Calistoga agreed Tuesday to make a sizable payment to the city’s retirement fund that will result in savings over the long term.
The city will make a $1 million payment to CalPERS (California Public Employees’ Retirement System) that will be applied to the unfunded side fund liability, said City Manager Dylan Feik.
Over a 30-year period that payment will result in an annual $100,000 savings to the city.
The city currently pays in to CalPERS for city employees’ retirement, and employees are eligible to participate in pension plans offered by CalPERS as well. CalPERS provides retirement and disability benefits, cost of living adjustments and death benefits to public employees and their beneficiaries.
Funding for those benefits and plans are calculated and each year CalPERS creates actuarial reports that determines the employers' rates that must be paid for the upcoming Fiscal Year, Feik said in his report. Rates are set two years in the future, so for example, the employer rates for the 2017-18 Fiscal Year were set based on data concluded June 30, 2015.
“It is not unusual to have an unfunded liability, meaning that pension assets do not meet pension obligations,” Feik wrote in his report. “This unfunded liability does cost the city in the long run. The city is on a schedule to pay off the unfunded portion over the next 30 years.”
The city has been setting aside funds since Fiscal Year 2012-13 to apply toward the unfunded CalPERS liability and will make a payment of $1 million to CalPERS on or before May 30 to allow CalPERS to adjust the Fiscal Year 2018-19 employer rates.