Item 40 - Refinancing City’s Pension Obligations with California Public Employees Retirement System

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11 4826-7904-2280v7/200434-0005 TABLE 3 City of Santa Ana Projected Normal Cost Employer Contributions 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 Miscellaneous 11.23% 10.90% 10.50% 10.20% 10.00% 9.70% Safety 22.07% 21.60% 20.90% 20.30% 19.60% 18.90% Source: CalPERS Annual Valuation Reports as of June 30, 2019. Unfunded Accrued Liability Payments CalPERS has notified the City of the amount of the Pension Liability based on the June 30, 2020 actuarial valuation as set forth in Table 4 below, which is the most recent actuarial valuation performed by CalPERS for the City’s Miscellaneous Plan and Safety Plan. The actuarial report for the Miscellaneous Plan incorporates the Classic and PEPRA plan for Miscellaneous employees. The actuarial report for the Safety Plan incorporates the Classic and PEPRA plan for Fire and Police Sworn Officers. TABLE 4 City of Santa Ana Unfunded Accrued Liability of CalPERS Pension Plans Miscellaneous Plan Safety Plan Combined Accrued Liability (AL) $ 983,234,906 $ 1,232,748,676 $ 2,215,983,582 Market Value of Assets (MVA) 660,268,312 791,080,421 1,451,348,733 Unfunded Accrued Liability (UAL) $ 322,966,594 $ 441,668,255 $ 764,634,849 Percentage of UAL Funded 67.15% 64.17% 65.49% Source: CalPERS Annual Valuation Report as of June 30, 2020. There is a two-year lag between the valuation date and the start of the contribution fiscal year. The UAL determined in the June 30, 2020 actuarial valuation relates to the corresponding UAL Payments commence two years after the valuation date in Fiscal Year 2022-23. This two-year lag is necessary due to the amount of time needed to confirm the membership and financial data, and to provide public agencies with their required employer contribution in advance of the start of the fiscal year. As of August 1, 2021, the projected UAL is equal to $322,966,594 for the Miscellaneous Plan and $441,668,255 for the Safety Plan, resulting in a combined total of $764,634,849. The UAL is comprised of a series of amortization bases. The Miscellaneous Plan has 26 amortization bases and the Safety Plan has 24 amortization bases. Each amortization base has as stated balance/(credit), amortization period, and discount and escalation rate, which results in an individual amortization schedule. The amortization schedule in Table 5 below sets forth the minimum annual UAL payment contributions required according to the CalPERS current amortization policy as of June 30, 2020 based on information