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Finance and Management Services <br />https://www.santa-ana.org/finance <br />Item # 25 <br />City of Santa Ana <br />20 Civic Center Plaza, Santa Ana, CA 92701 <br /> Staff Report <br />June 1, 2021 <br />TOPIC: Approval to Pre-Pay the City’s Safety & Miscellaneous Unfunded Actuarial <br />Obligations FY 21-22 <br />AGENDA TITLE: <br />Approve Prepayment for the City’s Contribution to Both the CalPERS Miscellaneous and <br />Safety Employee Pension Unfunded Liability for Fiscal Year 21-22 (General and Non- <br />General Fund) <br />RECOMMENDED ACTION <br />1. Approve a $25,244,430 pre-payment for the City’s annual Unfunded Actuarial Liability <br />to California Public Employees Retirement System (CalPERS) – Miscellaneous Plan <br />for Fiscal Year 2021-22, to save $868,611. <br />2. Approve a $29,101,640 pre-payment for the City’s annual Unfunded Actuarial Liability <br />to California Public Employees Retirement System (CalPERS) – Safety Plan for Fiscal <br />Year 2021-22, to save $1,001,331. <br />EXECUTIVE SUMMARY <br />The discounted pre-payments are included in the City’s proposed FY 21-22 budget. If the <br />City Council does not approve the recommendation, the proposed budget will need to <br />increase by $1,869,942. <br />The City is preparing to refinance its pension debt. Over the next few months, the <br />refinancing team will propose a debt structure that may include savings for FY 21-22. As <br />we move closer to the July 31 due date for FY 21-22 payment of the unfunded liability, <br />staff will have a better idea of how to proceed. The City may need to make monthly <br />payments on the unfunded liability until the debt refinancing is complete. The <br />recommendation will provide the maximum flexibility to meet the City’s obligation and <br />maximize savings while moving through the refinancing process. <br />DISCUSSION <br />The City provides a defined benefit pension plan to its employees, managed by CalPERS. <br />As employees provide service and accrue service credit, the City incurs a liability. <br />Contributions from both the City and employees offset the liability. When the contributions