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<br />4826-7904-2280v7/200434-0005
<br />exceed the then-current discount rate by two or more percentage points. There can be no assurance as to whether
<br />or when the CalPERS Board of Administration will consider lowering the discount rate.
<br />Investment Performance. CalPERS earnings reports for Fiscal Years 2010 through 2020 report
<br />investment gains of approximately 13.3%, 21.7%, 0.1%, 13.2%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%, 6.7% and
<br />4.7%, respectively. On July 12, 2021, CalPERS announced preliminary investment gains of approximately
<br />21.3% for Fiscal Year 2021. Future earnings performance may increase or decrease future contribution rates for
<br />plan participants, including the City.
<br />GASB 68 Pension Information Provided in the Audited Financial Statements
<br />The CalPERS website contains the most recent actuarial valuation reports for the City’s Miscellaneous
<br />Plan and Safety Plan and other information that concerns benefits and other matters. The comprehensive annual
<br />financial reports of CalPERS are also available on CalPERS’ Internet website at www.calpers.ca.gov. The
<br />textual reference to such Internet website is provided for convenience only. None of the information on such
<br />Internet website is incorporated by reference herein. The City cannot guarantee the accuracy of such
<br />information.
<br />The following information has been derived primarily from the City’s Comprehensive Annual Financial
<br />Report for the Fiscal Year ended June 30, 2020 (the “Annual Financial Report”). This information has been
<br />produced by CalPERS, its independent accountants and its actuaries, for the purposes of GASB 68 (as such term
<br />is defined below) reporting. The financial figures reported in the Financial Report are different from the
<br />CalPERS actuarial reports. No attempt has been made to reconcile the difference between the pension figures
<br />used for GASB 68 reporting requirements and the information provided in the most recent June 30, 2020
<br />CalPERS actuarial report.
<br />Accounting and financial reporting by state and local government employers for defined benefit pension
<br />plans is governed by Governmental Accounting Standards Board (“GASB”) Statement No. 68 (“GASB 68”).
<br />GASB 68 governs the accounting treatment of defined benefit pension plans, including how expenses and
<br />liabilities are calculated and reported by state and local government employers in their financial statements.
<br />GASB 68 includes the following components: (i) unfunded pension liabilities are included on the
<br />employer’s statement of net position; (ii) pension expense incorporates rapid recognition of actuarial experience
<br />and investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial
<br />discount rates are required to be used for underfunded plans in certain cases for purposes of the financial
<br />statements; (iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes
<br />of the financial statements; and (v) the difference between expected and actual investment returns will be
<br />recognized over a closed five-year smoothing period. GASB 68 affects the City’s accounting and reporting
<br />requirements, but it does not change the City’s pension plan funding obligations.
<br />In accordance with GASB 68, the City’s Miscellaneous Plan had a total net pension liability of
<br />approximately $283,808,398 for the Fiscal Year ended June 30, 2019, while the City’s Safety Plan had a total
<br />net pension liability of approximately $380,972,437 for the Fiscal Year ended June 30, 2019. The net pension
<br />liability is the difference between the total pension liability and the plan fiduciary net position. The City’s total
<br />pension assets include funds that are held by CalPERS, and its net pension asset or liability is based on such
<br />amounts.
<br />For Fiscal Years 2018, 2019 and 2020, the City incurred Miscellaneous Plan pension contributions
<br />subsequent to the measurement date in the amount of (inclusive of both UAL and Normal Cost) $21,182,283,
<br />$24,143,358 and $28,459,807, respectively, and Safety Plan pension contributions subsequent to the
<br />measurement date in the amount of (inclusive of both UAL and Normal Cost) $24,212,791, $27,718,529 and
<br />$33,630,219, respectively.
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