 0.057 0.068
55 0.029 0.042 0.064 0.109 0.150 0.225
56 0.036 0.047 0.068 0.106 0.134 0.194
57 0.051 0.047 0.060 0.092 0.116 0.166
58 0.035 0.046 0.062 0.093 0.119 0.170
59 0.029 0.053 0.072 0.112 0.139 0.165
60 0.039 0.069 0.094 0.157 0.177 0.221
61 0.080 0.077 0.086 0.140 0.167 0.205
62 0.086 0.131 0.149 0.220 0.244 0.284
63 0.135 0.135 0.147 0.214 0.222 0.262
64 0.114 0.128 0.158 0.177 0.233 0.229
65 0.112 0.174 0.222 0.209 0.268 0.273
66 0.235 0.254 0.297 0.289 0.321 0.337
67 0.237 0.240 0.267 0.249 0.267 0.277
68 0.258 0.271 0.275 0.207 0.210 0.212
69 0.117 0.208 0.266 0.219 0.250 0.270
70 0.229 0.229 0.229 0.229 0.229 0.229

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
155

Packet Pg. 353 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Miscellaneous 2.7% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.011 0.016 0.022 0.033 0.034 0.038
51 0.018 0.019 0.023 0.032 0.031 0.031
52 0.019 0.020 0.026 0.035 0.034 0.037
53 0.020 0.020 0.025 0.043 0.048 0.053
54 0.018 0.030 0.040 0.052 0.053 0.070
55 0.045 0.058 0.082 0.138 0.208 0.278
56 0.057 0.062 0.080 0.121 0.178 0.222
57 0.045 0.052 0.071 0.106 0.147 0.182
58 0.074 0.060 0.074 0.118 0.163 0.182
59 0.058 0.067 0.086 0.123 0.158 0.187
60 0.087 0.084 0.096 0.142 0.165 0.198
61 0.073 0.084 0.101 0.138 0.173 0.218
62 0.130 0.133 0.146 0.187 0.214 0.249
63 0.122 0.140 0.160 0.204 0.209 0.243
64 0.104 0.124 0.154 0.202 0.214 0.230
65 0.182 0.201 0.242 0.264 0.293 0.293
66 0.272 0.249 0.273 0.285 0.312 0.312
67 0.182 0.217 0.254 0.249 0.264 0.264
68 0.223 0.197 0.218 0.242 0.273 0.273
69 0.217 0.217 0.217 0.217 0.217 0.217
70 0.227 0.227 0.227 0.227 0.227 0.227

Public Agency Miscellaneous 3% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.015 0.020 0.025 0.039 0.040 0.044
51 0.041 0.034 0.032 0.041 0.036 0.037
52 0.024 0.020 0.022 0.039 0.040 0.041
53 0.018 0.024 0.032 0.047 0.048 0.057
54 0.033 0.033 0.035 0.051 0.049 0.052
55 0.137 0.043 0.051 0.065 0.076 0.108
56 0.173 0.038 0.054 0.075 0.085 0.117
57 0.019 0.035 0.059 0.088 0.111 0.134
58 0.011 0.040 0.070 0.105 0.133 0.162
59 0.194 0.056 0.064 0.081 0.113 0.163
60 0.081 0.085 0.133 0.215 0.280 0.333
61 0.080 0.090 0.134 0.170 0.223 0.292
62 0.137 0.153 0.201 0.250 0.278 0.288
63 0.128 0.140 0.183 0.227 0.251 0.260
64 0.174 0.147 0.173 0.224 0.239 0.264
65 0.152 0.201 0.262 0.299 0.323 0.323
66 0.272 0.273 0.317 0.355 0.380 0.380
67 0.218 0.237 0.268 0.274 0.284 0.284
68 0.200 0.228 0.269 0.285 0.299 0.299
69 0.250 0.250 0.250 0.250 0.250 0.250
70 0.245 0.245 0.245 0.245 0.245 0.245

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
156

Packet Pg. 354 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Miscellaneous 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.005 0.008 0.012 0.015 0.019 0.031
53 0.007 0.011 0.014 0.018 0.021 0.032
54 0.007 0.011 0.015 0.019 0.023 0.034
55 0.010 0.019 0.028 0.036 0.061 0.096
56 0.014 0.026 0.038 0.050 0.075 0.108
57 0.018 0.029 0.039 0.050 0.074 0.107
58 0.023 0.035 0.048 0.060 0.073 0.099
59 0.025 0.038 0.051 0.065 0.092 0.128
60 0.031 0.051 0.071 0.091 0.111 0.138
61 0.038 0.058 0.079 0.100 0.121 0.167
62 0.044 0.074 0.104 0.134 0.164 0.214
63 0.077 0.105 0.134 0.163 0.192 0.237
64 0.072 0.101 0.129 0.158 0.187 0.242
65 0.108 0.141 0.173 0.206 0.239 0.300
66 0.132 0.172 0.212 0.252 0.292 0.366
67 0.132 0.172 0.212 0.252 0.292 0.366
68 0.120 0.156 0.193 0.229 0.265 0.333
69 0.120 0.156 0.193 0.229 0.265 0.333
70 0.120 0.156 0.193 0.229 0.265 0.333

Public Agency Fire Half Pay at age 55 and 2% at age 55
Age Rate

Age Rate
50 0.016 56 0.111
51 0.000 57 0.000
52 0.034 58 0.095
53 0.020 59 0.044
54 0.041 60 1.000
55 0.075

Public Agency Police Half Pay at age 55 and 2% at age 55 Age Rate

Age Rate
50 0.026 56 0.069
51 0.000 57 0.051
52 0.016 58 0.072
53 0.027 59 0.070
54 0.010 60 0.300
55 0.167

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
157

Packet Pg. 355 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.018 0.077 0.056 0.046 0.043 0.046
51 0.022 0.087 0.060 0.048 0.044 0.047
52 0.020 0.102 0.081 0.071 0.069 0.075
53 0.016 0.072 0.053 0.045 0.042 0.046
54 0.006 0.071 0.071 0.069 0.072 0.080
55 0.009 0.040 0.099 0.157 0.186 0.186
56 0.020 0.051 0.108 0.165 0.194 0.194
57 0.036 0.072 0.106 0.139 0.156 0.156
58 0.001 0.046 0.089 0.130 0.152 0.152
59 0.066 0.094 0.119 0.143 0.155 0.155
60 0.177 0.177 0.177 0.177 0.177 0.177
61 0.134 0.134 0.134 0.134 0.134 0.134
62 0.184 0.184 0.184 0.184 0.184 0.184
63 0.250 0.250 0.250 0.250 0.250 0.250
64 0.177 0.177 0.177 0.177 0.177 0.177
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.054 0.054 0.056 0.080 0.064 0.066
51 0.020 0.020 0.021 0.030 0.024 0.024
52 0.037 0.037 0.038 0.054 0.043 0.045
53 0.051 0.051 0.053 0.076 0.061 0.063
54 0.082 0.082 0.085 0.121 0.097 0.100
55 0.139 0.139 0.139 0.139 0.139 0.139
56 0.129 0.129 0.129 0.129 0.129 0.129
57 0.085 0.085 0.085 0.085 0.085 0.085
58 0.119 0.119 0.119 0.119 0.119 0.119
59 0.167 0.167 0.167 0.167 0.167 0.167
60 0.152 0.152 0.152 0.152 0.152 0.152
61 0.179 0.179 0.179 0.179 0.179 0.179
62 0.179 0.179 0.179 0.179 0.179 0.179
63 0.179 0.179 0.179 0.179 0.179 0.179
64 0.179 0.179 0.179 0.179 0.179 0.179
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
158

Packet Pg. 356 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.019 0.053 0.045 0.054 0.057 0.061
51 0.002 0.017 0.028 0.044 0.053 0.060
52 0.002 0.031 0.037 0.051 0.059 0.066
53 0.026 0.049 0.049 0.080 0.099 0.114
54 0.019 0.034 0.047 0.091 0.121 0.142
55 0.006 0.115 0.141 0.199 0.231 0.259
56 0.017 0.188 0.121 0.173 0.199 0.199
57 0.008 0.137 0.093 0.136 0.157 0.157
58 0.017 0.126 0.105 0.164 0.194 0.194
59 0.026 0.146 0.110 0.167 0.195 0.195
60 0.155 0.155 0.155 0.155 0.155 0.155
61 0.210 0.210 0.210 0.210 0.210 0.210
62 0.262 0.262 0.262 0.262 0.262 0.262
63 0.172 0.172 0.172 0.172 0.172 0.172
64 0.227 0.227 0.227 0.227 0.227 0.227
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.003 0.006 0.013 0.019 0.025 0.028
51 0.004 0.008 0.017 0.026 0.034 0.038
52 0.005 0.011 0.022 0.033 0.044 0.049
53 0.005 0.034 0.024 0.038 0.069 0.138
54 0.007 0.047 0.032 0.051 0.094 0.187
55 0.010 0.067 0.046 0.073 0.134 0.266
56 0.010 0.063 0.044 0.069 0.127 0.253
57 0.135 0.100 0.148 0.196 0.220 0.220
58 0.083 0.062 0.091 0.120 0.135 0.135
59 0.137 0.053 0.084 0.146 0.177 0.177
60 0.162 0.063 0.099 0.172 0.208 0.208
61 0.598 0.231 0.231 0.231 0.231 0.231
62 0.621 0.240 0.240 0.240 0.240 0.240
63 0.236 0.236 0.236 0.236 0.236 0.236
64 0.236 0.236 0.236 0.236 0.236 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
159

Packet Pg. 357 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.124 0.103 0.113 0.143 0.244 0.376
51 0.060 0.081 0.087 0.125 0.207 0.294
52 0.016 0.055 0.111 0.148 0.192 0.235
53 0.072 0.074 0.098 0.142 0.189 0.237
54 0.018 0.049 0.105 0.123 0.187 0.271
55 0.069 0.074 0.081 0.113 0.209 0.305
56 0.064 0.108 0.113 0.125 0.190 0.288
57 0.056 0.109 0.160 0.182 0.210 0.210
58 0.108 0.129 0.173 0.189 0.214 0.214
59 0.093 0.144 0.204 0.229 0.262 0.262
60 0.343 0.180 0.159 0.188 0.247 0.247
61 0.221 0.221 0.221 0.221 0.221 0.221
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.233 0.233 0.233 0.233 0.233 0.233
64 0.234 0.234 0.234 0.234 0.234 0.234
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.095 0.048 0.053 0.093 0.134 0.175
51 0.016 0.032 0.053 0.085 0.117 0.149
52 0.013 0.032 0.054 0.087 0.120 0.154
53 0.085 0.044 0.049 0.089 0.129 0.170
54 0.038 0.065 0.074 0.105 0.136 0.167
55 0.042 0.043 0.049 0.085 0.132 0.215
56 0.133 0.103 0.075 0.113 0.151 0.209
57 0.062 0.048 0.060 0.124 0.172 0.213
58 0.124 0.097 0.092 0.153 0.194 0.227
59 0.092 0.071 0.078 0.144 0.192 0.233
60 0.056 0.044 0.061 0.131 0.186 0.233
61 0.282 0.219 0.158 0.198 0.233 0.260
62 0.292 0.227 0.164 0.205 0.241 0.269
63 0.196 0.196 0.196 0.196 0.196 0.196
64 0.197 0.197 0.197 0.197 0.197 0.197
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
160

Packet Pg. 358 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.040 0.040 0.040 0.040 0.040 0.080
51 0.028 0.028 0.028 0.028 0.040 0.066
52 0.028 0.028 0.028 0.028 0.043 0.061
53 0.028 0.028 0.028 0.028 0.057 0.086
54 0.028 0.028 0.028 0.032 0.069 0.110
55 0.050 0.050 0.050 0.067 0.099 0.179
56 0.046 0.046 0.046 0.062 0.090 0.160
57 0.054 0.054 0.054 0.072 0.106 0.191
58 0.060 0.060 0.060 0.066 0.103 0.171
59 0.060 0.060 0.060 0.069 0.105 0.171
60 0.113 0.113 0.113 0.113 0.113 0.171
61 0.108 0.108 0.108 0.108 0.108 0.128
62 0.113 0.113 0.113 0.113 0.113 0.159
63 0.113 0.113 0.113 0.113 0.113 0.159
64 0.113 0.113 0.113 0.113 0.113 0.239
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.005 0.005 0.005 0.005 0.008 0.012
51 0.006 0.006 0.006 0.006 0.009 0.013
52 0.012 0.012 0.012 0.012 0.019 0.028
53 0.033 0.033 0.033 0.033 0.050 0.075
54 0.045 0.045 0.045 0.045 0.069 0.103
55 0.061 0.061 0.061 0.061 0.094 0.140
56 0.055 0.055 0.055 0.055 0.084 0.126
57 0.081 0.081 0.081 0.081 0.125 0.187
58 0.059 0.059 0.059 0.059 0.091 0.137
59 0.055 0.055 0.055 0.055 0.084 0.126
60 0.085 0.085 0.085 0.085 0.131 0.196
61 0.085 0.085 0.085 0.085 0.131 0.196
62 0.085 0.085 0.085 0.085 0.131 0.196
63 0.085 0.085 0.085 0.085 0.131 0.196
64 0.085 0.085 0.085 0.085 0.131 0.196
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
161

Packet Pg. 359 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.038 0.038 0.038 0.038 0.055 0.089
52 0.038 0.038 0.038 0.038 0.058 0.082
53 0.036 0.036 0.036 0.036 0.073 0.111
54 0.036 0.036 0.036 0.041 0.088 0.142
55 0.061 0.061 0.061 0.082 0.120 0.217
56 0.056 0.056 0.056 0.075 0.110 0.194
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.072 0.072 0.072 0.079 0.124 0.205
59 0.072 0.072 0.072 0.083 0.126 0.205
60 0.135 0.135 0.135 0.135 0.135 0.205
61 0.130 0.130 0.130 0.130 0.130 0.153
62 0.135 0.135 0.135 0.135 0.135 0.191
63 0.135 0.135 0.135 0.135 0.135 0.191
64 0.135 0.135 0.135 0.135 0.135 0.287
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.012 0.018
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.042 0.042 0.042 0.042 0.064 0.096
54 0.057 0.057 0.057 0.057 0.088 0.132
55 0.074 0.074 0.074 0.074 0.114 0.170
56 0.066 0.066 0.066 0.066 0.102 0.153
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.071 0.071 0.071 0.071 0.110 0.164
59 0.066 0.066 0.066 0.066 0.101 0.151
60 0.102 0.102 0.102 0.102 0.157 0.235
61 0.102 0.102 0.102 0.102 0.157 0.236
62 0.102 0.102 0.102 0.102 0.157 0.236
63 0.102 0.102 0.102 0.102 0.157 0.236
64 0.102 0.102 0.102 0.102 0.157 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
162

Packet Pg. 360 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Public Agency Police 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.040 0.040 0.040 0.040 0.058 0.094
52 0.038 0.038 0.038 0.038 0.058 0.083
53 0.038 0.038 0.038 0.038 0.077 0.117
54 0.038 0.038 0.038 0.044 0.093 0.150
55 0.068 0.068 0.068 0.091 0.134 0.242
56 0.063 0.063 0.063 0.084 0.123 0.217
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.080 0.080 0.080 0.088 0.138 0.228
59 0.080 0.080 0.080 0.092 0.140 0.228
60 0.150 0.150 0.150 0.150 0.150 0.228
61 0.144 0.144 0.144 0.144 0.144 0.170
62 0.150 0.150 0.150 0.150 0.150 0.213
63 0.150 0.150 0.150 0.150 0.150 0.213
64 0.150 0.150 0.150 0.150 0.150 0.319
65 1.000 1.000 1.000 1.000 1.000 1.000

• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety.

Public Agency Fire 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.044 0.044 0.044 0.044 0.068 0.102
54 0.061 0.061 0.061 0.061 0.093 0.140
55 0.083 0.083 0.083 0.083 0.127 0.190
56 0.074 0.074 0.074 0.074 0.114 0.171
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
163

Packet Pg. 361 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Service Retirement (continued)

Schools 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.003 0.004 0.006 0.007 0.010 0.010
51 0.004 0.005 0.007 0.008 0.011 0.011
52 0.005 0.007 0.008 0.009 0.012 0.012
53 0.007 0.008 0.010 0.012 0.015 0.015
54 0.006 0.009 0.012 0.015 0.020 0.021
55 0.011 0.023 0.034 0.057 0.070 0.090
56 0.012 0.027 0.036 0.056 0.073 0.095
57 0.016 0.027 0.036 0.055 0.068 0.087
58 0.019 0.030 0.040 0.062 0.078 0.103
59 0.023 0.034 0.046 0.070 0.085 0.109
60 0.022 0.043 0.062 0.095 0.113 0.141
61 0.030 0.051 0.071 0.103 0.124 0.154
62 0.065 0.098 0.128 0.188 0.216 0.248
63 0.075 0.112 0.144 0.197 0.222 0.268
64 0.091 0.116 0.138 0.180 0.196 0.231
65 0.163 0.164 0.197 0.232 0.250 0.271
66 0.208 0.204 0.243 0.282 0.301 0.315
67 0.189 0.185 0.221 0.257 0.274 0.287
68 0.127 0.158 0.200 0.227 0.241 0.244
69 0.168 0.162 0.189 0.217 0.229 0.238
70 0.191 0.190 0.237 0.250 0.246 0.254

Schools 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.004 0.007 0.010 0.011 0.013 0.015
53 0.004 0.008 0.010 0.013 0.014 0.016
54 0.005 0.011 0.015 0.018 0.020 0.022
55 0.014 0.027 0.038 0.045 0.050 0.056
56 0.013 0.026 0.037 0.043 0.048 0.055
57 0.013 0.027 0.038 0.045 0.050 0.055
58 0.017 0.034 0.047 0.056 0.062 0.069
59 0.019 0.037 0.052 0.062 0.068 0.076
60 0.026 0.053 0.074 0.087 0.097 0.108
61 0.030 0.058 0.081 0.095 0.106 0.119
62 0.053 0.105 0.147 0.174 0.194 0.217
63 0.054 0.107 0.151 0.178 0.198 0.222
64 0.053 0.105 0.147 0.174 0.194 0.216
65 0.072 0.142 0.199 0.235 0.262 0.293
66 0.077 0.152 0.213 0.252 0.281 0.314
67 0.070 0.139 0.194 0.229 0.255 0.286
68 0.063 0.124 0.173 0.205 0.228 0.255
69 0.066 0.130 0.183 0.216 0.241 0.270
70 0.071 0.140 0.196 0.231 0.258 0.289

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
164

Packet Pg. 362 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Miscellaneous

Models

The valuation results are based on proprietary actuarial valuation models. The models are centralized and maintained by a specialized team to achieve a high degree of accuracy and consistency. The Actuarial Office is responsible for confirming the appropriateness of the inputs (such as part icipant data, actuarial methods and assumptions, and plan provisions) as well as performing tests and validating the reasonableness of the output. The results of our models are independently confirmed by parallel valuations performed by outside actuaries o n a periodic basis using their models. In our professional judgment, our actuarial valuation models produce comprehensive pension funding information consistent with the purposes of the valuation and have no material limitations or known weaknesses.

Internal Revenue Code Section 415(b)

The limitations on benefits imposed by Internal Revenue Code section 415(b) are taken into account in this valuation. Each year, the impact of any changes in this limitation other than assumed since the prior valuation is included and amortized as part of the non-investment gain or loss base. This results in lower contributions for those employers contributing to the Replacement Benefit Fund and protects CalPERS from prefunding expected benefits in excess of limits imposed by federal tax law. The Section 415(b) dollar limit for the 2024 calendar year is $275,000.

Internal Revenue Code Section 401(a)(17)

The limitations on compensation imposed by Internal Revenue Code section 401(a)(17) are taken into account in this valuation.

Each year, the impact of any changes in the compensation limitation other than assumed since the prior valuation is included and amortized as part of the non-investment gain or loss base. The compensation limit for classic members for the 2024 calendar year is $345,000.

PEPRA Compensation Limits

The limitations on compensation for PEPRA members imposed by Government Code section 7522.10 are taken into account in this valuation. Each year, the impact of any changes in the comp ensation limitation other than assumed since the prior valuation is included and amortized as part of the non-investment gain or loss base. The PEPRA compensation limit for 2024 is $151,446 for members who participate in Social Security and $181,734 for those who do not. The limits are adjusted annually based on changes to the CPI for all urban consumers.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
165

Packet Pg. 363 of 510

Appendix B - Principal Plan Provisions

• Service Retirement 66
• Vested Deferred Retirement 68
• Non-Industrial Disability Retirement 68
• Industrial Disability Retirement 69
• Post-Retirement Death Benefit 70
• Form of Payment for Retirement Allowance 70
• Pre-Retirement Death Benefits 71
• Cost-of-Living Adjustments (COLA) 73
• Purchasing Power Protection Allowance (PPPA) 73
• Employee Contributions 74
• Refund of Employee Contributions 74
• 1959 Survivor Benefit 75

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
166

Packet Pg. 364 of 510

CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

The following is a description of the principal plan pr ovisions used in calculating costs and liabilities. We have indicated whether a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits vary among employers. Optional benefits that apply to a single p eriod of time, such as Golden Handshakes, have not been included. Many of the statements in this summary are general in nature, and are intended to provide an easily understood summary of the Public Employees’ Retirement Law and the California Public Emplo yees’ Pension Reform Act of 2013. The law itself governs in all situations.

Service Retirement

Eligibility

A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of age 50 with at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). For employees hired into a plan with the 1.5% at age 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA Miscellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service.

Benefit

The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. The benefit factor depends on the benefit formula specified in the agency’s contract. The table below shows the factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors for retire ment at whole year ages:

Miscellaneo us Plan Formulas

Retirement
Age

1.5% at
age 65
2% at
age 60
2% at
age 55

2.5% at
age 55

2.7% at
age 55
3% at
age 60
PEPRA
2% at
age 62
50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A
51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A
52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000%
53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100%
54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200%
55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300%
56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400%
57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500%
58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600%
59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700%
60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800%
61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900%
62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000%
63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100%
64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200%
65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300%
66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400%
67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500%

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Safety Valuation as of June
30, 2024

Item 4: Staff Report
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167

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Classic Safety Plan Formulas

Retirement Age Half Pay at
age 55* 2% at age 55 2% at age 50 3% at age 55 3% at age 50 50 1.783% 1.426% 2.000% 2.400% 3.000%
51 1.903% 1.522% 2.140% 2.520% 3.000%
52 2.035% 1.628% 2.280% 2.640% 3.000%
53 2.178% 1.742% 2.420% 2.760% 3.000%
54 2.333% 1.866% 2.560% 2.880% 3.000%
55 & Up 2.500% 2.000% 2.700% 3.000% 3.000%

* For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of 35 or greater. If entry age is less than 35, then the age 55 benefit factor is 50% divided by the difference between age 55 and entry age. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in the above table.

PEPRA Safety Plan Formulas

Retirement Age 2% at age 57 2.5% at age 57 2.7% at age 57 50 1.426% 2.000% 2.000%
51 1.508% 2.071% 2.100%
52 1.590% 2.143% 2.200%
53 1.672% 2.214% 2.300%
54 1.754% 2.286% 2.400%
55 1.836% 2.357% 2.500%
56 1.918% 2.429% 2.600%
57 & Up 2.000% 2.500% 2.700%

• The years of service is the amount credited by CalPERS to a member while he or she is employed in this group (or for other periods that are recognized under the employer’s contract with CalPERS). For a member who has earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s contract, and then added together for the total allowance. An agency may contract for an optional benefit where any unused sick leave accumulated at the time of retirement will be converted to credited service at a rate of 0.004 years of service for each day of sick leave.

• The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full-time equivalent monthly pay (no matter which CalPERS emplo yer paid this compensation). The standard benefit is 36 months. Employers had the option of providing a final compensation equal to the highest 12 consecutive months for classic plans only. Final compensation must be defined by the highest 36 consecutive m onths’ pay under the 1.5% at age 65 formula. PEPRA members have a limit on the annual compensation that can be used to calculate final compensation. The limits are adjusted annually based on changes to the CPI for all urban consumers.

• PEPRA benefit formulas have no Social Security offsets and Social Security coverage is optional. For Classic benefit formulas, e mployees must be covered by Social Security with the 1.5% at age 65 formula. Social Security is optional for all other Classic benefit formulas. For employees covered by Social Security, the modified formula is the standard benefit.

Under this type of formula, the final compensation is offset by $133.33 (or by one third if the final compensation is less th an $400). Employers may contract for the full benefit with Social Security that will eliminate the offset applicable to the final compensation. For employees not covered by Social Security, the full benefit is paid with no offsets. Auxiliary organizations of the CSUC system may elect reduced contribut ion rates, in which case the offset is $317 if members are not covered by Social Security or $513 if members are covered by Social Security.

• The Miscellaneous and PEPRA Safety service retirement benefit is not capped. The Classic Safety service retirement benefit is capped at 90% of final compensation.

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Safety Valuation as of June
30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Vested Deferred Retirement

Eligibility for Deferred Status

CalPERS member s becomes eligible for a deferred vested retirement benefit when they leave employment , keep their contribution account balance on deposit with CalPERS, and have earned at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements).

Eligibility to Start Receiving Benefits

The CalPERS classic members and PEPRA Safety members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired into a 1.5% at age 65 plan). PEPRA Miscellaneous members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 52.

Benefit

The vested deferred retirement benefit is the same as the service retirement benefit, where the benefit factor is based on the member’s age at allowance commencement. For members who have earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s contract, and then added together for the total allowance.

Non-Industrial Disability Retirement

Eligibility

A CalPERS member is eligible for Non-Industrial (non-job related) Disability Retirement if he or she becomes disabled and has at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems w ith which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to perform their job because of an illness or injury, which is expected to be permanent or to last indefinitely. The illness or injury does not have to be job related. A CalPERS member must be actively employed by any CalPERS employer at the time of disability in order to be eligible for this benefit.

Standard Benefit

The standard Non -Industrial Disability Retirement benefit is a monthly allowance equal to 1.8% of final compensation, multiplied by service, which is determined as follows:

• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of service; or

• Service is CalPERS credited service plus the additional number of years that the member would have worked until age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in this case is 33⅓% of final compensation.

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Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
169

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Improved Benefit

Employers have the option of providing the improved Non -Industrial Disability Retirement benefit. This benefit provides a monthly allowance equal to 30% of final compensation for the first 5 years of service, plus 1% for eac h additional year of service to a maximum of 50% of final compensation.

Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability b enefit.

Members eligible to retire, and who have attained the normal retirement age determined by their service retirement benefit formula, will receive the same dollar amount for disability retirement as that payable for service retirement. For members wh o have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a particular employer to the total CalPERS service.

Industrial Disability Retirement

This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all Miscellaneous members, employers have the option of providing this benefit. An employer may choose to provide the increased benefit option or the improved benefit option.

Eligibility

An employee is eligible for Industrial (job related) Disability Retirement if he or she becomes disabled while working, where disabled means the member is unable to perform the duties of the job because of a work-related illness or injury, which is expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group is not eligible for this benefit, except to the extent described below.

Standard Benefit

The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50% of final compensation.

Increased Benefit (75% of Final Compensation)

The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75% of final com pensation for total disability.

Improved Benefit (50% to 90% of Final Compensation)

The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation Appeals Board permanent disability rate percentage (if 50% or greater, with a maximum of 90%) times the final compensation.

For a CalPERS member not actively employed in this group who became disabled while employed by some other CalPERS employer, the benefit is a return of accumulated member contributions wit h respect to employment in this group. With the standard or increased benefit, a member may also choose to receive the annuitization of the accumulated member contributions.

If a member is eligible for service retirement and if the service retirement bene fit is more than the industrial disability retirement benefit, the member may choose to receive the larger benefit.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Post-Retirement Death Benefit

Standard Lump Sum Payment

Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated survivor(s), or to the retiree’s estate. The lump sum payment amount increases to $2,000 for any death occurring on or after July 1, 2023, due to SB 1168.

Optional Lump Sum Payment

In lieu of the standard lump sum death benefit, employers have the option of providing a lump sum death benefit of $600, $3,000, $4,000 or $5,000.

Form of Payment for Retirement Allowance

Standard Form of Payment

Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The retiree may choose to provide for a portion of their allowance to be paid to any designated ben eficiary after the retiree’s death.

CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction in their retirement allowance. Such reduction takes into account the amount to be provided to the beneficiary and the probable duration of payments (based on the ages of the member and beneficiary) made subsequent to the member’s death.

Improved Form of Payment (Post-Retirement Survivor Allowance)

Employers have the option to contract for the post-retirement survivor allowance.

For retirement allowances with respect to service subject to a modified Classic formula, 25% of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. For retirement allowances with respect to service subject to a PEPRA formula or a full or supplemental Classic formula, 50% of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the deat h of the retiree, without a reduction in the retiree’s allowance. This additional benefit is referred to as post -retirement survivor allowance (PRSA) or simply as survivor continuance.

In other words, 25% or 50% of the allowance, the continuance portion , is paid to the retiree for as long as he or she is alive, and that same amount is continued to the retiree’s spouse (or if no eligible spouse, to unmarried child(ren) until they attain ag e 18; or, if no eligible child(ren), to a qualifying dependent pare nt) for the rest of their lifetime. This benefit will not be discontinued in the event the spouse remarries.

The remaining 75% or 50% of the retirement allowance, which may be referred to as the option portion of the benefit, is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for some of this option portion to be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the sam e as those offered with the standard form. The reduction is calculated in the same manner but is applied only to the option portion.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
171

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Pre-Retirement Death Benefits

Basic Death Benefit

This is a standard benef it.

Eligibility

An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed. A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit.

Benefit

The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where interest is credited annually at the greater of 6% or the prevailing discount rate through the date of death, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months ' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full -time rate of compensation during the 12 months preceding death.

1957 Survivor Benefit

This is a standard benefit.

Eligibility

An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed, has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has at least 5 years of credited service (total service across all CalPERS employers and with certain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death or, if there is no eligible spouse, to the member's unmarried child(ren) under age 18. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this 1957 Survivor benefit.

Benefit

The 1957 Survivor benefit is a monthly allowance equal to one-half of the unmodified service retirement benefit that the member would have been entitled to receive if the member had retired on the date of their death. If the benefit is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent child(ren), the benefit will be discontinued upon death or attainment of age 18, unless the child(ren) is disa bled. The total amount paid will be at least equal to the basic death benefit.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
172

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Optional Settlement 2 Death Benefit

This is an optional benefit.

Eligibility

An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively employed, has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has at least 5 years of credited service (total service across all CalPERS employers and with cert ain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this Optional Settlement 2 Death benefit.

Benefit

The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member would have received had the member retired on the date of their death and elected 100% to continue to the eligible survivor after the mem ber’s death. The allowance is payable to the surviving spouse until death, at which time it is continued to any unmarried child(ren), if applicable. The total amount paid will be at least equal to the basic death benefit.

Special Death Benefit

This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all Miscellaneous members, employers have the option of providing this benefit.

Eligibility

An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed and the death is job-related. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 22. An eligible survivor who chooses to receive this benefit will not receive any other death benefit.

Benefit

The special death benefit is a monthly allowance equal to 50% of final compensation and will be increased whenever the compensation paid to active employees is increased but ceasing to increase wh en the member would have attained age 50. The allowance is payable to the surviving spouse until death , at which time the allowance is continued to any unmarried child(ren) under age 22. There is a guarantee that the total amount paid will at least equal the basic death benefit.

If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried child(ren) under age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following:

• if 1 eligible child: 12.5% of final compensation
• if 2 eligible children: 20.0% of final compensation
• if 3 or more eligible children: 25.0% of final compensation Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Alternate Death Benefit for Local Fire Members

This is an optional benefit available only to local fire members.

Eligibility

An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957 Survivor benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 18.

Benefit

The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have receive d had the member retired on the date of their death and elected Optional Settlement 2. (A retiree who elects Optional Settlement 2 receives an allowance that has been reduced so that it will continue to be paid after their death to a surviving beneficiary.) If the member has not yet attained age 50, the benefit is equal to that which would be payable if the member had retired at age 50, based on service credited at the time of death. The allowance is payable to the surviving spouse until death, at which time it is continued to any unmarried child(ren), if applicable. The total amount paid will be at least equal to the basic death benefit.

Cost-of-Living Adjustments (COLA)

Standard Benefit

Retirement and survivor allowances are adjusted each year in May for cost of living, beginning the second calendar year after the year of retirement. The standard cost -of-living adjustment (COLA) is 2%. Annual adjustments are calculated by first determining the lesser of 1) 2% compounded from the end of the year of retirement or 2) actual rate of price inflation. The resulting increase is divided by the total increase provided in prior years. For any given year, the COLA adjustment may be less than 2% (when the rate of price inflation is low), may be greater than the rate of price inflation (when the rate of price inflation is low after several years of high price inflation) or may even be greater than 2% (when price inflation is high after several years of low price inflation).

Improved Benefit

Employers have the option of providing a COLA of 3%, 4%, or 5%, determined in the same manner as described above for the standard 2% COLA. An improved COLA is not available with the 1.5% at age 65 formula.

Purchasing Power Protection Allowance (PPPA)

Retirement and survivor allowances are protected against price inflation by PPPA. PPPA benefits are cost-of-living adjustments that are intended to maintain an individual’s allowance at 80 % of the initial allowance at retirement adjusted for price inflation since retirement. The PPPA benefit will be coordinated with other cost-of-living adjustments provided under the plan.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Employee Contributions

Each employee contributes toward their retirement based upon the retirement formula. The standard employee contribution is as described below.

• The percent contributed below the monthly compensation breakpoint is 0 %.

• The monthly compensation breakpoint is $0 for all PEPRA members and Classic members covered by a full or supplemental formula and $133.33 for Classic members covered by a modified formula.

• The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as shown in the table below.

Benefit Formula Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Miscellaneous, 2% at age 62 50% of the Total Normal Cost Miscellaneous, 1.5% at age 65 50% of the Total Normal Cost Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
Safety, 2% at age 57 50% of the Total Normal Cost
Safety, 2.5% at age 57 50% of the Total Normal Cost
Safety, 2.7% at age 57 50% of the Total Normal Cost

The employer may choose to “pick-up” these contributions for classic members (Employer Paid Member Contributions or EPMC). EPMC is prohibited for new PEPRA members.

An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the employer contribution. These contributions are paid in addition to the member contribution.

Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and the contribution rate is 6% if members are not covered by Social Security. If members are covered by Social Security, the offset is $513 and the contribution rate is 5%.

Refund of Employee Contributions

If the member’s service with the employer ends, and if the member does not sa tisfy the eligibility conditions for any of the retirement benefits above, the member may elect to receive a refund of their employee contributions, which are credited with 6% interest compounded annually.

Item 4
Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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175

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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

1959 Survivor Benefit

This is a pre-retirement death benefit available only to members not covered by Social Security. Any agency joining CalPERS subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2, and 3 are now closed. Any new agency or any agency wishing to add this benefit or increase the current level may only choose the 4th or Indexed Level.

This benefit is not included in the results presented in this valuation. More information on this benefit is available on the CalPERS website.

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
Pg.
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Appendix C - Participant Data

• Active Members 77
• Transferred and Separated Members 78
• Retired Members and Beneficiaries 79

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Active Members

Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities.

Distribution of Active Members by Age and Service

Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 5 0 0 0 0 0 5
25-29 17 4 0 0 0 0 21
30-34 21 8 1 0 0 0 30
35-39 6 8 6 1 0 0 21
40-44 3 1 11 12 0 0 27
45-49 1 4 6 5 6 2 24
50-54 0 1 2 4 8 7 22
55-59 0 0 0 1 4 2 7
60-64 0 1 0 0 1 0 2
65 and Over 0 0 0 0 0 0 0
All Ages 53 27 26 23 19 11 159

Distribution of Average Annual Salaries by Age and Service

Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+
Average
Salary
15-24 $133,213 $0 $0 $0 $0 $0 $133,213
25-29 139,595 172,721 0 0 0 0 145,905
30-34 152,154 175,930 179,691 0 0 0 159,412
35-39 152,749 181,168 192,543 217,536 0 0 178,030
40-44 164,026 179,691 190,161 239,252 0 0 208,687
45-49 128,565 219,768 216,886 197,438 235,299 300,630 221,216 50-54 0 197,141 201,296 241,500 221,859 244,895 229,767 55-59 0 0 0 197,253 197,423 243,754 210,636
60-64 0 179,691 0 0 228,500 0 204,096
65 and Over 0 0 0 0 0 0 0
Average $146,633 $184,566 $197,332 $227,783 $221,308 $254,821 $189,512

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Attachment C - CalPERS
Safety Valuation as of June
30, 2024

Item 4: Staff Report
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CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857

Transferred and Separated Members

Distribution of Transfers to Other CalPERS Plans by Age, Service, and average Salary

Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 1 0 0 0 0 0 1 105,797
30-34 9 1 0 0 0 0 10 121,380
35-39 12 4 0 0 0 0 16 156,266
40-44 5 4 2 1 0 0 12 178,798
45-49 11 1 0 1 0 0 13 145,098
50-54 5 1 0 0 0 0 6 185,677
55-59 2 1 0 0 0 0 3 125,869
60-64 2 0 0 0 0 0 2 222,805
65 and Over 0 0 0 0 0 0 0 0
All Ages 47 12 2 2 0 0 63 $155,381

Distribution of Separated Participants with Funds on Deposit by Age, Service, and average Salary

Years of Service at Valuation Date
Attained Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 2 0 0 0 0 0 2 101,507
30-34 6 1 0 0 0 0 7 110,047
35-39 17 1 1 0 0 0 19 107,029
40-44 12 2 1 0 0 0 15 99,359
45-49 9 3 1 1 0 0 14 108,157
50-54 5 1 0 1 0 0 7 105,794
55-59 2 1 0 0 0 0 3 99,434
60-64 4 0 0 0 0 0 4 53,419
65 and Over 0 1 0 0 0 0 1 129,400
All Ages 57 10 3 2 0 0 72 $102,686

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Retired Members and Beneficiaries

Distribution of Retirees and Beneficiaries by Age and Retirement Type*

Attained Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 30 0 0 1 0 0 2 3
30-34 0 0 1 0 0 0 1
35-39 0 0 0 0 0 1 1
40-44 0 0 7 0 0 0 7
45-49 0 0 9 0 0 0 9
50-54 13 0 10 0 0 0 23
55-59 50 1 11 0 0 1 63
60-64 46 0 21 0 1 2 70
65-69 46 2 18 0 2 3 71
70-74 31 0 14 0 0 3 48
75-79 26 1 16 0 0 9 52
80-84 25 0 13 0 0 20 58
85 and Over 23 1 18 0 0 16 58
All Ages 260 5 139 0 3 57 464

Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type*

Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $54,129 $0 $0 $33,786 $40,567
30-34 0 0 1,884 0 0 0 1,884
35-39 0 0 0 0 0 31,093 31,093
40-44 0 0 77,076 0 0 0 77,076
45-49 0 0 60,963 0 0 0 60,963
50-54 73,908 0 60,307 0 0 0 67,995
55-59 75,782 101 85,498 0 0 27,352 75,508
60-64 102,371 0 83,448 0 61,679 29,729 94,037
65-69 89,302 20,515 84,966 0 44,278 36,622 82,771
70-74 92,638 0 59,761 0 0 35,790 79,496
75-79 66,398 20,949 60,407 0 0 40,370 59,176
80-84 48,498 0 31,319 0 0 46,554 43,977
85 and Over 50,528 18,254 40,233 0 0 34,631 42,391
All Ages $78,998 $16,067 $64,058 $0 $50,078 $39,495 $68,805

* Counts of members do not include alternate payees receiving benefits while the member is still w orking. Therefore, the total counts may not match information on C-1 of the report. Multiple records may exist for those w ho have service in more than one coverage group. This does not result in double counting of liabilities.

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Retired Members and Beneficiaries (continued)

Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*

Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 5 Yrs 52 0 19 0 0 28 99
5-9 37 1 15 0 0 10 63
10-14 57 0 19 0 0 2 78
15-19 38 1 15 0 1 5 60
20-24 35 0 14 0 0 9 58
25-29 15 1 12 0 1 1 30
30 and Over 26 2 45 0 1 2 76
All Years 260 5 139 0 3 57 464

Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement Type*

Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 5 Yrs $79,034 $0 $73,438 $0 $0 $38,958 $66,625 5-9 80,458 2,447 67,804 0 0 18,438 66,362
10-14 102,583 0 112,612 0 0 29,442 103,151
15-19 73,303 101 80,949 0 61,679 48,444 71,729
20-24 78,330 0 63,600 0 0 57,287 71,509
25-29 38,209 38,582 54,825 0 54,601 61,396 46,187
30 and Over 57,900 19,602 35,322 0 33,955 48,976 42,974 All Years $78,998 $16,067 $64,058 $0 $50,078 $39,495 $68,805

* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total counts may not match information on C-1 of the report. Multiple records may exist for those who have service in more than one coverage group. This does not result in double counting of liabilities .

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Appendix D - Glossary

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Glossary

Accrued Liability (Actuarial Accrued Liability)
The portion of the Present Value of Benefits allocated to prior years. It can also be expressed as the Present Value of Benefits minus the present value of future Normal Cost . Different actuarial cost methods and different assumptions will lead to different measures of Accrued Liability.

Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two categories: demographic and economic. Demographic assumptions include such things as mortality, disability , and retirement rates. Economic assumptions include discount rate, wage inflation , and price inflation.

Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include an actuarial cost method, an amortization policy, and an asset valuation method.

Actuarial Valuation
The determination as of a valuation date of the Normal Cost, Accrued Liability, and related actuarial present values for a pension plan. These valuations are performed annually or when an employer is contemplating a change in plan provisions.

Actuary
A business professional proficient in mathematics and statistics who measures and manages risk. A public retirement system actuary in California perform s actuarial valuations necessary to properly fund a pension plan and disclose its liabilities and must satisfy the qualification standards for actuaries issuing statements of actuarial opinion in the United States with regard to pensions.

Amortization Bases
Separate payment schedules for different portions of the Unfunded Accrued Liability (UAL). The total UAL of a rate plan can be segregated by cause. The impact of such individual causes on the UAL are quantified at the time of their occurrence, resulting in new amortization bases. Each base is separately amortized and paid for over a specific period of time.

Generally, in an actuarial valuation, the separate bases consist of changes in UAL due to contract amendments, actuarial assumption changes, method changes, and/or experience gains and losses.

Amortization Period
The number of years required to pay off an Amortization Base.

Classic Member (under PEPRA)
A member who joined a public retirement system prior to January 1, 2013 , and who is not defined as a new member under PEPRA. (See definition of New Member below.)

Discount Rate
The rate used to discount the expected future benefit payments to the valuation date to determine the Projected Value of Benefits. Different discount rates will produce different measures of the Projected Value of Benefits. The discount rate for funding purposes is based on the assumed long-term rate of return on plan assets, net of investment and administrative expenses. This rate is called the “actuarial interest rate” in Section 20014 of the California Public Employees’ Retirement Law.

Entry Age
The earliest age at which a plan mem ber begins to accrue benefits under a defined benefit pension plan. In most cases, this is the age of the member on their date of hire.

Entry Age Actuarial Cost Method
An actuarial cost method that allocates the cost of the projected benefits on an individual basis as a level percent of earnings for the individual between entry age and retirement age. This method yields a total normal cost rate, expressed as a percentage of payroll, which is designed to remain level throughout the member’s career.

Fresh Start
A Fresh Start is when multiple amortization bases are combined into a single base and amortized over a new Amortization Period.

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Glossary (continued)

Funded Ratio
Defined as the Market Value of Assets divided by the Accrued Liability. Different actuarial cost methods and different assumptions will lead to different measures of Funded Ratio. The Funded Ratio with the Accrued Liability equal to the funding target is a measure of how well funded a rate plan is. A ratio greater than 100% means the rate plan has more assets than the funding target and the employer need only contribute the Normal Cost . A ratio less than 100% means assets are less than the funding target and contributions in addition to Normal Cost are required.

Funded Status
Any comparison of a particular measure of plan assets to a particular measure of pension obligations. The methods and assumptions used to calculate a funded status should be consistent with the purpose of the measurement.

Funding Target
The Accrued Liability measure upon which the funding requirements are based. The funding target is the Accrued Liability under the Entry Age Actuarial Cost Method using the assumptions adopted by the board.

GASB 68
Statement No. 68 of the Governmental Accounting Standards Board ; the accounting standard governing a state or local governmental employer’s accounting and financial reporting for pensions.

New Member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system for the first time on or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject to reciprocity with another public retirement system.

Normal Cost
The portion of the Present Value of Benefits allocated to the upcoming fiscal year for active employees. Different actuarial cost methods and different assumptions will lead to different measures of Normal Cost. The Normal Cost under the Entry Age Actuarial Cost Method, using the assum ptions adopted by the board, plus the required amortization of the UAL, if any, make up the required contributions.

PEPRA
The California Public Employees’ Pension Reform Act of 2013.

Present Value of Benefits (PVB)
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned in the future for current members.

Traditional Unit Credit Actuarial Cost Method
An actuarial cost method that sets the Accrued Liability equal to the Present Value of Benefits as suming no future pay increases or service accruals. The Traditional Unit Credit Cost Method is used to measure the accrued liability on a termination basis .

Unfunded Accrued Liability (UAL)
The Accrued Liability minus the Market Value of Assets. If the UAL for a rate plan is positive, the employer is required to make contributions in excess of the Normal Cost.

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City Council
Staff Report
From: City Auditor
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: January 20, 2026
Report #:2512-5773
TITLE
Approval of the Advisory Report: Contract Solicitation & Authority Levels and Subsequent Management Response as recommended by the Policy & Services Committee. CEQA Status – Not a Project.

RECOMMENDATION
The Policy & Services (P&S) Committee and the Office of the City Auditor recommend City Council approve the results of the Contract Solicitation & Authority Levels Advisory Report and subsequent management response to bring forth recommendations for revising the City’s procurement policies and ordinances and related procedures.

BACKGROUND
Baker Tilly Advisory, in its capacity serving as the Office of the City Auditor (OCA), performed a citywide risk assessment that evaluated a wide range of risk areas, including strategic, financial, operational, compliance, technological, and reputational risks. The purpose of the assessment was to identify and prioritize risks to develop the annual audit plan. During the FY2025 risk assessment, the OCA identified contract solicitation and associated signature authority levels as potential areas of risk and this topic was included as an advisory project in the FY2026 Annual Audit Plan approved by Council.

In accordance with our agreement with the City, Baker Tilly Advisory is required to execute the Annual Audit Plan each year which consists of specific, approved task orders. Task Orders approved by the Council are executed by the P&S Committee Chair as the Project Manager for the Baker Tilly Contract as stipulated in the contract terms.

ANALYSIS
Policy & Services Committee Discussion
The P&S Committee unanimously approved the results of the Contract Solicitation & Authority Levels Advisory Report on December 10, 2025. Committee members discussed the possible impacts of increasing solicitation and signature authority level thresholds including improved and more efficient processes while also noting the potential to lose some transparency over the procurement process as fewer contracts would move through a formal bidding process and Item 5
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fewer contracts would require Council approval depending on what changes are codified.

Management noted that Council does receive regular reporting on City contracts but will look for ways to improve this reporting. City management will return to Council with an outline of proposed changes in the Spring 2026. An overview of the advisory report findings is below.

Advisory Report Summary
The objective for the Contract Solicitation and Authority Levels Advisory Project was to assess and benchmark the City’s current contract solicitation and approval authority level thresholds.

Overall, OCA recommends the City conduct a comprehensive review of its Contracts and Purchasing Procedures ordinance and related policies, update solicitation requirements and authority levels to reflect current market conditions and consider adopting best practices from peer cities. Please see the attached report for a more detailed discussion of our observations and recommendations and below for a summary.

The City’s procurement procedures were last amended in 20161. Since then, market conditions and costs have changed significantly. According to industry cost indices and economic benchmarks, construction costs have increased by approximately 67%2, goods and general services by 41%3, and professional services by 35%4. Despite these changes, solicitation thresholds and authority levels have remained static, creating inefficiencies and administrative burdens.

The OCA’s primary observation is that updating the City’s procurement procedures will improve purchasing processes, eliminate administrative inefficiencies and better align the City with peer and industry best practices.

Compared to 15 benchmarked jurisdictions, Palo Alto’s competitive bidding thresholds, $10,000 for informal bidding and $85,000 for formal solicitation, are among the lowest in the region.

The City is one of only two jurisdictions that have not updated their procurement procedures since 2021. In addition, exemptions and purchasing card (P-Card) limits have not kept pace with operational needs or inflation, further constraining flexibility and efficiency. Many peer cities have updated their procedures within the past five years, adopting higher thresholds and flexible frameworks, such as the California Uniform Public Construction Cost Accounting Act (CUPCCAA), to improve efficiency and responsiveness.

The City’s signature authority levels are also among the lowest in the region, creating administrative inefficiencies and operational delays. Contract signature authority is divided between the Procurement Officer, City Manager and City Council. 1 See Ordinance 5387 of the Council of the City of Palo Alto Amending Chapter 2.30 of the Palo Alto Municipal Code 2 Department of General Services (DGS) California Construction Cost Index CCCI, DGS California Construction Cost Index CCCI 3 Municipal Cost Index (MCI), developed by American City & County, The Municipal Cost Index | Smart Cities Dive 4 U.S. Bureau of Labor Statistics, Employment Cost Index, ECI, ECI Home : U.S. Bureau of Labor Statistics Item 5
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Finally, the City’s P-Card transaction limit of $10,000, unchanged since 2016, has lost more than 25% of its purchasing power due to inflation. While some peers have similar limits, others have either increased levels, such as San Jose to $15,000, or are in the process of reviewing their limits, such as Sunnyvale. In addition, the Federal Acquisition Regulation recently increased the micro purchase threshold to $15,000 in October 2025. This erosion results in staff having to initiate formal procurement processes for routine purchases that could fall under the P-Card threshold should it be raised to $15,000, adding unnecessary steps and delays for routine items.

Management Response
Staff agrees with the recommendation to conduct a review of the Contracts and Purchasing Procedures ordinance informed by the auditor’s advisory report. Staff has been systematically working improve procurement processes and agrees that the next step should include a review and recommendation to implement the identified opportunities for streamlining the purchasing process. Recent internal actions have included updating the operational purchasing handbook, implementing a new procurement software system for greater administrative ease, standardized contract templates for faster contract development, provision of citywide training on the purchasing process to improve the flow of information, automation of the intake process for solicitations.

By the Spring 2026 staff, in collaboration with the City Attorney’s Office, will conduct a review and recommend adjustments to the municipal code and procurement policies. Edits will seek to adjust purchasing threshold levels with current market conditions, contract signature authority levels, and local government procurement best practices.

FISCAL/RESOURCE IMPACT
This report does not have a fiscal impact. Staff will return to Council with recommendations for adjusting purchasing thresholds and will present any related fiscal impacts at that time.

STAKEHOLDER ENGAGEMENT
The OCA worked with and would like to thank the Administrative Services, Information Technology, Community Services, and Public Works Departments, as well as the City Manager’s and City Attorney’s Offices for their assistance in conducting this audit.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because contracting for auditing services is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).

ATTACHMENTS
Attachment A: Contract Solicitation and Authority Levels Advisory Report APPROVED BY:

Kate Murdock, City Auditor
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1 City of Palo Alto
Office of the City Auditor
Contract Solicitation and Authority Levels Advisory
Report
November 25, 2025
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Contents
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.

EXECUTIVE SUMMARY .................................................................................................. 1 PURPOSE OF THE ASSESSMENT ........................................................................................................ 1 REPORT HIGHLIGHTS ............................................................................................................................... 1 INTRODUCTION ............................................................................................................... 5 OBJECTIVE ................................................................................................................................................... 5 BACKGROUND ............................................................................................................................................. 5 SCOPE AND PROCEDURES ................................................................................................................... 6 DETAILED ANALYSIS ..................................................................................................... 7 APPENDICES .....................................................................................................................

APPENDIX A: CITY OF PALO ALTO CURRENT STATE ................................................................ 16 APPENDIX B: BENCHMARKING SUMMARY ..................................................................................... 17

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1 Executive Summary
Purpose of the Assessment
Baker Tilly Advisory Group, LP (Baker Tilly), in its capacity serving as the Office of the City Auditor (OCA) for the City of Palo Alto (the City or Palo Alto), conducted a Contract Solicitation and Authority Levels Advisory Project based on approved Task Order 4.40 as part of the City’s Fiscal Year (FY) 2026 Audit Plan. The objective of this project was to assess and benchmark the City’s current solicitation and signature authority thresholds.

Report Highlights
Observation 1:
(Page 5)

Updating the City’s procurement procedures will improve purchasing processes, eliminate administrative inefficiencies and better align the City with peer and industry best practices.

The City’s procurement procedures, primarily codified under Chapter 2.30 of the Municipal Code, Contracts and Purchasing Procedures ordinance1, were last updated in 2016 and no longer fully reflect current market realities. Since the last revision, costs have risen significantly, by an estimated 35–67%, while purchasing thresholds have remained unchanged. This gap has led to increased administrative steps and delays, making routine purchases more cumbersome and reducing vendor engagement.

Compared to 15 benchmarked jurisdictions, Palo Alto’s competitive bidding thresholds are among some of the lowest in the region. The City is one of only two jurisdictions that have not updated their procedures since 2021. In addition, exemptions and purchasing card (P-Card) limits have not kept pace with operational needs or inflation, further constraining flexibility and efficiency.

Many peer cities have updated their procedures within the past five years, adopting higher thresholds and flexible frameworks, such as the California Uniform Public Construction Cost Accounting Act (CUPCCAA), to improve efficiency and responsiveness.

Current limits require formal solicitation for General Services and Goods contracts exceeding $50,000 and Professional Services and Public Works contracts exceeding $85,000. Informal bidding for purchases as low as $10,000 is required for Public Works, Goods and General Services, which forces staff to engage in time-consuming processes for relatively small transactions. These requirements divert resources from higher-value priorities and increase staff workload According to staff, rising costs for goods and services, combined with unchanged thresholds, have further amplified these challenges, reducing flexibility and slowing project delivery.

Benchmarking against peer jurisdictions shows that most comparable cities set informal bid thresholds between $15,000 and $75,000 and formal bid

1 Chapter 2.30 CONTRACTS AND PURCHASING PROCEDURES*
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2 EXECUTIVE SUMMARY

thresholds between $100,000 and $250,000, often incorporating annual inflation adjustments and streamlined processes for amendments and change orders. In contrast, Palo Alto’s limits result in more frequent formal solicitations, longer procurement cycles, and increased administrative burden. These practices not only strain internal resources but may also risk discouraging vendor participation if the process is seen as too complex and/or not worth the effort for the size of the opportunity. This could potentially lead to reduced competition and vendor attrition.

Additionally, the City’s P-Card transaction limit of $10,000, unchanged since 2016, has lost more than 25% of its purchasing power due to inflation. This erosion results in staff having to initiate formal procurement processes for routine purchases that previously fell under the P-Card threshold, adding unnecessary steps and delays.

Finally, the City’s signature authority levels are also among the lowest in the region, creating administrative inefficiencies and operational delays. Contract signature authority is divided between the Procurement Officer, City Manager, and City Council. In general, the Procurement Officer may award most public works, goods, general services, and professional services contracts up to $85,000 per contract year for terms up to three years. The City Manager has signing authority up to $85,000 for general and professional services contracts and up to up to $250,000 per year for Public Works and goods contracts.

Contracts exceeding $250,000 per year require Council approval. For many peer cities, the City Manager has signing authority up to $100,000 or more for all contracts.

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3 EXECUTIVE SUMMARY
Recommendation:

We recommend the City conduct a comprehensive review of its Contracts and Purchasing Procedures ordinance and related policies, update solicitation requirements and authority levels to reflect current market conditions and consider adopting best practices from peer cities. In updating the procurement policy and related City ordinance, the City should consider the following elements:

Increase Bid and Signature Authority Level Thresholds
The City should raise informal and formal solicitation thresholds and related authority levels to align with regional practices and reduce administrative burdens, shorten processing times, and reduce the number of contracts requiring Council review . In conjunction with raising bid thresholds, the City should consider increasing the City’s signature authority levels to align with procurement processes, increase efficiency and reduce operational delays.

Annual CPI Adjustment
The City should consider incorporating an inflation-based adjustment mechanism into the City’s Municipal Code which would ensure thresholds remain current without requiring frequent ordinance amendments. This approach is consistent with practices observed in cities such as Redwood City and San Jose, which adjust thresholds annually based on cost indices.

Consider CUPCCAA Adoption
Seven of the 15 benchmarked jurisdictions have adopted the CUPCCAA. This framework allows informal bidding for public works projects up to $220,000 and formal bidding only above that amount, significantly reducing administrative steps for smaller projects.

Expand Exemptions
Adding exemptions for IT-related purchases (such as software renewals and subscriptions), and specialized services would reduce delays for routine or unique needs. Benchmarking shows that several peer cities include these exemptions to improve efficiency and vendor engagement.

Increase P-Card Thresholds
The City should consider updating the City’s P-Card transaction limit from $10,000 to at least $15,000, or to the inflation-adjusted equivalent, to restore purchasing power lost since 2016. The City should also establish a process for periodic review and adjustment of P-Card limits based on inflation and benchmarking data to ensure thresholds remain relevant and effective over time.

Standard Review Process
The City should consider the feasibility of establishing a formal review cycle requiring the City’s procurement ordinance be evaluated and Item 5
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updated at least every five years. This process should include benchmarking thresholds against current market conditions, integrating regulatory changes, assessing staff workload, and documenting revisions for transparency.

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5 Introduction

2 See Ordinance 5387 of the Council of the City of Palo Alto Amending Chapter 2.30 of the Palo Alto Municipal Code 3 Department of General Services (DGS) California Construction Cost Index CCCI, DGS California Construction Cost Index CCCI 4 Municipal Cost Index (MCI), developed by American City & County, The Municipal Cost Index | Smart Cities Dive 5 U.S. Bureau of Labor Statistics, Employment Cost Index, ECI, ECI Home : U.S. Bureau of Labor Statistics 6 Procurement Thresholds Reimagined: Implementing the Ideal Approach for Your Government Objective The purpose of this assessment was to assess and benchmark the City’s current contract solicitation and approval authority level thresholds.

Background The City is required to follow procurement rules and regulations outlined in the Municipal Code and applicable State laws to ensure fair competition, transparency, and cost-effective use of taxpayer dollars. These requirements govern how goods, services, and public works projects are solicited and awarded, including thresholds for informal and formal bidding and authority levels for contract approval.

The City’s procurement procedures were last amended in 20162. Since then, market conditions and costs have changed significantly. According to industry cost indices and economic benchmarks, construction costs have increased by approximately 67%3, goods and general services by 41%4, and professional services by 35%5. Despite these changes, solicitation thresholds and authority levels have remained static, creating inefficiencies and administrative burdens.

According to research from the Partners for Public Good’s Procurement Excellence Network
6, benefits of regularly reviewing and updating procurement thresholds include increasing administrative efficiency by reducing time spent on lower-risk purchases, adapting to inflation to ensure thresholds don’t become obsolete, and improving responsiveness by allowing agencies to meet operational needs more quickly for routine purchases. While determining how much to increase thresholds, cities should consider the need for oversight and transparency, maintaining visibility over competitive purchases, and continuing to ensure accountability.

The OCA assessed the City’s contract solicitation requirements and authority levels to evaluate their effectiveness and alignment with best practices. The review included analysis of policies, municipal code, contract inventory, and benchmarking against peer jurisdictions. The assessment found that Palo Alto’s procurement thresholds, summarized in Table 1 (on page 5), are significantly lower than those of comparable cities. These low thresholds may have resulted in high administrative burden, longer procurement cycles, and reduced operational efficiency.

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Table 1: Palo Alto Solicitation Processes & Thresholds

Purchase
Category
Estimated Dollar
Amount Solicitation Method
Goods
$0 to $10,000 None, price comparisons encouraged
$10,001 to $50,000 Informal request for quotations (RFQ) Greater than $50,000 Formal RFQ
General
Services
$0 to $10,000 None, price comparisons encouraged
$10,001 to $50,000 Informal RFQ or RFP
Greater than $50,000 Formal RFQ or RFP
Professional
Services
$0 to $50,000 None, best value comparisons encouraged
$50,001 to $85,000 Informal RFP
Greater than $85,000 Formal RFP
Public Works
Construction
$0 to $10,000 None, price comparisons encouraged
$10,001 to $85,000 Informal invitation for bids (IFB)
Greater than $85,000 Formal IFB or formal RFP design-build

Departments report spending increasing time on solicitation processes, diverting resources from core responsibilities and voiced concerns that vendors may be discouraged from bidding due to lengthy processes.

Scope and
Procedures

The OCA performed the following procedures:

• Reviewed the City’s procurement policies, procedures, and Municipal Code to understand current solicitation requirements and approval authority levels. • Interviewed key stakeholders, including department managers, purchasing staff, and the City Attorney’s office, to gain insight into workflow challenges and operational impacts of existing thresholds.
• Benchmarked Palo Alto’s thresholds against peer cities and counties, including bid and approval limits, P-Card limits, and practices such as inflation adjustments and exemptions for specialized contracts (See Appendix A for Palo Alto current state and Appendix B for benchmarking results).
• Reviewed current procurement processes and analyzed contract inventory data to evaluate timeliness of contract execution and administrative burden. • Performed analysis of solicitation and contract data to determine the frequency of formal versus informal bids, identify bottlenecks, and assess the potential impact of raising authority levels on efficiency and compliance.
• Completed this assessment report based on supporting evidence gathered from policies, interviews, benchmarking, and data analysis.

The OCA greatly appreciates the support of the many departments who helped in conducting this assessment.

Thank you!

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7 DETAILED ANALYSIS
Detailed Analysis
Updating the City’s procurement procedures will improve purchasing processes, eliminate administrative inefficiencies and better align the City with peer and industry best practices.

Background

Palo Alto’s procurement procedures were last comprehensively reviewed and updated in 2016, as reflected in Ordinance No. 5387. The Municipal Code establishes requirements for competitive solicitation, approval authority levels, and contract management for goods, services, and public works.

Current thresholds require informal bidding for purchases above $10,000 and formal bidding for contracts exceeding $85,000. Professional services and goods contracts above $50,000 also trigger additional formal bidding requirements. The Municipal Code allows for a one-time, six-month extension of contracts without increasing the budget, but any increase in contract value requires full City Council approval. Exemptions exist for emergency procurements, sole-source contracts, and certain legal and utility agreements, but routine purchases and amendments often require multiple layers of review and Council involvement. The policy does not include automatic inflation adjustments or separate thresholds for IT purchases, which has led to increased administrative workload and delays as costs have risen since the last update. Compared to peer cities, Palo Alto’s thresholds are among the lowest in the region, and the policy has not kept pace with changes in market conditions or best practices.

Outdated Policy and Static Thresholds

The City’s procurement procedures have not been updated to reflect significant changes in the cost of goods, services, and construction since 2016. According to industry cost indices and economic benchmarks, cost indices have increased significantly since the City’s last policy update in 2016: the California Construction Cost Index (CCCI) for Public Works rose by 67%, the Municipal Cost Index (MCI) for goods and general services increased by 41%, and the Employment Cost Index (ECI) for professional services rose by 35%. Despite these substantial increases, Palo Alto’s solicitation thresholds have remained static.

Benchmarking against 15 peer jurisdictions (See Appendix B for detailed benchmarking results) shows that Palo Alto’s thresholds are among the lowest in the region, and the City is one of only two jurisdictions that have not updated its procurement procedures since 2021. Additionally, as seen in Table 2 below, most peers revised their policies between 2021 and 2025, and nearly half have adopted the CUPCCAA, which allows for higher thresholds which may reduce the time it takes for these procurements as it reduces the number of steps staff need to complete.

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Table 2: CUPCCAA Adoption and Policy Revision by Agency

Benchmarked City CUPCCAA Year of Last Policy
Revision
City of Palo Alto No 2016
City of Campbell No 2024
City of Cupertino Yes 2024
City of Fremont Yes 2021
City of Gilroy Yes 2023
City of Hayward No 2024
City of Los Altos No 2016
City of Milpitas Yes 2021
City of Mountain View Yes 2025
City of Redwood City No 2021
City of San Jose No 2021
City of San Mateo No Not publicly available
City of Santa Clara No 2021
City of Sunnyvale No 2021
County of San Mateo Yes Not publicly available
County of Santa Clara Yes 2021

Operational Inefficiencies

The current procurement procedures creates inefficiencies that affect day-to-day operations and the City’s overall ability to deliver services. As noted in walkthroughs with key personnel, some routine purchases and professional service contracts can take up to five months to complete, capital improvement project contracts often take up to six months, and even emergency purchases are delayed, sometimes resulting in additional costs, due to the current contracting processes and thresholds. It should be noted that many purchases are made within reasonable timeframes. In general, there are many steps in the procurement process that are necessary to support the City’s overall public procurement objectives of transparency and government fiscal oversight.

Departments are also seeing more instances where no bids are submitted, leading them to bundle contracts to attract vendor interest. Because solicitation thresholds remain low, staff must conduct formal solicitations or full RFP processes for relatively small purchases, diverting time and resources from core program work and discouraging vendor participation, particularly among smaller providers who find the process burdensome.

Procurement Timeliness and Contract Inventory

According to the Key Performance Measures as published on the City’s budget document, the average time from receipt of a Purchase Requisition to a Purchase Order is 21 days, however, some procurements can take longer depending on their complexity. In FY 2024, the City processed 1,578 Purchase Orders and Purchase Requisitions and an estimated 1,600 in FY25. Staff interviews and process reviews indicate that routine purchases are delayed, and resources are diverted from higher- value activities to manage solicitation paperwork and approvals.

The volume of purchase orders and requisitions, combined with processing times, highlights inefficiencies created in the current procurement process due to unchanged limits. Staff report that the time spent on procurement activities detracts from their ability to focus on core job duties and strategic Item 5
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initiatives. The City’s thresholds and approval processes are not scaled for current market realities, resulting in unnecessary delays and increased workload for both operational departments and central purchasing.

Low Authority Levels Compared to Peer Agencies Creating Administrative Inefficiencies

According to the City’s Municipal Code, Palo Alto’s procurement authority levels are defined by both contract type and dollar threshold. The code differentiates between Public Works (construction), Professional Services, Purchase of Goods, and General Services, each with its own solicitation and approval requirements. Purchases up to $10,000 do not require competitive bidding; those between $10,001 and $85,000 require informal bidding; and contracts exceeding $85,000 must undergo formal solicitation. While the code provides exemptions for situations such as emergencies, sole-source procurements, and certain legal or utility agreements, staff noted that obtaining approval for these exemptions can be challenging and time-consuming, often causing delays in routine purchases and adding administrative burden. To support low-dollar, routine purchases, the City sets a P-Card transaction limit of $10,000, aligning it with the no-bid threshold in the municipal code.

The following table provides an overview of Palo Alto’s contract solicitation and award limits as outlined in the Palo Alto Municipal Code (PAMC). It summarizes the competitive solicitation requirements for informal and formal processes, as well as signature authority thresholds for designated employees, the Purchasing Manager, City Manager, and City Council. These limits vary by contract type: Public Works, Purchase of Goods, General Services, and Professional Services, and establish the monetary and term parameters for approvals and oversight.

Table 3: Competitive Solicitation Process and Signature Authority by Contract Type

Contract Type7
Competitive Solicitation
Process
Signature Authority
PAMC § 2.30. 200; § 2.30. 210, § 2.30. 220
Informal Formal Designated
Employees
Purchasing
Manager City Manager City Council
Public Works
PAMC § 2.30.300
$10,001 –
$85,000
Over
$85,000
N/A Up to $85,000/yr
(up to 3 years)
PAMC § 2.30. 200
Up to $250,000/yr
(up to 3 years)
Over $250,000/yr
or over 3 years
Purchase of
Goods PAMC §

2.30.310
$10,001 –
$50,000
Over
$50,000
Up to $10,000
(up to 1 year)
Up to $85,000/yr
(up to 3 years)
Up to $250,000/yr
(up to 3 years)
Over $250,000 or
over 3 years
General Services
PAMC § 2.30.320
$10,001 –
$50,000
Over
$50,000
Up to $10,000
(up to 1 year)
Up to $85,000/yr
(up to 3 years)
Up to $85,000/yr
(up to 3 years***)
Over $85,000/yr
or over 3 years***
Prof. Services
PAMC § 2.30.330
$50,001 –
$85,000
Over
$85,000
N/A Up to $85,000/yr
(up to 3 years)
Up to $85,000/yr
(up to 3 years)
Over $85,000/yr
or over 3 years

7 *Informal Procedure:
• § 2.30.400 - Requires solicitation of 3 bids
• § 2.30.360 - subdivisions (i) and (l), create exceptions for all contracts below $10,000 in total expenditure and for professional services contracts below $50,000 in total expenditure
**Formal Procedure: § 2.30.410 and 2.30.420 – Posting on the City’s website at least five days before bid date. Special procedures apply for design-build projects (§ 2.30.490)
*** 7-year limit for: Software/hardware purchase and maintenance contracts (§ 2.30.210(l)) and contracts to lease personal property (i.e. equipment) (§ 2.30.210(l)(c))

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The City’s current authority levels are significantly lower than those of peer jurisdictions, resulting in administrative inefficiencies and operational challenges. Staff must devote substantial time to solicitation activities for relatively small purchases, diverting effort from core responsibilities. The City Attorney’s Office also reviews a high volume of agenda reports for routine contracts, drawing attention away from higher-value legal work. Meanwhile, staff report that rising costs for goods and services, along with outdated procurement thresholds, have lengthened project timelines and reduced staff efficiency.

These factors can discourage vendor participation, limit competition, and contribute to delays that affect service delivery. Overall, the City’s outdated authority levels drive administrative burden, reduce operational effectiveness, and increase the risk of vendor attrition.

Benchmarking against peer cities indicates that Palo Alto’s thresholds are among the lowest in the region, and the City has not adopted practices such as annual inflation adjustments or exemptions for specialized contracts that are common elsewhere. Based on interviews with staff, these factors may have contributed to delays in project execution, increased workload for staff, and potential vendor attrition. Benchmarking analysis shows that cities of similar size (See Appendix B for detailed benchmarking results) have adopted higher thresholds for informal and formal procurement, often $15,000–$75,000 for informal and $100,000–$250,000 for formal bids, as compared to Palo Alto’s $85,000 threshold. Many cities also allow for annual inflation adjustments and have streamlined approval processes for contract amendments and change orders. Palo Alto’s thresholds are among the lowest in the region, resulting in more frequent formal solicitations and slower procurement cycles.

The table below compares Palo Alto’s current procurement authority levels with those established under the CUPCCAA. It illustrates the differences in thresholds for when bids are not required, when informal bidding applies, and when formal bidding is mandated. CUPCCAA provides significantly higher limits, offering greater flexibility and efficiency for smaller projects compared to Palo Alto’s current thresholds.

Table 4: Bid Thresholds for Palo Alto vs. CUPCCAA Standards

Bid Not Required Informal Bid Formal Bid
Palo Alto <= $10,000 $10,001 - $85,000 Over $85,000 CUPCCAA <= $75,000 $75,001 - $220,000 Over $220,000

To evaluate the potential impact of raising solicitation thresholds, the OCA analyzed FY 2024 and FY 2025 contract data by dollar ranges. The table below summarizes the total value and count of contracts within each band.

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Table 5: FY2024 – FY2025 Palo Alto Contract Inventory Analysis

Contract Levels Sum of Total Contract
Value Count of Total Contracts
< $10,000 $ 3,940,161 1,219 Between $10k and $25k $ 6,192,058 409 Between $25k and $40k $ 5,445,840 174 Between $40k and $55k $ 8,630,636 184 Between $55k and $70k $ 3,400,334 54 Between $70k and $85k $ 6,599,229 84 Between $85k and $100k $ 3,864,291 43 Between $100k and $115k $ 3,065,924 29 Between $115k and $130k $ 2,792,671 23 Between $130k and $145k $ 1,628,213 12 Between $145k and $160k $ 3,199,049 21 Between $160k and $175k $ 3,679,467 22 Between $175k and $190k $ 2,755,697 15 Between $190k and $200k $ 389,920 2 Between $200k and $300k $ 11,546,854 48 Between $300k and $400k $ 5,758,887 17 Between $400k and $500k $ 12,209,163 27 Between $500k and $1 million $ 22,778,435 34 Between $1 million and $2 million $ 24,362,352 17 Between $2 million and $3 million $ 17,474,801 7 Between $3 million and $4 million $ 6,225,140 2 Between $4 million and $5 million $ 8,814,023 2 Greater than $5 million $ 146,268,277 12 Grand Total $ 311,021,419 2,457

If Palo Alto were to increase its formal bid requirement to $100,000, based on FY 2024 contract data, 43 contracts (1.75%) currently requiring formal bidding would shift to informal solicitation. This change would eliminate the need for Council agenda reports and possibly reduce processing time by several Item 5
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months per contract, freeing staff resources for higher-value work. Alternatively, if Palo Alto were to adopt CUPCCAA thresholds for Public Works contracts, the impact could be far greater.

Purchasing Card Limit – Reduced Purchasing Power

The City’s P-Card transaction limit of $10,000, set in 2016, has not been adjusted for inflation or rising costs. Based on the U.S. Bureau of Labor Statistics CPI Inflation Calculator8, $10,000 in 2016 is equivalent to approximately $13,500 in 2025, reflecting a loss of more than 25% in real purchasing power. This erosion means the current cap now limits rather than facilitates efficient purchasing, requiring staff to initiate formal procurement processes for transactions that previously fell under the P-Card threshold. These additional steps increase administrative burden, delay service delivery, and create inefficiencies for routine purchases.

By contrast, peer cities (see Appendix B for detailed benchmarking results) have recognized this need and adjusted their limits. For example, the City of San José sets its P-Card limit at $15,000.

Similarly, the City of Sunnyvale is conducting a benchmarking review to inform their upcoming update.

In August 2025, the City Auditor’s Office reported to the Policy and Services Committee on the City’s Purchasing Card Program and found that raising the City’s P-Card limit could save significant staff time and recommended the City consider updating the P-Card limit to $15,000 in line with the Federal Acquisition Regulation
9 which was updated in October 2025.

Exemptions Misaligned with Operational Needs

The Municipal Code allows exemptions for emergency purchases, sole-source procurements, and certain legal and utility agreements, however, the code does not currently provide broad exemptions for IT-related purchases (e.g., software renewals, subscriptions) or specialized services like recreation instructors. These categories often require going through the full solicitation process, even when competitive bidding offers little value. Benchmarking shows that peer jurisdictions provide broader exemptions for these types of purchases, including IT services, specialized professional services, and unique personal services. For example, cities such as Fremont, Redwood City, Sunnyvale, and Gilroy allow exemptions for software renewals, subscriptions, specialized instructors, and other categories where competition is limited or impractical. These targeted exemptions reduce administrative burden and speed up routine procurements, enabling staff to focus on higher-value activities rather than lengthy solicitations for non-competitive items.

Updating the City’s procurement procedures will help to eliminate operational risks by incorporating best practices, regulatory changes, and/or technological advancements. This should help reduce potential operational inefficiencies and inconsistency across departments and updating cost and threshold limits can reduce unnecessary approvals for routine purchases.

Recommendations

We recommend the City conduct a comprehensive review of its procurement procedures, update solicitation requirements and authority levels to reflect current market conditions and consider adopting best practices from peer cities.

The City should consider the following elements when reviewing and updating the policy:

8 U.S. Bureau of Labor Statistics CPI Inflation Calculator 9 Effective October 1, 2025, FAR Amendment: Micro-purchase threshold limit increased to $15,000 Item 5
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Increase Bid and Signature Authority Level Thresholds

The City should raise informal and formal solicitation thresholds to align with regional practices. For example, adopting a $15,000 threshold for informal procurement and $100,000 or more for formal procurements. This change would reduce administrative burden, shorten processing times, and eliminate the need for Council review on these contracts. In conjunction with raising bid thresholds, the City should consider increasing the City’s signature authority levels to align with procurement processes, increase efficiency and reduce operational delays.

While higher thresholds may require enhanced oversight, risk remains controlled due to departmental spending is constrained by approved budgets. Additionally, training and clear compliance protocols, particularly for federally funded projects10, would ensure accountability as the City transitions to a more efficient procurement framework.

Annual CPI Adjustment

The City should consider incorporating an inflation-based adjustment mechanism into the Municipal Code which would ensure thresholds remain current without requiring frequent ordinance amendments. This approach is consistent with practices observed in cities such as Redwood City and San Jose, which adjust thresholds annually based on cost indices.

Consider CUPCCAA Adoption

Adopting the CUPCCAA like seven of the 15 benchmarked jurisdictions would allow for informal bidding on public works projects up to $220,000 and formal bidding only above that amount, significantly reducing administrative steps for smaller projects.

Expand Exemptions

Adding exemptions IT-related purchases (such as software renewals and subscriptions), and specialized services would reduce delays for routine or unique needs. Benchmarking shows that several peer cities include these exemptions to improve efficiency and vendor engagement.

Increase P-Card Thresholds

Palo Alto should consider updating the City’s P-Card transaction limit from $10,000 to at least $15,000, or to the inflation-adjusted equivalent, to restore purchasing power lost since 2016.

Increasing the limit would reduce administrative burden by minimizing unnecessary formal solicitations for routine purchases, improve operational efficiency, and align Palo Alto with the Federal Acquisition Regulation limit updated in October 2025. , which currently sets its P-Card limit at $15,000. The City should also establish a process for periodic review and adjustment of P-Card limits based on inflation and benchmarking data to ensure thresholds remain relevant and effective over time.

Standard Review Process

The City should consider the feasibility of establishing a formal review cycle requiring the procurement ordinance to be evaluated and updated at least every five years. This process

10 Projects receiving federal funds can be subject to federal procurement requirements, which may override the City’s procurement ordinance.

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should include benchmarking thresholds against current market conditions, integrating regulatory changes, assessing staff workload, and documenting revisions for transparency.

Implementing a periodic review system will ensure policies remain relevant, reduce operational strain, and mitigate financial and compliance risks.

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16 Appendix A: City of Palo Alto Current State
Table 6: Authorities and Responsibilities for Competitive Solicitations and Sourced Procurements by Category

Procurement Category
Goods/General
Services between
$10,001 and $50,000
Goods/General
Services greater
than $50,000
Professional
Services between
$50,001 and $85,000
Professional
Services greater
than $85,000
Public Works
Construction greater
than $10,000
Responsibility for preparing bid
ready specifications Departments Departments Departments Departments Departments Responsibility for conducting
solicitation Departments* Purchasing Departments* Purchasing Purchasing Competitive solicitation method Informal Formal Informal Formal Informal, up to
$85,000; Formal,
greater than $85,000
Cooperative purchasing methods Informal Informal Informal*** Not Applicable Not applicable Competitive bidding exemptions Informal** Informal** Informal** Informal** Not applicable

Reference Key:

*Departments may request that Purchasing conduct a solicitation or Purchasing may be required to conduct the solicitation. **Requests for competitive bidding exemptions must be approved by Procurement Officer and City Manager. ***Cooperative purchasing methods for Professional Services between $50,001 and $85,000 are Informal.

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17 Appendix B: Benchmarking Summary
I. Bid and Approval Limits

Table 7: Approval Limits by Agency and Contract Type

Agency Public Works Material Equipment Supplies
(MES) / Goods General Services Professional Services
Formal Informal Formal Informal Formal Informal Formal Informal City of Palo Alto > $85,000 < $85,000 but >
$10,000 > $50,000 < $50,000 but >
$10,000 > $50,000 < $50,000 but >
$10,000 > $85,000 < $85,000 but >
$50,000
City of Mountain View Per CUPCAA11 Per CUPCAA Per CUPCAA Per CUPCAA but < $20,000 Per CUPCAA Per CUPCAA
but > $20,000 Per CUPCAA Per CUPCAA
but > $20,000
City of Cupertino > $220,000 < $220,000 > $220,000 < $220,000 > $220,000 < $220,000 Exempt Exempt City of Gilroy Per CUPCAA Per CUPCAA > $100,000 < $100,000 but > $5,000 > $100,000 < $100,000 but
> $5,000 None None
City of Santa Clara > $250,000 < $250,000
but > $15,000 > $250,000 < $250,000
but > $15,000 > $250,000 < $250,000
but > $15,000 N/A N/A
City of Sunnyvale > $250,000 < $100,000
but > $15,000 > $100,000 < $100,000
but > $15,000 > $100,000 < $100,000
but > $15,000 None None
City of Milpitas Per CUPCAA Per CUPCAA > $50,000 < $50,000 > $50,000 < $50,000 > $100,000 < $100,000 City of Fremont Per CUPCAA Per CUPCAA > $25,000 < $25,000 but > $5,000 > $100,00 < $100,000 >$100,000 < $100,000
City of San Jose None None > $250,000 < $250,000 but
> $10,000 > $250,000 < $250,000 but
> $10,000 None None
City of San Mateo > $100,000 < $100,000 > $100,000 < $100,000 > $100,000 < $100,000 > $100,000 < $100,000 County of Santa Clara Per CUPCAA Per CUPCAA > $100,000 < $100,000 > $100,000 < $100,000 > $300,000 < $300,000 County of San Mateo > $200,000 < $200,000 > $200,000 < $200,000 but > $5,000 > $200,000 < $200,000
but > $5,000 > $200,000 < $200,000
but > $5,000
City of Campbell > $100,000 < $100,000 > $100,000 < $100,000 > $100,000 < $100,000 > $100,000 < $100,000 City of Redwood City > $100,000 < $100,000
but >$10,000 > $100,000 < $100,000
but > $10,00 > $100,000 < $100,000
but > $10,00 N/A > $10,000
City of Los Altos > $75,000 < $75,000 but >
$5,000 > $75,000 < $75,000 but >
$5,000 > $75,000 < $75,000 but >
$5,000 > $75,000 < $75,000
City of Hayward > $35,00012
> $10,00013
< $35,000
< $10,000 > $150,000 < $150,000 > $100,000 < $100,000 > $100,000 < $100,000

11 CUPCCAA is a voluntary program that promotes uniformity in cost accounting standards and bidding procedures for public construction work performed or contracted by public agencies in California. Under CUPCCA, projects up to $75,000 may be performed by a public agency’s own workforce or through negotiated contracts or purchase orders; projects up to $220,000 may use informal bidding procedures; and projects exceeding $220,000 must follow formal bidding procedures. CUPCCAA is updated annually to increase thresholds. 12 New construction
13 Maintenance, replacement, or repair
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18 Table 8: General Exemptions from Competitive Solicitation Requirements by Agency

Agency Exemptions from Competitive Solicitation Requirements City of Palo Alto
• Emergency contracts (FEMA compliance required).
• Impracticable or impossible solicitations (e.g.,
unique specifications, time constraints, grant
conditions).
• Documentation required for all exemptions.
• No bids received after solicitation.
• Sole source procurements (e.g., proprietary
products, unique parts, compatibility requirements).
• Standardization approved by City Manager.
• Insurance and bonds.
• Legal services (outside counsel, consultants,
experts).
• Private development studies funded by developers.
• Professional services ≤ $50,000.
• Cooperative purchases with other agencies.
• Piggybacking on other agency contracts.
• Utility and energy contracts (NCPA, TANC, WAPA,
PG&E, CAISO).
• Public agency construction using similar methods.
• Public utility or franchise work.
• Developer-constructed public improvements.
• City-performed public works.
• Small purchases ≤ $10,000.
• Feed-in tariff energy program purchases.
• Personnel-related professional services
(recruitment, investigations, safety).

City of Mountain View
• Professional or specialized services (e.g., attorneys, architects, engineers).
• Situations where bidding is undesirable or
impossible.
• Sole source for patented articles or processes.
• Emergency situations.
• Real property transactions serving public interest.

City of Cupertino
• Emergency purchases for operational continuity or
safety.
• Recurring or essential services with unpredictable
costs (e.g., utilities, insurance, payroll).
• Legal services per Chapter 2.18.
• Purchases from other public agencies.
• Specialized services under Gov. Code §37103.
• Sole source purchases for unique capabilities or
compatibility.
• Cooperative purchasing using other agencies’
competitive processes.
• General law city
City of Gilroy
• Emergency procurements; impracticable
solicitations.
• Professional or specialized services; public library
materials.
• Insurance, bonds, financial services; sole source
goods/services.
• Highly specialized equipment for unique activities or compatibility.
• Grant-funded procurements with conditions; surplus
property; memberships/travel; works of art; goods
for resale.
• No bids received; software renewals; HR
investigations; legal/medical services; regulatory
permits; subscriptions; reimbursements/refunds.
• Council-authorized exemptions over $100,000.

City of Santa Clara • Emergency purchases.
• Public agency purchases.
• Sole source purchases.
• Other exemptions per SCCC §§2.105.260–290.

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19 City of Sunnyvale
• Professional or specialized services.
• Emergency procurements.
• Impracticable solicitations.
• Sole source goods/services.
• Insurance and bonds.
• Library materials.
• Grant-funded procurements.
• Intergovernmental agreements.
• Works of art, entertainment, or performance.
• Surplus property.
• Memberships/travel; advertisements; goods for
resale.
• No bids received.

City of Milpitas • Emergency authority.
• Public agency purchases.
• Sole source procurements.
• Council-authorized exemptions.
• General law city
City of Fremont
• Utility services.
• Equipment maintenance by manufacturer/dealer.
• Software upgrades/license renewals.
• Insurance and bonds.
• Legal services.
• Private development studies.
• Unique personal services (e.g., instructors,
performers).
• Purchases under price contracts.
• Personal property/services ≤ $5,000.
• General law city
City of San Jose
• Intergovernmental contracts.
• Public utility contracts.
• Developer contracts.
• Specialty work.
• Urgent necessity.
• Idle act situations.

City of San Mateo
• Emergencies.
• Impracticable solicitations.
• Insurance.
• Franchises.
• Attorney/expert employment.
• Community service funding.
• Intergovernmental contracts.
• Use of State or other city bids.

County of Santa Clara • No exemptions beyond standard provisions.

County of San Mateo
• Emergencies.
• Impracticable solicitations.
• Insurance.
• Franchises.
• Attorney/expert employment.
• Community service funding.
• Intergovernmental contracts.
• Use of State or other city bids.

City of Campbell • No exemptions beyond standard provisions. • General law city City of Redwood City
• Sole source purchases (requires City Manager
recommendation and approval by five Council
members).
• Purchases ≤ $10,000 for goods, services, or public
works.
• City Council may waive bidding if in City’s best
interest or less expensive alternatives exist.
• Emergency procurements when immediate action is
required
• Other exemptions per City Charter
• Purchases not suited to competitive bidding
City of Los Altos • Emergency purchases from nearest available source.
• Purchases below Council-set threshold.
• Sole source purchases when only one vendor exists.
• General law city
City of Hayward • No exemptions beyond standard provisions.

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20 Table 9: Sole Source and Proprietor Procurements Ordinances by Agency

Agency Sole Source and Proprietor Procurements
City of Palo Alto
• Contracts for goods, wholesale commodities and services, general services or professional services available from only one source, where the Procurement Officer has determined in writing that there are no adequate substitutes or equivalent providers.

City of Mountain View
• Contracts involving the obtaining of professional or specialized services, including, but not limited to, services rendered by attorneys, architects, engineers, accountants and specialized consultants, except contracts for "certain services" as defined in Section 2.204
City of Cupertino
• Specialized Services Purchase: Specialized services and advice, in accordance with Government Code Section 37103, for financial, economic, accounting, or administrative matters are exempt from a competitive process.
• Sole Source Purchase: Purchases from a single entity that possess the unique ability, capability, equipment, technology, patent or copyright to O31meet the City’s need based on standardization, compatibility or operational requirement.

City of Gilroy
• Single or sole source goods or services as defined herein • Highly specialized equipment developed or designed for a special activity or function or whose purpose is in the best interests of the City due to compatibility with existing equipment or training of personnel.

City of Santa Clara
• A procurement shall be exempted from the requirements of subsection (a) of this section if the Purchasing Division Manager has determined that a particular product or general service may be specifically designated by reason of one or more of the following purposes:
• To acquire a specific product or performance for the purpose of conducting a field test or experiment to determine the product’s suitability for use
• When required to ensure operation or function to match other products with respect to the repair, expansion or completion of a system, existing structure or program currently in use by the City, including, but not limited to, utility and technology purchases required to achieve interoperability with existing systems or programs • When the purchase of an item is only available from one source (sole source) • When a service is considered unique or unusual such that requirements for competitive procurement are contrary to public interest; and
• In order to make an emergency purchase pursuant to this chapter City of Sunnyvale • Professional or specialized services • Sole source goods or services
City of Milpitas
• A contract may be awarded without competition when the Purchasing Agent determines in writing, after conducting a good faith review of available sources, that only one viable source exists for the required supplies, material, equipment, or general service, or that there is a compelling reason for using only one source.

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21 City of Fremont
• The city may enter into a contract for personal property or services without complying with the competitive procurement requirements of this chapter in accordance with the following:
• The requesting department shall evaluate available sources to determine whether there is only one source capable of competently and efficiently providing the required personal property or service. • If it is determined that there is only a single source for the purchasing of a particular item or service, the requesting department shall prepare a request for exemption from competitive solicitation and submit it to the purchasing manager.
• If it is determined that there is only a single source for the purchasing of a particular item or service, upon review and approval of the request by the purchasing manager and the city manager, the city may award the contract to the sole source vendor or service provider without competitive procurement. • Examples of acceptable sole source purchases are: equipment for which there is no comparable competitive product, proprietary products sold directly from the manufacturer, a component or replacement part for which there is no commercially available substitute and which can be obtained only from the manufacturer, items where there is only one authorized distributor in the area, and items where compatibility with items in use by the city is an overriding consideration. (Ord. 2494 § 1, 12-3-02; Ord. 8-2011 § 14(D), 7-12-11. 1990 Code § 2-9703.)
City of San Jose • Procurement authority may make purchases of supplies, materials or equipment which can be obtained from only one vendor or manufacturer
City of San Mateo • None
County of Santa Clara • None
County of San Mateo • Contractor is a sole source
City of Campbell • None
City of Redwood City
• A purchase may be made or contract awarded without a competitive bidding process when there is only one (1) reasonable and practicable source for the required goods, materials, equipment, supplies or support service because of its uniqueness, quality, durability, availability, compatibility with existing City programs, equipment or systems or fitness for a particular use. Such a sole source purchase must be determined to meet these requirements and be recommended for approval by the City Manager and shall be approved only on the affirmative votes of at least five (5) members of the City Council.

City of Los Altos • None
City of Hayward • None

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22 Table 10: Exemptions Continued – Community Services Department and Information Technology

Note: The benchmarked cities excluded from this summary were found to have no CSD or IT exemptions, including: City of Palo Alto, City of Mountain View, City of Cupertino, City of Gilroy, City of Santa Clara, City of Sunnyvale, City of Milpitas, City of San Jose, City of San Mateo, County of San Matro, County of Santa Clara, City of Campbell, City of Los Altos, City of Hayward

Agency Community Services Department Information Technology City of Fremont
Contracts for services where selection is based on a
unique personal accomplishment or characteristic
such as guest speakers, performers, artists,
recreation instructors, trainers, and facilitators.

Software upgrades and maintenance, software license renewals, and operating system maintenance services where the city has previously procured software and operating systems.

City of Redwood City
N/A Purchases Not Susceptible to Competitive Bidding Process:

Except where otherwise required by federal law or by reason of the source of funding for the project, goods and services may be obtained without a competitive bidding process where such purchases are not readily adaptable to the open market and bidding processes. Such purchases include, but shall not be limited to:

1. Utility services (telephone, gas, water, sewer and electricity) provided to City buildings and facilities;

2. Franchises awarded by the City Council;

3. Insurance or bond premiums; and

4. Subscriptions, memberships, software licenses,
advertisements and travel expenses.

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23 II. Purchasing Card Survey

Table 11: Purchasing Card Survey Results

The table below summarizes P-Card limits and related practices for Palo Alto and selected peer cities. It includes daily or transaction limits, monthly limits, effectiveness of current limits, the date of the last increase, and how limits are established. This information provides insight into how other jurisdictions manage purchasing flexibility and administrative efficiency. OCA contacted 15 peer jurisdictions and received responses from the following agencies.

Agency Daily / Transaction
Purchase Limits
Monthly Purchase
Limits
Effectiveness of
Limits in the City
Date of Last
Purchasing Limit
Increase
How Are Card Limits
Established
City of Palo Alto
$10,000 Data not stated in
municipal code
Currently under review by
OCA for adequacy
2016 Set through policies in the
Purchasing Manual and
delegated by the City
Manager and
Procurement Officer
City of Cupertino
No daily limit; single
transaction limit $1,000
Monthly limit of $2,000;
higher amounts approved
based on transaction
needs
Current limits meet the
needs of most P-card
holders. Flexibility to
increase single-
transaction or monthly
limits, with approved
justification, reduces the
need to modify the
standard limits.

September 2025 Determined as an
administrative decision
informed with knowledge
from other city’s standard
limits
City of Gilroy
No daily limit; single
transaction limit $1,000
Varies by department;
generally, $2,500–
$10,000
Limits currently in use;
functioning for City needs
During COVID Based on internal process
and City Administrator
City of Sunnyvale
No daily limit; single
transaction limit $1,000
Monthly limit of $2,000 Increasing limits based on
benchmarking study of
surrounding cities
Last increased over 12
years ago
Based on internal analysis
and benchmarking; not
tied to federal or
association standards
City of San Jose
No daily limit; single
transaction limit $10,000
No monthly limit at
program level
Planning to raise single
transaction limit to
$15,000 to align with
updated Municipal Code
April 2024 Based on Municipal Code
and City policies

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: January 20, 2026
Report #:2510-5282
TITLE
Approval of the City of Palo Alto’s Updated 2026 Water, Gas, and Wastewater Utility Standards (Design and Construction); CEQA Status- Not a Project.

RECOMMENDATION
Staff recommends that the City Council approve the City of Palo Alto’s updated 2026 Water, Gas, and Wastewater Utility Standards (2026 WGW Utility Standards).

EXECUTIVE SUMMARY
As a utility best practice, the City’s Water, Gas, and Wastewater Utility Standards (WGW Utility Standards), which include utility design standards and construction specifications are reviewed and updated periodically. The review and updating of the standards ensures that the City’s design and construction practices remain current with regulatory requirements, industry materials, and efficient construction practices. This staff report provides information on the updated WGW Utility Standards1, a redline version showing the recommended changes2, and the previous version of the Standards provided to City Council in 20243.

BACKGROUND
The City of Palo Alto Utilities (CPAU) Department’s Water, Gas, and Wastewater (WGW) Engineering Division implements standard design and construction specifications for water, gas, and wastewater facilities, set forth in the WGW Utility Standards, as updated periodically. City staff and contractors will reference the WGW Utility Standards for construction work on CPAU- 1 2026 WGW Utility Standards Proposed Changes (Clean Version) http://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council-agendas- minutes/2026/january/2026-wgw-utility-standards_proposed-changes-clean-version.pdf 2 2026 WGW Utility Standards Proposed Changes (Redline Version) http://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council-agendas- minutes/2026/january/2026-wgw-utility-standards_proposed-changes-redline-version.pdf 3 City Council, June 3, 2024; Agenda Item #19; SR #2404-2860, https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=14299 Item 6
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owned facilities within the public right-of-way and on private property to ensure that utility infrastructure is constructed and maintained in a safe, uniform, and reliable manner. The WGW Utility Standards include installation requirements, material specifications, and standardized configurations.

ANALYSIS
CPAU Engineering staff updates the WGW Utility Standards periodically and last issued revisions in 2024. This 2026 WGW Utility Standards reflects current construction material availability to expand procurement marketplace, and incorporates up to date field practices, contract management, as well as other non-substantial technical editing. These changes are intended to further clarify contractor’s responsibilities, thereby enhancing staff’s ability to enforce contract requirements and manage contract disputes or potential change orders. A summary of the more significant recommended revisions is provided below:

Establish an annual or bi-annual update cycle to keep the standards current with new technologies, codes, and construction practices.
Additional required items for progress payments (Section 800). Additional third-party codes and standards incorporated by reference (Section 800). Update the Water Design and Construction Standards section (Section 2660) comprehensively to align with current state regulations, incorporating new design criteria, material specifications, and system performance requirements. The revisions clarify pressure, separation, and installation standards while introducing stricter testing, certification, and digital documentation procedures to ensure safety, reliability, and regulatory compliance. The updates also include changes related to backflow preventers as part of the state’s Cross-Connection Control Program. Although these changes may have associated cost implications for customers and developers, the assessment of such costs is beyond the scope of the Utility Standards, which are limited to documenting required updates resulting from state regulations.
Revise the Natural Gas Distribution System section (Section 2685) to align with federal pipeline safety regulations and modernize materials, testing, and installation requirements. Updates include clarifications for incorporating by reference CFR Title 49, Part 192.7; updating service length protection for different models of Excessive Flow Valve (EFV) fittings; specifying the make of the EFVs; clarifying transition fitting specifications; establishing minimum standards for manufacturer testing; and defining the horizontal design location of new gas mains relative to parallel utility lines. Comprehensively revise and expand the Cured-in-Place Pipe (CIPP) rehabilitation section (Section 2736) with defined ASTM (American Society for Testing and Materials International) requirements, including testing, quality control, and performance standards.
Update Survey and GIS data collection standards section (Section 2740) to require the use of additional City GPS control point feature codes.

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FISCAL/RESOURCE IMPACT
There is no anticipated fiscal impact associated with the recommended revisions to the 2026 WGW Utility Standards. The recommended changes are not expected to result in significant cost increases for construction involving the City’s WGW systems.

STAKEHOLDER ENGAGEMENT
Other than providing this item for City Council approval at a regularly scheduled public meeting, no stakeholder engagement was sought or received for this routine item.

ENVIRONMENTAL REVIEW
This administrative activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378(b)(2), and no further environmental review is required.

LINKS
2026 WGW Utility Standards Proposed Changes (Clean Version) 2026 WGW Utility Standards Proposed Changes (Redline Version) APPROVED BY:

Alan Kurotori, Director of Utilities
Staff: Nelson Schlater, Water, Gas and Wastewater Engineering Manager Item 6
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Manager
Meeting Date: January 20, 2026
Report #:2512-5780
TITLE
Adopt a Resolution to Allow Consumption of Alcohol under PAMC section 9.04.010 on Certain Days and Times through May 31, 2026, on California Avenue.

RECOMMENDATION
Staff recommends that the City Council Adopt a Resolution to Allow Consumption of Alcohol under PAMC section 9.04.010 on California Avenue from El Camino Real to Birch Street through May 31, 2026.

BACKGROUND
The Resolution was initially approved as a pilot to operate during 3rdThursdays only, from June 2024 through December 2024, within the car-free portion of California Avenue between 4:00 p.m. and 10:00 p.m. The City Council approved the Resolution via consent calendar on June 17, 20241. After the Resolution expired, it was reintroduced and approved by the City Council on the consent calendar at the June 17, 2025, meeting2, under similar conditions, with a new sunset date of December 31, 2025. Stakeholders have indicated support for continuing the program, and staff has conducted outreach to extend it through the 2026 Super Bowl and future California Avenue activations.

ANALYSIS
Staff has identified a path forward to support California Avenue Merchants for the Super Bowl schedule for February 8, 2026, while an Entertainment Zone Ordinance is worked through for the 2026 FIFA World Cup
A Resolution to allow open containers during the Superbowl and California Avenue Activations on the car-free street portion of California Avenue from El Camino Real to Birch Street is incorporated under Attachment A for the City Council’s consideration. The 1 June 17, 2024 Meeting Staff Report:
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=7b643945-3828-4941-8858-ff95939f6fb3 2 June 17, 2025 Meeting Staff Report:
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=9f372ac5-64eb-401e-9b78-429af7f3e632 Item 7
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Resolution goes into effect immediately, and would only allow open containers Wednesday to Sunday, only from 5 PM – 10 PM, and only on the car-free street portion of California Avenue from El Camino Real to Birch Street. The Resolution authorizes the City Manager to further limit the days and times to protect public safety, health, and welfare. The Resolution will sunset on May 31, 2026. It is anticipated that the City Council would consider approval of an Entertainment Zone Ordinance on California Avenue, which would be in effect prior to the 2026 FIFA World Cup games.

The Resolution does not replace any requirements imposed by the California Department of Alcohol Beverage Control (ABC) and the City of Palo Alto permits for the sale of alcohol and all vendors must still comply with the terms of their ABC and City permits. Staff will work with local providers to ensure awareness as well as pass along reminders from ABC and City, representatives to ensure businesses understand it is their responsibility to remain in compliance with their ABC and City permits.

It should be noted that while the Resolution addresses enforcement of alcoholic beverage consumption within a defined geographic location and timeframe, it does not address alcohol sales or transport.

Staff will monitor the status of this effort through its implementation and will assess any additional program needs or alterations for future discussion with the City Council.

FISCAL/RESOURCE IMPACT
No additional resources are necessary if the Resolution is adopted.

STAKEHOLDER ENGAGEMENT
Staff has engaged in discussions with California’s ABC representatives and business stakeholders along California Avenue during monthly Merchant Meetings and site visits.

ENVIRONMENTAL REVIEW
This Resolution is categorically exempt under CEQA Guidelines Sections 15301 (existing facilities); 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment); 15305 (minor alterations in land use limitations); and 15323 (normal operations of facilities for public gatherings).

ATTACHMENTS
Attachment A: Resolution Authorizing Consumption of Alcoholic Beverages under PAMC

9.04.010.

APPROVED BY:

Ed Shikada, City Manager
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NOT YET APPROVED Attachment A
151_20260107_ts24 1

Resolution No. _____

Resolution of the Council of the City of Palo Alto to Authorize Consumption of Alcoholic Beverages under PAMC § 9.04.010 on Specific Days and Times on California Avenue in 2026

R E C I T A L S

A. Palo Alto Municipal Code (PAMC) section 9.04.010 makes it unlawful to consume any alcoholic beverage upon any street, sidewalk, highway or alley except as may be authorized by the City Council.

B. Through this R esolution, the City Council desires to authorize such consumption for specific, temporary days and times on the section of California Avenue closed to vehicular traffic as detailed in this Resolution.

NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows:

SECTION 1. The City Council hereby authorizes the consumption of alcoholic beverages under PAMC section 9.04.010 upon the section of California Avenue between El Camino Real and Birch Street that is closed to traffic (the ‘designated area’) as follows:

1. Between the hours of 5:00 pm to 10:00 pm, Wednesday to Sunday from the date of adoption of this Resolution through May 31, 2026, subject to further limits as specified in Section 2 of this Resolution.

SECTION 2. This authorization is subject to any conditions, regulations, or limits imposed by the City through its City Manager, any City Department, or any relevant law, permit, or condition. The City Manager may promulgate regulations of such consumption in order to ensure public safety, health, and welfare , including but not limited to regulations regarding staffing, security and law enforcement requirements, refuse/trash/recycling, and bathrooms . The City Manager is authorized to further limit the designated area , days, and time duration than that allowed in Section 1 to ensure public safety, health, and welfare . The City Manager is also authorized to suspend this Resolution and reinstate the enforcement of PAMC section 9.04.010 to ensure public safety, health, and welfare.

SECTION 3. This Resolution’s authority is limited to that which is granted under PAMC section 9.04.010. It does not authorize any event generally, nor does it grant or waive any other generally applicable requirements under law, regulation, license, or permit condition. It does not curtail or supersede any other applicable law, regulation, permit, license, or condition. It does not limit the ability of the City to issue or enforce any permit conditions that limit or forbid alcohol sales or consumption in or adjacent to the designated area under other laws or regulations. It does not create any right or vested interest in any person or business to sell alcoholic beverages.

It does not prevent law enforcement from enforcing any provision of state law or the Palo Alto Municipal Code besides PAMC section 9.04.010 during the dates and times specified above. This Resolution shall not be interpreted to conflict with any state law, regulation, license, or permit Item 7
Attachment A - Resolution
Authorizing Consumption of
Alcoholic Beverages under
PAMC 9.04.010.

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NOT YET APPROVED Attachment A
151_20260107_ts24 2

condition imposed by the State of California’s Department of Alcoholic Beverage Control or City- issued Conditional Use Permit.

SECTION 4. Environmental Review. The Council finds that this Resolution is categorically exempt under CEQA Guidelines Sections 15301 (existing facilities) ; 15304(e) (minor temporary use of land having negligible or no permanent effects on the environment) ; 15305 (minor alterations in land use limitations); and 15323 (normal operations of facilities for public gatherings).

SECTION 5. Effective Date and Sunset. This Resolution shall be effective immediately upon adoption and shall automatically sunset on May 31, 2026.

INTRODUCED AND PASSED:

AYES:

NOES:

ABSENT:

ABSTENTIONS:

ATTEST:

__________________________ _____________________________ City Clerk Mayor

APPROVED AS TO FORM: APPROVED:

__________________________ _____________________________ Assistant City Attorney City Manager

Item 7
Attachment A - Resolution
Authorizing Consumption of
Alcoholic Beverages under
PAMC 9.04.010.

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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: January 20, 2026
Report #:2510-5352
TITLE
Approve Recommended Changes that will Align Increased General Liability Insurance Costs in the General Liability Fund to be Included in the Mid-Year Budget Report as Recommended by the Finance Committee. CEQA Status—Not a project.

RECOMMENDATION
The Finance Committee and Staff recommend that the City Council approve including amendments to the Fiscal Year 2026 Budget Appropriation for the General Liability Fund to recognize increased insurance costs as part of the Mid-Year Budget Report (scheduled to be considered by City Council in February 2026).

BACKGROUND
At its October 21, 2025 meeting, the Finance Committee reviewed the City’s approach to Risk Management 1. The City’s current practice combines self-insurance for liability up to $1 million with layered excess insurance coverage purchased annually through the City‘s risk pool, ACCEL2.

The Finance Committee evaluated the current practice and concurred with Staff and the City’s broker, Alliant Insurance Services, that the approach continues to provide the City with key benefits, including lower long-term costs, collective purchasing power in the insurance market, protection against significant losses, and shared cost responsibility across risk pool members.

The staff report also informed the Finance Committee that the actual cost of Excess Liability insurance in Fiscal Year 2026 was $6.6M - an increase of $1.5M or 30% compared to the prior fiscal year. The report further noted that Excess Liability insurance costs are projected to increase by 15% to 25% in the coming fiscal years, which influenced the City’s Long-Range Financial Forecast discussed by the Finance Committee in December 2025. These cost increases 1 Finance Committee Meeting, October 21 2025, Staff Report 2507-4955 https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=16278&compileOutputType =1
2 ACCEL: Authority for California Cities Excess Liability Item 8
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are driven primarily by payroll growth, recent claims history, the City’s experience modification rate (Ex-Mod), recent large jury verdicts against public entities, and reserve requirements.

ANALYSIS
Staff recommended to the Finance Committee to utilize $0.9 million of available fund balance to rebalance the fund and cover claims costs expected to be paid out in FY 2026 from the General Liability Insurance Fund.

The Finance Committee unanimously approved the recommendation: The Finance Committee and Staff recommend that the City Council approve amending the Fiscal Year 2026 Budget Appropriation for the General Liability Fund within the FY 2026 Mid-Year Report, with the following referrals to staff:

1. Evaluate increased liability insurance for cybersecurity and earthquake,

2. Add tort reform to the proposed 2026 legislative guidelines,

3. Request that staff conduct systematic claims analysis and mitigation strategy,

4. Request that staff update the City Council on risk management and safety policies, and

5. Evaluate the adequacy of senior safety positions throughout the organization.

Staff were able to conduct the follow-up to the Finance Committee questions as part of this item as outlined below, alleviating the need to make formal referrals from Council.

1. Evaluate increased liability insurance for cybersecurity and earthquake Staff and the City’s broker review liability coverage as part of its risk oversight and are exploring options for the City’s Cyber Liability Insurance Program and earthquake insurance, in alignment with annual budget development. Follow-up on additional options and costs will be brought forward for discussion with the Committee in May 2026.

2. Add tort reform to the proposed 2026 legislative guidelines Staff coordinated internally and included this item in the draft citywide Legislative Guidelines that the Policy & Services Committee reviewed and recommended for City Council approval on November 19, 2025. The draft Legislative Guidelines, including the reference to the desire for tort reform, are agendized for consideration on the January 20, 2026 City Council agenda.

3. Request that staff conduct systematic claims analysis and mitigation strategy The City Attorney’s Office routinely reviews liability claims, potential recovery of costs from third parties, and litigation trends, with staff and the City Manager’s Office, and provides periodic reports to the Council. Departments diligently report injuries and accidents, using this information as a foundation for developing effective risk mitigation strategies. When issues extend beyond the affected department, the City Manager‘s Office directs post- incident reviews, root cause analysis, documentation of lessons learned, and support for implementing corrective actions to ensure departments learn and consistently work to Item 8
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improve operations. This work is facilitated by the Office of Emergency Services. Additional risk mitigation strategies include safety inspections, permitting and oversight of field activities, scheduled maintenance of City vehicles, and review of contractual insurance requirements.

4. Request that staff update the City Council on risk management and safety policies The City focuses on establishing and maintaining safe workplaces, equipment, materials, practices, and procedures. Risk Management is embedded across departmental policies and procedures to ensure a coordinated and holistic approach to the City’s diverse and multifaceted exposures. These policies collectively address risk prevention, mitigation, transfer, and retention. A list of key risk management and safety policies is provided in Attachment A, with each policy referenced by topic area and a general description of what it aims to address.

The foundation of staff responsibilities is, above all, to ensure the safety of employees and the public, while actively implementing training procedures, fulfilling safety committee duties, and administering the remedial action process. Each department implements safe work practices to support the City's Injury Incident Prevention Plan (IIPP), to train staff, and to provide guidance to contractors on workplace safety and expectations, proper use of equipment and materials, hazard identification, and record keeping. Human Resources coordinates mandated safety training annually for various City operations as required to meet key CalOSHA program areas. IIPP updates are completed periodically as regulations or City processes are revised. For example, an update to the Workplace Violence policy is currently under revision and will be followed by training for all employees prior to the end of this fiscal year.

Always seeking to improve, policies reflect both proactive and responsive measures to ensure we learn from incidents, trends, and emerging areas of concern. In addition, the City auditor does a risk assessment to develop the annual workplan for Council review and approval. Many have included a more in-depth assessment of risk in specific areas, such as cybersecurity, providing an independent lens and industry-specific feedback to ensure the City considers best practices.

5. Evaluate the adequacy of senior safety positions throughout the organization Senior safety positions are established within specific operational departments, such as Utilities and Public Works. Department supervisors and managers actively support senior safety staff with reporting, compliance, and training needs, as appropriate. Overall, the structure of senior safety responsibilities aligns with departmental operations and their areas of risk. Further evaluation of senior safety positions would be part of the annual budget development. Centrally, there is a Risk Management position in Administrative Services and a Workers Compensation team in Human Resources that are coordinating efforts Citywide to ensure that transactional work is completed and that a citywide lens is applied to identify trends, concerns, and consistency in safety culture.

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Discussion of referrals can be found in the October 21, 2025 Finance Committee Action Minutes5.

FISCAL/RESOURCE IMPACT
If $0.9 million of available fund balance within the General Liability Insurance Fund is approved by City Council to be used to cover Excess Liability insurance expenses incurred in Fiscal Year 2026 and to increase funding for Liability Claims expenses, the impact on the remaining fund balance will decrease the balance from $2.1million to $1.2 million.

STAKEHOLDER ENGAGEMENT
This review involved input from Human Resources, Office of Management and Budget, Administrative Services, City Attorney and Alliant Insurance Services, the City’s broker.

ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because funding for the City’s insurance program is a continuing administrative or maintenance activity. CEQA Guidelines section 15378(b)(2).

ATTACHMENTS
Attachment A: Risk Management and Safety policies
APPROVED BY:

Lauren Lai, Administrative Services Director
5 Finance Committee Meeting, October 21, 2025, Action Minutes 2507-4955 https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=16277&compileOutputType =1
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1 ATTACHMENT A
Risk Management and Safety Policies
Risk Management
Policy Description
1-03/ASD Cash Handling
Manual
Addresses theft and misappropriation risk. Implements cash- counting and deposit procedures. Mitigates loss through dual custody and reconciliations. Transfers accountability with documented roles and audits.
1-06/ASD Payment
Procedures
Addresses duplicate payments, unauthorized payments, and fraud risk. Mitigates financial loss through invoice, PO, and receipt matching. Requires approval thresholds and segregation.

Transfers 3rd-party risk via ACH controls.
1-11/ASD
Leased Use of City Land/
Facilities
Addresses environmental, safety, financial, and liability risk.

Mitigates losses through compliance checks, tenant verification, and fair-market-value application. Transfer liability through indemnity requirements.
1-34/HRD Insurance
Requirements for
Contracts
Addresses liability risk. Transfers risk through coverage requirements, indemnity, and waivers.
1-44/ASD Pre-
Qualification of
Contractors
Addresses 3rd party risk. Mitigates project and performance risk through contractor screening and qualification criteria. Transfers liability through bonding and insurance. Requires ongoing compliance monitoring.
1-48/ASD Procedure for
Sale/ Transfer of Surplus
City-Owned Real Property
Addresses legal, financial, liability, and reputational risk.

Mitigates loss through title verification, formal appraisals, fair market valuations, council approvals, and public notifications. 1-48/ASD Procedure for
Sale/ Transfer of Surplus
City-Owned Real Property
Addresses legal, financial, liability, and reputational risk.

Mitigates loss through title verification, formal appraisals, fair market valuations, council approvals, and public notifications. 1-54/MGR Social Media
Use Policy, Standards, and
Procedures
Addresses reputational, legal, and cyber risk. Implements IT control, monitoring, and documented removal procedures.

Mitigates loss through content standards, approval processes, disclaimers, and user guidelines.
1-56/MGR Electronic
Signatures on City
Documents
Addresses fraud and compliance risk. Mitigates loss through secure electronic signature standards, identity validation, and audits.
1-63/IT Information
Security Policy
Addresses cybersecurity risk. Implements access controls, audits, and backups. Mitigates loss through patching, monitoring, and incident response. Transfers risk through vendor security requirements.

Item 8
Attachment A - Risk
Management and Safety
policies

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2 ATTACHMENT A
Risk Management and Safety Policies
Safety
Policy Description
2-07/HRD Volunteer Policy Addresses maintaining safe environments for the public and all City employees. Implements background checks and strict training requirements, screening, waivers, and supervision protocols.
2-28/HRD Fingerprint
Policy
Addresses maintaining safe environments for the public and all City employees, volunteers, and vendors. Implements
fingerprinting requirements, DOJ and FBI background checks, verifying clearances, recordkeeping, and compliance reviews. 3-01/HRD Safety Policy Addresses public and employee safety through hazard identification and prevention measures. Implements workplace safety standards, regular review protocol, and vendor
compliance with established safety requirements outlined in contracts. Provides volunteers with guidelines and resources to ensure secure participation.
3-02/HRD Workers'
Compensation Modified
Duty Policy
Addresses public and employee safety by assigning modified duties to injured employees. Requires vendors and contractors to comply with return-to-work safety guidelines when
applicable.
4-01/PWD Vehicle and
Equipment Use,
Maintenance and
Replacement
Addresses public and employee safety by ensuring vehicles are operated responsibly. Implements mandatory training and safe driving standards, regular maintenance, and timely equipment replacement.
4-02/PWD Building Safety
Responsibility
Addresses public and employee safety by maintaining secure, hazard-free facilities. Implements timely inspections to prevent unsafe conditions.
4-07/MGR Conduct in City
Facilities
Addresses public and employee safety by requiring respectful and orderly conduct in all city facilities. Implements standards that prohibit disruptive or unsafe actions within buildings, reducing hazards.

Item 8
Attachment A - Risk
Management and Safety
policies

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1 February 27, 2023 City Council Meeting (Item 9):
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=1195 2 December 4, 2023 City Council Meeting (Item 7)
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13062 3 January 13, 2025 City Council Meeting (Item 6)
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=15914 City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Manager
Meeting Date: January 20, 2026
Report #:2511-5470
TITLE
Approval of Contract Amendment Number 3 to Contract C23183770 with Townsend Public Affairs, Inc. in the amount of $186,000 to Revise the Not-to-Exceed Total to $744,000 and to Extend the Term for an Additional Year of Service (the third of four one-year options to renew) for State and Federal Legislative Advocacy and Grant Consulting and Compliance Services; CEQA Status - Not a Project

RECOMMENDATION
Staff recommends the City Council approve and authorize the City Manager or designee to execute Amendment Number 3 (Attachment A) to Contract C23183770 with Townsend Public Affairs, Inc. (TPA) for an additional year to exercise the third of four one-year options to renew the services for State and Federal legislative advocacy services and grant consulting and compliance services, and to increase the not-to-exceed by $186,000. This amendment results in a revised contract not-to-exceed amount of $744,000 over this 4-year term expiring December 31, 2026. Staff will return to Council in December 2026 with the fourth and final contract amendment as directed by Council in February 2023.

BACKGROUND
On February 27, 2023, the City Council approved a contract with Townsend Public Affairs, Inc. (TPA) after the completion of a request for proposals process and extensive City Council discussion1. The City Council approved the contract as a one (1) year contract with the option to renew for four (4) additional one-year terms. In addition to approving the contract, the City Council established a time-limited Legislative Matters Ad Hoc Committee which met in 2023.

On December 4, 2023, the City Council approved Amendment 1 with TPA2 and on January 13, 2025, Council approved Amendment 2 with TPA3. The City Council approved each of these amendments as one (1) year extensions for State and Federal Legislative Advocacy and grant consulting and compliance services after TPA’s completion of services of the previous year.

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ANALYSIS
TPA successfully carried forward the City’s legislative advocacy in this third year of the contract as well as expanding the City’s capacity regarding grant applications and management.

Specifically, this year TPA:
Continued providing frequent legislative updates to City Council and staff. Drafted and refined advocacy letters on bills of interest to the City. Assisted in ensuring Palo Alto’s interests were heard in Sacramento.
Helped secure federal community project funding grant for Fire Station No. 4 in the federal budget and helped get it included again when the federal government did a continuing resolution instead of adopting that budget last year. Assisted staff with navigating local impact of federal hold on all grants and financial assistance by analyzing at risk grants based on TPA’s legislative insights. Kept the City abreast of potential local impacts of pending legislation. Drafted the updated legislative guidelines/legislative platform with staff. Provided monthly updates on grant funding opportunities and assisted the City with application submissions and compliance requirements. In 2025, the City was awarded a $2,855,000 MTC grant to install electric vehicle charging stations. Other duties defined in the contract scope of work.

Per feedback from the City Council, in the initial amendment (Amendment 1), staff added text to the scope that TPA will, in legislative memos, provide written potential impacts information on select bills that the City Council will consider weighing in on at the State level. This was added to Amendment 1 and is still within the contract scope for Amendments 2 and 3. TPA has done this in their discussions with City Council in 2025 and plans to continue it into 2026.

FISCAL/RESOURCE IMPACT
The original contract has a not-to-exceed amount of $558,000 with an annual budgeted amount of $186,000 for State and Federal advocacy services and grant application and compliance services, intended to cover the cost for 3 of the 5 possible contract years (with annual City Council authorization). Staff now seeks the authorization to increase the not-to-exceed amount by $186,000 to $744,000 total for the 4-year term and to have Council authorize the 4th year of the contract to continue services. The year 4 (calendar year 2026) services will continue the annual budgeted amount of $186,000 for all services. Staff are evaluating the continuation of the full suite of services in the context of the current financial constraints and may bring forward a revised proposal to the City Council for consideration as part of the budget process.

Approval of this amendment does not preclude adjustment in the future. The contract holds a termination/adjustment clause with a 10-day noticing requirement.

The compensation schedule in Amendment 3 Revised Exhibit C clearly delineates the expected year-by-year funding associated with the February 2023 City Council motion. The compensation Item 9
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schedule clarifies how much money will be spent per year on the contract if the City Council exercises the option to renew each year. City Council approved $186,000 funding in the FY 2026 budget, similar to current funding allocations. Future funding is subject to City Council approval of the FY 2027 Adopted Operating Budget. The rate continues to be the per-month retainer cost of $15,500 for all three service areas/tasks (State, Federal, and grants) with no additional fees.

STAKEHOLDER ENGAGEMENT
During this current contract year, staff continued to regularly meet with TPA to discuss relevant State and Federal legislation and updates. Staff also met with TPA to discuss grant opportunities and compliance. These meetings included staff from a variety of City departments.

ENVIRONMENTAL REVIEW
Approval of this contract is not a project under the California Environmental Quality Act (CEQA), as it is an administrative activity that will not result in direct or indirect changes in the environment (CEQA Guidelines 15378(b)(5).).

ATTACHMENTS
Attachment A: Amendment 3 to Contract C23183770 with Townsend Public Affairs, Inc.

APPROVED BY:

Ed Shikada, City Manager
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Vers.: Aug. 5, 2019