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SUPPLEMENTAL MATERIAL <br />2 <br /> <br />This license is also part of a broader set of agreements between the City and <br />EBRPD that provide for shared, controlled access along the ridge to support <br />maintenance of City water tanks and pipelines and EBRPD facilities. <br /> <br />Overall, the agreement is focused on ensuring that continued use of Santos <br />Ranch Road is governed by updated, City-standard terms, including <br />insurance and indemnification, clear damage/repair responsibilities, and <br />preserving the City’s ability to manage access through executed agreements. <br /> <br />Agenda Item #14: Receive a report and presentation on the City's pension obligation <br />management strategy and adopt the pension funding policy <br /> <br />3. Why/how was each ’smoothing level’ for each option determined? Why was each <br />'smoothing level’ option not closer to the currently $29M / $31M levels being <br />experienced (or a slight reduction from it) since we’ve been maintaining that cost <br />level? <br />A. Regarding the $29M/$31M level, that includes $9M of Normal Cost. The <br />actual unfunded accrued liability (UAL) for FY 2026 is $20.2M. All smoothing <br />levels referenced/shown in slides 22 to 28 are compared to the UAL <br />payments only (blue bars) and not inclusive of Normal Cost. This is related to <br />a question below as well, which needs clarification. Because the Normal Cost <br />gets picked up through monthly payroll and doesn’t fluctuate much, the cost <br />management strategy analysis focused on the UAL debt portion of costs. <br /> <br />The decision on the four options was based on where it would leave the 115 <br />Trust balance as a percentage of FY26 annual costs (0%, 50%, 100%, <br />150%). There are an infinite number of options that could be analyzed, and <br />the goal was to be comprehensive (covering a range of options and <br />cost/benefit) while keeping the analysis digestible for discussion. The metric <br />of “% of annual budget” (as opposed to a $ amount) is part of the new <br />recommended policy target and can be adaptive to changes in UAL. <br /> <br />4. Please clarify, when looking at Option 4, the only reason it ends a fiscal year or <br />two earlier than the others, is it due to the smoothing level being higher than <br />those final years that are falling out/off? <br />• Option 1: $60M balance => $84M cost savings benefit due to annuity gains <br />• Option 2: $60M balance => $74M cost savings benefit + $14.8M balance <br />remaining = $88.8M total benefit <br />• Option 3: $60M balance => $64M cost savings benefit + $29.5M balance <br />remaining = $93.5M total benefit