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SUPPLEMENTAL MATERIAL 1 Responses to City Council Agenda Items – March 4, 2025 Regular Meeting Agenda Item #8: Receive report and presentation on City’s CalPERS and Other Post- Employment Benefits (OPEB) Funding Actuarial Analysis 1. Why is the total pension trust fund drawdown amount for Scenario 1 only about $37 million, and for Scenario 2, it is only about $35 million? A. As described in Foster & Foster’s report, the amounts shown on the charts are for every other year. The total drawdown amounts are higher than $37 million and $35 million. Please note that the charts are simplified to make them less complex to be consistent with the recent Eide Bailly recommendation regarding presentation of information in agenda reports. 2. Will the City’s pension and OPEB plans achieve 100% funded status? A. As stated in Foster & Foster’s report, the Actuarial Accrued Liability (AAL) represents the target asset value so that the plan is on track to meet the goal of having sufficient assets to pay all benefits from the trust once employees retire. Plans will rarely be 100% funded. In each valuation, the recommended contribution is equal to the value of benefits accruing for active employees, plus/minus a payment/credit to move the plan towards 100% funding. Foster & Foster recommends that the City continue to fund pension and OPEB liabilities to move towards 100% funding. 3. Is there any possibility that the discount rate could be lowered further? A. Yes. The CalPERS Board will consider information presented in the regular four-year Asset Liability Management (ALM) cycle review in 2025 that could result in a recommendation to lower the discount rate (the Q&A is from the CalPERS website). 4. Are CalPERS investment returns expected to remain at current levels in Foster & Foster’s report? A. Investment returns are expected to change periodically depending on market conditions. The analysis prepared by Foster & Foster reflects the current 6.8% CalPERS discount rate, but rates lower or higher than this are also included. 5. Has the City been withdrawing funds from its City and Fire OPEB trust accounts? A. The City has not been withdrawing funds from its OPEB trust accounts every year, although in some years there were small withdrawals in amounts such as $200k. With the accumulated funds and investment earnings, the funded status for OPEB was 81% at June 30, 2024.