City Council Agenda Report
TO: Mayor McCord and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Saadiah Ryan, Finance Director
MEETING DATE: January 18, 2022
ITEM NO: 7.4
SUBJECT: Adopt Resolution No. 2022-02, approving the Pension Funding Policy.
RECOMMENDATION
Motion to Adopt Resolution No. 2022-02, approving the Pension Funding Policy.
BACKGROUND
The proposed City of Patterson Pension Funding Policy (Exhibit “A”) has been developed to provide guidance in the management of the City’s defined benefit pension plans. These plans, administered by the California Public Employees’ Retirement System (CalPERS), have been established for sworn public safety (Safety) and non-sworn (Miscellaneous) personnel. The funding of these plans has been a significant fiscal challenge for the City for many years. As a result, the City began efforts to address the issue.
On June 19, 2012, the City Council adopted resolution no 2012-40 final budget for fiscal year 2012-2013 that showed City Council had set-aside $1 million to Pension and OPEB Reserves.
On June 26, 2017, the City Council adopted resolution no 2017-28 final budget for fiscal year 2017-2018 that showed City Council approved an increased to set-aside Pension and OPEB Reserves amount to $1,571,713.
Required contributions to CalPERS rose dramatically during the past decade. This was primarily due to CalPERS lowering its assumptions regarding future investment return, along with actual returns during that period falling below their investment targets. Moving forward, contribution requirements are projected to remain relatively steady over the next decade thanks to the strong investment return achieved by CalPERS in Plan Year 2020-21.