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