CalPERS Fresh Start
Strategy Implementation
CITY COUNCIL
JUNE 02, 2026
SCOTT WAGNER,
CHIEF FINANCIAL OFFICER
Overview
Unfunded liability payments to CalPERS have increased greatly over the last 10 years and are a significant strain on budgets
The Finance Department along with NHA Advisors presented a study session on 4/21/2026 detailing strategies developed to shorten the payoff of unfunded liability, create savings and provide more predictable budgeting
City Council directed staff to return with implementation of option 1, a Fresh Start program with CalPERS that utilizes restricted pension funds to smooth payments 2 Overview
Resolution authorizes the City Manager to execute the necessary documents with CalPERS to implement a Fresh Start program
This action is irrevocable and will lock the City into this schedule for the existing unfunded pension liabilities
Future gains or losses will add or subtract from the overall payment, Fresh Start does not change future impacts
Historical &
Projected
General Fund
CalPERS
Payments
-Increases have been driven by:
- Investment returns not meeting
target (great recession)
- Reforms to more conservative
assumptions around investments
and life expectancy
- Shortened payoff schedules
4 Strategic Goals
More predictable budgeting that matches expense growth with revenue growth Decrease total amount paid
Pay off unfunded liability quicker
Maintain local control over local funds
Provide maximum cost avoidance and budgetary relief in the near term Execute a CalPERS Fresh Start (FS) and leverage the Section 115 Trust over 9 Years to offset General Fund CalPERS costs; Ramp-up payments for better budget alignment
Option 1
(FS/115)
No Fresh Start; Use Section 115 Trust to offset General Fund CalPERS costs; Ramp-up payments for better budget alignment Option 2
(115 Trust)
Liquidate the Section 115 Pension Trust by FYE 2026 by making an Additional Discretionary Payment (ADP) to CalPERS to directly pay down the General Fund’s UAL to generate near term cost avoidance Option 3
(ADP)
Options Presented
Option 1
(Fresh Start + 115 Trust)
OPTION 2
(100% Section 115 Trust)
Option 3
(100% ADP)
Cost Avoidance
(First 5 Years) $28M $24M $24M
Cost Avoidance
(Total) $37M $30M $33M
Local Investment
Control, Budget Flex &
Section 115 Liquidity
Yes Yes No
Budget Predictability 2% Linear Payment,
then Level (16 Years)
2% Linear Payment for
8 Years
Escalating payment for
7 years
Retirement of UAL
Debt Early Yes (6 Years Earlier) No No
Comparison of Options Presented
8 9
Recommendation
The Finance Department recommends that the City Council adopt a Resolution authorizing the City Manager to execute an amendment to the City's contract with CalPERS to implement a "Fresh Start" re-amortization of the City's UAL. Additionally, staff recommends Council approve the concurrent strategic drawdown of $26 million in restricted pension funds to achieve budget stability and long-term cost avoidance.
Questions