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

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40 4826-7904-2280v7/200434-0005 The following table presents the total OPEB liability of the City, calculated using the discount rate for the OPEB Plan, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower (1.79%) or 1 percentage-point higher (3.79%) than the current discount rate: City of Santa Ana Sensitivity of the OPEB Benefit Plan Net Liability to Changes in the Discount Rate Discount Rate Net OPEB Liability Impact on Liability 1.79% $ 63,261,890 $10,144,436 2.79% 53,117,454 - 3.79% 45,225,706 7,891,748 Source: City’s Annual Financial Report for Fiscal Year 2020. Future changes in funding policies and assumptions, including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases in the City’s annual required OPEB Benefit plan contributions, and such increases could be material to the finances of the City. No assurance can be provided that such expenses will not increase significantly in the future. The City does not expect that any increased funding of OPEB Benefits will have a material adverse effect on the ability of the City to pay the Bonds. For additional information relating to the City’s OPEB Benefit plan, see Note 4 to the City’s audited financial statements set forth in Appendix A. The City established a Section 115 Trust for its pension liability. The Trust is administered by Public Agency Retirement System. An initial deposit of $0.5 million was made during Fiscal Year 2016. No further deposits have been made to the Trust and none are budgeted for Fiscal Year 2022. City Financial Statements A copy of the most recent audited financial statements of the City (the “Financial Statements”) for the Fiscal Year ended June 30, 2020, prepared by CliftonLarsonAllen LLP, Irvine, California (the “Auditor”), are included as Appendix A to this Official Statement. The Auditor’s letter dated December 10, 2020 is set forth therein. The Financial Statements are public documents and are included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has not performed any post-audit analysis of the financial condition of the City, nor has the Auditor reviewed or audited this Official Statement. Certain financial information that is set forth in this Official Statement is derived from the Financial Statements and the City’s audited financial statements for prior years (excluding certain non-cash items and after certain other adjustments) and is qualified in its entirety by reference to such statements, including the notes thereto. The Auditor has not reviewed or audited such financial information or any other portion of this Official Statement. In the Financial Statements, data relating to governmental funds such as the General Fund focus on current financial resources. Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the City’s balance sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances (which is set forth under the caption “—Change in Fund Balance of the City General Fund”), presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period.