HomeMy WebLinkAbout2025-09-16 Finance Committee Agenda PacketFINANCE COMMITTEE
Regular Meeting
Tuesday, September 16, 2025
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5:30 PM
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1 September 16, 2025
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CALL TO ORDER
PUBLIC COMMENT
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end of the agenda.
ACTION ITEMS
1.Accept California Public Employees’ Retirement System (CalPERS) Pension Annual
Valuation Reports as of June 30, 2024.
2.Recommendation to the City Council to Adopt a Resolution Amending Utilities
Connection Fees and Service Charges in Utilities Rate Schedules E-15 (Electric Service
Connection Charges), W-5 (Water Service Connection Charges), G-5 (Gas Service
Connection Charges), S-5 (Wastewater Service Connection Charges) and C-1 (Utility
Miscellaneous Charges), and to Approve Corresponding Budget Appropriation Revisions
for FY 2026. CEQA status: Not a Project.
3.Recommendation to City Council to Approve Purchase Order C26195416 with Carahsoft,
Utilizing a General Services Administration Blanket Purchase Agreement, to Procure SAP
S/4 HANA Suite of Products and Corresponding Software and Hosting Services for a 5-
Year Term for a Not-To-Exceed Amount of $6,640,429; and Approve a Budget
Amendment in the Technology Fund; CEQA Status - Not a Project
FUTURE MEETINGS AND AGENDAS
Members of the public may not speak to the item(s)
ADJOURNMENT
2 September 16, 2025
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3 September 16, 2025
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4 September 16, 2025
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Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: September 16, 2025
Report #:2506-4901
TITLE
Accept California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation
Reports as of June 30, 2024.
RECOMMENDATION
Staff recommends that the Finance Committee review and recommend that Council accept the
California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation Reports as
of June 30, 2024 for the Miscellaneous and Safety Plans.
EXECUTIVE SUMMARY
The June 30, 2024 CalPERS Annual Valuation report is used to inform the development of the
upcoming FY 2027 Budget process and FY 2027 - 2036 Long Range Financial Forecast (LRFF).
This report estimates total employer costs of $71.1 million in FY 2027, an increase of $2.6
million or 3.8% from the total employer cost of $68.5 million in FY 2026. This increase is
primarily due to CalPERS investment gain of 9.3% and 5.8% as compared to target levels of 6.8%
for the period ending June 30, 2024 and June 30, 2023, respectively. This was preceded by
significant volatile investment loss of -6.1% and gain of +21.3% for the period ending June 30,
2022 and June 30, 2021, respectively. This gain triggered the CalPERS Risk Mitigation Policy,
which ultimately resulted in the reduction of the discount rate (target investment return) from
7.0% to 6.8%. Overall, the City’s combined funded status is projected to be 66.0% in FY 2027 as
compared to 64.0% in FY 2026 and 63.8% in FY 2025.
The Unfunded Accrued Liability (UAL) is $566.4 million. This amount is reduced to $456.5
million or 72.6% funded status once adjusted for the City’s Pension Trust, which has $109.9
million of contributions/principal and net earnings. In total, planned contributions (principal) of
$87.5 million to the Pension Trust will have been made through FY 2025 ($56.5 million, or
64.6% of the total, is from the General Fund). Contributions to this Trust continue in alignment
with the City’s goal to reach 90% funded by FY2036.
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BACKGROUND
The City of Palo Alto offers its employees and retirees a defined pension benefit plan which is managed
and administered by CalPERS, a State of California Pension Trust Program. The CalPERS program maintains
two pension plans for the City: one for safety employees (sworn fire and police personnel) and another
for miscellaneous employees (all other non-safety personnel employed by the City, including field
personnel, administrative support, and managers).
There are three tiers of benefits within the two plans described above. Table 1 below details the current
pension plans and the different benefit levels in each tier. It takes City employees five (5) years of service
to vest in any tier of the pension program. Attachment A outlines the number of employees in each tier
by pension plan and employee group. As of the third quarter of calendar year 2025, the majority of the
workforce in both plans are in Tier 3, or PEPRA. The employee ratios within the Miscellaneous Plans tier
1, tier 2 and tier 3 are 25.0%, 10.2%, and 64.8% respectively. The employee ratios within the Safety Plans
tier 1, tier 2 and tier 3 are 34.5%, 6.4%, and 59.1% respectively for the same period.
Table 1: City of Palo Alto Pension Benefit Plans and Tiers
Miscellaneous Safety: Fire Safety: Police
Tier 1 2.7%/service year worked;
eligibility starting at the age of
55 (2.7% @ 55)
3.0%/service year worked;
eligibility starting at the age of
50 (3.0% @ 50)
3.0%/service year worked;
eligibility starting at the age of
50 (3.0% @ 50)
Tier 2 Effective July 16, 2010:
2.0%/service year worked,
eligibility starting at age 60
(2.0% @ 60)
Effective June 7, 2012:
3.0%/service year worked,
eligibility starting at age 55
(3.0% @ 55)
Effective December 6, 2012:
3.0%/service year worked,
eligibility starting at age 55
(3.0% @ 55)
Tier 3
“PEPRA”*
Effective January 1, 2013:
2.0%/service year worked;
eligibility starting at age 62
(2.0% at 62)
Effective January 1, 2013:
2.7%/service year worked;
eligibility starting at age 57
(2.7% at 57)
Effective January 1, 2013:
2.7%/service year worked;
eligibility starting at age 57
(2.7% at 57)
* Under the California Public Employees’ Pension Reform Act (PEPRA), the benefit calculation is limited by a maximum salary of
$186,096 in 2025 for both the Miscellaneous and Safety plans, therefore it is calculated based on service years but cannot exceed
the maximum amount. The final salary calculation is based on the average of the highest three years.
CalPERS Annual Valuations
The CalPERS Annual Valuation reports are included in Attachments B and C and provide an actuarial
analysis of the City of Palo Alto pension trust plans based on member and financial data as of June 30,
2024. The purpose of these reports is to provide an update on the assets and accrued liabilities of plans,
determine minimum employer contributions for the coming fiscal year, and communicate significant
changes in actuarial assumptions or policies. The valuation reports included for review as part of this
memo will be used to inform the FY 2027 – FY 2036 Long Range Financial Forecast (LRFF) and FY 2027
budget development process. The calculations for annual employer contributions are based on a set of
actuarial assumptions for demographic (e.g., mortality, retirement, termination, and disability rates) and
economic factors (e.g., investment returns, inflations, salary growth). These assumptions reflect CalPERS’
best estimate for future experience of the plans and are long term in nature. Valuation results will vary
from one year to the next due to assumption or method changes, changes in plan provisions, and actuarial
experience that is different than anticipated such as investment returns that do not meet the CalPERS
6.8% target.
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2021 CalPERS Asset Liability Management (ALM) Study
In addition to the valuation reports issued annually, CalPERS completes a comprehensive review of plans
every four years. In November 2021, CalPERS completed an Asset Liability Management (ALM) process to
review the capital market assumptions and the strategic asset allocation to ascertain whether a change in
the discount rate and other economic assumptions was warranted. As part of this process, the Actuarial
Office also completed an Experience Study to review pension demographics for potential modification.
This comprehensive review last resulted in a reduction in the discount rate from 7.5% to 7.0% over three
years (FY 2019 - 2021). Notable outcomes of the 2021 ALM process included but were not limited to the
following:
Reduction to the discount rate from 7.0% to 6.8%;
New actuarial assumptions, including a reduction for price inflation from 2.5% to 2.3%; and
New asset allocation to add 5% leverage and increase private asset (private equity, real assets,
and private debt) allocations from 21% to 33%.
While not impacting the June 30, 2024 CalPERS Annual Valuation reports, it should be noted that the
CalPERS investment gain for the period ending June 30, 2025 is estimated to be 11.6% compared to target
levels of 6.8%. On April 16, 2024, the CalPERS board suspended the CalPERS Risk Mitigation Policy which
automatically reduced expected investment return when actual investment returns outperform the
expected investment return by at least 2 percentage points replacing it with the CalPERS board decision
whether the pension fund’s expected investment return should be adjusted and its asset allocation
changed in line with the new expected rate of return.
The next CalPERS ALM is anticipated to conclude in November 2025. This will determine what discount
rate will be applied in the following cycle and kickoff preparations for the City’s internal comprehensive
review of the Retiree Benefit Policy. In alignment with City policy, the Retiree Benefit Policy review will be
brought forward in fall 2026. This will include collaboration with an outside actuary, transmittal of
pertinent results from the CalPERS ALM, and any recommended policy adjustments based on this work
such as an updated assumed discount rate.
Long-term Financial Planning
The City has taken several proactive steps to address rising pension costs and long-term liabilities,
including cost-sharing in labor agreements, establishing an irrevocable Section 115 Pension Trust “Pension
Trust” (CMR 75531), and adopting a Retiree Benefit Funding Policy that guides financial planning of
retirement benefits. The City initially contributed to the Pension Trust in FY 2017 on an ad-hoc basis, using
one-time savings or excess revenues. Beginning in FY 2019, the City Council directed staff to use a more
conservative discount rate as compared to CalPERS for the Normal Cost (NC) portion of the payment, and
transferring the additional “supplemental” funding beyond CalPERS required employer contributions to
the Pension Trust (CMR 97402). This practice was reinforced in the development of a funding policy, as
1 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-
cmrs/year-archive/2017/7553.pdf
2 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-
cmrs/year-archive/2018/9740.pdf
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The Actuarial Determined Contribution (ADC) or “blended rate” reflects the combined cost of NC and UAL
to approximate total employer cost.
Current and Projected Employer Contributions
Table 2 summarizes the projected employer contributions required for each plan to fund the ADC and the
NC and UAL that make up this rate. Over the next six years, CALPERS estimates that future ADCs will adjust
from 43.7% of payroll or $43.7 million in FY 2026 to 34.6% of payroll or $46.5 million by FY 2032 for the
Miscellaneous plan. Over the same six-year span, CalPERS estimates that the ADC will adjust from 81.7%
of payroll or $24.8 million in FY 2026 to 77.5% of payroll or $29.1 million in 2032 for Safety. As projected
in the table below, the cost fluctuations in the outyears are primarily due to investment returns of +21.3%
as of June 30, 2021 (used to develop FY 2024), -6.1% as of June 30, 2022 (used to develop FY 2025), +5.8%
as of June 30, 2023 (used to develop FY 2026) where investment gains and losses are subject to a five-
year ramp-up period. The full impact from these returns will be realized in FY 2028, FY 2029 and FY 2030,
respectively.
TABLE 2: CalPERS Current and Projected Employer Contributions*
Miscellaneous FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032
NC (%)**11.3%10.9%10.5%10.2%9.9%9.7%9.5%9.3%
UAL (%)36.1%32.8%27.2%27.4%29.1%28.6%28.0%25.3%
Total ADC
(% payroll)
47.4%43.7%37.6%37.6%39.0%38.3%37.5%34.6%
NC ($)10.1 10.9 12.3 12.3 12.3 12.3 12.4 12.5
UAL ($)**32.2 32.8 31.8 33.0 35.9 36.4 36.7 34.0
Total ADC ($M)$42.3 $43.7 $44.1 $45.3 $48.2 $48.7 $49.1 $46.5
Safety FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032
NC (%)**22.2%20.6%19.6%19.0%18.3%17.7%17.1%16.5%
UAL (%)60.9%61.1%62.8%63.2%66.0%65.1%64.0%61.0%
Total ADC
(% payroll)
83.1%81.7%82.4%82.2%84.3%82.8%81.1%77.5%
NC ($)6.0 6.3 6.4 6.4 6.3 6.3 6.3 6.2
UAL ($)**16.6 18.5 20.5 21.3 22.8 23.1 23.4 22.9
Total ADC ($M)$22.6 $24.8 $27.0 $27.7 $29.1 $29.4 $29.7 $29.1
* This table does not include cost savings for prepayment of the UAL, which confers 3.2% or $1.7 million in savings,
or provisions in labor agreements for employees to pay a portion of employer normal costs; Miscellaneous groups
pay 1-2% and Safety groups pay 3-4%. These savings will continue to be included in budget development.
** The City makes payments to CalPERS for NC as a percentage of payroll and for UAL as a flat dollar rate. For
illustrative purposes, this table uses CalPERS estimates to restate the total ADC (NC and UAL) in respective terms.
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TABLE 3: CalPERS Investment Returns
Returns as of 6/30/22 6/30/23 6/30/24 6/30/25 6/30/26 6/30/27 6/30/28 6/30/29
Used to develop FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032
Actual (%)-6.1 5.8 9.3 11.6*----
Target (%)6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8
*This CalPERS report does not consider the preliminary 11.6% return on investments for the period ending June 30,
2025 (6.8 percent target)[5]. The estimated impact from this return will be included in long-term financial planning.
TABLE 4: Long-Range Financial Forecast – Pension Rates by Plan
Plan Type FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031
Miscellaneous 43.7%40.6%41.0%43.1%42.7%42.2%
Safety 81.7%82.8%83.3%86.3%85.4%84.4%
In comparing the CalPERS current and projected rates (Table #2) with the most recent long-range financial
forecast (LRFF, Table #4), these new pension projected rates align and are favorable compared to LRFF
within 0.4% to 4% between FY 2027 and FY 2031. Note that only the next fiscal year (FY 2027) are definite
rates, while the next four years are projections, subject to change with annual actuarial reports especially
future investment returns.
Pension Plan’s Funded Status
The funded status is a measure of how well funded, or how “on track” a plan is with respect to assets
versus accrued liabilities. As of June 30, 2024, the funded status of the overall Public Employee’s
Retirement Fund (PERF) increased from 71.4% to projected levels of 75.0%[6]. This rate is higher than the
City’s funded status of 68.7% for Miscellaneous and 61.1% for Safety. Table 5 details the City’s June 30,
2024 funded status for the Miscellaneous and Safety plans. The total unfunded pension liability
decreased from $573.5 million as of June 30, 2023 to $566.4 million as of June 30, 2024. This represents
a decrease of $7.1 million, or 1.2% compared to the prior year. This change was predominantly due to
investment returns. When investment returns come in lower than anticipated, this increases the City’s
unfunded liability. Conversely, when investment returns come in higher than anticipated this favorably
impacts the City’s plans.
TABLE 5: CalPERS Projected Unfunded Accrued Liability
As of
June 30, 2020
As of
June 30, 2021
As of
June 30, 2022
As of
June 30, 2023
As of
June 30, 2024
Miscellaneous 317,116,346 236,033,956 340,518,738 349,828,105 339,818,201
Misc. Funded Status 65.1%75.3%65.8%66.3%68.7%
Safety 193,301,713 155,885,841 212,812,272 223,707,130 226,573,506
Safety Funded Status 60.3%69.4%60.0%59.7%61.1%
TOTAL UNFUNDED
PENSION LIABILITY
$510,418,059 $391,919,797 $553,331,510 $573,535,235 $566,391,707
% Change from Prior Yr $7.0%-23.2%41.2%3.7%-1.2%
TOTAL FUNDED STATUS % 63.5%73.3%63.8%64.0%66.0%
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Pension Trust Status
In total, planned contributions (principal) of $87.5 million to the pension Trust Fund will have been made
since inception in FY 2017 through FY 2025 ($56.5 million, or 64.6% of the total, is from the General Fund).
The Trust Fund is invested in a Balanced portfolio, earning 12.5%, 11.5%, and 6.7% for the years ending
June 30, 2025, 2024, and 2023 respectively. The annualized 5-year return as of July 2025 is 6.1%. In the
City Pension Trust, the total balance of $109.9 million as of June 30, 2025 includes contributions of $87.5
million and net earnings since inception of $22.4 million. The City Pension Trust is not factored into the
CalPERS reports funded status; however, when included the City’s combined funded status is 72.6%.
The Retirement Benefit Policy indicates that the City make Additional Discretionary Payments (ADPs) from
the Pension Trust to CalPERS for amounts that exceed the one-year minimum employer contribution.
CalPERS allows agencies to make ADPs at any time and in any amount at the agency’s discretion. These
optional payments serve to reduce the UAL and future required contributions.
FISCAL/RESOURCE IMPACT
This report and feedback from the Finance Committee will be used to inform the development of the FY
2027–2036 Long Range Financial Forecast (LRFF), the FY 2027 Budget, and other long-term financial
planning. Staff will continue to update the City Council and incorporate information as it becomes
available. Below is a timeline of anticipated reporting:
December/January: FY 2027 to FY 2036 Long Range Financial Forecast (LRFF)
Annually, staff brings forward a LRFF that projects the City’s financial outlook over the next 10 years based
on current City Council approved service levels and several alternative scenarios. The financial
implications of these reports and input from the Finance Committee are used to inform the development
of the annual budget. Staff expects to include estimates in the base budget and potential alternative
scenario(s) of the LRFF for anticipated changes in the City’s pension plans, such as the investment return
of 9.3% as of June 30, 2024 (beginning in FY 2027), future ADPs to CalPERS for Pension Trust balances that
exceed one-year employer payment, and other impacts resulting from new labor agreements and
increased staffing levels.
May/June: FY 2027 Budget Deliberations and City Council Adoption
Consistent with current practice, staff will include the actuarially determined contributions as calculated
by CalPERS in the June 30, 2024 valuation reports and the additional contributions per the pension funding
policy including use of a lower 5.3% discount rate as part of the development of the FY 2027 budget for
contributions to the pension trust fund.
Fall 2026: 4 Year Palo Alto Retiree Benefit Policy Review
The next CalPERS ALM is anticipated to conclude in November 2025. This will determine what discount
rate will be applied in the following cycle and kickoff preparations for the City’s internal comprehensive
review of the Retiree Benefit Policy. In alignment with City policy, the Retiree Benefit Policy review will be
brought forward in fall 2026. This will include collaboration with an outside actuary, transmittal of
pertinent results from the CalPERS ALM, and any recommended policy adjustments based on this work
such as an updated assumed discount rate.
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STAKEHOLDER ENGAGEMENT
The Administrative Service Department staff worked primarily with the City Manager’s office on this
informational report.
ENVIRONMENTAL REVIEW
This report is presented to the Finance Committee for informational and discussion purposes only, with
no action required by the Council.
ATTACHMENTS
Attachment A - Pension Plan Benefit Levels Enrollment by Plan and Employee Group
Attachment B - CalPERS Miscellaneous Valuation as of June 30, 2024
Attachment C - CalPERS Safety Valuation as of June 30, 2024
APPROVED BY:
Lauren Lai, Administrative Services Director
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Employee Group Employee Group
Q3 2025 Q3 2024 Q3 2025 Q3 2024
City Council & Council Appointees 8 8 IAFF 87 79
Tier 1 1 1 Tier 1 28 30
Tier 2 2 2 Tier 2 9 8
Tier 3 5 5 Tier 3 50 41
Management & Professional 218 199 Fire Chiefs' Association 4 4
Tier 1 54 56 Tier 1 4 4
Tier 2 36 36 Tier 2 0 0
Tier 3 128 107 Tier 3 0 0
Service Employees' International 556 571 Fire Management 4 6
Tier 1 127 145 Tier 1 4 3
Tier 2 38 43 Tier 2 0 1
Tier 3 391 383 Tier 3 0 2
Utilities Management 45 47 PAPOA 67 73
Tier 1 25 29 Tier 1 15 20
Tier 2 8 6 Tier 2 1 3
Tier 3 12 12 Tier 3 51 50
Police Management Association 7 7
Tier 1 7 7
Tier 2 0 0
Tier 3 0 0
Police Management 2 9
Tier 1 1 3
Tier 2 1 2
Tier 3 0 4
Grand Total Miscellaneous Plans 827 825 Grand Total Safety Plans 171 178
Tier 1 207 231 Tier 1 59 67
Tier 2 84 87 Tier 2 11 14
Tier 3 536 507 Tier 3 101 97
Tiered Percentage Miscellaneous Plans Tiered Percentage Safety Plans
Tier 1 25.0%28.0%Tier 1 34.5%37.6%
Tier 2 10.2%10.5%Tier 2 6.4%7.9%
Tier 3 64.8%61.5%Tier 3 59.1%54.5%
Tier Definitions Tier Definitions
Tier 1 2.7% @ 55 Tier 1 3% @ 50
Tier 2 2% @ 60 Tier 2 3% @ 55
Tier 3 2% @ 62 Tier 3 2.7% @ 57
* Includes Police Trainee and Limited Hourly FTE
Attachment A:
City of Palo Alto Pension Plan Benefit Levels Enrollment by Plan and Employee Group as of Third Quarter
Miscellaneous Plans Safety Plans
Employee Count Employee Count
Item 1
Attachment A - Pension Plan
Benefit Levels Enrollment
by Plan and Employee
Group
Item 1: Staff Report Pg. 9 Packet Pg. 13 of 321
California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795 -3000 | Fax: (916) 795-2744
888 CalPERS (or 888-225-7377) | TTY: (877) 249 -7442 | www.calpers.ca.gov
July 2025
Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857)
Annual Valuation Report as of June 30, 2024
Dear Employer,
Attached to this letter is the June 30, 2024, actuarial valuation report for the plan noted above. Provided in this report is the
determination of the minimum required employer contributions for fiscal year (FY) 2026 -27. In addition, the report
contains important information regarding the current financial status of the plan as well as projections and risk measures to aid
in planning for the future.
Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member contribution rates for FY 2026 -27
along with an estimate of the employer contribution requirements for FY 2027-28. The required employer and member
contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.
Fiscal Year Employer Normal
Cost Rate
Employer Amortization of
Unfunded Accrued Liability
PEPRA Member
Contribution Rate
2026-27 10.48% $31,802,552 7.25%
Projected Results
2027-28 10.2% $32,983,000 TBD
The actual investment return for FY 202 4-25 was not known at the time this report was prepared. The projection UAL payment
above assumes the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2024-25
differs from 6.8%, the actual UAL contribution requirement for FY 2027 -28 will differ from that shown above. For additional
information on future contribution requirements , please refer to Projected Employer Contributions . This section also contains
projected required contributions through FY 2031-32.
PEPRA Member Contribution Rate
The employee contribution rate for PEPRA members can change based on the results of the actuarial valuation. See Member
Contribution Rates for more information.
Report Navigation Features
The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly.
The tables of contents are “clickable .” This is true for the main table of contents that follows the title page and the intermediate
tables of contents at the beginning of sections. The Adobe navigation pane on the left c an also be used to skip to specific
exhibits .
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 10 Packet Pg. 14 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 2
There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined,
while underlined links will take you to the CalPERS website. Examples are shown be low.
Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool
Member Contribution Rates Public Agency PEPRA Member Contribution Rates
Summary of Key Valuation Results Pension Outlook Overview
Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results
Projected Employer Contributions Public Agency Actuarial Valuation Reports
Further descriptions of general changes are included in the Highlights and Executive Summary section and in Appendix A -
Actuarial Methods and Assumptions . The effects of any cha nges on the required contributions are included in the Reconciliation
of Required Employer Contributions section.
Questions
A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer Contact
Center at 888 CalPERS (or 888-225-7377).
Sincerely,
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS
Scott Terando , ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 11 Packet Pg. 15 of 321
California Public Employees’ Retirement System
Actuarial Valuation for the
Miscellaneous Plan
of the City of Palo Alto
as of June 30, 2024
(CalPERS ID: 6373437857)
(Rate Plan ID: 8)
Required Contributions for Fiscal Year
July 1, 2026 — June 30, 2027
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 12 Packet Pg. 16 of 321
CY Fin Job Instance ID: 464138 PY Fin Job Instance ID: 438257 Report ID: 473152
Table of Contents
Actuarial Certification .......................................................................................................................................................................................1
Highlights and Executive Summary .............................................................................................................................................................2
Introduction .......................................................................................................................................................................................................3
Purpose .............................................................................................................................................................................................................3
Summary of Key Valuati on Results ..............................................................................................................................................................4
Changes Since the Prior Year’s Valuation ..................................................................................................................................................5
Subsequent Events .........................................................................................................................................................................................5
Assets ...................................................................................................................................................................................................................6
Reconciliation of the Market Value of Assets ..............................................................................................................................................7
Asset Allocation................................................................................................................................................................................................8
CalPERS History of Investment Returns .....................................................................................................................................................9
Liabilities and Contributions ....................................................................................................................................................................... 10
Determination of Required Contributions.................................................................................................................................................. 11
Development of Accrued and Unfunded Liabilities ................................................................................................................................. 12
Required Employer Contributions .............................................................................................................................................................. 13
Member Contribution Rates ........................................................................................................................................................................ 14
Funded Status – Funding Policy Basis ..................................................................................................................................................... 15
Additional Employer Contributions............................................................................................................................................................. 16
Projected Employer Contributions ............................................................................................................................................................. 17
(Gain)/Loss Analysis 6/30/23 – 6/30/24 .................................................................................................................................................... 18
Schedule of Amortization Bases ................................................................................................................................................................ 19
Amortization Schedule and Alternatives ................................................................................................................................................... 21
Reconciliation of Required Employer Contributions ................................................................................................................................ 23
Employer Contribution History .................................................................................................................................................................... 24
Funding History ............................................................................................................................................................................................. 24
Risk Analysis ................................................................................................................................................................................................... 25
Future Investment Return Scenarios ......................................................................................................................................................... 26
Discount Rate Sensitivity............................................................................................................................................................................. 27
Mortality Rate Sensitivity ............................................................................................................................................................................. 27
Maturity Measures ........................................................................................................................................................................................ 28
Maturity Measures History........................................................................................................................................................................... 29
Funded Status – Termination Basis .......................................................................................................................................................... 30
Funded Status – Low-Default-Risk Basis ................................................................................................................................................. 31
Supplementary Information ......................................................................................................................................................................... 32
Normal Cost by Benefit Group .................................................................................................................................................................... 33
Summary of Valuation Data ........................................................................................................................................................................ 34
Status of PEPRA Transition ........................................................................................................................................................................ 35
Plan's Major Benefit Options....................................................................................................................................................................... 36
Appendix A - Actuarial Methods and Assumptions .............................................................................................................................. 38
Appendix B - Principal Plan Provisions .................................................................................................................................................... 64
Appendix C - Participant Data ..................................................................................................................................................................... 75
Appendix D - Glossary .................................................................................................................................................................................. 80
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 13 Packet Pg. 17 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Al to
CalPERS ID: 6373437857
Page 1
Actuarial Certification
It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the
applicable Standards of Practice promulgated by the Actuarial Standards Board . While this report is intended to be complete,
our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification
Standards for Actuaries I ssuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with
regard to pensions.
Actuarial Methods and Assumptions
It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board
of Administration, are internally consistent and reasonable for this plan.
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS
Scott Terando , ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Actuarial Data and Rate Plan Results
To the best of my knowledge and having relied upon the attestation above that the actuarial methods and assumptions are
reasonable, this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded
condition of the Miscellaneous Plan of the City of Palo Alto and satisfies the actuarial valuation requirements of Government
Code section 7504. This valuation and related validation work w as performed by the CalPERS Actuarial Office. The valuation
was based on the member and financial data as of June 30, 2024 , provided by the various CalPERS databases and the benefits
under this plan with CalPERS as of the date this report was pr oduced.
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 14 Packet Pg. 18 of 321
Highlights and Executive Summary
• Introduction 3
• Purpose 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 15 Packet Pg. 19 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 3
Introduction
This report presents the results of the June 30, 2024 , actuarial valuation of the Miscellaneous Plan of the City of Palo Alto of the
California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required contributions
for fiscal year (FY) 2026-27.
Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using data as of June 30,
2024. This report contains actuarial information for the following rate plan(s).
• 8, Miscellaneous First Level
• 30157, Miscellaneous Second Level
• 26004, Miscellaneous PEPRA Level
The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2024 ;
• Determine the minimum required employer contributions for this rate plan for FY July 1, 2026, through June 30, 2027;
• Determine the required member contribution rate for FY July 1, 2026, through June 30, 2027, for employees subject
to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and
• Provide actuarial information as of June 30, 2024 , to the CalPERS Board of Administration (board) and other
interested parties.
The pension funding in formation presented in this report should not be used in financial reports subject to Governmental
Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit Pension Plan. A separate
accounting valuation report for such purpos es is available from CalPERS and details for ordering are available on the CalPERS
website (www.calpers.ca.gov).
The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency should contact a
CalPERS actuary before disseminating any portion of this report for any reason that is not explicitly described above.
Future actuarial measurements may differ significantly from the current measurements presented in this report due to such
factors as the following: plan expe rience differing from that anticipated by the economic or demographic assumptions; changes
in economic or demographic assumptions; changes in actuarial policies; changes in plan provisions or applicable law; and
differences between the required contributio ns determined by the valuation and the actual contributions made by the agency.
Assessment and Disclosure of Risk
This report includes the following risk disclosures consistent with the guidance of the Actuarial Standards of Practice:
• A “Scenario Test,” projecting future results under different investment income returns.
• A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 5.8% and
7.8%.
• A “Sensitivity Analysis,” showing the impact on current valua tion results assuming rates of mortality are 10% lower or
10% higher than our current post-retirement mortality assumptions adopted in 2021.
• Plan maturity measures indicating how sensitive a plan may be to the risks noted above.
• The funded status on a term ination basis.
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 16 Packet Pg. 20 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 4
Summary of Key Valuation Results
Below is a brief summary of key valuation resu lts along with page references where more detailed information can be found .
Required Employer Contributions — page 13
Fiscal Year
2025-26
Fiscal Year
2026-27
Employer Normal Cost Rate 10.90% 10.48%
Unfunded Accrued Liability (UAL) Contribution Amount $32,780,459 $31,802,552
Paid either as
Option 1) 12 Monthly Payments of $2,731,705 $2,650,213
Option 2) Annual Prepayment in July $31,719,724 $30,773,461
Member Contribution Rates — page 14
Fiscal Year
2025-26
Fiscal Year
2026-27
Classic Member Contribution Rate 7.00%/8.00% 7.00%/8.00%
PEPRA Member Contribution Rate 7.25% 7.25%
Projected Employer Contributions — page 17
Fiscal Year Normal Cost
(% of payroll)
Annual
UAL Payment
2027-28 10.2% $32,983,000
2028-29 9.9% $35,941,000
2029-30 9.7% $36,353,000
2030-31 9.5% $36,662,000
2031-32 9.3% $33,998,000
Funded Status – Funding Policy Basis — page 15
June 30, 2023 June 30, 2024
Entry Age Accrued Liability (AL) $1,037,247,281 $1,085,448,984
Market Value of Assets (MVA) 687,419,176 745,630,783
Unfunded Accrued Liability (UAL) [AL – MVA] $349,828,105 $339,818,201
Funded Ratio [MVA ÷ AL] 66.3% 68.7%
Summary of Valuation Data — page 34
June 30, 2023 June 30, 2024
Active Member Count 757 833
Annual Covered Payroll $91,956,169 $107,807,296
Transferred Member Count 392 393
Separated Member Count 488 504
Retired Members and Beneficiaries Count 1,348 1,364
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 17 Packet Pg. 21 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 5
Changes Since the Prior Year’s Valuation
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation
following the effective date of the legislation. For rate plans that are not in a risk pool (non -pooled), benefit changes by contract
amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the
effective date of the amendment is after the valuation date.
Please refer to the Plan’s Major Benefit Options and Appendix B - Principal Plan Provisions for a summary of the plan provisions
used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in the
(Gain)/Loss Analysis 6/30/23 – 6/30/24 and the effect on the employer contribution is shown in the Reconciliation of Required
Employer Contributions . It should be noted that no change in liability or contribution is shown for any plan changes which were
already included in the p rior year’s valuation.
Board Policy
On April 16, 2024, the board took action to modify the Funding Risk Mitigation Policy to remove the automatic change to the
discount rate when the investment return exceeds various thresholds. Rather than an automatic change to the discount rate, a
board discussion would be placed on the calendar. The 95 th percentile return in the Future Investment Return Scenarios exhibit
in this report, which include s returns high enough to trigger a board discussion, do es not reflect any change in the discount rate.
Actuarial Methods and Assumptions
There are no significant changes to the actuarial methods or assumptions for the June 30, 2024, actuarial valuation.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 2024, as well as statutory changes, regulatory
changes and board actions through January 202 5.
CalPERS will be completing an Asset Liability Management (ALM) review process in November 2025 that will review the capital
market assumptions and the CalPERS Total Fund Investment Policy and ascertain whether a change in the discount is
warranted. In addition, the Actuarial Office will be presenting the findings of its Experience Study which reviews economic
assumptions other than the discount rate as well as all demographic assumptions and makes recommendations to modify
actuarial assumptions where appropriate. Any ch anges in actuarial assumptions will be reflected in the June 30, 2025, actuarial
valuations.
The 202 4 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IR C
section 401(a)(17) and Government Code section 7522.10 were use d for this valuation and are assumed to increase 2.3% per
year based on the price inflation assumption. The actual 202 5 limits , determined in October 202 4, are not reflected.
To the best of our knowledge, there have been no other s ubsequent events that could materially affect current or future
certifications rendered in this report.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 18 Packet Pg. 22 of 321
Assets
• Reconciliation of the Market Value of Assets 7
• Asset Allocation 8
• CalPERS History of Investment Returns 9
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 19 Packet Pg. 23 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 7
Reconciliation of the Market Value of Assets
1. Market Value of Assets as of 6/30/23 including Receivables $687,419,176
2. Change in Receivables for Service Buybacks (237,909)
3. Employer Contributions 38,293,903
4. Employee Contributions 9,399,972
5. Benefit Payments to Retirees and Beneficiaries (54,755,943)
6. Refunds (415,563)
7. Transfers 0
8. Service Credit Purchase (SCP) Payments and Interest 220,928
9. Administrative Expenses (502,688)
10. Miscellaneous Adjustments 0
11. Investment Return (Net of Investment Expenses) 66,208,907
12. Market Value of Assets as of 6/30/24 including Receivables $745 ,630,783
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 20 Packet Pg. 24 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 8
Asset Allocation
CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges and
manages those asset class allocations within their policy ranges . CalPERS Investment Belief No. 6 recognizes that strategic
asset allocation is the dominant determinant of portfolio risk and return .
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in its entirety. The
assets for City of Palo Alto Miscellaneous Plan are a subset of the PERF and are invested accordingly.
On March 20, 2024, the board adopted changes to the strategic asset allocation . The new allocation was effective July 1, 202 4.
The asset allocation as of June 30, 2024 , is shown below, along with the strategic asset allocation targets.
For more information s ee the Trust Level Review as of June 30, 2024 , which is available on the CalPERS website.
31.8%
10.0%
7.3%
5.3%
6.4%
5.3%
5.3%
15.5%
13.2%
2.8%
(3.0%)
27%
10%
7%
5%
6%
5%
5%
17%
15%
8%
(5%)
(10%)0%10%20%30%40%
Public Equities - Cap Weighted
Public Equities - Factor Weighted
Treasury
Mortgage-Backed Securities
Investment Grade Corporates
High Yield
Emerging Market Sovereign Bonds
Private Equity
Real Assets
Private Debt
Strategic Financing
Current Allocation Strategic Asset Allocation Target
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 21 Packet Pg. 25 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 9
CalPERS History of Investment Returns
The following is a chart with 20 years of historical annual returns of the PERF for each fiscal year ending on June 30 as reported
by the Investment Office. Investment returns reported are net of investment expenses but without reduction for administrative
expenses. The assumed rate of return , however, is net of both investment and administrative expenses. Also, the Investment
Office uses lag ged private asset valuations for investment performance reporting purposes. This can lead to a timing difference
in private asset influence on performance in the returns below and those used for financial reporting purposes. The investment
gain or loss calculation in this report relies on final assets that have been audited and are appropriate for financial reporting.
Because of these differences, the effective investment return for funding purposes in a single year can be higher or lower than
the return reported by the Investment Office shown here.
History of Investment Returns (2005 through 2024)
* As reported by the Investment Office with lagged private valuations and without any reduction for administrative expenses .
The table below shows annualized investment returns of the PERF for various time periods ending on June 30, 2024 . These
returns are the annual rates that if compounded over the indicated number of years would equate to the actual time -weighted
investment performance of the PERF. It should be recognized that the annual rate of return is volatile, as the chart above
illustrates, so when looking at investment returns, it is informative to look at average returns over longer time horizons.
PERF Realized Rates of Return as of June 30, 2024
1 year 3 year 5 year 10 year 20 year 30 year
9.3% 2.8% 6.6% 6.2% 6.7% 7.7 %
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 22 Packet Pg. 26 of 321
Liabilities and Contributions
• Determination of Required Contributions 11
• Development of Accrued and Unfunded Liabilities 12
• Required Employer Contributions 13
• Member Contribution Rates 14
• Funded Status – Funding Policy Basis 15
• Additional Employer Contributions 16
• Projected Employer Contributions 17
• (Gain)/Loss Analysis 6/30/23 – 6/30/24 18
• Schedule of Amortization Bases 19
• Amortization Schedule and Alternatives 21
• Reconciliation of Required Employer Contributions 23
• Employer Contribution History 24
• Funding History 24
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 23 Packet Pg. 27 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 11
Determination of Required Contributions
Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex
calculations based on a set of actuarial assumptions and methods. See Appendix A for information on the assumptions and
methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required
contributions for the fiscal year that begins two years after the valuation date.
Contribution Components
Two components comprise required contributions:
• Normal Cost — expressed as a percentage of pensionable payroll
• Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount
Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exact ly
matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The em ployer and employee s each
pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate
for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total
normal cost.
When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the
total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL
over time. This is called the UAL Contribution component. There is an option to prepay this amount during July of each fi scal
year, otherwise it is paid monthly.
In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience
different than expected , non-investment experience different than expected, assumption changes, and benefit changes. Each
source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordan ce
with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the
Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A for mor e information on
the amortization policy.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 24 Packet Pg. 28 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 12
Development of Accrued and Unfunded Liabilities
June 30, 2023 June 30, 2024
1. Present Value of Projected Benefits
a) Active Members $454,680,927 $500,299,849
b) Transferred Members 45,946,284 50,315,737
c) Separated Members 22,788,782 24,294,459
d) Members and Beneficiaries Receiving Payments 653,009,459 670,851,688
e) Total $1,176,425,452 $1,245,761,733
2. Present Value of Future Employer Normal Costs $77,828,908 $88,353,448
3. Present Value of Future Employee Contributions $61,34 9,263 $71,959,301
4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $315,502,756 $339,987,100
b) Transferred Members (1b) 45,946,284 50,315,737
c) Separated Members (1c) 22,788,782 24,294,459
d) Members and Beneficiaries Receiving Payments (1d) 653,009,459 670,851,688
e) Total $1,037,247,281 $1,085,448,984
5. Market Value of Assets (MVA) $687,419,176 $745,630,783
6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $349,828,105 $339,818,201
7. Funded Ratio [(5) ÷ (4e)] 66.3% 68.7%
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 25 Packet Pg. 29 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 13
Required Employer Contributions
The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Fiscal Year
Required Employer Contributions 2026-27
Employer Normal Cost Rate 10.48%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount $31,802,552
Paid either as
1) Monthly Payment $2,650,213
Or
2) Annual Prepayment Option* $30,773,461
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate
(expressed as a percentage of payroll and paid as payroll is reported) and the Unfunded Accrued Liability
(UAL) Contribution Amount (billed monthly (1) or p repaid annually (2) in dollars).
* Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later
than July 31).
For Member Contribution Rates see the following page.
Fiscal Year Fiscal Year
2025-26 2026-27
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost1 18.39% 17.93%
Offset due to Employee Contribution s 2 (7.49%) (7.45%)
Employer Normal Cost 10.90% 10.48%
Projected Annual Payroll for Contribution Year $99,898,787 $117,119,039
Estimated Employer Contributions Based on Projected Payroll
Total Normal Cost $18,371,387 $20,999,444
Expected Employee Contribution s (7,482,419) (8,725,368)
Employer Normal Cost $10,888,968 $12,274,076
Unfunded Liability Contribution $32,780,459 $31,802,552
% of Projected Payroll (illustrative only) 32.81% 27.15%
Estimated Total Employer Contribution $43,669,427 $44,076,628
% of Projected Payroll (illustrative only) 43.71% 37.63%
1 The Total Normal Cost is a blended rate for all benefit groups in the plan. For a breakout of normal cost by benefit
group, see Normal Cost by Benefit Group.
2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use
of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each
benefit formula, see Member Contribution Rates .
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 26 Packet Pg. 30 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 14
Member Contribution Rates
The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Classic Members
Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution
ra te above the breakpoint, if any, is as described below.
Benefit Formula
Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Auxiliary organizations of the CSU system may elect reduced contribution rates for Miscellaneous members, in which case the
contribution rate above the breakpoint is 6% if members are not covered by Social Security and 5% if they are.
PEPRA Members
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas, final compensation
period, and contribution requirements for “new” employees (generally those first hired into a CalPERS -covered position on or
after January 1, 2013). In accordance with Government Code Section 7522.30(b), “new members … shall have an initial
contribution rate of at least 50% of the normal cost rate.” The normal cost rate for the plan is dependent on the benefit levels,
actuarial assumptions, and demographics of the plan, particularly members’ entry age into the plan. Should the total normal cost
rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate
shall be 50% of the new normal cost rate rounded to the nearest quarter percent.
The table below shows the determination of the PEPRA m ember contribution rates effective July 1, 2026, based on 50 % of the
total normal cost rate for each respective rate plan as of the June 30, 2024, valuation.
Basis for Current Rate Rates Effective July 1, 2026
Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in
Normal
Cost
Adj.
Needed
Member
Rate
26004 Miscellaneous PEPRA
Level 14.250% 7.25% 14.59% 0.340% No 7.25%
For a description of the methodology used to determine the Total Normal Cost for this purpose, see PEPRA Normal C ost Rate
Methodology in Appendix A.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 27 Packet Pg. 31 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 15
Funded Status – Funding Policy Basis
The table below provides information on the current funded status of the plan under the funding policy. The funded status for this
purpose is based on the market value of assets relative to the funding target produced by the entry age actuarial cost method
and actuarial assumptions adopted by the board. The actuarial cost method allocates the total expected cost of a member’s
projected benefit (Present Value of Benefits ) to individual years of service (the Normal Cost). The value of the projected
benefit that is not allocated to future service is referred to as the Accrued Liability and is the plan’s funding target on the
valuation date. The Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute
measure of funded status and can be viewed as employer debt. The Funded Ratio equals the assets divided by the funding
target. The funded ratio is a relative measure of the funded status and allows for comparisons between plans of different sizes.
June 30, 2023 June 30, 2024
1. Present Value of Benefits $1,176,425,452 $1,245,761,733
2. Entry Age Accrued Liability 1,037,247,281 1,085,448,984
3. Market Value of Assets (MVA) 687,419,176 745,630,783
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $349,828,105 $339,818,201
5. Funded Ratio [(3) ÷ (2)] 66.3% 68.7%
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to the
normal cost of the active plan members will be sufficient to fully fund all retirement benefits if future experience matches the
actuarial assumptions. A fu nded ratio of less than 100% (positive UAL) implies that in addition to normal costs, payments toward
the UAL will be required. Plans with a funded ratio greater than 100% have a negative UAL (or surplus) but are required under
current law to continue contributing the normal cost in most cases, preserving the surplus for future contingencies.
Calculations for the funding target reflect the expected long -term investment return of 6.8%. If it were known on the valuation
date that future investment returns wi ll average something greater/less than the expected return, calculated normal costs and
accrued liabilities provided in this report would be less/greater than the results shown. Therefore, for example, if actual a verage
future returns are less than the exp ected return, calculated normal costs and UAL contributions will not be sufficient to fully fund
all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those provided in
this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative
purposes, funded status es based on a 1% lower and higher average future investment return (discount rate) are as follows:
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Present Value of Benefits $1,442,802,538 $1,245,761,733 $1,090,341,534
2. Entry Age Accrued Liability 1,223,262,430 1,085,448,984 971,255,802
3. Market Value of Assets (MVA) 745,630,783 745,630,783 745,630,783
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $477,631,647 $339,818,201 $225,625,019
5. Funded Ratio [(3) ÷ (2)] 61.0% 68.7% 76.8%
The Risk Analysis section of the report provides additional information regarding the sensitivity of valuation results to the
expected investment return and other factor s. Also provided in that section are measures of funded status that are appropriate
for assessing the sufficiency of plan assets to cover estimated termination liabilities.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 28 Packet Pg. 32 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 16
Additional Employe r Contributions
The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL)
over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is
provided in Amortization Schedule and Alternatives . Certain aspects of the policy such as 1) layered amortization bases
(positive and negative) with different remaining payoff periods, and 2) the pha se-in of required payments toward investment
gains and losses, can result in volatility in year -to-year projected UAL payments. Provided below is information on how an
Additional Discretionary Payment (ADP), together with your required UAL payment of $31,802,552 for FY 2026-27, may better
accomplish your agen cy’s specific objectives with regard to either smoothing out projected future payments or achieving a
greater reduction in UAL than would otherwise occur w hen making only the minimum required payment. Such additional
payments are allowed at any time and ca n also result in significant long -term savings.
Fiscal Year 2026-27 Employer Contribution Versus Agency Funding Objectives
The interest-to-payment ratio for the FY 2026-27 minimum required UAL payment is 65%, which means the required payment of
$31,802,552 includes $20,574,053 of interest cost and results in a $11,228,499 reduction in the UAL , as can be seen in
Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If th e interest-to-payment ratio is
close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming
years, which would be shown in Projected Em ployer Contributions . Another measure that can be used to evaluate how well the
FY 2026-27 required UAL payment meets the agency’s specific funding objectives is the number o f years required to pay off the
existing UAL if the annual payment were held constant in future years . With an annual payment of $31,802,552 it would take
16.3 years to pay off the current UAL . A result that is longer than the agency’s target funding period suggests that the option of
supplementing the minimum payment with an ADP should be weighed against the agency’s budget constraints.
Provided below are select ADP options for consideration. Making such an ADP during FY 2026-27 does not require an ADP be
made in any future year, nor does it change the remaining amortization period of any portion of unfunded liability. For
information on permanent changes to amortization periods, see Amortization Schedule and Alternatives . Agencies considering
making an ADP should contact CalPERS for additional information.
Fiscal Year 2026-27 Employer Contributions — Illustrative Scenarios
If the Annual UAL
Payment Each
Year W ere…
The Current
UAL Would be
Paid Off in…
This W ould
Require an ADP1
in FY 2026-27 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$31,802,552 16.3 years $0 $12,274,076 $44,076,628
33,380,276 15 years 1,577,724 12,274,076 45,654,352
43,434,023 10 years 11,631,471 12,274,076 55,708,099
74,692,930 5 years 42,890,378 12,274,076 86,967,006
1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal year would have to
be less or more than the amount shown to have the same effect on the UAL amortization.
The calculations above are based on the projected UAL as of June 30, 2026, as determined in the June 30, 2024, actuarial
valuation. New unfunded liabilities can emerge in future years due to assumption or method changes, changes in plan
provisions, and actuarial experience different than assumed. Making an ADP illustrated above for the indicated number of year s
will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one year to
the next and can diverge significantly from projections over a period of several years.
Additional Discretionary Payment History
The following table provides a recent history of actual ADPs made to the plan.
Fiscal
Year ADP Fiscal
Year ADP
2017-18 N/A 2021-22 $0
2018-19 $0 2022-23 0
2019-20 0 2023-24 0
2020-21 0 2024-25 0
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 29 Packet Pg. 33 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 17
Projected Employer Contributions
The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. The
projection assumes that all actuarial assumptions will b e realized and that no further changes to assumptions, contributions,
benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2024-25 is
assumed to be 6.80% per year, net of investment and administrative expenses. The actual long -term cost of the plan will
depend on the actual benefits and expenses paid and the actual investment experience of the fund.
The projected normal cost percentages below reflect that the normal cost is expected to continue to decline over time as new
employees are hired into lower cost benefit tiers. Future contribution requirements may differ significantly from those shown
below. The actuaria l valuation does not include payroll beyond the valuation date. For the most realistic projections, the
employer should apply projected payroll amounts to the rates below based on the most recent information available, such as
current payroll as well as an y plans to fill vacancies or add or remove positions.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2024-25 and Beyond)
2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
Normal Cost % 10.48% 10.2% 9.9% 9.7% 9.5% 9.3%
UAL Payment $31,802,552 $32,983,000 $35,941,000 $36,353,000 $36,662,000 $33,998,000
Total as a % of Payroll* 37.63% 37.6% 39.0% 38.3% 37.5% 34.6%
Projected Payroll $117,119,039 $120,398,372 $123,769,526 $127,235,073 $130,797,655 $134,459,989
*Illustrative only and based on the projected payroll shown.
The required UAL payments are expected to vary significantly from the projections above due to experience, particularly
investment experience. For projected contributions under alternate investment return scenarios, please see the Future
Investment Return Scenarios exhibit. Our online pension plan projection tool, Pension Outlook, is available in the Employers
section of the CalPERS website. Pension Outlook can help plan and budget pension costs under various scenarios.
For ongoing plans, investment gains and losses are amortized using a n initial 5-year ramp. For more information, please see
Amortization of Unfunded Actuarial Accrued Liability in Appendix A. This method phases in the impact of the change in UAL
over a 5 -year period in order to reduce employer cost volatility from year to year. As a result of this methodology, dramatic
changes in the required employer contributions in any one ye ar are less likely. However, required contributions can change
gradually and significantly over the next five years. In years when there is a large investment loss, the relatively small
amortization payments during the initial ramp period could result in contributions that are less than interest on the UAL (i.e.
negative amortization) while the contribution impact of the increase in the UAL is phased in.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 30 Packet Pg. 34 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 18
(Gain)/Loss Analysis 6/30/23 – 6/30/24
To calculate the cost requirements of the plan, assumptions are made about future events that affect the amount and timing of
benefits to be paid and assets to be accumulated. Each year , actual experience is comp ared to the expected experience based
on the actuarial assumptions. This results in actuarial gains or losses, as shown below.
1. Total (Gain)/Loss for the Year
a) Unfunded Accrued Liability (UAL) as of 6/30/23 $349,828,105
b) Expected payment on the UAL during 20 23-24 28,646,081
c) Interest through 6/30/24 [0.068 x (1a) - ((1.068)½ - 1) x (1b)] 22,830,365
d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 344,012,389
e) Change due to plan changes 0
f) Change due to AL Significant Increase 0
g) Change due to assumption changes 0
h) Change due to method change s 0
i) Change due to discount rate change with Funding Risk Mitigation 0
j) Expected UAL after all other changes [(1d) + (1e) + (1f) + (1g) + (1h) + (1i)] 344,012,389
k) Actual UAL as of 6/30/24 339,818,201
l) Total (Gain)/Loss for 20 23-24 [(1k) - (1j)] ($4,194,188)
2. Investment (Gain)/Loss for the Year
a) Market Value of Assets as of 6/30/23 $687,419,176
b) Prior fiscal year receivables (512,051)
c) Current fiscal year receivables 274,142
d) Contributions received 47,693,875
e) Benefits and refunds paid (55,171,505)
f) Transfers, SCP p ayments and interest, and m iscellaneous adjustments 220,928
g) Expected return at 6.8% per year 47,425,254
h) Expected assets as of 6/30/24 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 727,349,818
i) Actual Market Value of Assets as of 6/30/24 745,630,783
j) Investment (Gain)/Loss [(2h) - (2i)] ($18,280,965)
3. Non -Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) ($4,194,188)
b) Investment (Gain)/Loss (2j) (18,280,965)
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $14,086,777
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 31 Packet Pg. 35 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 19
Schedule of Amortization Bases
Below is the schedule of the plan’s amortization bases. Note that there is a two -year lag between the valuation date and the start of the contribution year.
• The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2024 .
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuati on date: FY 2026-27.
This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their
required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years fro m the valuation date to the first day of
the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for the fiscal year and
adjusting for interest. The expected payment on the UAL for FY 2024-25 is based on the actuarial valuation two years ago , adjusted for additional discretionary payments , if
necessary, and the expected payment for FY 2025-26 is based on the actuarial valuation one year ago.
Reason for Base
Date
Est.
Ramp
Level
2026-27
Ramp
Shape
Escala -
tion
Rate
Amort.
Period
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Minimum
Required
Payment
2026-27
Assumption Change 6/30/03 No Ramp 2.80% 0 2,483,697 2,566,754 0 0 0 0
Method Change 6/30/04 No Ramp 2.80% 0 (342,649) (180,433) (179,482) (185,484) 0 0
Benefit Change 6/30/05 No Ramp 2.80% 0 7,591,259 3,997,417 3,976,371 4,109,344 0 0
Assumption Change 6/30/09 No Ramp 2.80% 5 17,191,729 2,837,767 15,428,102 2,917,224 13,462,434 2,998,906
Special (Gain)/Loss 6/30/09 No Ramp 2.80% 15 16,114,614 1,306,515 15,860,202 1,343,097 15,550,684 1,380,704
Special (Gain)/Loss 6/30/10 No Ramp 2.80% 16 1,352,994 105,376 1,336,098 108,326 1,315,004 111,359
Assumption Change 6/30/11 No Ramp 2.80% 7 9,139,787 1,216,703 8,503,902 1,250,770 7,789,571 1,285,792
Special (Gain)/Loss 6/30/11 No Ramp 2.80% 17 (57,758) (4,334) (57,207) (4,455) (56,493) (4,580)
(Gain)/Loss 6/30/12 No Ramp 2.80% 18 25,812,160 1,871,123 25,633,692 1,923,514 25,388,945 1,977,372
Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 18 3,061,875 221,955 3,040,705 228,170 3,011,673 234,559
(Gain)/Loss 6/30/13 100% Up/Dn 2.80% 19 80,448,305 6,044,993 79,671,647 6,214,252 78,667,257 6,388,252
(Gain)/Loss 6/30/14 100% Up/Dn 2.80% 20 (51,512,649) (3,738,908) (51,151,569) (3,843,597) (50,657,746) (3,951,218)
Assumption Change 6/30/14 100% Up/Dn 2.80% 10 38,560,921 4,718,366 36,306,911 4,850,480 33,763,097 4,986,293
(Gain)/Loss 6/30/15 100% Up/Dn 2.80% 21 32,173,075 2,261,077 32,024,155 2,324,387 31,799,681 2,389,470
(Gain)/Loss 6/30/16 100% Up/Dn 2.80% 22 37,121,900 2,531,532 37,030,001 2,602,415 36,858,599 2,675,283
Assumption Change 6/30/16 100% Up/Dn 2.80% 12 13,131,361 1,386,503 12,591,425 1,425,325 11,974,653 1,465,235
(Gain)/Loss 6/30/17 100% Up/Dn 2.80% 23 (21,004,122) (1,392,639) (20,993,192) (1,431,633) (20,941,221) (1,471,719)
Assumption Change 6/30/17 100% Up/Dn 2.80% 13 14,748,572 1,462,604 14,239,960 1,503,557 13,654,440 1,545,657
Assumption Change 6/30/18 100% Up/Dn 2.80% 14 28,301,618 2,651,517 27,485,942 2,725,759 26,538,075 2,802,080
Method Change 6/30/18 100% Up/Dn 2.80% 14 5,482,156 513,611 5,324,156 527,992 5,140,550 542,776
Item 1
Attachment B - CalPERS Miscellaneous
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 32 Packet Pg. 36 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20
Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2026-27
Ramp
Shape
Escala -
tion
Rate
Amort.
Period
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Minimum
Required
Payment
2026-27
(Gain)/Loss 6/30/18 100% Up/Dn 2.80% 24 (6,651,530) (429,546) (6,659,924) (441,574) (6,656,458) (453,938)
Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 15 2,743,035 218,624 2,703,626 273,280 2,605,054 273,280
Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 15 5,365,131 524,400 5,188,024 524,400 4,998,873 524,400
Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 16 16,946,208 1,018,917 17,045,560 1,358,556 16,800,671 1,698,195
Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 16 9,819,658 931,019 9,525,242 931,019 9,210,805 931,019
Assumption Change 6/30/21 No Ramp 0.00% 17 2,035,513 187,721 1,979,929 187,720 1,920,567 187,721
Net Investment (Gain) 6/30/21 80% Up Only 0.00% 17 (85,533,269) (3,516,036) (87,715,916) (5,274,054) (88,230,175) (7,032,072)
Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 17 (7,304,375) (673,629) (7,104,917) (673,629) (6,891,896) (673,630)
Benefit Change 6/30/22 No Ramp 0.00% 18 946,437 85,107 922,842 85,107 897,642 85,107
Investment (Gain)/Loss 6/30/22 60% Up Only 0.00% 18 119,392,600 2,566,307 124,859,170 5,132,615 128,045,340 7,698,922
Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 18 10,006,578 899,827 9,757,107 899,827 9,490,672 899,827
Investment (Gain)/Loss 6/30/23 40% Up Only 0.00% 19 5,361,749 0 5,726,348 123,086 5,988,538 246,172
Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 19 11,085,809 0 11,839,644 1,064,663 11,544,474 1,064,663
Investment (Gain)/Loss 6/30/24 20% Up Only 0.00% 20 (18,280,965) 0 (19,524,071) 0 (20,851,708) (448,201)
Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 20 14,086,777 0 15,044,678 0 16,067,716 1,444,866
Total 339,818,201 32,190,210 329,659,161 32,780,459 318,199,318 31,802,552
Item 1
Attachment B - CalPERS Miscellaneous
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 33 Packet Pg. 37 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 21
Amortization Schedule and Alternatives
The amortization schedule on the previous pag e(s) shows the minimum contributions required according to the CalPERS
amortization policy. Each year, m any agencies express a desire for a more stable pattern of payments or indicate interest in
paying off the unfunded accrued liabilities more quickly tha n required. As such, we have provided alternative amortization
schedules to help analyze the current amortization schedule and illustrate the potential savings of accelerating unfunded lia bility
payments.
Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting th e
individual bases and remaining periods shown on the previous page, and 2) alternative “fresh start” amortization schedules
using two sample periods that would both result in interest savings relative to the current amortization schedule. To initiate a
fresh s tart, please contact a CalPERS actuary.
The current amortization s chedule typically contains both positive and negative bases . Positive bases result from plan changes,
assumption changes, method changes , or plan experience that increase unfunded liability. Negative bases result from plan
changes, assumption changes, method changes, or plan experience that decrease unfunded liabi lity. The combination of
positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future year s,
such as:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period, and results in
a large change in the employer contribution requirement.
In any year when one of the above scenarios occurs, the actuary will consider correcti ve action such as replacing the existing
unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.
The current amortization s chedule on the following page may appear to show that, based on the current amortization bases, one
of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact
arise since there will be additional bases added to the amortization schedule in each future year. Should su ch a scenario arise in
any future year, the actuary will take appropriate action based on guidelines in the CalPERS Actuarial Amortization Policy.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 34 Packet Pg. 38 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 22
Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 15 Year Amortization 10 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2026 318,199,318 31,802,552 318,199,318 33,380,276 318,199,318 43,434,023
6/30/2027 306,970,819 32,982,994 305,340,331 33,380,276 294,950,378 43,434,022
6/30/2028 293,758,863 35,940,967 291,606,933 33,380,276 270,120,511 43,434,023
6/30/2029 276,591,603 36,352,715 276,939,663 33,380,275 243,602,212 43,434,023
6/30/2030 257,831,449 36,662,002 261,275,020 33,380,275 215,280,669 43,434,023
6/30/2031 237,475,979 33,997,767 244,545,181 33,380,275 185,033,261 43,434,022
6/30/2032 218,489,664 33,524,893 226,677,713 33,380,276 152,729,030 43,434,023
6/30/2033 198,700,967 31,445,836 207,595,257 33,380,276 118,228,110 43,434,022
6/30/2034 179,715,220 30,469,177 187,215,194 33,380,276 81,381,129 43,434,023
6/30/2035 160,447,760 29,023,760 165,449,286 33,380,275 42,028,552 43,434,023
6/30/2036 141,363,869 26,598,727 142,203,298 33,380,276
6/30/2037 123,488,402 25,373,300 117,376,581 33,380,275
6/30/2038 105,663,810 24,065,344 90,861,649 33,380,276
6/30/2039 87,978,841 23,090,801 62,543,700 33,380,275
6/30/2040 70,098,426 22,504,787 32,300,132 33,380,276
6/30/2041 51,607,754 18,066,784
6/30/2042 36,446,126 14,786,516
6/30/2043 23,643,472 22,788,335
6/30/2044 1,700,831 1,757,708
6/30/2045
6/30/2046
6/30/2047
6/30/2048
6/30/2049
Total 511,234,965 500,704,134 434,340,227
Interest Paid 193,035,647 182,504,816 116,140,909
Estimated Savings 10,530,831 76,894,738
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 35 Packet Pg. 39 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 23
Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)
1. For Period 7/1/25 – 6/30/26
a) Employer Normal Cost 10.90%
b) Employee contribution 7.49%
c) Total Normal Cost 18.39%
2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.46%)
b) Effect of plan changes 0.00%
c) Effect of discount rate change due to Funding Risk Mitigation 0.00%
d) Effect of assumption changes 0.00%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.46%)
3. For Period 7/1/26 – 6/30/27
a) Employer Normal Cost 10.48%
b) Employee contribution 7.45%
c) Total Normal Cost 17.93%
Employer Normal Cost Change [(3a) – (1a)] (0.42%)
Employee Contribution Change [(3b) – (1b)] (0.04%)
Unfunded Liability Contribution ($)
1. For Period 7/1/25 – 6/30/26 32,780,459
2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule 0
b) Effect of elimination of amortization bases (3,923,860)
c) Effect of progression of amortization bases 1 1,949,288
d) Effect of investment (gain)/loss during prior year2 (448,201)
e) Effect of non-investment (gain)/loss during prior year 1,444,866
f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0
g) Effect of Golden Handshake 0
h) Effect of plan changes 0
i) Effect of AL Significant Increase (Government Code section 20791) 0
j) Effect of assumption changes 0
k) Effect of adjustments to the amortization schedule (e.g., Fresh Start) 0
l) Effect of method change 0
m) Net effect of the changes above [sum of (a) through (l)] (977,907)
3. For Period 7/1/26 – 6/30/27 [(1) + (2m)] 31,802,552
The amounts shown for the period 7/1/25 – 6/30/26 may be different if a prepayment of unfunded actuarial liability is made or a
plan change became effective after the prior year’s actuarial valuation was performed.
1 Includes scheduled escalation in individual amortization base payments due to the 5 -year ramp and payroll growth
assumption used in the pre-2019 amortization policy.
2 The unfunded liability contribution for the investment (gain)/loss during the year prior to the valuation date is 20% of the
“full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be
included in line c ) for each of the next four years.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 36 Packet Pg. 40 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 24
Employer Contribution History
The table below provides a 10-year history of the employer contribution requirements for the plan , as determined by the annual
actuarial valuation . Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.
Valuation
Date
Contribution
Year
Employer
Normal Cost Rate
Unfunded Liability
Payment
06/30/2015 2017-18 10.039% $15,765,273
06/30/2016 2018-19 10.217% 18,392,618
06/30/2017 2019-20 10.716% 21,287,260
06/30/2018 2020-21 11.487% 23,432,860
06/30/2019 2021-22 10.95% 26,358,094
06/30/2020 2022-23 10.58% 29,715,229
06/30/2021 2023-24 11.73% 28,654,772
06/30/2022 2024-25 11.34% 32,190,210
06/30/2023 2025-26 10.90% 32,780,459
06/30/2024 2026-27 10.48% 31,802,552
Funding History
The table below shows the recent history of the actuarial accrued liability, market value of assets, unfunded accrued liability,
funded ratio and annual covered payroll.
Valuation
Date
Accrued
Liability
(AL)
Market Value of
Assets (MVA)
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
6/30/2015 $696,699,220 $477,031,099 $219,668,121 68.5% $71,574,823
6/30/2016 730,382,476 468,702,245 261,680,231 64.2% 75,345,962
6/30/2017 772,526,669 511,805,893 260,720,776 66.3% 78,476,098
6/30/2018 831,958,865 547,102,617 284,856,248 65.8% 80,363,405
6/30/2019 868,716,440 574,012,871 294,703,569 66.1% 78,848,216
6/30/2020 909,429,635 592,313,289 317,116,346 65.1% 84,892,137
6/30/2021 956,179,582 720,145,626 236,033,956 75.3% 79,718,988
6/30/2022 996,201,108 655,682,370 340,518,738 65.8% 82,193,044
6/30/2023 1,037,247,281 687,419,176 349,828,105 66.3% 91,956,169
6/30/2024 1,085,448,984 745,630,783 339,818,201 68.7% 107,807,296
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 37 Packet Pg. 41 of 321
Risk Analysis
• Future Investment Return Scenarios 26
• Discount Rate Sensitivity 27
• Mortality Rate Sensitivity 27
• Maturity Measures 28
• Maturity Measures History 29
• Funded Status – Termination Basis 30
• Funded Status – Low-Default-Risk Basis 31
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 38 Packet Pg. 42 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 26
Future Investment Return Scenarios
Analysis using the investment return scenarios from the Asset Liability Management process completed in 2021 was performed
to determine the effects of various future investment returns on required employer UAL contributions. The CalPERS Funding
Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2%, the board will
consider adjustments to the discount rate . The projections below use a discount rate of 6.8% for all scenarios even though an
annual return of 1 0.8% is high enough to trigger a board discussion on the discount rate . The projections also assume that all
other actua rial assumptions will be realized and that no further changes in assumptions, contributions, benefits , or funding will
occur.
The employer normal cost rates are not affected by investment returns, and since no future assumption changes are being
reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown
earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.
The first table shows projected UAL contribution requirements if the fund were to earn either 3.0% or 10.8% annually. These
alternate investment returns were chosen because 90% of long -term average returns are expected to fall between them over the
20-year period ending June 30, 2044.
Assumed Annual Return
FY 2024-25
through FY 2043 -44
Projected Employer UAL Contributions
2027-28 2028-29 2029-30 2030 -31 2031-32
3.0% (5th percentile) $33,676,000 $38,037,000 $40,578,000 $43,760,000 $44,730,000
10.8% (95th percentile ) $32,254,000 $33,678,000 $31,670,000 $28,583,000 $20,028,000
Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns
will average less than 3.0% or greater than 10.8% over a 20 -year period, the likelihood of a single investment return less than
3.0% or greater than 10.8% in any given year is much greater. The following analysis illustrates the effect of an extreme, single
year investment return.
The portfolio has an expected volatility (or standard deviation) of 12.0% per year. Accordingly, in any given ye ar there is a 16%
probability that the annual return will be -5.2% or less and a 2.5% probability that the annual return will be -17.2% or less. These
returns represent one and two standard deviations below the expected return of 6.8%.
The following table shows the effect of one and two standard deviation investment loss es in FY 2024-25 on the FY 2027-28
contribution requirements. Note that a single -year investment gain or loss decreases or increases the required UAL contribution
amount incrementally for each of the next five years, not just one, due to the 5 -year ramp in the amortization policy. However,
the contribution requirements beyond the first year are also impacted by investment returns beyond the first year . Historically,
significant downturns in the market are often followed by higher than average retur ns. Such investment gains would offset the
impact of these single year negative returns in years beyond FY 2027-28.
Assumed Annual Return for
Fiscal Year 2024-25
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2026-27 2027-28
(17.2%) (2 standard deviation loss) $31,802,552 $37,358,000
(5.2%) (1 standard deviation loss ) $31,802,552 $35,171,000
• Without investment gains (returns higher than 6.8%) in FY 2025-26 or later, projected contributions rates would
continue to rise over the next four years due to the continued phase -in of the impact of the illustrated investment loss in
FY 2024-25.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2027-28 as
well as to model other investment return scenarios .
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 39 Packet Pg. 43 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 27
Discount Rate Sensitivity
The discount rate assumption is calculated as the sum of the assumed real rate of return and the assumed annual price
inflation, currently 4.5% and 2.3%, respectively. Changing either the price inflation assumption or the real rate of return
assumption will change the discount rate. The sensitivity of the valuation results to the discount rate assumption depends on
which component of the discount rate is changed. Shown b elow are various valuation results as of June 30, 2024, assuming
alternate discount rates by changing the two components independently. Results are shown using the current discount rate of
6.8% as well as alternate discount rates of 5.8% and 7.8%. The rates of 5.8% and 7.8% were selected since they illustrate the
impact of a 1.0% increase or decrease to the 6.8% assumption.
Sensitivity to the Discount Rate Due to Varying the Real Rate of Return Assumption
As of June 30, 2024
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.3% 2.3% 2.3%
Real Rate of Return 3.5% 4.5% 5.5%
a) Total Normal Cost 22.67% 17.93% 14.34%
b) Accrued Liability $1,223,262,430 $1,085,448,984 $971,255,802
c) Market Value of Assets $745,630,783 $745,630,783 $745,630,783
d) Unfunded Liability/(Surplus) [(b) - (c)] $477,631,647 $339,818,201 $225,625,019
e) Funded Ratio 61.0% 68.7% 76.8%
Sensitivity to the Discount Rate Due to Varying the Price Inflation Assumption
As of June 30, 2024
1% Lower
Price Inflation
Current
Assumptions
1% Higher
Price Inflation
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.3% 2.3% 3.3%
Real Rate of Return 4.5% 4.5% 4.5%
a) Total Normal Cost 18.86% 17.93% 16.30%
b) Accrued Liability $1,120,247,466 $1,085,448,984 $1,012,531,819
c) Market Value of Assets $745,630,783 $745,630,783 $745,630,783
d) Unfunded Liability/(Surplus) [(b) - (c)] $374,616,683 $339,818,201 $266,901,036
e) Funded Ratio 66.6% 68.7% 73.6%
Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2024, plan costs and funded status under two differe nt longevity
scenarios, namely assuming rates of post-retirement mortality are 10% lower or 10% higher than our current mortality
assumptions adopted in 2021 . This type of analysis highlights the impact on the plan of a change in the mortality assumption .
As of June 30, 2024 10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 18.24% 17.93% 17.64%
b) Accrued Liability $1,109,541,976 $1,085,448,984 $1,063,363,775
c) Market Value of Assets $745,630,783 $745,630,783 $745,630,783
d) Unfunded Liability/(Surplus) [(b) - (c)] $363,911,193 $339,818,201 $317,732,992
e) Funded Ratio 67.2% 68.7% 70.1%
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 40 Packet Pg. 44 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 28
Maturity Measures
As pension plans mature , they become more sensitive to risks. Understanding plan maturity and how it affects the ability of a
pension plan sponsor to tolerate risk is important in understanding how the pension plan is impacted by investment return
volatility, other economic varia bles , and changes in longevity or other demographic assumptions.
One way to look at the maturity level of CalPERS and its plans is to look at the ratio of a plan’s retiree liability to its t otal liability.
A pension plan in its infancy will have a very low ratio of retiree liability to total liability. As the plan matures, the ratio increases.
A mature plan will often have a ratio above 60%-65%.
Ratio of Retiree Accrued Liability to
Total Accrued Liability June 30, 2023 June 30, 2024
1. Retiree Accrued Liability $653,009,459 $670,851,688
2. Total Accrued Liability $1,037,247,281 $1,085,448,984
3. Ratio of Retiree AL to Total AL [(1) ÷ (2)] 63% 62%
Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called the s upport ratio. A
pension plan in its infancy will have a very high ratio of active to retired members. As the plan matures and members retir e, the
ratio declines. A mature plan will often have a ratio near or below one.
To calculate the support ratio for the rate plan, retirees and beneficiaries receiving a continuance are each counted as one, even
though they may have only worked a portion of their careers as an active member of this rate plan. For this reason, the support
ratio, while intuitive, may be less informative than the ratio of retiree liability to total accrued liability above.
For comparison, the support ratio for all CalPERS pu blic agency plans as of June 30, 202 3, was 0.78 and was calculated
consistently with how it is for the individual rate plan. Note that to calculate the support ratio for all public agency plan s, a retiree
with service from more than one CalPERS agency is c ounted as a retiree more than once .
Support Ratio June 30, 2023 June 30, 2024
1. Number of Actives 757 833
2. Number of Retirees 1,348 1,364
3. Support Ratio [(1) ÷ (2)] 0.56 0.61
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 41 Packet Pg. 45 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 29
Maturity Measures (continued)
The actuarial calculations supplied in this communication are based on various assumptions about long -term demographic and
economic behavior. Unless these assumptions (e.g., terminations, deaths, disabilities, retirements, salary increases, investment
return) are exactly realized each year, there will be differences on a year -to-year basis. The year-to-year differences between
actual experience and the assumptions are called actuarial gains and losses and serve to lower or raise required employer
contributi ons from one year to the next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and
downs of investment returns.
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of market value of assets to payroll. Plans that have
a higher AVR experience more volatile employer contributions (as a percentage of payroll) due to investment return. For
example, a plan with an AVR of 8 may experience twice the contribution volatility due to investment return volatility than a plan
with an AVR of 4. It should be noted that this ratio is a measure of the current situation. It increases over time but generally
tends to stabilize as a plan matures.
Liability Volatility Ratio
Also shown in the table below is the liability volatility ratio (LVR), which is the ratio of accrued liability to payroll. Plans that ha ve
a higher LVR experience more volatile employer contributions (as a percentage of payroll) due to changes in liability. For
example, a plan with an LVR of 8 is expected to have twice the contribution volatility of a plan with an LVR of 4 when there is a
change in accrued liability, such as when there is a change in actuarial assumptions . It should be noted that this ratio indicates a
longer-term potential for contribution volatility, since the AVR, described above, will tend to move closer to the LVR as the
funded ratio approaches 100%.
Contribution Volatility June 30, 2023 June 30, 2024
1. Market Value of Assets without Receivables $686,907,124 $745,356,641
2. Payroll 91,956,169 107,807,296
3. Asset Volatility Ratio (AVR) [(1) ÷ (2)] 7.5 6.9
4. Accrued Liability $1,037,247,281 $1,085,448,984
5. Liability Volatility Ratio (LVR) [(4) ÷ (2)] 11.3 10.1
Maturity Measures History
Valuation Date
Ratio of
Retiree Accrued Liability
to
Total Accrued Liability Support Ratio
Asset
Volatility
Ratio
Liability
Volatility
Ratio
6/30/2017
57%
0.74
6.5
9.8
6/30/2018
57%
0.72
6.8
10.4
6/30/2019
61%
0.65
7.3
11.0
6/30/2020
60%
0.64
7.0
10.7
6/30/2021
62%
0.57
9.0
12.0
6/30/2022
64%
0.54
8.0
12.1
6/30/2023
63%
0.56
7.5
11.3
6/30/2024
62%
0.61
6.9
10.1
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 42 Packet Pg. 46 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 30
Funded Status – Termination Basis
The funded status measured on a termination basis is an estimate d range for the financial position of the plan had the contract
with CalPERS been terminated as of June 30, 2024 . The accrued liability on a termination basis (termination liability) is
calculated differently from the p lan’s ongoing funding liability. For th e termination liability calculation, both compensation and
service are frozen as of the valuation date and no future pay increases or service accruals are assumed. This measure of
funded status is not appropriate for assessing the need for future employer contributions in the case of an ongoing plan, that is,
for an employer that continues to provide CalPERS retirement benefits to active employees. Unlike the actuarial cost method
used for ongoing plans, the terminatio n liability is the present value of the benefits earned through the valuation date.
A more conservative investment policy and asset allocation strategy was adopted by the board for the Terminated Agency Pool.
The Terminated Agency Pool has limited funding sources since no future employer contributions will be made. Therefore,
expected benefit payments are secured by risk-free assets and benefit security for members is increased while limiting the
funding risk. However, this asset allocation has a lower expected rate of return than the re mainder of the PERF and
consequently, a lower discoun t rate assumption. The lower discount rate for the Terminated Agency Pool results in higher
liabilities for terminated plans.
The discount rate used for actual termination valuations is a weighted average of the 10 -year and 30 -year Treasury yields where
the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the
following analysis is based on 20 -year Treasury bonds , which is a good proxy for most plans. The discount rate upon contract
termination will depend on actual Treasury rates on the date of termination , which varies over time, as demonstrated below.
Valuation 20-Year Valuation 20-Year
Date Treasury Rate Date Treasury Rate
06/30/201 5 2.83% 06/30/2020 1.18%
06/30/201 6 1.86% 06/30/2021 2.00%
06/30/201 7 2.61% 06/30/2022 3.38%
06/30/201 8 2.91% 06/30/2023 4.06%
06/30/201 9 2.31% 06/30/2024 4.61%
As Treasury rates are variable, the table below shows a range for the termination liability using discount rates 1% below and
above the 20-year Treasury rate on the valuation date. The price inflation assumption is the 20 -year Treasury breakeven
inflation rate, that is, the difference between the 20 -year inflation indexed bond and the 20 -year fixed -rate bond.
The Market Value of Assets (MVA) also varies with interest rates and will fluctuate depending on other market conditions on the
date of termination . Since i t is not possible to approximate how the MVA will change in different interest rate environments, th e
results below use the MVA as of the valuation date.
Discount Rate: 3.61 %
Price Inflation: 2.45%
Discount Rate: 5.61%
Price Inflation: 2.45%
1. Termination Liability1 $1,561,870,398 $1,198,572,890
2. Market Value of Assets (MVA) 745,630,783 745,630,783
3. Unfunded Termination Liability [(1) – (2)] $816,239,615 $452,942,107
4. Funded Ratio [(2) ÷ (1)] 47.7% 62.2%
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial
assumptions can be found in Appendix A.
In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent to Termin ate. The
completed Resolution will allow a CalPERS actuary to provide a preliminary termination valuation with a more up -to-date
es timate of the plan ’s assets and liabilities. Before beginning this process, please consult with a CalPERS actuary.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 43 Packet Pg. 47 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 31
Funded Status – Low-Default-Risk Basis
Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or
Contributions, requires the disclosure of a low -default-risk obligation measure (LDROM) of benefit costs accrued as of the
valuation date using a discount rate based on the yields o f high quality fixed income securities with cash flows that replicate
expected benefit payments. Conceptually, this measure represents the level at which financial markets would value the accrued
plan costs, and would be approximately equal to the cost of a portfolio of low-default-risk bonds with similar financial
characteristics to accrued plan costs.
As permitted in ASOP No. 4, the Actuarial Office uses the Entry Age Actuarial Cost Method to calculate the LDROM. This
methodology is in line with the measure of “benefit entitlements” calculated by the Bureau of Economic Analysis and used by the
Federal Reserve to report the indebtedness due to pensions of plan sponsors and, conversely, the household wealth due to
pensions of plan members.
As shown below, the discount rate used for the LDROM is 5.35%, which is the Standard FTSE Pension Liability Index1 discount
rate as of June 30, 2024 .
Selected Measures on a Low -Default-Risk Basis June 30, 2024
Discount Rate 5.35%
1. Accrued Liability – Low -Default-Risk Basis (LDROM)
a) Active Members $427,708,543
b) Transferred Members 67,059,167
c) Separated Members 29,975,511
d) Members and Beneficiaries Receiving Payments 769,883,438
e) Total $1,294,626,659
2. Market Value of Assets (MVA) 745,630,783
3. Unfunded Accrued Liability – Low-Default-Risk Basis [(1e) – (2)] $548,995,876
4. Unfunded Accrued Liability – Funding Policy Basis 339,818,201
5. Present Value of Unearned Investment Risk Premium [(3) – (4)] $209,177,675
The difference between the unfunded liabilities on a low -default-risk basis and on the funding policy basis represents the present
value of the investment risk premium that must be earned in future years to keep future contributions for currently accrued p lan
costs at the levels anticipated by the funding policy.
Benefit security for members of the plan relies on a combination of the assets in the plan, the investment income generated f rom
those assets and the ability of the plan sponsor to make necessary future contributions. If future returns fall short of 6.8%,
benefit security could be at risk without higher than currently anticipated future contributions.
The funded status on a low -default-risk basis is not appropriate for assessing the sufficiency o f plan assets to cover the cost of
settling the plan’s benefit obligations (see Funded Status – Termination Basis), nor is it appropriate for assessing the need for
future contributions (see Funded Status – Funding Policy Basis ).
1 This index is based on a yield curve of hypothetical AA -rated zero-coupon corporate bonds whose maturities range
from 6 months to 30 years. The index represents the single discount rate that would produce the same present value
as discounting a standardized set of liabilit y cash flows for a fully open pension plan using the yield curve. The liability
cash flows are reasonably consistent with the pattern of benefits expected to be pa id from the entire Public
Employees’ Retirement Fund for current and former plan members. A different index, hence a different discount rate,
may be needed to measure the LDROM for a subset of the fund, such as a single rate plan or a group o f retirees.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 44 Packet Pg. 48 of 321
Supplementary Information
• Normal Cost by Benefit Group 33
• Summary of Valuation Data 34
• Status of PEPRA Transition 35
• Plan's Major Benefit Options 36
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 45 Packet Pg. 49 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 33
Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2026-27. The Total Normal Cost is the
annual cost of service accrual for the fiscal year for active employees and can be viewed as the long -term contribution rate for
the benefits contracted. Generally, the normal cost for a benefit group subject to more generous benefit provisions will exceed
the normal cost for a group with less generous benefits. However, based on the characteristics of the members (particularly
when the number of actives is small), this may not be the case. Future measurements of the Total Normal Cost for each group
may differ significantly from the current values due to such factors as: changes in the demographics of the group, changes in
economic and demographic assumptions, changes in plan be nefits or applicable law.
Rate
Plan
Identifier Benefit Group Name
Total
Normal
Cost
FY 2026-27
Offset due to
Employee
Contributions
FY 2026-27
Employer
Normal
Cost1
FY 2026-27
Number
of
Actives
Payroll on
6/30/2024
8 Miscellaneous First Level 23.09% 8.00% 15.09% 232 $34,593,373
30157 Miscellaneous Second Level 19.61% 7.00% 12.61% 88 14,389,852
26004 Miscellaneous PEPR A Level 14.59% 7.25% 7.34% 513 58,824,071
Plan Total 17.93% 7.45% 10.48% 833 $107,807,296
1 The employer normal cost for individual rate plans is provided for illustrative purposes only. The employer normal cost rate for
contribution purposes is the blended rate shown in the Plan Total row and is the employer normal cost contribution rate that applies to
the covered payroll of members in every rate plan shown above.
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benef its
such as Employer Paid Member Contributions, then the Normal Cost shown for the respective benefit level does not reflect
those differences. Additionally, if a Second Level Benefit Group amended to the same benefit formula as a First Level Benefit
Group, their Normal Costs may be diss imilar due to demographic or other population differences. For questions in these
situations, please contact a CalPERS actuary.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 46 Packet Pg. 50 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 34
Summary of Valuation Data
June 30, 2023 June 30, 2024
1. Active Members
a) Counts 757 833
b) Average Attained Age
45.55 45.17
c) Average Entry Age to Rate Plan 35.29 35.61
d) Average Years of Credited Service 10.26 9.47
e) Average Annual Covered Payroll $121,474 $129,421
f) Annual Covered Payroll $91,956,169 $107,807,296
g) Projected Annual Payroll for Contribution Year $99,898,787 $117,119,039
h) Present Value of Future Payroll $829,447,506 $977,355,440
2. Transferred Members
a) Counts 392 393
b) Average Attained Age 45.76 46.08
c) Average Years of Credited Service 3.58 3.68
d) Average Annual Covered Payroll $137,723 $146,064
3. Separated Members
a) Counts 488 504
b) Average Attained Age 47.65 47.81
c) Average Years of Credited Service 3.03 3.03
d) Average Annual Covered Payroll $80,177 $80,559
4. Retired Members and Beneficiaries Receiving Payments
a) Counts 1,348 1,364
b) Average Attained Age 71.13 71.49
c) Average Annual Benefits $40,011 $41,180
d) Total Annual Benefits $53,934,949 $56,169,453
5. Active to Retired Ratio [(1a) ÷ (4a)] 0.56 0.61
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist
for those who have service in more than one valuation group. This does not result in double counting of liabilities.
Average Annual Benefits represe nts benefit amounts payable by this plan only. Some members may have service with
another agency and would therefore have a larger total benefit than would be included as part of the average shown here.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 47 Packet Pg. 51 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 35
Status of PEPRA Transition
The California Public Employees' Pension Reform Act of 2013 (PEPRA), which took effect in January 2013, changed
CalPERS retirement benefits and placed compensation limits on new members joining CalPERS o n or after January 1, 2013.
One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their
members. While such changes can reduce future benefit costs in a meaningful way, the full impact on empl oyer contributions
will not occur until all active members are subject to the rules and provisions of PEPRA. The table below illustrates the sta tus
of this transition as of June 30, 2024 .
Classic PEPRA
PEPRA
as a Percent
of Total
Active Members
Count 320 513 61.6%
Average Attained Age 52.82 40.41
Average Entry Age 34.43 36.34
Average Years of Credited Service 18.33 3.94
Average Annual Covered Payroll $153,073 $114,667
Annual Covered Payroll $48,983,225 $58,824,071 54.6%
Present Value of Future Payroll $338,328,246 $639,027,194 65.4%
Transferred Members
Count 245 148 37.7%
Separated Members
Count 305 199 39.5%
Retired Members and Beneficiaries Receiving Payments
Count 1,349 15 1.1%
Average Annual Benefit $41,507 $11,735
Total Annual Benefits $55,993,431 $176,022 0.3%
Accrued Liabilities
Active Members $294,722,928 $45,264,172 13.3%
Transferred Members 44,271,203 6,044,534 12.0%
Separated Members 21,456,422 2,838,037 11.7%
Retired Members and Beneficiaries 668,453,307 2,398,381 0.4%
Total $1,028,903,860 $56,545,124 5.2%
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 48 Packet Pg. 52 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 36
Plan's Major Benefit Options
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Misc Misc Misc Misc Misc Misc Misc
Demographics
Actives No Yes Yes No Yes No No
Transfers/Separated Yes Yes Yes Yes Yes No No
Receiving Yes Yes Yes Yes Yes Yes Yes
Benefit Group Key 105391 105393 107485 111264 200040 200044 200045
Benefit Provision
Benefit Formula 2% @ 55 2.7% @ 55 2% @ 60 2% @ 62 2% @ 62
Social Security Coverage No No No No No
Full/Modified Full Full Full Full Full
Employee Contribution Rate 8.00% 7.00% 7.25%
Final Average Compensation Period One Year One Year One Year Three Year Three Year
Sick Leave Credit No No No No No
Non-Industrial Disability Standard Standard Standard Standard Standard
Industrial Disability No No No No No
Pre-Retirement Death Benefits
Optional Settlement 2 No No No No No
1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Level 1
Special No No No No No
Alternate (firefighters) No No No No No
Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
Item 1
Attachment B - CalPERS Miscellaneous
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 49 Packet Pg. 53 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 37
Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Misc
Demographics
Actives No
Transfers/Separated No
Receiving Yes
200046
Benefit Provision
Benefit Formula
Social Security Coverage
Full/Modified
Employee Contribution Rate
Final Average Compensation Period
Sick Leave Credit
Non-Industrial Disability
Industrial Disability
Pre-Retirement Death Benefits
Optional Settlement 2
1959 Survivor Benefit Level
Special
Alternate (firefi ghters)
Post-Retirement Death Benefits
Lump Sum $2,000
Survivor Allowance (PRSA) No
COLA 2%
Item 1
Attachment B - CalPERS Miscellaneous
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 50 Packet Pg. 54 of 321
Appendix A - Actuarial Methods and Assumptions
• Actuarial Data 39
• Actuarial Methods 39
• Actuarial Assumptions 43
• Miscellaneous 63
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 51 Packet Pg. 55 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 39
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the various
CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and appropriate in aggregate. We
are unaware of any potential data issues that would have a material effect on the results of this valuation, except that data does
not always contain the latest salary information for former members now in reciprocal systems and does not recognize the
potential for unusually large salary deviation in certain cases such as elected officials. Therefore, salary inf ormation in these
cases may not be accurate. These situations are relatively infrequent, however, and generally do not have a material impact o n
the required employer contributions.
Actuarial Methods
Actuarial Cost Method
With one exception, the actuarial cost method use d in this valuation is the Entry Age Actuarial Cost Method. This method is
used to calculate the required employer contributions and the PEPRA member contribution rate. Under this method, the cost of
the projected benefits is allocated on an individual basis as a level percent of earnings for the individual between entry age and
retirement age. The portion allocated to the year following the valuation date is the normal cost. This method yields a total
normal cost rate, expressed as a percentage of payroll, which is designed to remain level throughout the member’s career.
The actuarial accrued liability for active members is then calculated as the present value of benefits minus the present value of
future normal cost, or the portion of the total present value of benefits allocated to prior years. The actuarial accrued liability for
members currently receiving benefits and for members entitled to deferred benefits is equal to the present value of the benef its
expected to be paid. No normal costs are applicable for these pa rticipants.
To calculate the accrued liability on termination basis, this valuation use d the Traditional Unit Credit Actuarial Cost Method. This
method differs from the entry age method only for active members where the accrued liability is the present va lue of benefits
assuming no future pay increases or service accruals.
Amortization of Unfunded Actuarial Accrued Liability
The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded actuarial acc rued
l iability (UAL). Funding requirements are determined by adding the normal cost and a payment toward the UAL. The UAL
payment is equal to the sum of individual amortization payments, each representing a different source of UAL for a given
measurement period.
Amortization payments are determined according to the CalPERS Actuarial Amortization Policy. The board adopted a new
policy effective for the June 30, 2019 , actuarial valua tion. The new policy applies prospectively only; amortization bases
(sources of UAL) established prior to the June 30, 2019 , valuation will continue to be amortized according to the prior policy.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 52 Packet Pg. 56 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 40
Amortization of Unfunded Actuarial Accrued Liability (continued)
Prior Policy (Bases Established on or after June 30, 2013 , and prior to June 30, 2019)
Amortization payments are determined as a level percentage of payroll whereby the payment increases each year at an
escalation rate. Gains or losses are amorti zed over a fixed 30 -year period with a 5 -year ramp up at the beginning and a 5 -year
ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden
handshakes) are amortized over a 20 -year period with no ramp. Changes in actuarial assumptions or changes in actuarial
methodology are amortized over a 20 -year period with a 5 -year ramp up at the beginning and a 5 -year ramp down at the end of
the amortization period. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five
years (20 years prior to June 30, 2014). A summary is provided in the following table:
Driver
Source
(Gain)/Loss
Assumption/Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 30 Years 30 Years 20 Years
20
Years 5 Years
Escalation Rate
- Active Plans
- Inactive Plans
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
Ramp Up 5 5 5 0 0
Ramp Down 5 5 5 0 0
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of
the “full” payment which begins in year five. The 5 -year ramp down means that the reverse is true in the final four years of the
amortization period.
Current Policy (Bases Es tablished on or after June 30, 2019)
Amortization payments are determined as a level dollar amount. Investment gains or losses are amortized over a fixed 20 -year
period with a 5 -year ramp up at the beginning of the amortization period. Non -investment gain s or losses are amortized over a
fixed 20 -year period with no ramps. All changes in liability due to plan amendments (other than golden handshakes) are
amortized over a 20 -year period with no ramps. Changes in actuarial assumptions or changes in actuarial methodology are
amortized over a 20 -year period with no ramps. Changes in unfunded accrued liability due to a Golden Handshake are
amortized over a period of five years. A summary is provided in the table below:
Driver
Source
(Gain)/Loss
Assumption/
Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 20 Years 20 Years 20 Years 20 Years 5 Years
Escalation Rate 0% 0% 0% 0% 0%
Ramp Up 5 0 0 0 0
Ramp Down 0 0 0 0 0
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of
the “full” payment which begins in year five.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 53 Packet Pg. 57 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 41
Amortization of Unfunded Actuarial Accrued Liability (continued)
Exceptions for Inconsistencies
An exception to the amortization rules above is used whenever their application results in inconsistencies. In these cases, a
“fresh start” approach is used. This means that the current unfunded actuarial liability is projected and amortized over a se t
number of years. For example, a fresh start is needed in the following situations:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period, and results in
a large change in the employer contribution requirement .
It should be noted that the actuary may determine that a fresh start is necessary under other circumstances. In all cases of a
fresh start, the period is set by the actuary at what is deemed appropriate; however, the period will not be greater than 20 years.
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Market Value of Assets exceeds the plan’s accrued liability) any prior amortization layers shall be
considered fully amortized, and the surplus shall not be amortized.
In the event of any subsequent unfunded liability, a Fresh Start shall be used with an amortization period of 20 years or les s.
Exceptions for Small Amounts
Where small unfunded liabilities are identi fied in annual valuations which result in small payment amounts, the actuary may
shorten the remaining period for these bases.
• When the balance of a single amortization base has an absolute value less than $250, the amortization period is
reduced to one year.
• When the entire unfunded liability is a small amount , the actuary may perform a Fresh Start and use an appropriate
amortization period.
Exceptions for Inactive Plans
The following exceptions apply to plans classified as Inactive. These plans have no active members and no expectation to have
active members in the future.
• Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay” basis. For
amortization layers, which utilize a ramp up and ramp down, the “u ltimate” payment is constant.
• Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods that are deemed
too long given the duration of the liability. The specific demographics of the plan will be used to deter mine if shorter
periods may be more appropriate.
Exceptions for Inactive Agencies
For a public agency with no active members in any CalPERS rate plan, the unfunded liability shall be amortized over a closed
amortization period of no more than 15 years.
Asset Valuation Method
The Actuarial Value of Assets is set equal to the m arket value of assets. Asset values include accounts receivable.
PEPRA Normal Cost Rate Methodology
Per Government Code s ection 7522.30(b), the “normal cost rate” shall mean the annual actuarially determined normal cost for
the plan of retirement benefits provided to the new member and shall be established based on actuarial assumptions used to
determine the liabilities and costs as part of the annual actuarial valuation. The plan of retirement benefits shall include any
elements that would impact the actuarial determination of the normal cost, including, but not limited to, the retirement form ula,
eligibility and vesting criteria, ancillary benefit provisions, and any automatic co st-of-living adjustments as determined by the
public retirement system.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 54 Packet Pg. 58 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 42
PEPRA Normal Cost Rate Methodology (continued)
For purposes of setting member rates, it is preferable to determine total normal cost using a large active population so that the
rate remains relatively stable. While each CalPERS non -pooled plan has a sufficiently large active population for this purpose,
the PEPRA active population by itself may not be sufficiently large enough yet. The total PEPRA normal cost for each PEPRA
benefit tier will be determined based on the entire active plan population (both PEPRA and Classic) only until the number of
members covered under the PEPRA formula meets either:
1. 50% of the active population, or
2. 25% of the active population and 100 or more PEPRA members
Once one of these conditions is met, the total PEPRA normal cost for each PEPRA benefit tier will be determined using the
entire active PEPRA population.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 55 Packet Pg. 59 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 43
Actuarial Assumptions
In 2021, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic
asset allocation. In November 2021, the board adopted changes to the asset allocation that increased the expec ted volatility of
returns. The adopted asset allocation was expected to have a long -term blended return that continued to support a discount rate
assumption of 6.80%. The board also approved several changes to the demographic assumptions that more closely aligned with
actual experience.
For more details and additional rationale for the selection of the actuarial assumptions, please refer to the 2021 CalPERS
Experience Study and Review of Actuarial Assumptions that can be found on the CalPERS website under: Forms and
Publications. Click on “View All” and search for Experience Study.
All actuarial assumptions (except the discount rates and price inflation ass umption used for the accrued liability on a termination
basis and the interest rate used for the low -default-risk obligation measure ) represent an estimate of future experience rather
than observations of the estimates inherent in market data.
Economic As sumptions
Discount Rate
The prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80% compounded annually (net of
investment and administrative expenses) as of June 30, 2024. The discou nt rate is based on the long-term expected rate of
return on assets using a building -block method in which expected future real rates of return (expected returns, net of pension
plan investment expense and inflation) are developed for each major a s set clas s. The current assumption, originally based on
capital market assumptions developed by the Investment Office in 2021, has been reviewed for this valuation based on capital
market assumptions developed by the Investment Office in 2023.
Termination Liability Discount Rate
The current discount rate assumption used for termination valuations is a weighted average of the 10 -year and 30 -year U.S.
Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The accrued
liabilities on a termination basis in this report use discount rates that are based on the 20-year Treasury rate on the valuation
date.
To illustrate the impact of the variability of interest rates, the accrued liabilities on a termination basis in this report use discount
rates 1% below and 1% above the 20-year Treasury rate on the valuation date. The 20-year Treasury rate was 4.61% on June
30, 2024.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 56 Packet Pg. 60 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 44
Salary Increases
Annual increases vary by category, entry age, and duration of service. A sample of assumed increases due to seniority, merit
and promotion are shown below. Assumed wage inflation is combined with these factors to develop the total expected salary
increases.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0764 0.0621 0.0521
1 0.0663 0.0528 0.0424
2 0.0576 0.0449 0.0346
3 0.0501 0.0381 0.0282
4 0.0435 0.0324 0.0229
5 0.0378 0.0276 0.0187
10 0.0201 0.0126 0.0108
15 0.0155 0.0102 0.0071
20 0.0119 0.0083 0.0047
25 0.0091 0.0067 0.0031
30 0.0070 0.0054 0.0020
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1517 0.1549 0.0631
1 0.1191 0.1138 0.0517
2 0.0936 0.0835 0.0423
3 0.0735 0.0613 0.0346
4 0.0577 0.0451 0.0284
5 0.0453 0.0331 0.0232
10 0.0188 0.0143 0.0077
15 0.0165 0.0124 0.0088
20 0.0145 0.0108 0.0101
25 0.0127 0.0094 0.0115
30 0.0112 0.0082 0.0132
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1181 0.1051 0.0653
1 0.0934 0.0812 0.0532
2 0.0738 0.0628 0.0434
3 0.0584 0.0485 0.0353
4 0.0462 0.0375 0.0288
5 0.0365 0.0290 0.0235
10 0.0185 0.0155 0.0118
15 0.0183 0.0150 0.0131
20 0.0181 0.0145 0.0145
25 0.0179 0.0141 0.0161
30 0.0178 0.0136 0.0179
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 57 Packet Pg. 61 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 45
Salary Increases (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1238 0.1053 0.0890
1 0.0941 0.0805 0.0674
2 0.0715 0.0616 0.0510
3 0.0544 0.0471 0.0387
4 0.0413 0.0360 0.0293
5 0.0314 0.0276 0.0222
10 0.0184 0.0142 0.0072
15 0.0174 0.0124 0.0073
20 0.0164 0.0108 0.0074
25 0.0155 0.0094 0.0075
30 0.0147 0.0083 0.0077
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0275 0.0275 0.0200
1 0.0422 0.0373 0.0298
2 0.0422 0.0373 0.0298
3 0.0422 0.0373 0.0298
4 0.0388 0.0314 0.0245
5 0.0308 0.0239 0.0179
10 0.0236 0.0160 0.0121
15 0.0182 0.0135 0.0103
20 0.0145 0.0109 0.0085
25 0.0124 0.0102 0.0058
30 0.0075 0.0053 0.0019
• The Miscellaneous salary scale is used for Local Prosecutors.
• The Police salary scale is used for Other Safety, Local Sheriff, and School Police.
Price Inflation
2.30% compounded annually.
Termination Liability Price Inflation
The breakeven inflation rate for 20 -year Treasuries on the valuation date, 2.45%.
Wage Inflation
2.80% compounded annually. This is used in projecting individual salary increases.
Payroll Growth
2.80% compounded annu ally. This is used as the escalation rate of the amortization payments on level percent of payroll
amortization bases , that is, on any amortization bases established prior to 2019 for plans that currently have active members.
Miscellaneous Loading Factors
Credit for Unused Sick Leave
Total years of service is increased by 1% for those plans that have adopted the provision of providing Credit for Unused Sick
Leave.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 58 Packet Pg. 62 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 46
Conversion of Employer Paid Member Contributions (EPMC)
Total years of service is increase d by the Employee Contribution Rate for those plans with the provision providing for the
Conversion of Employer Paid Member Contributions (EPMC) during the final compensation period.
Norris Decision (Best Factors)
Employees hired prior to July 1, 1982 , have projected benefit amounts increased in order to reflect the use of “Best Factors” in
the calculation of optional benefit forms. This is due to a 1983 Supreme Court decision, known as the Norris decision, which
required males and females to be treated equally in the determination of benefit amounts. Consequently, anyone already
employed at that time is given the best possible conversion factor when optional benefits are determined. No loading is
necessary for employees hired after July 1, 1982.
Termination Liability
The termination liabilities include a 5% contingency load. This load is for unforeseen improvements in mortality.
Demographic Assumptions
Pre -Retirement Mortality
The mortality assumptions are based on mortality rates resulting from the m ost recent CalPERS Experience Study adopted by
the CalPERS Board in November 2021. For purposes of the mortality rates, the rates incorporate generational mortality to
capture ongoing mortality improvement. Generational mortality explicitly assumes that me mbers born more recently will live
longer than the members born before them thereby capturing the mortality improvement seen in the past and expected
continued improvement. For more details, please refer to the 2021 CalPERS Experience Study and Review of Actuarial
Assumptions report that can be found on the CalPERS website .
Rates vary by age and gender. This table only contains a sample of the 2017 base tab le rates for illustrative purposes. The non -
industrial death rates are used for all plans. The industrial death rates are used for Safety plans , except for local Safety
members described in Government Code s ection 20423.6 where the agency has not specifica lly contracted for industrial death
benefits.
Miscellaneous Safety
Non-Industrial Death Non-Industrial Death Industrial Death
(Not Job-Related) (Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
20 0.00039 0.00014 0.00038 0.00014 0.00004 0.00002
25 0.00033 0.00013 0.00034 0.00018 0.00004 0.00002
30 0.00044 0.00019 0.00042 0.00025 0.00005 0.00003
35 0.00058 0.00029 0.00048 0.00034 0.00005 0.00004
40 0.00075 0.00039 0.00055 0.00042 0.00006 0.00005
45 0.00093 0.00054 0.00066 0.00053 0.00007 0.00006
50 0.00134 0.00081 0.00092 0.00073 0.00010 0.00008
55 0.00198 0.00123 0.00138 0.00106 0.00015 0.00012
60 0.00287 0.00179 0.00221 0.00151 0.00025 0.00017
65 0.00403 0.00250 0.00346 0.00194 0.00038 0.00022
70 0.00594 0.00404 0.00606 0.00358 0.00067 0.00040
75 0.00933 0.00688 0.01099 0.00699 0.00122 0.00078
80 0.01515 0.01149 0.02027 0.01410 0.00225 0.00157
• The pre -retirement mortality rates above are for 2017 and are projected generationally for future years using 80% of
the Society of Actuaries’ Scale MP -2020.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for
industrial death benefits. If so, each non -industrial death rate shown above will be split into two components : 99% will
become the non-industrial death rate and 1% will become the industrial death rate.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 59 Packet Pg. 63 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 47
Post-Retirement Mortality
Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are used for all plans.
Service Retirement
Non-Industrial Disability Industrial Disability
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00267 0.00199 0.01701 0.01439 0.00430 0.00311
55 0.00390 0.00325 0.02210 0.01734 0.00621 0.00550
60 0.00578 0.00455 0.02708 0.01962 0.00944 0.00868
65 0.00857 0.00612 0.03334 0.02276 0.01394 0.01190
70 0.01333 0.00996 0.04001 0.02910 0.02163 0.01858
75 0.02391 0.01783 0.05376 0.04160 0.03446 0.03134
80 0.04371 0.03403 0.07936 0.06112 0.05853 0.05183
85 0.08274 0.06166 0.11561 0.09385 0.10137 0.08045
90 0.14539 0.11086 0.16608 0.14396 0.16584 0.12434
95 0.24665 0.20364 0.24665 0.20364 0.24665 0.20364
100 0.36198 0.31582 0.36198 0.31582 0.36198 0.31582
105 0.52229 0.44679 0.52229 0.44679 0.52229 0.44679
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
• The post-retirement mortality rates above are for 2017 and are projected generationally for future years using 80% of
the Society of Actuaries’ Scale MP -2020.
Marital Status
For active members, a percentage who are married upon retirement is assumed according to the member category as shown in
the following table.
Member Category Percent Married
Miscellaneous Member 70%
Local Police 85%
Local Fire 85%
Other Local Safety 70%
School Police 85%
Local County Peace Officers 75%
Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all plans.
Separated Members
It is assumed that separated members refund immediately if non -vested. Separated members who are vested are assumed to
retire at age 59 for Miscellaneous members and age 54 for Safety members.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 60 Packet Pg. 64 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 48
Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tables
below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.1851 0.1944 0.1769 0.1899 0.1631 0.1824 0.1493 0.1749 0.1490 0.1731 0.1487 0.1713
1 0.1531 0.1673 0.1432 0.1602 0.1266 0.1484 0.1101 0.1366 0.1069 0.1323 0.1037 0.1280
2 0.1218 0.1381 0.1125 0.1307 0.0970 0.1183 0.0815 0.1058 0.0771 0.0998 0.0726 0.0938
3 0.0927 0.1085 0.0852 0.1020 0.0727 0.0912 0.0601 0.0804 0.0556 0.0737 0.0511 0.0669
4 0.0672 0.0801 0.0616 0.0752 0.0524 0.0670 0.0431 0.0587 0.0392 0.0523 0.0352 0.0459
5 0.0463 0.0551 0.0423 0.0517 0.0358 0.0461 0.0292 0.0404 0.0261 0.0350 0.0230 0.0296
10 0.0112 0.0140 0.0101 0.0129 0.0083 0.0112 0.0064 0.0094 0.0048 0.0071 0.0033 0.0049
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1022 0.1317 0.1298 0.1389 0.1086 0.1284
1 0.0686 0.1007 0.0789 0.0904 0.0777 0.0998
2 0.0441 0.0743 0.0464 0.0566 0.0549 0.0759
3 0.0272 0.0524 0.0274 0.0343 0.0385 0.0562
4 0.0161 0.0349 0.0170 0.0206 0.0268 0.0402
5 0.0092 0.0214 0.0113 0.0128 0.0186 0.0276
10 0.0015 0.0000 0.0032 0.0047 0.0046 0.0038
15 0.0000 0.0000 0.0000 0.0000 0.0023 0.0036
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• The police termination and refund rates are also used for Public Agency Local Prosecutors, Other Safety, Local
Sheriff, and School Police.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 61 Packet Pg. 65 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 49
Termination with Refund (continued)
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.2054 0.2120 0.1933 0.1952 0.1730 0.1672 0.1527 0.1392 0.1423 0.1212 0.1318 0.1032
1 0.1922 0.2069 0.1778 0.1883 0.1539 0.1573 0.1300 0.1264 0.1191 0.1087 0.1083 0.0910
2 0.1678 0.1859 0.1536 0.1681 0.1298 0.1383 0.1060 0.1086 0.0957 0.0934 0.0853 0.0782
3 0.1384 0.1575 0.1256 0.1417 0.1042 0.1155 0.0829 0.0893 0.0736 0.0774 0.0643 0.0656
4 0.1085 0.1274 0.0978 0.1143 0.0800 0.0925 0.0622 0.0707 0.0542 0.0620 0.0462 0.0533
5 0.0816 0.0991 0.0732 0.0887 0.0590 0.0713 0.0449 0.0539 0.0383 0.0476 0.0317 0.0413
10 0.0222 0.0248 0.0200 0.0221 0.0163 0.0174 0.0125 0.0128 0.0094 0.0100 0.0063 0.0072
15 0.0106 0.0132 0.0095 0.0113 0.0077 0.0083 0.0058 0.0052 0.0040 0.0039 0.0021 0.0026
20 0.0059 0.0065 0.0050 0.0054 0.0035 0.0036 0.0021 0.0019 0.0010 0.0009 0.0000 0.0000
25 0.0029 0.0034 0.0025 0.0029 0.0018 0.0020 0.0010 0.0012 0.0005 0.0006 0.0000 0.0000
30 0.0012 0.0015 0.0011 0.0013 0.0011 0.0011 0.0010 0.0009 0.0005 0.0005 0.0000 0.0000
35 0.0006 0.0007 0.0006 0.0007 0.0005 0.0006 0.0005 0.0005 0.0003 0.0002 0.0000 0.0000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 62 Packet Pg. 66 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 50
Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tables
below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0381 0.0524 0.0381 0.0524 0.0358 0.0464 0.0334 0.0405 0.0301 0.0380
10 0.0265 0.0362 0.0265 0.0362 0.0254 0.0334 0.0244 0.0307 0.0197 0.0236
15 0.0180 0.0252 0.0180 0.0252 0.0166 0.0213 0.0152 0.0174 0.0119 0.0132
20 0.0141 0.0175 0.0141 0.0175 0.0110 0.0131 0.0079 0.0087 0.0000 0.0000
25 0.0084 0.0108 0.0084 0.0108 0.0064 0.0076 0.0000 0.0000 0.0000 0.0000
30 0.0047 0.0056 0.0047 0.0056 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0038 0.0041 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0272 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0198 0.0126 0.0189
15 0.0048 0.0120 0.0083 0.0144 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0105 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0073 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0037 0.0021 0.0031
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• After termination with vested benefits, a Miscellaneous member is assumed to retire at age 59 and a Safety
member at age 54.
• The Police termination with vested benefits rates are also used for Public Agency Local Prosecutors, Other Safety,
Local Sheriff, and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0359 0.0501 0.0359 0.0501 0.0332 0.0402 0.0305 0.0304 0.0266 0.0272
10 0.0311 0.0417 0.0311 0.0417 0.0269 0.0341 0.0228 0.0265 0.0193 0.0233
15 0.0193 0.0264 0.0193 0.0264 0.0172 0.0220 0.0151 0.0175 0.0123 0.0142
20 0.0145 0.0185 0.0145 0.0185 0.0113 0.0141 0.0080 0.0097 0.0000 0.0000
25 0.0089 0.0123 0.0089 0.0123 0.0074 0.0093 0.0000 0.0000 0.0000 0.0000
30 0.0057 0.0064 0.0057 0.0064 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0040 0.0049 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 63 Packet Pg. 67 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 51
Non-Industrial (Not Job -Related) Disability
Rates vary by age and gender for Miscellaneous plans. Rates vary by age and category for Safety plans.
Miscellaneous Fire Police County Peace Officer Schools
Age Male Female All All All Male Female
20 0.0001 0.0000 0.0001 0.0001 0.0001 0.0000 0.0002
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0002
30 0.0002 0.0003 0.0001 0.0001 0.0001 0.0002 0.0002
35 0.0004 0.0007 0.0001 0.0002 0.0003 0.0005 0.0004
40 0.0009 0.0012 0.0001 0.0002 0.0006 0.0010 0.0008
45 0.0015 0.0019 0.0002 0.0003 0.0011 0.0019 0.0015
50 0.0015 0.0019 0.0004 0.0005 0.0016 0.0027 0.0021
55 0.0014 0.0013 0.0006 0.0007 0.0009 0.0024 0.0017
60 0.0012 0.0009 0.0006 0.0011 0.0005 0.0020 0.0010
• The Miscellaneous non -industrial disability rates are used for Local Prosecutors.
• The police non -industrial disability rates are also used for Other Safety, Local Sheriff, and School Police.
Industrial (Job -Related) Disability
Rates vary by age and category.
Age Fire Police County Peace Officer
20 0.0001 0.0000 0.0004
25 0.0002 0.0017 0.0013
30 0.0006 0.0048 0.0025
35 0.0012 0.0079 0.0037
40 0.0023 0.0110 0.0051
45 0.0040 0.0141 0.0067
50 0.0208 0.0185 0.0092
55 0.0307 0.0479 0.0151
60 0.0438 0.0602 0.0174
• The police industrial disability rates are also used for Local Sheriff and Other Safety.
• 50% of the police industrial disability rates are used for School Police.
• 1% of the police industrial disability rates are used for Local Prosecutors.
• Normally, rates are zero for Miscellaneous plans unless the agency has specifically contracted for industrial
disability benefits. If so, each Miscellaneous non -industrial disability rate will be split into two compone nts: 50% will
become the non -industrial disability rate and 50% will become the industrial disability rate.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 64 Packet Pg. 68 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 52
Service Retirement
Retirement rates vary by age, service, and formula, except for the Safety Half Pay at 55 and 2% at 55 formulas, where
retirement rates vary by age only.
Public Agency Miscellaneous 1.5% at age 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248
Public Agency Miscellaneous 2% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.011 0.014 0.014 0.017 0.017
51 0.017 0.013 0.014 0.010 0.010 0.010
52 0.014 0.014 0.018 0.015 0.016 0.016
53 0.015 0.012 0.013 0.010 0.011 0.011
54 0.006 0.010 0.017 0.016 0.018 0.018
55 0.012 0.016 0.024 0.032 0.036 0.036
56 0.010 0.014 0.023 0.030 0.034 0.034
57 0.006 0.018 0.030 0.040 0.044 0.044
58 0.022 0.023 0.033 0.042 0.046 0.046
59 0.039 0.033 0.040 0.047 0.050 0.050
60 0.063 0.069 0.074 0.090 0.137 0.116
61 0.044 0.058 0.066 0.083 0.131 0.113
62 0.084 0.107 0.121 0.153 0.238 0.205
63 0.173 0.166 0.165 0.191 0.283 0.235
64 0.120 0.145 0.164 0.147 0.160 0.172
65 0.138 0.160 0.214 0.216 0.237 0.283
66 0.198 0.228 0.249 0.216 0.228 0.239
67 0.207 0.242 0.230 0.233 0.233 0.233
68 0.201 0.234 0.225 0.231 0.231 0.231
69 0.152 0.173 0.164 0.166 0.166 0.166
70 0.200 0.200 0.200 0.200 0.200 0.200
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 65 Packet Pg. 69 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 53
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.014 0.017 0.021 0.023 0.024
51 0.013 0.017 0.017 0.018 0.018 0.019
52 0.013 0.018 0.018 0.020 0.020 0.021
53 0.013 0.019 0.021 0.024 0.025 0.026
54 0.017 0.025 0.028 0.032 0.033 0.035
55 0.045 0.042 0.053 0.086 0.098 0.123
56 0.018 0.036 0.056 0.086 0.102 0.119
57 0.041 0.046 0.056 0.076 0.094 0.120
58 0.052 0.044 0.048 0.074 0.106 0.123
59 0.043 0.058 0.073 0.092 0.105 0.126
60 0.059 0.064 0.083 0.115 0.154 0.170
61 0.087 0.074 0.087 0.107 0.147 0.168
62 0.115 0.123 0.151 0.180 0.227 0.237
63 0.116 0.127 0.164 0.202 0.252 0.261
64 0.084 0.138 0.153 0.190 0.227 0.228
65 0.167 0.187 0.210 0.262 0.288 0.291
66 0.187 0.258 0.280 0.308 0.318 0.319
67 0.195 0.235 0.244 0.277 0.269 0.280
68 0.228 0.248 0.250 0.241 0.245 0.245
69 0.188 0.201 0.209 0.219 0.231 0.231
70 0.229 0.229 0.229 0.229 0.229 0.229
Public Agency Miscellaneous 2.5% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.017 0.027 0.035 0.046 0.050
51 0.019 0.021 0.025 0.030 0.038 0.040
52 0.018 0.020 0.026 0.034 0.038 0.037
53 0.013 0.021 0.031 0.045 0.052 0.053
54 0.025 0.025 0.030 0.046 0.057 0.068
55 0.029 0.042 0.064 0.109 0.150 0.225
56 0.036 0.047 0.068 0.106 0.134 0.194
57 0.051 0.047 0.060 0.092 0.116 0.166
58 0.035 0.046 0.062 0.093 0.119 0.170
59 0.029 0.053 0.072 0.112 0.139 0.165
60 0.039 0.069 0.094 0.157 0.177 0.221
61 0.080 0.077 0.086 0.140 0.167 0.205
62 0.086 0.131 0.149 0.220 0.244 0.284
63 0.135 0.135 0.147 0.214 0.222 0.262
64 0.114 0.128 0.158 0.177 0.233 0.229
65 0.112 0.174 0.222 0.209 0.268 0.273
66 0.235 0.254 0.297 0.289 0.321 0.337
67 0.237 0.240 0.267 0.249 0.267 0.277
68 0.258 0.271 0.275 0.207 0.210 0.212
69 0.117 0.208 0.266 0.219 0.250 0.270
70 0.229 0.229 0.229 0.229 0.229 0.229
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 66 Packet Pg. 70 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 54
Service Retirement (continued)
Public Agency Miscellaneous 2.7% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.011 0.016 0.022 0.033 0.034 0.038
51 0.018 0.019 0.023 0.032 0.031 0.031
52 0.019 0.020 0.026 0.035 0.034 0.037
53 0.020 0.020 0.025 0.043 0.048 0.053
54 0.018 0.030 0.040 0.052 0.053 0.070
55 0.045 0.058 0.082 0.138 0.208 0.278
56 0.057 0.062 0.080 0.121 0.178 0.222
57 0.045 0.052 0.071 0.106 0.147 0.182
58 0.074 0.060 0.074 0.118 0.163 0.182
59 0.058 0.067 0.086 0.123 0.158 0.187
60 0.087 0.084 0.096 0.142 0.165 0.198
61 0.073 0.084 0.101 0.138 0.173 0.218
62 0.130 0.133 0.146 0.187 0.214 0.249
63 0.122 0.140 0.160 0.204 0.209 0.243
64 0.104 0.124 0.154 0.202 0.214 0.230
65 0.182 0.201 0.242 0.264 0.293 0.293
66 0.272 0.249 0.273 0.285 0.312 0.312
67 0.182 0.217 0.254 0.249 0.264 0.264
68 0.223 0.197 0.218 0.242 0.273 0.273
69 0.217 0.217 0.217 0.217 0.217 0.217
70 0.227 0.227 0.227 0.227 0.227 0.227
Public Agency Miscellaneous 3% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.025 0.039 0.040 0.044
51 0.041 0.034 0.032 0.041 0.036 0.037
52 0.024 0.020 0.022 0.039 0.040 0.041
53 0.018 0.024 0.032 0.047 0.048 0.057
54 0.033 0.033 0.035 0.051 0.049 0.052
55 0.137 0.043 0.051 0.065 0.076 0.108
56 0.173 0.038 0.054 0.075 0.085 0.117
57 0.019 0.035 0.059 0.088 0.111 0.134
58 0.011 0.040 0.070 0.105 0.133 0.162
59 0.194 0.056 0.064 0.081 0.113 0.163
60 0.081 0.085 0.133 0.215 0.280 0.333
61 0.080 0.090 0.134 0.170 0.223 0.292
62 0.137 0.153 0.201 0.250 0.278 0.288
63 0.128 0.140 0.183 0.227 0.251 0.260
64 0.174 0.147 0.173 0.224 0.239 0.264
65 0.152 0.201 0.262 0.299 0.323 0.323
66 0.272 0.273 0.317 0.355 0.380 0.380
67 0.218 0.237 0.268 0.274 0.284 0.284
68 0.200 0.228 0.269 0.285 0.299 0.299
69 0.250 0.250 0.250 0.250 0.250 0.250
70 0.245 0.245 0.245 0.245 0.245 0.245
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 67 Packet Pg. 71 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 55
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.005 0.008 0.012 0.015 0.019 0.031
53 0.007 0.011 0.014 0.018 0.021 0.032
54 0.007 0.011 0.015 0.019 0.023 0.034
55 0.010 0.019 0.028 0.036 0.061 0.096
56 0.014 0.026 0.038 0.050 0.075 0.108
57 0.018 0.029 0.039 0.050 0.074 0.107
58 0.023 0.035 0.048 0.060 0.073 0.099
59 0.025 0.038 0.051 0.065 0.092 0.128
60 0.031 0.051 0.071 0.091 0.111 0.138
61 0.038 0.058 0.079 0.100 0.121 0.167
62 0.044 0.074 0.104 0.134 0.164 0.214
63 0.077 0.105 0.134 0.163 0.192 0.237
64 0.072 0.101 0.129 0.158 0.187 0.242
65 0.108 0.141 0.173 0.206 0.239 0.300
66 0.132 0.172 0.212 0.252 0.292 0.366
67 0.132 0.172 0.212 0.252 0.292 0.366
68 0.120 0.156 0.193 0.229 0.265 0.333
69 0.120 0.156 0.193 0.229 0.265 0.333
70 0.120 0.156 0.193 0.229 0.265 0.333
Public Agency Fire Half Pay at age 55 and 2% at age 55
Age Rate
Age Rate
50 0.016 56 0.111
51 0.000 57 0.000
52 0.034 58 0.095
53 0.020 59 0.044
54 0.041 60 1.000
55 0.075
Public Agency Police Half Pay at age 55 and 2% at age 55
Age Rate
Age Rate
50 0.026 56 0.069
51 0.000 57 0.051
52 0.016 58 0.072
53 0.027 59 0.070
54 0.010 60 0.300
55 0.167
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 68 Packet Pg. 72 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 56
Service Retirement (continued)
Public Agency Police 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.018 0.077 0.056 0.046 0.043 0.046
51 0.022 0.087 0.060 0.048 0.044 0.047
52 0.020 0.102 0.081 0.071 0.069 0.075
53 0.016 0.072 0.053 0.045 0.042 0.046
54 0.006 0.071 0.071 0.069 0.072 0.080
55 0.009 0.040 0.099 0.157 0.186 0.186
56 0.020 0.051 0.108 0.165 0.194 0.194
57 0.036 0.072 0.106 0.139 0.156 0.156
58 0.001 0.046 0.089 0.130 0.152 0.152
59 0.066 0.094 0.119 0.143 0.155 0.155
60 0.177 0.177 0.177 0.177 0.177 0.177
61 0.134 0.134 0.134 0.134 0.134 0.134
62 0.184 0.184 0.184 0.184 0.184 0.184
63 0.250 0.250 0.250 0.250 0.250 0.250
64 0.177 0.177 0.177 0.177 0.177 0.177
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.054 0.054 0.056 0.080 0.064 0.066
51 0.020 0.020 0.021 0.030 0.024 0.024
52 0.037 0.037 0.038 0.054 0.043 0.045
53 0.051 0.051 0.053 0.076 0.061 0.063
54 0.082 0.082 0.085 0.121 0.097 0.100
55 0.139 0.139 0.139 0.139 0.139 0.139
56 0.129 0.129 0.129 0.129 0.129 0.129
57 0.085 0.085 0.085 0.085 0.085 0.085
58 0.119 0.119 0.119 0.119 0.119 0.119
59 0.167 0.167 0.167 0.167 0.167 0.167
60 0.152 0.152 0.152 0.152 0.152 0.152
61 0.179 0.179 0.179 0.179 0.179 0.179
62 0.179 0.179 0.179 0.179 0.179 0.179
63 0.179 0.179 0.179 0.179 0.179 0.179
64 0.179 0.179 0.179 0.179 0.179 0.179
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 69 Packet Pg. 73 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 57
Service Retirement (continued)
Public Agency Police 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.019 0.053 0.045 0.054 0.057 0.061
51 0.002 0.017 0.028 0.044 0.053 0.060
52 0.002 0.031 0.037 0.051 0.059 0.066
53 0.026 0.049 0.049 0.080 0.099 0.114
54 0.019 0.034 0.047 0.091 0.121 0.142
55 0.006 0.115 0.141 0.199 0.231 0.259
56 0.017 0.188 0.121 0.173 0.199 0.199
57 0.008 0.137 0.093 0.136 0.157 0.157
58 0.017 0.126 0.105 0.164 0.194 0.194
59 0.026 0.146 0.110 0.167 0.195 0.195
60 0.155 0.155 0.155 0.155 0.155 0.155
61 0.210 0.210 0.210 0.210 0.210 0.210
62 0.262 0.262 0.262 0.262 0.262 0.262
63 0.172 0.172 0.172 0.172 0.172 0.172
64 0.227 0.227 0.227 0.227 0.227 0.227
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.006 0.013 0.019 0.025 0.028
51 0.004 0.008 0.017 0.026 0.034 0.038
52 0.005 0.011 0.022 0.033 0.044 0.049
53 0.005 0.034 0.024 0.038 0.069 0.138
54 0.007 0.047 0.032 0.051 0.094 0.187
55 0.010 0.067 0.046 0.073 0.134 0.266
56 0.010 0.063 0.044 0.069 0.127 0.253
57 0.135 0.100 0.148 0.196 0.220 0.220
58 0.083 0.062 0.091 0.120 0.135 0.135
59 0.137 0.053 0.084 0.146 0.177 0.177
60 0.162 0.063 0.099 0.172 0.208 0.208
61 0.598 0.231 0.231 0.231 0.231 0.231
62 0.621 0.240 0.240 0.240 0.240 0.240
63 0.236 0.236 0.236 0.236 0.236 0.236
64 0.236 0.236 0.236 0.236 0.236 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 70 Packet Pg. 74 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 58
Service Retirement (continued)
Public Agency Police 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.124 0.103 0.113 0.143 0.244 0.376
51 0.060 0.081 0.087 0.125 0.207 0.294
52 0.016 0.055 0.111 0.148 0.192 0.235
53 0.072 0.074 0.098 0.142 0.189 0.237
54 0.018 0.049 0.105 0.123 0.187 0.271
55 0.069 0.074 0.081 0.113 0.209 0.305
56 0.064 0.108 0.113 0.125 0.190 0.288
57 0.056 0.109 0.160 0.182 0.210 0.210
58 0.108 0.129 0.173 0.189 0.214 0.214
59 0.093 0.144 0.204 0.229 0.262 0.262
60 0.343 0.180 0.159 0.188 0.247 0.247
61 0.221 0.221 0.221 0.221 0.221 0.221
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.233 0.233 0.233 0.233 0.233 0.233
64 0.234 0.234 0.234 0.234 0.234 0.234
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.095 0.048 0.053 0.093 0.134 0.175
51 0.016 0.032 0.053 0.085 0.117 0.149
52 0.013 0.032 0.054 0.087 0.120 0.154
53 0.085 0.044 0.049 0.089 0.129 0.170
54 0.038 0.065 0.074 0.105 0.136 0.167
55 0.042 0.043 0.049 0.085 0.132 0.215
56 0.133 0.103 0.075 0.113 0.151 0.209
57 0.062 0.048 0.060 0.124 0.172 0.213
58 0.124 0.097 0.092 0.153 0.194 0.227
59 0.092 0.071 0.078 0.144 0.192 0.233
60 0.056 0.044 0.061 0.131 0.186 0.233
61 0.282 0.219 0.158 0.198 0.233 0.260
62 0.292 0.227 0.164 0.205 0.241 0.269
63 0.196 0.196 0.196 0.196 0.196 0.196
64 0.197 0.197 0.197 0.197 0.197 0.197
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 71 Packet Pg. 75 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 59
Service Retirement (continued)
Public Agency Police 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.040 0.040 0.040 0.040 0.040 0.080
51 0.028 0.028 0.028 0.028 0.040 0.066
52 0.028 0.028 0.028 0.028 0.043 0.061
53 0.028 0.028 0.028 0.028 0.057 0.086
54 0.028 0.028 0.028 0.032 0.069 0.110
55 0.050 0.050 0.050 0.067 0.099 0.179
56 0.046 0.046 0.046 0.062 0.090 0.160
57 0.054 0.054 0.054 0.072 0.106 0.191
58 0.060 0.060 0.060 0.066 0.103 0.171
59 0.060 0.060 0.060 0.069 0.105 0.171
60 0.113 0.113 0.113 0.113 0.113 0.171
61 0.108 0.108 0.108 0.108 0.108 0.128
62 0.113 0.113 0.113 0.113 0.113 0.159
63 0.113 0.113 0.113 0.113 0.113 0.159
64 0.113 0.113 0.113 0.113 0.113 0.239
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.005 0.005 0.005 0.008 0.012
51 0.006 0.006 0.006 0.006 0.009 0.013
52 0.012 0.012 0.012 0.012 0.019 0.028
53 0.033 0.033 0.033 0.033 0.050 0.075
54 0.045 0.045 0.045 0.045 0.069 0.103
55 0.061 0.061 0.061 0.061 0.094 0.140
56 0.055 0.055 0.055 0.055 0.084 0.126
57 0.081 0.081 0.081 0.081 0.125 0.187
58 0.059 0.059 0.059 0.059 0.091 0.137
59 0.055 0.055 0.055 0.055 0.084 0.126
60 0.085 0.085 0.085 0.085 0.131 0.196
61 0.085 0.085 0.085 0.085 0.131 0.196
62 0.085 0.085 0.085 0.085 0.131 0.196
63 0.085 0.085 0.085 0.085 0.131 0.196
64 0.085 0.085 0.085 0.085 0.131 0.196
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 72 Packet Pg. 76 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 60
Service Retirement (continued)
Public Agency Police 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.038 0.038 0.038 0.038 0.055 0.089
52 0.038 0.038 0.038 0.038 0.058 0.082
53 0.036 0.036 0.036 0.036 0.073 0.111
54 0.036 0.036 0.036 0.041 0.088 0.142
55 0.061 0.061 0.061 0.082 0.120 0.217
56 0.056 0.056 0.056 0.075 0.110 0.194
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.072 0.072 0.072 0.079 0.124 0.205
59 0.072 0.072 0.072 0.083 0.126 0.205
60 0.135 0.135 0.135 0.135 0.135 0.205
61 0.130 0.130 0.130 0.130 0.130 0.153
62 0.135 0.135 0.135 0.135 0.135 0.191
63 0.135 0.135 0.135 0.135 0.135 0.191
64 0.135 0.135 0.135 0.135 0.135 0.287
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.012 0.018
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.042 0.042 0.042 0.042 0.064 0.096
54 0.057 0.057 0.057 0.057 0.088 0.132
55 0.074 0.074 0.074 0.074 0.114 0.170
56 0.066 0.066 0.066 0.066 0.102 0.153
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.071 0.071 0.071 0.071 0.110 0.164
59 0.066 0.066 0.066 0.066 0.101 0.151
60 0.102 0.102 0.102 0.102 0.157 0.235
61 0.102 0.102 0.102 0.102 0.157 0.236
62 0.102 0.102 0.102 0.102 0.157 0.236
63 0.102 0.102 0.102 0.102 0.157 0.236
64 0.102 0.102 0.102 0.102 0.157 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 73 Packet Pg. 77 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 61
Service Retirement (continued)
Public Agency Police 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.040 0.040 0.040 0.040 0.058 0.094
52 0.038 0.038 0.038 0.038 0.058 0.083
53 0.038 0.038 0.038 0.038 0.077 0.117
54 0.038 0.038 0.038 0.044 0.093 0.150
55 0.068 0.068 0.068 0.091 0.134 0.242
56 0.063 0.063 0.063 0.084 0.123 0.217
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.080 0.080 0.080 0.088 0.138 0.228
59 0.080 0.080 0.080 0.092 0.140 0.228
60 0.150 0.150 0.150 0.150 0.150 0.228
61 0.144 0.144 0.144 0.144 0.144 0.170
62 0.150 0.150 0.150 0.150 0.150 0.213
63 0.150 0.150 0.150 0.150 0.150 0.213
64 0.150 0.150 0.150 0.150 0.150 0.319
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.044 0.044 0.044 0.044 0.068 0.102
54 0.061 0.061 0.061 0.061 0.093 0.140
55 0.083 0.083 0.083 0.083 0.127 0.190
56 0.074 0.074 0.074 0.074 0.114 0.171
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 74 Packet Pg. 78 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 62
Service Retirement (continued)
Schools 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.004 0.006 0.007 0.010 0.010
51 0.004 0.005 0.007 0.008 0.011 0.011
52 0.005 0.007 0.008 0.009 0.012 0.012
53 0.007 0.008 0.010 0.012 0.015 0.015
54 0.006 0.009 0.012 0.015 0.020 0.021
55 0.011 0.023 0.034 0.057 0.070 0.090
56 0.012 0.027 0.036 0.056 0.073 0.095
57 0.016 0.027 0.036 0.055 0.068 0.087
58 0.019 0.030 0.040 0.062 0.078 0.103
59 0.023 0.034 0.046 0.070 0.085 0.109
60 0.022 0.043 0.062 0.095 0.113 0.141
61 0.030 0.051 0.071 0.103 0.124 0.154
62 0.065 0.098 0.128 0.188 0.216 0.248
63 0.075 0.112 0.144 0.197 0.222 0.268
64 0.091 0.116 0.138 0.180 0.196 0.231
65 0.163 0.164 0.197 0.232 0.250 0.271
66 0.208 0.204 0.243 0.282 0.301 0.315
67 0.189 0.185 0.221 0.257 0.274 0.287
68 0.127 0.158 0.200 0.227 0.241 0.244
69 0.168 0.162 0.189 0.217 0.229 0.238
70 0.191 0.190 0.237 0.250 0.246 0.254
Schools 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.004 0.007 0.010 0.011 0.013 0.015
53 0.004 0.008 0.010 0.013 0.014 0.016
54 0.005 0.011 0.015 0.018 0.020 0.022
55 0.014 0.027 0.038 0.045 0.050 0.056
56 0.013 0.026 0.037 0.043 0.048 0.055
57 0.013 0.027 0.038 0.045 0.050 0.055
58 0.017 0.034 0.047 0.056 0.062 0.069
59 0.019 0.037 0.052 0.062 0.068 0.076
60 0.026 0.053 0.074 0.087 0.097 0.108
61 0.030 0.058 0.081 0.095 0.106 0.119
62 0.053 0.105 0.147 0.174 0.194 0.217
63 0.054 0.107 0.151 0.178 0.198 0.222
64 0.053 0.105 0.147 0.174 0.194 0.216
65 0.072 0.142 0.199 0.235 0.262 0.293
66 0.077 0.152 0.213 0.252 0.281 0.314
67 0.070 0.139 0.194 0.229 0.255 0.286
68 0.063 0.124 0.173 0.205 0.228 0.255
69 0.066 0.130 0.183 0.216 0.241 0.270
70 0.071 0.140 0.196 0.231 0.258 0.289
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 75 Packet Pg. 79 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 63
Miscellaneous
Models
The valuation results are based on proprietary actuarial valuation models. The models are centralized and maintained by a
specialized team to achieve a high degree of accuracy and consistency. The Actuarial Office is responsible for confirming the
appropriateness of the inputs (such as participant data, actuarial methods and assumptions, and plan provisions) as well as
performing tests and validating the reasonableness of the output. The results of our models are independently confirmed by
parallel valuations performed by outside actuaries o n a periodic basis using their models. In our professional judgment, our
actuarial valuation models produce comprehensive pension funding information consistent with the purposes of the valuation
and have no material limitations or known weaknesses.
Internal Revenue Code Section 415 (b)
The limitations on benefits imposed by Internal Revenue Code s ection 415(b) are taken into account in this valuation. Each
year, the impact of any changes in this limitation other than assumed since the prior valuation is included and amortized as part
of the non-investment gain or loss base. This results in lower contributions for those employers contributing to the Replacement
Benefit Fund and protects CalPERS from prefunding expected benefits in excess of limits imposed by federal tax law. The
Section 415(b) dollar limit for the 2024 calendar year is $2 75,000.
Internal Revenue Code Section 401(a)(17)
The limitations on compensation imposed by Internal Revenue Code s ection 401(a)(17) are taken into account in this valuation.
Each year, the impact of any changes in the compensation limitation other than assumed since the prior valuation is included
and amortized as part of the non -investment gain or loss base. The compensation limit for classic members for the 2024
calendar year is $345,000.
PEPRA Compensation Limits
The limitations on compensation for PEPRA members imposed by Government Code section 7522.10 are taken into account in
this valuation. Each year, the impact of any changes in the comp ensation limitation other than assumed since the prior valuation
is included and amortized as part of the non-investment gain or loss base. The PEPRA compensation limit for 2024 is $151,446
for members who participate in Social Security and $181,734 for those who do not. The limits are adjusted annually based on
changes to the CPI for all urban consumers.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 76 Packet Pg. 80 of 321
Appendix B - Principal Plan Provisions
• Service Retirement 65
• Vested Deferred Retirement 67
• Non-Industrial Disability Retirement 67
• Industrial Disability Retirement 68
• Post-Retirement Death Benefit 69
• Form of Payment for Retirement Allowance 69
• Pre-Retirement Death Benefits 70
• Cost-of-Living Adjustments (COLA) 72
• Purchasing Power Protection Allowance (PPPA) 72
• Employee Contributions 73
• Refund of Employee Contributions 73
• 1959 Survivor Benefit 74
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 77 Packet Pg. 81 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 65
The following is a description of the principal plan pr ovisions used in calculating costs and liabilities. We have indicated whether
a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits vary among
employers. Optional benefits that apply to a single p eriod of time, such as Golden Handshakes, have not been included. Many
of the statements in this summary are general in nature, and are intended to provide an easily understood summary of the
Public Employees’ Retirement Law and the California Public Emplo yees’ Pension Reform Act of 2013 . The law itself governs in
all situations.
Service Retirement
Eligibility
A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of age 50 with
at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with
which Ca lPERS has reciprocity agreements). For employees hired into a plan with the 1.5% at age 65 formula, eligibility for
service retirement is age 55 with at least 5 years of service. PEPRA Miscellaneous members become eligible for service
retirement upon attai nment of age 52 with at least 5 years of service.
Benefit
The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final
compensation. The benefit factor depends on the benefit formula specified in the agency’s contract. The table below shows the
factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors for retire ment
at whole year ages:
Miscellaneo us Plan Formulas
Retirement
Age
1.5% at
age 65
2% at
age 60
2% at
age 55
2.5% at
age 55
2.7% at
age 55
3% at
age 60
PEPRA
2% at
age 62
50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A
51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A
52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000%
53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100%
54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200%
55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300%
56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400%
57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500%
58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600%
59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700%
60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800%
61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900%
62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000%
63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100%
64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200%
65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300%
66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400%
67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500%
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 78 Packet Pg. 82 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 66
Classic Safety Plan Formulas
Retirement Age Half Pay at
age 55* 2% at age 55 2% at age 50 3% at age 55 3% at age 50
50 1.783% 1.426% 2.000% 2.400% 3.000%
51 1.903% 1.522% 2.140% 2.520% 3.000%
52 2.035% 1.628% 2.280% 2.640% 3.000%
53 2.178% 1.742% 2.420% 2.760% 3.000%
54 2.333% 1.866% 2.560% 2.880% 3.000%
55 & Up 2.500% 2.000% 2.700% 3.000% 3.000%
* For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of 35 or
greater. If entry age is less than 35, then the age 55 benefit factor is 50% divided by the difference between age 55 and entry
age. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in the above table.
PEPRA Safety Plan Formulas
Retirement Age 2% at age 57 2.5% at age 57 2.7% at age 57
50 1.426% 2.000% 2.000%
51 1.508% 2.071% 2.100%
52 1.590% 2.143% 2.200%
53 1.672% 2.214% 2.300%
54 1.754% 2.286% 2.400%
55 1.836% 2.357% 2.500%
56 1.918% 2.429% 2.600%
57 & Up 2.000% 2.500% 2.700%
• The years of service is the amount credited by CalPERS to a member while he or she is employed in this group (or for other
periods that are recognized under the employer’s contract with CalPERS). For a member who has earned service with
multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s
contract, and then added together for the total allowance. An agency may contract for an optional benefit where any unused
sick leave accumulated at the time of retirement will be co nverted to credited service at a rate of 0.004 years of service for
each day of sick leave.
• The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full -time equivalent
monthly pay (no matter which CalPERS emplo yer paid this compensation). The standard benefit is 36 months. Employers
had the option of providing a final compensation equal to the highest 12 consecutive months for classic plans only. Final
compensation must be defined by the highest 36 consecutive m onths’ pay under the 1.5% at age 65 formula. PEPRA
members have a limit on the annual compensation that can be used to calculate final compensation . The limits are adjusted
annually based on changes to the CPI for all urban consumers.
• PEPRA benefit formul as have no Social Security offsets and Social Security coverage is optional . For Classic benefit
formulas, employees must be covered by Social Security with the 1.5% at age 65 formula. Social Security is optional for all
other Classic benefit formulas. For employees covered by Social Security, the modified formula is the standard benefit.
Under this type of formula, the final compensation is offset by $133.33 (or by one third if the final compensation is less th an
$400). Employers may contract for the full benefit with Social Security that will eliminate the offset applicable to the final
compensation. For employees not covered by Social Security, the full benefit is paid with no offsets. Auxiliary organizations
of the CSUC system may elect reduced contribution rates, in which case the offset is $317 if members are not covered by
Social Security or $513 if members are covered by Social Security.
• The Miscellaneous and PEPRA Safety service retirement benefit is not capped. The Classic Safety service retirement
benefit is capped at 90% of final compensation.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 79 Packet Pg. 83 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 67
Vested Deferred Retirement
Eligibility for Deferred Status
CalPERS members becomes eligible for a deferred vested retirement benefit when they leave employment, keep their
contribution account balance on deposit with CalPERS, and have earned at least 5 years of credited service (total service
across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements).
Eligibility to Start Receiving Benefits
The CalPERS classic members and PEPRA Safety members become eligible to receive the deferred retirement benefit upon
satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired into a 1.5% at
age 65 plan). PEPRA Miscellaneous members become eligible to receive the deferred retirement benefit upon satisfying the
eligibility requirements for deferred status and upon attainment of age 52.
Benefit
The vested deferre d retirement benefit is the same as the service retirement benefit, where the benefit factor is based on the
member’s age at allowance commencement. For members who have earned service with multiple CalPERS employers, the
benefit from each employer is calc ulated separately according to each employer’s contract, and then added together for the total
allowance.
Non-Industrial Disability Retirement
Eligibility
A CalPERS member is eligible for Non -Industrial (non-job related) Disability Retirement if he or she becomes disabled and has
at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems w ith
which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to
perform their job because of an illness or injury, which is expected to be permanent or to last indefinitely. The illness or injury
does n ot have to be job related. A CalPERS member must be actively employed by any CalPERS employer at the time of
disability in order to be eligible for this benefit.
Standard Benefit
The standard Non -Industrial Disability Retirement benefit is a monthly allo wance equal to 1.8% of final compensation, multiplied
by service, which is determined as follows:
• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of
service; or
• Service is CalPERS credited service plus the additional number of years that the member would have worked until age
60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in this case is
33⅓% of final compensation.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 80 Packet Pg. 84 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 68
Improved Benefit
Employers have the option of providing the improved Non -Industrial Disability Retirement benefit. This benefit provides a
monthly allowance equal to 30% of final compensation for the first 5 years of service, plus 1% for eac h additional year of service
to a maximum of 50% of final compensation.
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability b enefit.
Members eligible to retire, and who have attained the normal retirement age determined by their service retirement benefit
formula, will receive the same dollar amount for disability retirement as that payable for service retirement. For members wh o
have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowance
multiplied by the ratio of service with a particular employer to the total CalPERS service.
Industrial Disability Retirement
This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all
Miscellaneous members, employers have the option of providing this benefit. An employer may choose to provide the increased
benefit option or the improved benefit option.
Eligibility
An employee is eligible for Industrial (job related) Disability Retirement if he or she becomes disabled while working, where
disabled means the member is unable to perform the duties of the job because of a work-related illness or injury, which is
expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group is not
eligible for this benefit, except to the extent described below.
Standard Benefit
The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50% of final compensation.
Increased Benefit (75% of Final Compensation)
The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75% of final com pensation for total
disability.
Improved Benefit (50% to 90% of Final Compensation)
The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation Appeals
Board permanent disability rate percentage (if 5 0% or greater, with a maximum of 90%) times the final compensation.
For a CalPERS member not actively employed in this group who became disabled while employed by some other CalPERS
employer, the benefit is a return of accumulated member contributions wit h respect to employment in this group. With the
standard or increased benefit, a member may also choose to receive the annuitization of the accumulated member
contributions.
If a member is eligible for service retirement and if the service retirement bene fit is more than the industrial disability retirement
benefit, the member may choose to receive the larger benefit.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 81 Packet Pg. 85 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 69
Post-Retirement Death Benefit
Standard Lump Sum Payment
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated survivor(s), or to the
retiree’s estate. The lump sum payment amount increases to $2,000 for any death occurring on or after July 1, 2023, due to SB
1168.
Optional Lump Sum Payment
In lieu of the standard lump sum death benefit, e mployers have the option of providing a lump sum death benefit of $600,
$3,000, $4,000 or $5,000.
Form of Payment for Retirement Allowance
Standard Form of Payment
Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The r etiree
may choose to provide for a portion of their allowance to be paid to any designated ben eficiary after the retiree’s death.
CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction in their retirement
allowance. Such reduction takes into account the amount to be provided to the beneficiary and the probable duration of
payments (based on the ages of the member and beneficiary) made subsequent to the member’s death.
Improved Form of Payment (Post-Retirement Survivor Allowance)
Employers have the option to contract for the post-retirement survivor allowance.
For retirement allowances with respect to service subject to a modified Classic formula, 25% of the retirement allowance will
automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in t he retiree’s
allowance. For retirement allowances with respect to service subject to a PEPRA formula or a full or supplemental Classic
formula, 50% of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the deat h of the
retiree, without a reduction in the retiree’s allowance. This additional benefit is referred to as post -retirement survivor allowance
(PRSA) or simply as survivor continuance.
In other words, 25% or 50% of the allowance, the continuance portion , is paid to the retiree for as long as he or she is alive, and
that same amount is continued to the retiree’s spouse (or if no eligible spouse, to unmarried child(ren) until they attain ag e 18;
or, if no eligible child(ren), to a qualifying dependent pare nt) for the rest of their lifetime. This benefit will not be discontinued in
the event the spouse remarries.
The remaining 75% or 50% of the retirement allowance, which may be referred to as the option portion of the benefit, is paid to
the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for some of this option portion to
be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the sam e as
those offe red with the standard form. The reduction is calculated in the same manner but is applied only to the option portion.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 82 Packet Pg. 86 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 70
Pre-Retirement Death Benefits
Basic Death Benefit
This is a standard benefit.
Eligibility
An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed. A
CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. A
member’s survivor who is eligible for any other pre -retirement death benefit may choose to receive that death benefit instead of
this basic death benefit.
Benefit
The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where interest is credited
annually at the greater of 6% or the prevailing discount rate through the date of death, plus a lump sum in the amount of one
month's salary for each completed year of current service, up to a maximum of six months ' salary. For purposes of this benefit,
one month's salary is defined as the member's average monthly full -time rate of compensation during the 12 months preceding
death.
1957 Survivor Benefit
This is a standard benefit.
Eligibility
An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed, has
attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has at
least 5 years of credited service (to tal service across all CalPERS employers and with certain other retirement systems with
which CalPERS has reciprocity agreements). A CalPERS member must be actively employed with the CalPERS employer
providing this benefit to be eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was
married at least one year before death or, if there is no eligible spouse, to the member's unmarried child(ren) under age 18. A
member’s survivor who is eligible for any other pre -retirement death benefit may choose to receive that death benefit instead of
this 1957 Survivor benefit.
Benefit
The 1957 Survivor benefit is a monthly allowance equal to one -half of the unmodified service retirement benefit that the member
would have been en titled to receive if the member had retired on the date of their death. If the benefit is payable to the spouse,
the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent child(ren), the benefit will be
discontinued upon death or attainment of age 18, unless the child(ren) is disa bled. The total amount paid will be at least equal to
the basic death benefit.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 83 Packet Pg. 87 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 71
Optional Settlement 2 Death Benefit
This is an optional benefit.
Eligibility
An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively employed,
has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has
at least 5 years of credited service (total service across all CalPERS employers and with cert ain other retirement systems with
which CalPERS has reciprocity agreements). A CalPERS member who is no longer actively employed with any CalPERS
employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at
least one year before death. A member’s survivor who is eligible for any other pre -retirement death benefit may choose to
receive that death benefit instead of this Optional Settlement 2 Death benefit.
Benefit
The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member would
have received had the member retired on the date of their death and elected 100% to continue to the eligible survivor after the
mem ber’s death. The allowance is payable to the surviving spouse until death , at which time it is continued to any unmarried
child(ren), if applicable. The total amount paid will be at least equal to the basic death benefit.
Special Death Benefit
This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all
Miscellaneous members, employers have the option of providing this benefit.
Eligibility
An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed and the
death is job -related. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this
benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or
illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under
age 22. An eligible survivor who chooses to receive this be nefit will not receive any other death benefit.
Benefit
The special death benefit is a monthly allowance equal to 50 % of final compensation and will be increased whenever the
compensation paid to active employees is increased but ceasing to increase wh en the member would have attained age 50. The
allowance is payable to the surviving spouse until death , at which time the allowance is continued to any unmarried child(ren)
under age 22. There is a guarantee that the total amount paid will at least equal t he basic death benefit.
If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the
performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried chil d(ren) under age 22)
in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following:
• if 1 eligible child: 12.5% of final compensation
• if 2 eligible children: 20.0% of final compensation
• if 3 or more eligible children: 25.0% of final compensation
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 84 Packet Pg. 88 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 72
Alternate Death Benefit for Local Fire Members
This is an optional benefit available only to local fire members.
Eligibility
An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957 Survivor
benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A CalPERS member who
is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the
surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no
eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 18.
Benefit
The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have receive d
had the member retired on the date of their death and elected Optional Settlement 2. (A retiree who elects Optional Settlement 2
receives an allowance that has been reduced so that it will continue to be paid after their death to a surviving beneficiary.) If the
member has not yet attained age 50, the benefit is equal t o that which would be payable if the member had retired at age 50,
based on service credited at the time of death. The allowance is payable to the surviving spouse until death , at which time it is
continued to any unmarried child(ren), if applicable. The t otal amount paid will be at least equal to the basic death benefit.
Cost-of-Living Adjustments (COLA)
Standard Benefit
Retirement and survivor allowances are adjusted each year in May for cost of livin g, beginning the second calendar year after
the year of retirement. The standard cost-of-living adjustment (COLA) is 2%. Annual adjustments are calculated by first
determining the lesser of 1) 2% compounded from the end of the year of retirement or 2) actu al rate of price inflation. The
resulting increase is divided by the total increase provided in prior years. For any given year, the COLA adjustment may be l ess
than 2% (when the rate of price inflation is low), may be greater than the rate of price inflation (when the rate of price inflation is
low after several years of high price inflation) or may even be greater than 2% (when price inflation is high after several years of
low price inflation).
Improved Benefit
Employers have the option of providing a COLA of 3 %, 4%, or 5%, determined in the same manner as described above for the
standard 2 % COLA. An improved COLA is not available with the 1.5% at age 65 formula.
Purchasing Power Protection Allowance (PPPA)
Retirement and survivor allowances are protected against price inflation by PPPA. PPPA benefits are cost-of-living adjustments
that are intended to maintain an individual’s allowance at 80 % of the initial allowance at retirement adjusted for price inflation
since retirement. The PPPA benefit will be coordinated with other cost -of-living adjustments provided under the plan.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 85 Packet Pg. 89 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 73
Employee Contributions
Each employee contributes toward their retirement based upon the retirement formula. The standard employee contribution is as
described below.
• The percent contributed below the monthly compensation breakpoint is 0 %.
• The monthly compensation breakpoint is $0 for all PEPRA members and Classic members covered by a full or
supplemental formula and $133.33 for Classic members covered by a modified formula.
• The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as shown in
the table below.
Benefit Formula Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Miscellaneous, 2% at age 62 50% of the Total Normal Cost
Miscellaneous, 1.5% at age 65 50% of the Total Normal Cost
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
Safety, 2% at age 57 50% of the Total Normal Cost
Safety, 2.5% at age 57 50% of the Total Normal Cost
Safety, 2.7% at age 57 50% of the Total Normal Cost
The employer may choose to “pick -up” these contributions for classic members (Employer Paid Member Contributions or
EPMC). EPMC is prohibited for new PEPRA members.
An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the employer
contribution. These co ntributions are paid in addition to the member contribution.
Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and the
contribution rate is 6 % if members are not covered by Social Security. If members are covered by Social Security, the offset is
$513 and the contribution rate is 5 %.
Refund of Employee Contributions
If the member’s service with the employer ends, and if the member does not sa tisfy the eligibility conditions for any of the
retirement benefits above, the member may elect to receive a refund of their employee contributions, which are credited with 6 %
interest compounded annually.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 86 Packet Pg. 90 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 74
1959 Survivor Benefit
This is a pre -retirement death benefit available only to members not covered by Social Security. Any agency joining CalPERS
subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The benefit is optional
for agencies joining CalPERS prior to 1994. Levels 1, 2 , and 3 are now closed. Any new agency or any agency wishing to add
this benefit or increase the current level may only choose the 4 th or Indexed Level.
This benefit is not included in the results presented in this valuation. More information on this benefit is available on the
CalPERS website.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 87 Packet Pg. 91 of 321
Appendix C - Participant Data
• Active Members 76
• Transferred and Separated Members 77
• Retired Members and Beneficiaries 78
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 88 Packet Pg. 92 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 76
Active Members
Counts of members included in the valuation are counts of the recor ds processed by the valuation. Multiple records may exist
for those who have service in more than one valuation group. This does not result in double counting of liabilities.
Distribution of Active Members by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 21 0 0 0 0 0 21
25-29 60 5 0 0 0 0 65
30-34 70 41 2 0 0 0 113
35-39 54 42 12 1 0 0 109
40-44 35 25 24 14 5 1 104
45-49 38 26 18 17 21 8 128
50-54 29 14 11 12 15 16 97
55-59 23 13 17 11 14 18 96
60-64 11 12 6 17 5 20 71
65 and Over 6 3 5 7 3 5 29
All Ages 347 181 95 79 63 68 833
Distribution of Average Annual Salaries by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-2 4 25+
Average
Salary
15-24 $85,114 $0 $0 $0 $0 $0 $85,114
25-29 106,368 112,343 0 0 0 0 106,828
30-34 103,541 118,880 157,450 0 0 0 110,061
35-39 113,202 139,208 121,507 164,905 0 0 124,611
40-44 109,623 133,070 157,097 157,711 133,462 119,850 133,933
45-49 117,930 147,706 149,826 135,113 159,975 155,220 139,974
50-54 122,533 175,127 136,335 149,946 144,666 176,825 147,458
55-59 111,185 137,611 147,760 137,941 130,410 164,542 137,114
60-64 143,348 152,667 135,397 148,996 147,498 131,449 142,544
65 and Over 97,489 95,451 104,023 171,062 99,656 147,199 124,959
Average $109,858 $137,065 $142,992 $148,315 $143,79 3 $154,670 $129,421
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 89 Packet Pg. 93 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 77
Transferred and Separated Members
Distribution of Transfers to Other CalPERS Plans by Age , Service, and average Salary
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 2 0 0 0 0 0 2 $116,890
25-29 10 0 0 0 0 0 10 117,748
30-34 41 6 0 0 0 0 47 115,736
35-39 47 9 1 0 0 0 57 136,817
40-44 47 12 7 0 2 0 68 155,809
45-49 57 12 5 2 1 2 79 148,598
50-54 31 12 2 5 0 0 50 161,893
55-59 28 9 1 2 0 0 40 164,890
60-64 23 6 3 0 0 0 32 143,809
65 and Over 7 1 0 0 0 0 8 140,924
All Ages 293 67 19 9 3 2 393 $146,064
Distribution of Separated Participants with Funds on Deposit by Age, Service, and average Salary
Years of Service at Valuation Date
Attained Age 0-4 5-9 10-14 15-19 20-2 4 25+ Total
Average
Salary
15-24 1 0 0 0 0 0 1 $39,990
25-29 13 0 0 0 0 0 13 74,591
30-34 48 6 0 0 0 0 54 87,119
35-39 55 10 4 0 0 0 69 94,119
40-44 64 11 4 2 1 0 82 83,724
45-49 65 7 5 0 0 1 78 84,472
50-54 47 16 2 0 1 0 66 80,125
55-59 51 12 2 0 0 2 67 72,714
60-64 38 7 1 1 0 0 47 65,439
65 and Over 24 3 0 0 0 0 27 63,090
All Ages 406 72 18 3 2 3 504 $80,559
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 90 Packet Pg. 94 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 78
Retired Members and Beneficiaries
Distribution of Retirees and Beneficiaries by Age and Retirement Type*
Attained Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 30 0 0 0 0 0 1 1
30 -34 0 0 1 0 0 1 2
35 -39 0 0 0 0 0 4 4
40 -44 0 0 2 0 0 1 3
45 -49 0 0 3 0 0 1 4
50 -54 34 2 3 0 0 0 39
55 -59 86 4 0 1 0 1 92
60 -64 197 11 4 0 0 12 224
65 -69 227 10 1 0 0 12 250
70 -74 215 7 0 0 0 20 242
75 -79 195 9 1 0 0 20 225
80 -84 132 2 1 0 0 30 165
85 and Over 76 4 0 0 0 33 113
All Ages 1,162 49 16 1 0 136 1,364
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $0 $0 $0 $39,748 $39,748
30-34 0 0 222 0 0 16,026 8,124
35-39 0 0 0 0 0 7,543 7,543
40-44 0 0 310 0 0 13,556 4,725
45-49 0 0 726 0 0 119,243 30,355
50-54 29,410 6,241 1,010 0 0 0 26,037
55-59 39,696 16,035 0 19,000 0 11,350 38,134
60-64 46,450 14,819 934 0 0 21,849 42,766
65-69 46,837 16,075 13,545 0 0 21,814 44,272
70-74 49,368 20,396 0 0 0 28,036 46,767
75-79 45,898 19,918 20,965 0 0 26,777 43,049
80-84 36,597 21,071 2,252 0 0 36,827 36,242
85 and Over 37,229 21,058 0 0 0 26,641 33,564
All Ages $44,252 $17,322 $2,909 $19,000 $0 $28,193 $41,180
* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total counts may not
match information on C-1 of the report. Multiple records may exist for those who have service in more than one coverage group. This does not
result in double counting of liabilities.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 91 Packet Pg. 95 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 79
Retired Members and Beneficiaries (continued)
Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 5 Yrs 266 1 5 0 0 46 318
5-9 253 2 1 1 0 31 288
10-14 233 6 5 0 0 19 263
15-19 214 13 3 0 0 21 251
20-24 114 8 1 0 0 8 131
25-29 46 8 1 0 0 6 61
30 and Over 36 11 0 0 0 5 52
All Years 1,162 49 16 1 0 136 1,364
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 5 Yrs $43,468 $17,302 $959 $0 $0 $30,071 $40,779
5-9 43,682 14,357 345 19,000 0 27,855 41,539
10-14 49,283 12,520 317 0 0 32,743 46,319
15-19 51,157 18,091 11,895 0 0 24,053 46,708
20-24 38,316 20,916 1,890 0 0 22,916 36,035
25-29 31,304 21,788 2,252 0 0 17,327 28,205
30 and Over 15,784 13,711 0 0 0 34,604 17,155
All Years $44,252 $17,322 $2,909 $19,000 $0 $28,193 $41,180
* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total
counts may not match information on C -1 of the report. Multiple records may exist for those who have service in more than one
coverage group. This does not result in double counting of liabilities .
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 92 Packet Pg. 96 of 321
Appendix D - Glossary
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 93 Packet Pg. 97 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 81
Glossary
Accrued Liability (Actuarial Accrued Liability)
The portion of the Present Value of Benefits allocated to prior years. It can also be expressed as the Present Value of
Benefits minus the present value of future Normal Cost. Different actuarial cost methods and different assumptions will lead
to different measures of Accrued Liability.
Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two
categories: demographic and economic. Demographic assumptions include such things as mortality, disability, and
retirement rates. Economic assumptions include discount rate, wage inflation , and price inflation.
Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include an
actuarial cost method, an amortizatio n policy, and an asset valuation method.
Actuarial Valuation
The determination as of a valuation date of the Normal Cost, Accrued Liability, and related actuarial present values for a
pension plan. These valuations are performed annually or when an employer is contemplating a change in plan provisions.
Actuary
A business professional proficient in mathematics and statistics who measures and manages risk. A public retirement
system actuary in California perform s actuarial valuation s necessary to properly fund a pension plan and disclose its
liabilities and must satisfy the qualification s tandards for actuaries issuing s tatements of actuarial opinion in the United
States with regard to pensions.
Amortization Bases
Separate payment schedules for different po rtions of the Unfunded Accrued Liability (UAL). The total UAL of a rate plan can
be segregated by cause. The impact of such individual causes on the UAL are quantified at the time of their occurrence,
resulting in new amortization bases. Each base is separately amortized and paid for over a specific period of time.
Generally, in an actuarial valuation, the separate bases consist of changes in UAL due to contract amendments, actuarial
assumption changes, method changes, and/or experience gains and losses.
Amortization Period
The number of years required to pay off an Amortization Base.
Classic Member (under PEPRA)
A member who joined a public retirement system prior to January 1, 2013 , and who is not defined as a new member under
PEPRA. (See definition of New Member below.)
Discount Rate
The rate used to discount the expected future benefit payments to the valuation date to determine the Projected Value of
Benefits. Different discount rates will produce different measures of the Projected Value of Benefits. The discount rate for
funding purposes is based on the assumed long-term rate of return on plan assets, net of investment and administrative
expenses. This rate is called the “actuarial interest rate” in Section 20014 of the California Public Employees’ Retirement
Law.
Entry Age
The earliest age at which a plan mem ber begins to accrue benefits under a defined benefit pension plan. In most cases, this
is the age of the member on their date of hire.
Entry Age Actuarial Cost Method
An actuarial cost method that allocates the cost of the projected benefits on an individual basis as a level percent of
earnings for the individual between entry age and retirement age. This method yields a total normal cost rate, expressed as
a percentage of payroll, which is designed to remain level throughout the member’s career.
Fresh Start
A Fresh Start is when multiple amortization bases are combined into a single base and amortized over a new Amortization
Period.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 94 Packet Pg. 98 of 321
CalPERS Actuarial Valuation - June 30, 2024
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 82
Glossary (continued)
Funded Ratio
Defined as the Market Value of Assets divided by the Accrued Liability. Different actuarial cost methods and different
assumptions will lead to different measures of Funded Ratio. The Funded Ratio with the Accrued Liability equal to the
funding target is a measure of how well funded a rate plan is. A ratio greater than 100% me ans the rate plan has more
assets than the funding target and the employer need only contribute the Normal Cost . A ratio less than 100% means
assets are less than the funding target and contributions in addition to Normal Cost are required.
Funded Status
Any comparison of a particular measure of plan assets to a particular measure of pension obligations. The methods and
assumptions used to calculate a funded status should be consistent with the purpose of the measurement.
Funding Target
The Accrued Liability measure upon which the funding requirements are based. The funding target is the Accrued Liability
under the Entry Age Actuarial Cost Method using the assumptions adopted by the board.
GASB 68
Statement No. 68 of the Governmental Acc ounting Standards Board ; the accounting standard governing a state or local
governmental employer’s accounting and financial reporting for pensions.
New Member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system for the first time on or after
January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject
to reciprocity with another public retirement system.
Normal Cost
The portion of the Present Val ue of Benefits allocated to the upcoming fiscal year for active employees. Different actuarial
cost methods and different assumptions will lead to different measures of Normal Cost. The Normal Cost under the Entry
Age Actuarial Cost Method , using the assumptions adopted by the board , plus the required amortization of the UAL, if any,
make up the required contributions.
PEPRA
The California Public Employees’ Pension Reform Act of 2013 .
Present Value of Benefits (PVB)
The total dollars needed as of the valu ation date to fund all benefits earned in the past or expected to be earned in the
future for current members.
Traditional Unit Credit Actuarial Cost Method
An actuarial cost method that sets the Accrued Liability equal to the Present Value of Benefits as suming no future pay
increases or service accruals. The Traditional Unit Credit Cost Method is used to measure the accrued liability on a
termination basis.
Unfunded Accrued Liability (UAL)
The Accrued Liability minus the Market Value of Assets. If the UAL for a rate plan is positive, the employer is required to
make contributions in excess of the Normal Cost.
Item 1
Attachment B - CalPERS
Miscellaneous Valuation as
of June 30, 2024
Item 1: Staff Report Pg. 95 Packet Pg. 99 of 321
California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795 -3000 | Fax: (916) 795-2744
888 CalPERS (or 888-225-7377) | TTY: (877) 249 -7442 | www.calpers.ca.gov
July 2025
Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857)
Annual Valuation Report as of June 30, 2024
Dear Employer,
Attached to this letter is the June 30, 2024, actuarial valuation report for the plan noted above. Provided in this report is the
determination of the minimum required employer contributions for fiscal year (FY) 2026 -27. In addition, the report
contains important information regarding the current financial status of the plan as well as projections and risk measures to aid
in planning for the future.
Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member contribution rates for FY 2026 -27
along with an estimate of the employer contribution requirements for FY 2027-28. The required employer and member
contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.
Fiscal Year Employer Normal
Cost Rate
Employer Amortization of
Unfunded Accrued Liability
PEPRA Member
Contribution Rate
2026-27 19.64% $20,548,215 11.75%
Projected Results
2027-28 19.0% $21,254,000 TBD
The actual investment return for FY 2024-25 was not known at the time this report was prepared. The projection UAL payment
above assumes the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2024-25
differs from 6.8%, the actual UAL contribution requirement for FY 2027 -28 will differ from that shown above. For additional
information on future contribution requirements , please refer to Projected Employer Contributions . This section also contains
projected required contributions through FY 2031-32.
PEPRA Member Contribution Rate
The employee contribution rate for PEPRA members can change based on the results of the actuarial valuation. See Member
Contribution Rates for more information.
Report Navigation Features
The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly.
The tables of contents are “clickable .” This is true for the main table of contents that follows the title page and the intermediate
tables of contents at the beginning of sections. The Adobe navigation pane on the left c an also be used to skip to specific
exhibits .
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 96 Packet Pg. 100 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 2
There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined,
while underlined links will take you to the CalPERS website. Examples are shown be low.
Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool
Member Contribution Rates Public Agency PEPRA Member Contribution Rates
Summary of Key Valuation Results Pension Outlook Overview
Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results
Projected Employer Contributions Public Agency Actuarial Valuation Reports
Further descriptions of general changes are included in the Highlights and Executive Summary section and in Appendix A -
Actuarial Methods and Assumptions . The effects of any cha nges on the required contributions are included in the Reconciliation
of Required Employer Contributions section.
Questions
A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer Contact
Center at 888 CalPERS (or 888-225-7377).
Sincerely,
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS
Scott Terando , ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 97 Packet Pg. 101 of 321
California Public Employees’ Retirement System
Actuarial Valuation for the
Safety Plan
of the City of Palo Alto
as of June 30, 2024
(CalPERS ID: 6373437857)
(Rate Plan ID: 5080)
Required Contributions for Fiscal Year
July 1, 2026 — June 30, 2027
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 98 Packet Pg. 102 of 321
CY Fin Job Instance ID: 472008 PY Fin Job Instance ID: 440173 Report ID: 476601
Table of Contents
Actuarial Certification .......................................................................................................................................................................................1
Highlights and Executive Summary .............................................................................................................................................................2
Introduction .......................................................................................................................................................................................................3
Purpose .............................................................................................................................................................................................................3
Summary of Key Valuati on Results ..............................................................................................................................................................4
Changes Since the Prior Year’s Valuation ..................................................................................................................................................5
Subsequent Events .........................................................................................................................................................................................5
Assets ...................................................................................................................................................................................................................6
Reconciliation of the Market Value of Assets ..............................................................................................................................................7
Asset Allocation................................................................................................................................................................................................8
CalPERS History of Investment Returns .....................................................................................................................................................9
Liabilities and Contributions ....................................................................................................................................................................... 10
Determination of Required Contributions.................................................................................................................................................. 11
Development of Accrued and Unfunded Liabilities ................................................................................................................................. 12
Required Employer Contributions .............................................................................................................................................................. 13
Member Contribution Rates ........................................................................................................................................................................ 14
Funded Status – Funding Policy Basis ..................................................................................................................................................... 15
Additional Employer Contributions............................................................................................................................................................. 16
Projected Employer Contributions ............................................................................................................................................................. 17
(Gain)/Loss Analysis 6/30/23 – 6/30/24 .................................................................................................................................................... 18
Schedule of Amortization Bases ................................................................................................................................................................ 19
Amortization Schedule and Alternatives ................................................................................................................................................... 21
Reconciliation of Required Employer Contributions ................................................................................................................................ 23
Employer Contribution History .................................................................................................................................................................... 24
Funding History ............................................................................................................................................................................................. 24
Risk Analysis ................................................................................................................................................................................................... 25
Future Investment Return Scenarios ......................................................................................................................................................... 26
Discount Rate Sensitivity............................................................................................................................................................................. 27
Mortality Rate Sensitivity ............................................................................................................................................................................. 27
Maturity Measures ........................................................................................................................................................................................ 28
Maturity Measures History........................................................................................................................................................................... 29
Funded Status – Termination Basis .......................................................................................................................................................... 30
Funded Status – Low-Default-Risk Basis ................................................................................................................................................. 31
Supplementary Information ......................................................................................................................................................................... 32
Normal Cost by Benefit Group .................................................................................................................................................................... 33
Summary of Valuation Data ........................................................................................................................................................................ 34
Status of PEPRA Transition ........................................................................................................................................................................ 35
Plan's Major Benefit Options....................................................................................................................................................................... 36
Appendix A - Actuarial Methods and Assumptions .............................................................................................................................. 39
Appendix B - Principal Plan Provisions .................................................................................................................................................... 65
Appendix C - Participant Data ..................................................................................................................................................................... 76
Appendix D - Glossary .................................................................................................................................................................................. 81
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 99 Packet Pg. 103 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 1
Actuarial Certification
It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the
applicable Standards of Practice promulgated by the Actuarial Standards Board . While this report is intended to be complete,
our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification
Standards for Actuaries I ssuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with
regard to pensions.
Actuarial Methods and Assumptions
It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board
of Administration, are internally consistent and reasonable for this plan.
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS
Scott Terando , ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Actuarial Data and Rate Plan Results
To the best of my knowledge and having relied upon the attestation above that the actuarial methods and assumptions are
reasonable, this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded
condition of the Safety Plan of the City of Palo Alto and satisfies the actuarial valuation requirements of Government Code
section 7504. This valuation and related validation work w as performed by the CalPERS Actuarial Office. The valuation was
based on the member and financial data as of June 30, 2024 , provided by the various CalPERS databases and the benefits
under this plan with CalPERS as of the date this report was pr oduced.
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 100 Packet Pg. 104 of 321
Highlights and Executive Summary
• Introduction 3
• Purpose 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 101 Packet Pg. 105 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 3
Introduction
This report presents the results of the June 30, 2024 , actuarial valuation of the Safety Plan of the City of Palo Alto of the
California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required contributions
for fiscal year (FY) 2026-27.
Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using data as of June 30,
2024. This report contains actuarial information for the following rate plan(s).
• 5080, Safety Police First Level
• 30705, Safety Fire First Level
• 30706, Safety Fire Second Level
• 30707, Safety Fire Third Level
• 30708, Safety Police Second Level
• 25006, Safety Fire PEPRA Level
• 25007, Safety Police PEPRA Level
The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2024 ;
• Determine the minimum required employer contributions for this rate plan for FY July 1, 2026, through June 30, 2027;
• Determine the required member contribution rate for FY July 1, 2026, through June 30, 2027, for employees subject
to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and
• Provide actuarial information as of June 30, 2024 , to the CalPERS Board of Administration (board) and other
interested parties.
The pension funding in formation presented in this report should not be used in financial reports subject to Governmental
Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit Pension Plan. A separate
accounting valuation report for such purpos es is available from CalPERS and details for ordering are available on the CalPERS
website (www.calpers.ca.gov).
The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency should contact a
CalPERS actuary before disseminating any portion of this report for any reason that is not explicitly described above.
Future actuarial measurements may differ significantly from the current measurements presented in this report due to such
factors as the following: plan expe rience differing from that anticipated by the economic or demographic assumptions; changes
in economic or demographic assumptions; changes in actuarial policies; changes in plan provisions or applicable law; and
differences between the required contributio ns determined by the valuation and the actual contributions made by the agency.
Assessment and Disclosure of Risk
This report includes the following risk disclosures consistent with the guidance of the Actuarial Standards of Practice:
• A “Scenario Test,” projecting future results under different investment income returns.
• A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 5.8% and
7.8%.
• A “Sensitivity Analysis,” showing the impact on current valua tion results assuming rates of mortality are 10% lower or
10% higher than our current post-retirement mortality assumptions adopted in 2021.
• Plan maturity measures indicating how sensitive a plan may be to the risks noted above.
• The funded status on a term ination basis.
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 102 Packet Pg. 106 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 4
Summary of Key Valuation Results
Below is a brief summary of key valuation resu lts along with page references where more detailed information can be found .
Required Employer Contributions — page 13
Fiscal Year
2025-26
Fiscal Year
2026-27
Employer Normal Cost Rate 20.61% 19.64%
Unfunded Accrued Liability (UAL) Contribution Amount $18,545,666 $20,548,215
Paid either as
Option 1) 12 Monthly Payments of $1,545,472 $1,712,351
Option 2) Annual Prepayment in July $17,945,551 $19,883,300
Member Contribution Rates — page 14
Fiscal Year
2025-26
Fiscal Year
2026-27
Classic Member Contribution Rate 9.00% 9.00%
PEPRA Member Contribution Rate 11.75% 11.75%
Projected Employer Contributions — page 17
Fiscal Year Normal Cost
(% of payroll)
Annual
UAL Payment
2027-28 19.0% $21,254,000
2028-29 18.3% $22,813,000
2029-30 17.7% $23,128,000
2030-31 17.1% $23,397,000
2031-32 16.5% $22,907,000
Funded Status – Funding Policy Basis — page 15
June 30, 2023 June 30, 2024
Entry Age Accrued Liability (AL) $555,403,195 $582,389,782
Market Value of Assets (MVA) 331,696,065 355,816,276
Unfunded Accrued Liability (UAL) [AL – MVA] $223,707,130 $226,573,506
Funded Ratio [MVA ÷ AL] 59.7% 61.1%
Summary of Valuation Data — page 34
June 30, 2023 June 30, 2024
Active Member Count 164 159
Annual Covered Payroll $27,941,899 $30,132,343
Transferred Member Count 61 63
Separated Member Count 65 72
Retired Members and Beneficiaries Count 458 464
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 103 Packet Pg. 107 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 5
Changes Since the Prior Year’s Valuation
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation
following the effective date of the legislation. For rate plans that are not in a risk pool (non -pooled), benefit changes by contract
amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the
effective date of the amendment is after the valuation date.
Please refer to the Plan’s Major Benefit Options and Appendix B - Principal Plan Provisions for a summary of the plan provisions
used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in the
(Gain)/Loss Analysis 6/30/23 – 6/30/24 and the effect on the employer contribution is shown in the Reconciliation of Required
Employer Contributions . It should be noted that no change in liability or contribution is shown for any plan changes which were
already included in the p rior year’s valuation.
Board Policy
On April 16, 2024, the board took action to modify the Funding Risk Mitigation Policy to remove the automatic change to the
discount rate when the investment return exceeds various thresholds. Rather than an automatic change to the discount rate, a
board discussion would be placed on the calendar. The 95 th percentile return in the Future Investment Return Scenarios exhibit
in this report, which include s returns high enough to trigger a board discussion, do es not reflect any change in the discount rate.
Actuarial Methods and Assumptions
There are no significant changes to the actuarial methods or assumptions for the June 30, 2024, actuarial valuation.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 2024, as well as statutory changes, regulatory
changes and board actions through January 202 5.
CalPERS will be completing an Asset Liability Management (ALM) review process in November 2025 that will review the capital
market assumptions and the CalPERS Total Fund Investment Policy and ascertain whether a change in the discount is
warranted. In addition, the Actuarial Office will be presenting the findings of its Experience Study which reviews economic
assumptions other than the discount rate as well as all demographic assumptions and makes recommendations to modify
actuarial assumptions where appropriate. Any ch anges in actuarial assumptions will be reflected in the June 30, 2025, actuarial
valuations.
The 202 4 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IR C
section 401(a)(17) and Government Code section 7522.10 were use d for this valuation and are assumed to increase 2.3% per
year based on the price inflation assumption. The actual 202 5 limits , determined in October 202 4, are not reflected.
To the best of our knowledge, there have been no other s ubsequent events that could materially affect current or future
certifications rendered in this report.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 104 Packet Pg. 108 of 321
Assets
• Reconciliation of the Market Value of Assets 7
• Asset Allocation 8
• CalPERS History of Investment Returns 9
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 105 Packet Pg. 109 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 7
Reconciliation of the Market Value of Assets
1. Market Value of Assets as of 6/30/23 including Receivables $331,696,065
2. Change in Receivables for Service Buybacks (20,121)
3. Employer Contributions 19,635,105
4. Employee Contributions 4,193,857
5. Benefit Payments to Retirees and Beneficiaries (31,278,872)
6. Refunds (4,638)
7. Transfers 0
8. Service Credit Purchase (SCP) Payments and Interest 29,298
9. Administrative Expenses (242,412)
10. Miscellaneous Adjustments 0
11. Investment Return (Net of Investment Expenses) 31,807,995
12. Market Value of Assets as of 6/30/24 including Receivables $355,816,276
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 106 Packet Pg. 110 of 321
CalPERS Actuarial Valuation - June 30, 2 024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 8
Asset Allocation
CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges and
manages those asset class allocations within their policy ranges . CalPERS Investment Belief No. 6 recognizes that strategic
asset allocation is the dominant determinant of portfolio risk and return .
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in its entirety. The
assets for City of Palo Alto Safety Plan are a subset of the PERF and are invested accordingly.
On March 20, 2024, the board adopted changes to the strategic asset allocation . The new allocation was effective July 1, 202 4.
The asset allocation as of June 30, 2024 , is shown below, along with the strategic asset allocation targets.
For more information s ee the Trust Level Review as of June 30, 2024 , which is available on the CalPERS website.
31.8%
10.0%
7.3%
5.3%
6.4%
5.3%
5.3%
15.5%
13.2%
2.8%
(3.0%)
27%
10%
7%
5%
6%
5%
5%
17%
15%
8%
(5%)
(10%)0%10%20%30%40%
Public Equities - Cap Weighted
Public Equities - Factor Weighted
Treasury
Mortgage-Backed Securities
Investment Grade Corporates
High Yield
Emerging Market Sovereign Bonds
Private Equity
Real Assets
Private Debt
Strategic Financing
Current Allocation Strategic Asset Allocation Target
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 107 Packet Pg. 111 of 321
CalPERS Actuarial Valuation - June 30, 2 024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 9
CalPERS History of Investment Returns
The following is a chart with 20 years of historical annual returns of the PERF for each fiscal year ending on June 30 as reported
by the Investment Office. Investment returns reported are net of investment expenses but without reduction for administrative
expenses. The assumed rate of return , however, is net of both investment and administrative expenses. Also, the Investment
Office uses lag ged private asset valuations for investment performance reporting purposes. This can lead to a timing difference
in private asset influence on performance in the returns below and those used for financial reporting purposes. The investment
gain or loss calculation in this report relies on final assets that have been audited and are appropriate for financial reporting.
Because of these differences, the effective investment return for funding purposes in a single year can be higher or lower than
the return reported by the Investment Office shown here.
History of Investment Returns (2005 through 2024)
* As reported by the Investment Office with lagged private valuations and without any reduction for administrative expenses .
The table below shows annualized investment returns of the PERF for various time periods ending on June 30, 2024 . These
returns are the annual rates that if compounded over the indicated number of years would equate to the actual time -weighted
investment performance of the PERF. It should be recognized that the annual rate of return is volatile, as the chart above
illustrates, so when looking at investment returns, it is informative to look at average returns over longer time horizons.
PERF Realized Rates of Return as of June 30, 2024
1 year 3 year 5 year 10 year 20 year 30 year
9.3% 2.8% 6.6% 6.2% 6.7% 7.7 %
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 108 Packet Pg. 112 of 321
Liabilities and Contributions
• Determination of Required Contributions 11
• Development of Accrued and Unfunded Liabilities 12
• Required Employer Contributions 13
• Member Contribution Rates 14
• Funded Status – Funding Policy Basis 15
• Additional Employer Contributions 16
• Projected Employer Contributions 17
• (Gain)/Loss Analysis 6/30/23 – 6/30/24 18
• Schedule of Amortization Bases 19
• Amortization Schedule and Alternatives 21
• Reconciliation of Required Employer Contributions 23
• Employer Contribution History 24
• Funding History 24
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 109 Packet Pg. 113 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 11
Determination of Required Contributions
Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex
calculations based on a set of actuarial assumptions and methods. See Appendix A for information on the assumptions and
methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required
contributions for the fiscal year that begins two years after the valuation date.
Contribution Components
Two components comprise required contributions:
• Normal Cost — expressed as a percentage of pensionable payroll
• Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount
Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exact ly
matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The em ployer and employee s each
pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate
for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total
normal cost.
When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the
total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL
over time. This is called the UAL Contribution component. There is an option to prepay this amount during July of each fi scal
year, otherwise it is paid monthly.
In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience
different than expected , non-investment experience different than expected, assumption changes, and benefit changes. Each
source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordan ce
with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the
Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A for mor e information on
the amortization policy.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 110 Packet Pg. 114 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 12
Development of Accrued and Unfunded Liabilities
June 30, 2023 June 30, 2024
1. Present Value of Projected Benefits
a) Active Members $208,285,143 $222,706,736
b) Transferred Members 13,177,758 14,412,580
c) Separated Members 6,467,049 8,092,929
d) Members and Beneficiaries Receiving Payments 402,806,352 413,652,979
e) Total $630,736,302 $658,865,224
2. Present Value of Future Employer Normal Costs $46,631,408 $46,330,486
3. Present Value of Future Employee Contributions $28,701,699 $30,144,956
4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $132,952,036 $146,231,294
b) Transferred Members (1b) 13,177,758 14,412,580
c) Separated Members (1c) 6,467,049 8,092,929
d) Members and Beneficiaries Receiving Payments (1d) 402,806,352 413,652,979
e) Total $555,403,195 $582,389,782
5. Market Value of Assets (MVA) $331,696,065 $355,816,276
6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $223,707,130 $226,573,506
7. Funded Ratio [(5) ÷ (4e)] 59.7% 61.1%
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 111 Packet Pg. 115 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 13
Required Employer Contributions
The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Fiscal Year
Required Employer Contributions 2026-27
Employer Normal Cost Rate 19.64%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount $20,548,215
Paid either as
1) Monthly Payment $1,712,351
Or
2) Annual Prepayment Option* $19,883,300
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate
(expressed as a percentage of payroll and paid as payroll is reported) and the Unfunded Accrued Liability
(UAL) Contribution Amount (billed monthly (1) or p repaid annually (2) in dollars).
* Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later
than July 31).
For Member Contribution Rates see the following page.
Fiscal Year Fiscal Year
2025-26 2026-27
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost1 30.76% 29.88%
Offset due to Employee Contribution s 2 (10.15%) (10.24%)
Employer Normal Cost 20.61% 19.64%
Projected Annual Payroll for Contribution Year $30,355,352 $32,734,993
Estimated Employer Contributions Based on Projected Payroll
Total Normal Cost $9,337,306 $9,781,216
Expected Employee Contribution s (3,081,068) (3,352,063)
Employer Normal Cost $6,256,238 $6,429,153
Unfunded Liability Contribution $18,545,666 $20,548,215
% of Projected Payroll (illustrative only) 61.10% 62.77%
Estimated Total Employer Contribution $24,801,904 $26,977,368
% of Projected Payroll (illustrative only) 81.71% 82.41%
1 The Total Normal Cost is a blended rate for all benefit groups in the plan. For a breakout of normal cost by benefit
group, see Normal Cost by Benefit Group.
2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use
of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each
benefit formula, see Member Contribution Rates .
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 112 Packet Pg. 116 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 14
Member Contribution Rates
The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Classic Members
Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution
ra te above the breakpoint, if any, is as described below.
Benefit Formula
Percent Contributed
above the Breakpoint
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
PEPRA Members
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas, final compensation
period, and contribution requirements for “new” employees (generally those first hired into a CalPERS -covered position on or
after January 1, 2013). In accordance with Government Code Section 7522.30(b), “new members … shall have an initial
contribution rate of at least 50% of the normal cost rate.” The normal cost rate for the plan is dependent on the benefit levels,
actuarial assumptions, and demographics of the plan, particularly members’ entry age into the plan. Should the total normal cost
rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate
shall be 50% of the new normal cost rate rounded to the nearest quarter percent.
The table below shows the determination of the PEPRA m ember contribution rates effective July 1, 2026, based on 50 % of the
total normal cost rate for each respective rate plan as of the June 30, 2024, valuation.
Basis for Current Rate Rates Effective July 1, 2026
Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in
Normal
Cost
Adj.
Needed
Member
Rate
25006 Safety Fire PEPRA
Level 23.540% 11.75% 23.16% (0.380%) No 11.75%
25007 Safety Police PEPRA
Level 23.540% 11.75% 23.16% (0.380%) No 11.75%
For a description of the methodology used to determine the Total Normal Cost for this purpose, see PEPRA Normal C ost Rate
Methodology in Appendix A.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 113 Packet Pg. 117 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 15
Funded Status – Funding Policy Basis
The table below provides information on the current funded status of the plan under the funding policy. The funded status for this
purpose is based on the market value of assets relative to the funding target produced by the entry age actuarial cost method
and actuarial assumptions adopted by the board. The actuarial cost method allocates the total expected cost of a member’s
projected benefit (Present Value of Benefits ) to individual years of service (the Normal Cost). The value of the projected
benefit that is not allocated to future service is referred to as the Accrued Liability and is the plan’s funding target on the
valuation date. The Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute
measure of funded status and can be viewed as employer debt. The Funded Ratio equals the assets divided by the funding
target. The funded ratio is a relative measure of the funded status and allows for comparisons between plans of different sizes.
June 30, 2023 June 30, 2024
1. Present Value of Benefits $630,736,302 $658,865,224
2. Entry Age Accrued Liability 555,403,195 582,389,782
3. Market Value of Assets (MVA) 331,696,065 355,816,276
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $223,707,130 $226,573,506
5. Funded Ratio [(3) ÷ (2)] 59.7% 61.1%
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to the
normal cost of the active plan members will be sufficient to fully fund all retirement benefits if future experience matches the
actuarial assumptions. A fu nded ratio of less than 100% (positive UAL) implies that in addition to normal costs, payments toward
the UAL will be required. Plans with a funded ratio greater than 100% have a negative UAL (or surplus) but are required under
current law to continue contributing the normal cost in most cases, preserving the surplus for future contingencies.
Calculations for the funding target reflect the expected long -term investment return of 6.8%. If it were known on the valuation
date that future investment returns wi ll average something greater/less than the expected return, calculated normal costs and
accrued liabilities provided in this report would be less/greater than the results shown. Therefore, for example, if actual a verage
future returns are less than the exp ected return, calculated normal costs and UAL contributions will not be sufficient to fully fund
all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those provided in
this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative
purposes, funded status es based on a 1% lower and higher average future investment return (discount rate) are as follows:
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Present Value of Benefits $761,638,929 $658,865,224 $577,517,101
2. Entry Age Accrued Liability 657,358,512 582,389,782 520,576,724
3. Market Value of Assets (MVA) 355,816,276 355,816,276 355,816,276
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $301,542,236 $226,573,506 $164,760,448
5. Funded Ratio [(3) ÷ (2)] 54.1% 61.1% 68.4%
The Risk Analysis section of the report provides additional information regarding the sensitivity of valuation results to the
expected investment return and other factor s. Also provided in that section are measures of funded status that are appropriate
for assessing the sufficiency of plan assets to cover estimated termination liabilities.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 114 Packet Pg. 118 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 16
Additional Employe r Contributions
The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL)
over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is
provided in Amortization Schedule and Alternatives . Certain aspects of the policy such as 1) layered amortization bases
(positive and negative) with different remaining payoff periods, and 2) the pha se-in of required payments toward investment
gains and losses, can result in volatility in year -to-year projected UAL payments. Provided below is information on how an
Additional Discretionary Payment (ADP), together with your required UAL payment of $20,548,215 for FY 2026-27, may better
accomplish your agen cy’s specific objectives with regard to either smoothing out projected future payments or achieving a
greater reduction in UAL than would otherwise occur w hen making only the minimum required payment. Such additional
payments are allowed at any time and ca n also result in significant long -term savings.
Fiscal Year 2026-27 Employer Contribution Versus Agency Funding Objectives
The interest-to-payment ratio for the FY 2026-27 minimum required UAL payment is 70%, which means the required payment of
$20,548,215 includes $14,340,930 of interest cost and results in a $6,207,285 reduction in the UAL , as can be seen in
Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If th e interest-to-payment ratio is
close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming
years, which would be shown in Projected Em ployer Contributions . Another measure that can be used to evaluate how well the
FY 2026-27 required UAL payment meets the agency’s specific funding objectives is the number o f years required to pay off the
existing UAL if the annual payment were held constant in future years . With an annual payment of $20,548,215 it would take
18.7 years to pay off the current UAL . A result that is longer than the agency’s target funding period suggests that the option of
supplementing the minimum payment with an ADP should be weighed against the agency’s budget constraints.
Provided below are select ADP options for consideration. Making such an ADP during FY 2026-27 does not require an ADP be
made in any future year, nor does it change the remaining amortization period of any portion of unfunded liability. For
information on permanent changes to amortization periods, see Amortization Schedule and Alternatives . Agencies considering
making an ADP should contact CalPERS for additional information.
Fiscal Year 2026-27 Employer Contributions — Illustrative Scenarios
If the Annual UAL
Payment Each
Year W ere…
The Current
UAL Would be
Paid Off in…
This W ould
Require an ADP1
in FY 2026-27 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$20,548,215 18.7 years $0 $6,429,153 $26,977,368
23,183,833 15 years 2,635,618 6,429,153 29,612,986
30,166,532 10 years 9,618,317 6,429,153 36,595,685
51,876,996 5 years 31,328,781 6,429,153 58,306,149
1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal year would have to
be less or more than the amount shown to have the same effect on the UAL amortization.
The calculations above are based on the projected UAL as of June 30, 2026, as determined in the June 30, 2024, actuarial
valuation. New unfunded liabilities can emerge in future years due to assumption or method changes, changes in plan
provisions, and actuarial experience different than assumed. Making an ADP illustrated above for the indicated number of year s
will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one year to
the next and can diverge significantly from projections over a period of several years.
Additional Discretionary Payment History
The following table provides a recent history of actual ADPs made to the plan.
Fiscal
Year ADP Fiscal
Year ADP
2017-18 N/A 2021-22 $0
2018-19 $0 2022-23 0
2019-20 0 2023-24 0
2020-21 0 2024-25 0
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 115 Packet Pg. 119 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 17
Projected Employer Contributions
The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. The
projection assumes that all actuarial assumptions will b e realized and that no further changes to assumptions, contributions,
benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2024-25 is
assumed to be 6.80% per year, net of investment and administrative expenses. The actual long -term cost of the plan will
depend on the actual benefits and expenses paid and the actual investment experience of the fund.
The projected normal cost percentages below reflect that the normal cost is expected to continue to decline over time as new
employees are hired into lower cost benefit tiers. Future contribution requirements may differ significantly from those shown
below. The actuaria l valuation does not include payroll beyond the valuation date. For the most realistic projections, the
employer should apply projected payroll amounts to the rates below based on the most recent information available, such as
current payroll as well as an y plans to fill vacancies or add or remove positions.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2024-25 and Beyond)
2026-27 2027-28 2028-29 2029-30 2030-31 2031-32
Normal Cost % 19.64% 19.0% 18.3% 17.7% 17.1% 16.5%
UAL Payment $20,548,215 $21,254,000 $22,813,000 $23,128,000 $23,397,000 $22,907,000
Total as a % of Payroll* 82.41% 82.2% 84.3% 82.8% 81.1% 77.5%
Projected Payroll $32,734,993 $33,651,573 $34,593,816 $35,562,444 $36,558,192 $37,581,822
*Illustrative only and based on the projected payroll shown.
The required UAL payments are expected to vary significantly from the projections above due to experience, particularly
investment experience. For projected contributions under alternate investment return scenarios, please see the Future
Investment Return Scenarios exhibit. Our online pension plan projection tool, Pension Outlook, is available in the Employers
section of the CalPERS website. Pension Outlook can help plan and budget pension costs under various scenarios.
For ongoing plans, investment gains and losses are amortized using a n initial 5-year ramp. For more information, please see
Amortization of Unfunded Actuarial Accrued Liability in Appendix A. This method phases in the impact of the change in UAL
over a 5 -year period in order to reduce employer cost volatility from year to year. As a result of this methodology, dramatic
changes in the required employer contributions in any one ye ar are less likely. However, required contributions can change
gradually and significantly over the next five years. In years when there is a large investment loss, the relatively small
amortization payments during the initial ramp period could result in contributions that are less than interest on the UAL (i.e.
negative amortization) while the contribution impact of the increase in the UAL is phased in.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 116 Packet Pg. 120 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 18
(Gain)/Loss Analysis 6/30/23 – 6/30/24
To calculate the cost requirements of the plan, assumptions are made about future events that affect the amount and timing of
benefits to be paid and assets to be accumulated. Each year , actual experience is comp ared to the expected experience based
on the actuarial assumptions. This results in actuarial gains or losses, as shown below.
1. Total (Gain)/Loss for the Year
a) Unfunded Accrued Liability (UAL) as of 6/30/23 $223,707,130
b) Expected payment on the UAL during 20 23-24 14,376,181
c) Interest through 6/30/24 [0.068 x (1a) - ((1.068)½ - 1) x (1b)] 14,731,332
d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 224,062,281
e) Change due to plan changes 0
f) Change due to AL Significant Increase 0
g) Change due to assumption changes 0
h) Change due to method change s 0
i) Change due to discount rate change with Funding Risk Mitigation 0
j) Expected UAL after all other changes [(1d) + (1e) + (1f) + (1g) + (1h) + (1i)] 224,062,281
k) Actual UAL as of 6/30/24 226,573,506
l) Total (Gain)/Loss for 20 23-24 [(1k) - (1j)] $2,511,225
2. Investment (Gain)/Loss for the Year
a) Market Value of Assets as of 6/30/23 $331,696,065
b) Prior fiscal year receivables (134,737)
c) Current fiscal year receivables 114,617
d) Contributions received 23,828,961
e) Benefits and refunds paid (31,283,509)
f) Transfers, SCP p ayments and interest, and m iscellaneous adjustments 29,298
g) Expected return at 6.8% per year 22,778,616
h) Expected assets as of 6/30/24 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 347,029,310
i) Actual Market Value of Assets as of 6/30/24 355,816,276
j) Investment (Gain)/Loss [(2h) - (2i)] ($8,786,966)
3. Non -Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) $2,511,225
b) Investment (Gain)/Loss (2j) (8,786,966)
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $11,298,191
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 117 Packet Pg. 121 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 19
Schedule of Amortization Bases
Below is the schedule of the plan’s amortization bases. Note that there is a two -year lag between the valuation date and the start of the contribution year.
• The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2024 .
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuati on date: FY 2026-27.
This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their
required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years fro m the valuation date to the first day of
the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for the fiscal year and
adjusting for interest. The expected payment on the UAL for FY 2024-25 is based on the actuarial valuation two years ago , adjusted for additional discretionary payments , if
necessary, and the expected payment for FY 2025-26 is based on the actuarial valuation one year ago.
Reason for Base
Date
Est.
Ramp
Level
2026-27
Ramp
Shape
Escala -
tion
Rate
Amort.
Period
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Minimum
Required
Payment
2026-27
Fresh Start 6/30/04 No Ramp 2.80% 10 (796,981) (83,940) (764,429) (86,290) (727,235) (88,706)
Benefit Change 6/30/05 No Ramp 2.80% 0 40,915 21,545 21,432 22,149 0 0
Assumption Change 6/30/09 No Ramp 2.80% 5 4,936,384 814,828 4,429,982 837,643 3,865,566 861,098
Special (Gain)/Loss 6/30/09 No Ramp 2.80% 15 8,614,890 698,464 8,478,881 718,021 8,313,413 738,126
Special (Gain)/Loss 6/30/10 No Ramp 2.80% 16 4,170,938 324,846 4,118,853 333,942 4,053,826 343,292
Assumption Change 6/30/11 No Ramp 2.80% 7 4,690,845 624,453 4,364,487 641,937 3,997,868 659,911
Special (Gain)/Loss 6/30/11 No Ramp 2.80% 17 2,399,398 180,047 2,376,489 185,089 2,346,812 190,271
(Gain)/Loss 6/30/12 No Ramp 2.80% 18 44,929,090 3,256,908 44,618,446 3,348,102 44,192,435 3,441,848
Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 18 1,569,767 113,792 1,558,914 116,979 1,544,029 120,254
(Gain)/Loss 6/30/13 100% Up/Dn 2.80% 19 44,627,249 3,353,351 44,196,412 3,447,245 43,639,244 3,543,768
(Gain)/Loss 6/30/14 100% Up/Dn 2.80% 20 (30,112,795) (2,185,657) (29,901,718) (2,246,855) (29,613,043) (2,309,767)
Assumption Change 6/30/14 100% Up/Dn 2.80% 10 18,443,073 2,256,719 17,365,016 2,319,907 16,148,350 2,384,864
(Gain)/Loss 6/30/15 100% Up/Dn 2.80% 21 16,708,808 1,174,271 16,631,467 1,207,150 16,514,889 1,240,951
(Gain)/Loss 6/30/16 100% Up/Dn 2.80% 22 19,861,109 1,354,431 19,811,940 1,392,355 19,720,235 1,431,340
Assumption Change 6/30/16 100% Up/Dn 2.80% 12 6,961,491 735,044 6,675,248 755,625 6,348,271 776,783
(Gain)/Loss 6/30/17 100% Up/Dn 2.80% 23 (1,220,309) (80,910) (1,219,674) (83,176) (1,216,654) (85,505)
Assumption Change 6/30/17 100% Up/Dn 2.80% 13 9,717,004 963,628 9,381,908 990,609 8,996,142 1,018,346
(Gain)/Loss 6/30/18 100% Up/Dn 2.80% 24 (3,481,572) (224,835) (3,485,965) (231,130) (3,484,151) (237,602)
Assumption Change 6/30/18 100% Up/Dn 2.80% 14 15,685,317 1,469,523 15,233,253 1,510,670 14,707,926 1,552,968
Method Change 6/30/18 100% Up/Dn 2.80% 14 3,617,061 338,875 3,512,814 348,363 3,391,673 358,117
Item 1
Attachment C - CalPERS Safety
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 118 Packet Pg. 122 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20
Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2026-27
Ramp
Shape
Escala -
tion
Rate
Amort.
Period
Balance
6/30/24
Expected
Payment
2024-25
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Minimum
Required
Payment
2026-27
Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 15 1,730,521 137,925 1,705,659 172,406 1,643,472 172,406
Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 15 6,523,586 637,630 6,308,237 637,630 6,078,244 637,630
Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 16 8,570,801 515,333 8,621,049 687,110 8,497,193 858,888
Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 16 1,457,904 138,226 1,414,193 138,226 1,367,510 138,227
Assumption Change 6/30/21 No Ramp 0.00% 17 2,619,493 241,577 2,547,963 241,577 2,471,569 241,577
Net Investment (Gain) 6/30/21 80% Up Only 0.00% 17 (40,853,663) (1,679,381) (41,896,171) (2,519,071) (42,141,800) (3,358,762)
Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 17 (6,879,285) (634,426) (6,691,435) (634,427) (6,490,810) (634,426)
Benefit Change 6/30/22 No Ramp 0.00% 18 289,298 26,015 282,085 26,015 274,382 26,015
Investment (Gain)/Loss 6/30/22 60% Up Only 0.00% 18 58,445,876 1,256,276 61,121,909 2,512,552 62,681,625 3,768,829
Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 18 8,973,858 806,961 8,750,134 806,961 8,511,197 806,961
Investment (Gain)/Loss 6/30/23 40% Up Only 0.00% 19 2,559,236 0 2,733,264 58,751 2,858,410 117,501
Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 19 9,262,974 0 9,892,856 889,601 9,646,220 889,601
Investment (Gain)/Loss 6/30/24 20% Up Only 0.00% 20 (8,786,966) 0 (9,384,480) 0 (10,022,625) (215,433)
Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 20 11,298,191 0 12,066,468 0 12,886,988 1,158,844
Total 226,573,506 16,551,519 224,875,487 18,545,666 221,001,171 20,548,215
Item 1
Attachment C - CalPERS Safety
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 119 Packet Pg. 123 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 21
Amortization Schedule and Alternatives
The amortization schedule on the previous pag e(s) shows the minimum contributions required according to the CalPERS
amortization policy. Each year, m any agencies express a desire for a more stable pattern of payments or indicate interest in
paying off the unfunded accrued liabilities more quickly tha n required. As such, we have provided alternative amortization
schedules to help analyze the current amortization schedule and illustrate the potential savings of accelerating unfunded lia bility
payments.
Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting th e
individual bases and remaining periods shown on the previous page, and 2) alternative “fresh start” amortization schedules
using two sample periods that would both result in interest savings relative to the current amortization schedule. To initiate a
fresh s tart, please contact a CalPERS actuary.
The current amortization s chedule typically contains both positive and negative bases . Positive bases result from plan changes,
assumption changes, method changes , or plan experience that increase unfunded liability. Negative bases result from plan
changes, assumption changes, method changes, or plan experience that decrease unfunded liabi lity. The combination of
positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future year s,
such as:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period, and results in
a large change in the employer contribution requirement.
In any year when one of the above scenarios occurs, the actuary will consider correcti ve action such as replacing the existing
unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.
The current amortization s chedule on the following page may appear to show that, based on the current amortization bases, one
of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact
arise since there will be additional bases added to the amortization schedule in each future year. Should su ch a scenario arise in
any future year, the actuary will take appropriate action based on guidelines in the CalPERS Actuarial Amortization Policy.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 120 Packet Pg. 124 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 22
Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 15 Year Amortization 10 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2026 221,001,171 20,548,215 221,001,171 23,183,833 221,001,171 30,166,532
6/30/2027 214,793,886 21,254,444 212,070,130 23,183,833 204,853,924 30,166,532
6/30/2028 207,434,660 22,812,869 202,531,779 23,183,834 187,608,664 30,166,532
6/30/2029 197,964,466 23,127,862 192,344,819 23,183,834 169,190,727 30,166,532
6/30/2030 187,524,773 23,397,304 181,465,145 23,183,833 149,520,370 30,166,532
6/30/2031 176,096,728 22,907,173 169,845,655 23,183,833 128,512,429 30,166,532
6/30/2032 164,398,100 22,828,981 157,436,039 23,183,834 106,075,948 30,166,532
6/30/2033 151,984,768 21,932,194 144,182,568 23,183,833 82,113,786 30,166,532
6/30/2034 139,654,106 21,600,970 130,027,862 23,183,833 56,522,197 30,166,532
6/30/2035 126,827,258 20,977,258 114,910,636 23,183,833 29,190,380 30,166,531
6/30/2036 113,772,757 19,919,208 98,765,439 23,183,833
6/30/2037 100,923,983 19,315,927 81,522,369 23,183,834
6/30/2038 87,824,945 18,667,641 63,106,769 23,183,834
6/30/2039 74,505,139 18,194,742 43,438,908 23,183,833
6/30/2040 60,768,300 17,984,907 22,433,634 23,183,834
6/30/2041 46,314,204 15,332,357
6/30/2042 33,618,486 13,712,638
6/30/2043 21,733,342 17,486,006
6/30/2044 5,140,458 3,486,570
6/30/2045 1,886,844 1,074,049
6/30/2046 905,183 935,453
6/30/2047
6/30/2048
6/30/2049
Total 367,496,768 347,757,501 301,665,319
Interest Paid 146,495,597 126,756,330 80,664,148
Estimated Savings 19,739,267 65,831,449
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 121 Packet Pg. 125 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 23
Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)
1. For Period 7/1/25 – 6/30/26
a) Employer Normal Cost 20.61%
b) Employee contribution 10.15%
c) Total Normal Cost 30.76%
2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.88%)
b) Effect of plan changes 0.00%
c) Effect of discount rate change due to Funding Risk Mitigation 0.00%
d) Effect of assumption changes 0.00%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.88%)
3. For Period 7/1/26 – 6/30/27
a) Employer Normal Cost 19.64%
b) Employee contribution 10.24%
c) Total Normal Cost 29.88%
Employer Normal Cost Change [(3a) – (1a)] (0.97%)
Employee Contribution Change [(3b) – (1b)] 0.09%
Unfunded Liability Contribution ($)
1. For Period 7/1/25 – 6/30/26 18,545,666
2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule 0
b) Effect of elimination of amortization bases (22,149)
c) Effect of progression of amortization bases 1 1,081,287
d) Effect of investment (gain)/loss during prior year2 (215,433)
e) Effect of non-investment (gain)/loss during prior year 1,158,844
f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0
g) Effect of Golden Handshake 0
h) Effect of plan changes 0
i) Effect of AL Significant Increase (Government Code section 20791) 0
j) Effect of assumption changes 0
k) Effect of adjustments to the amortization schedule (e.g., Fresh Start) 0
l) Effect of method change 0
m) Net effect of the changes above [sum of (a) through (l)] 2,002,549
3. For Period 7/1/26 – 6/30/27 [(1) + (2m)] 20,548,215
The amounts shown for the period 7/1/25 – 6/30/26 may be different if a prepayment of unfunded actuarial liability is made or a
plan change became effective after the prior year’s actuarial valuation was performed.
1 Includes scheduled escalation in individual amortization base payments due to the 5 -year ramp and payroll growth
assumption used in the pre-2019 amortization policy.
2 The unfunded liability contribution for the investment (gain)/loss during the year prior to the valuation date is 20% of the
“full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be
included in line c ) for each of the next four years.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 122 Packet Pg. 126 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 24
Employer Contribution History
The table below provides a 10-year history of the employer contribution requirements for the plan , as determined by the annual
actuarial valuation . Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.
Valuation
Date
Contribution
Year
Employer
Normal Cost Rate
Unfunded Liability
Payment
06/30/2015 2017-18 18.900% $7,127,885
06/30/2016 2018-19 19.397% 8,421,191
06/30/2017 2019-20 20.194% 10,019,332
06/30/2018 2020-21 21.566% 11,210,740
06/30/2019 2021-22 21.52% 13,282,515
06/30/2020 2022-23 20.58% 14,860,807
06/30/2021 2023-24 22.59% 14,376,181
06/30/2022 2024-25 22.21% 16,551,519
06/30/2023 2025-26 20.61% 18,545,666
06/30/2024 2026-27 19.64% 20,548,215
Funding History
The table below shows the recent history of the actuarial accrued liability, market value of assets, unfunded accrued liability,
funded ratio and annual covered payroll.
Valuation
Date
Accrued
Liability
(AL)
Market Value of
Assets (MVA)
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
6/30/2015 $377,934,524 $259,169,591 $118,764,933 68.6% $21,186,275
6/30/2016 392,911,774 249,886,581 143,025,193 63.6% 21,268,028
6/30/2017 422,062,152 267,871,162 154,190,990 63.5% 23,485,510
6/30/2018 451,111,924 280,399,741 170,712,183 62.2% 23,613,222
6/30/2019 471,338,133 289,117,004 182,221,129 61.3% 25,488,331
6/30/2020 487,159,688 293,857,975 193,301,713 60.3% 27,097,526
6/30/2021 509,225,515 353,339,674 155,885,841 69.4% 25,745,571
6/30/2022 531,613,942 318,801,170 212,812,772 60.0% 25,004,764
6/30/2023 555,403,195 331,696,065 223,707,130 59.7% 27,941,899
6/30/2024 582,389,782 355,816,276 226,573,506 61.1% 30,132,343
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 123 Packet Pg. 127 of 321
Risk Analysis
• Future Investment Return Scenarios 26
• Discount Rate Sensitivity 27
• Mortality Rate Sensitivity 27
• Maturity Measures 28
• Maturity Measures History 29
• Funded Status – Termination Basis 30
• Funded Status – Low-Default-Risk Basis 31
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 124 Packet Pg. 128 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 26
Future Investment Return Scenarios
Analysis using the investment return scenarios from the Asset Liability Management process completed in 2021 was performed
to determine the effects of various future investment returns on required employer UAL contributions. The CalPERS Funding
Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2%, the board will
consider adjustments to the discount rate . The projections below use a discount rate of 6.8% for all scenarios even though an
annual return of 1 0.8% is high enough to trigger a board discussion on the discount rate . The projections also assume that all
other actua rial assumptions will be realized and that no further changes in assumptions, contributions, benefits , or funding will
occur.
The employer normal cost rates are not affected by investment returns, and since no future assumption changes are being
reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown
earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.
The first table shows projected UAL contribution requirements if the fund were to earn either 3.0% or 10.8% annually. These
alternate investment returns were chosen because 90% of long -term average returns are expected to fall between them over the
20-year period ending June 30, 2044.
Assumed Annual Return
FY 2024-25
through FY 2043 -44
Projected Employer UAL Contributions
2027-28 2028-29 2029-30 2030 -31 2031-32
3.0% (5th percentile) $21,583,000 $23,805,000 $25,124,000 $26,746,000 $27,966,000
10.8% (95th percentile ) $20,908,000 $21,741,000 $20,915,000 $19,585,000 $16,991,000
Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns
will average less than 3.0% or greater than 10.8% over a 20 -year period, the likelihood of a single investment return less than
3.0% or greater than 10.8% in any given year is much greater. The following analysis illustrates the effect of an extreme, single
year investment return.
The portfolio has an expected volatility (or standard deviation) of 12.0% per year. Accordingly, in any given ye ar there is a 16%
probability that the annual return will be -5.2% or less and a 2.5% probability that the annual return will be -17.2% or less. These
returns represent one and two standard deviations below the expected return of 6.8%.
The following table shows the effect of one and two standard deviation investment loss es in FY 2024-25 on the FY 2027-28
contribution requirements. Note that a single -year investment gain or loss decreases or increases the required UAL contribution
amount incrementally for each of the next five years, not just one, due to the 5 -year ramp in the amortization policy. However,
the contribution requirements beyond the first year are also impacted by investment returns beyond the first year . Historically,
significant downturns in the market are often followed by higher than average retur ns. Such investment gains would offset the
impact of these single year negative returns in years beyond FY 2027-28.
Assumed Annual Return for
Fiscal Year 2024-25
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2026-27 2027-28
(17.2%) (2 standard deviation loss) $20,548,215 $23,331,000
(5.2%) (1 standard deviation loss ) $20,548,215 $22,293,000
• Without investment gains (returns higher than 6.8%) in FY 2025-26 or later, projected contributions rates would
continue to rise over the next four years due to the continued phase -in of the impact of the illustrated investment loss in
FY 2024-25.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2027-28 as
well as to model other investment return scenarios .
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 125 Packet Pg. 129 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 27
Discount Rate Sensitivity
The discount rate assumption is calculated as the sum of the assumed real rate of return and the assumed annual price
inflation, currently 4.5% and 2.3%, respectively. Changing either the price inflation assumption or the real rate of return
assumption will change the discount rate. The sensitivity of the valuation results to the discount rate assumption depends on
which component of the discount rate is changed. Shown b elow are various valuation results as of June 30, 2024, assuming
alternate discount rates by changing the two components independently. Results are shown using the current discount rate of
6.8% as well as alternate discount rates of 5.8% and 7.8%. The rates of 5.8% and 7.8% were selected since they illustrate the
impact of a 1.0% increase or decrease to the 6.8% assumption.
Sensitivity to the Discount Rate Due to Varying the Real Rate of Return Assumption
As of June 30, 2024
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.3% 2.3% 2.3%
Real Rate of Return 3.5% 4.5% 5.5%
a) Total Normal Cost 37.86% 29.88% 23.83%
b) Accrued Liability $657,358,512 $582,389,782 $520,576,724
c) Market Value of Assets $355,816,276 $355,816,276 $355,816,276
d) Unfunded Liability/(Surplus) [(b) - (c)] $301,542,236 $226,573,506 $164,760,448
e) Funded Ratio 54.1% 61.1% 68.4%
Sensitivity to the Discount Rate Due to Varying the Price Inflation Assumption
As of June 30, 2024
1% Lower
Price Inflation
Current
Assumptions
1% Higher
Price Inflation
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.3% 2.3% 3.3%
Real Rate of Return 4.5% 4.5% 4.5%
a) Total Normal Cost 31.36% 29.88% 27.13%
b) Accrued Liability $601,525,118 $582,389,782 $544,993,912
c) Market Value of Assets $355,816,276 $355,816,276 $355,816,276
d) Unfunded Liability/(Surplus) [(b) - (c)] $245,708,842 $226,573,506 $189,177,636
e) Funded Ratio 59.2% 61.1% 65.3%
Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2024, plan costs and funded status under two differe nt longevity
scenarios, namely assuming rates of post-retirement mortality are 10% lower or 10% higher than our current mortality
assumptions adopted in 2021 . This type of analysis highlights the impact on the plan of a change in the mortality assumption .
As of June 30, 2024 10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 30.30% 29.88% 29.49%
b) Accrued Liability $593,824,269 $582,389,782 $571,869,278
c) Market Value of Assets $355,816,276 $355,816,276 $355,816,276
d) Unfunded Liability/(Surplus) [(b) - (c)] $238,007,993 $226,573,506 $216,053,002
e) Funded Ratio 59.9% 61.1% 62.2%
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 126 Packet Pg. 130 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 28
Maturity Measures
As pension plans mature , they become more sensitive to risks. Understanding plan maturity and how it affects the ability of a
pension plan sponsor to tolerate risk is important in understanding how the pension plan is impacted by investment return
volatility, other economic varia bles , and changes in longevity or other demographic assumptions.
One way to look at the maturity level of CalPERS and its plans is to look at the ratio of a plan’s retiree liability to its t otal liability.
A pension plan in its infancy will have a very low ratio of retiree liability to total liability. As the plan matures, the ratio increases.
A mature plan will often have a ratio above 60%-65%.
Ratio of Retiree Accrued Liability to
Total Accrued Liability June 30, 2023 June 30, 2024
1. Retiree Accrued Liability $402,806,352 $413,652,979
2. Total Accrued Liability $555,403,195 $582,389,782
3. Ratio of Retiree AL to Total AL [(1) ÷ (2)] 73% 71%
Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called the s upport ratio. A
pension plan in its infancy will have a very high ratio of active to retired members. As the plan matures and members retir e, the
ratio declines. A mature plan will often have a ratio near or below one.
To calculate the support ratio for the rate plan, retirees and beneficiaries receiving a continuance are each counted as one, even
though they may have only worked a portion of their careers as an active member of this rate plan. For this reason, the support
ratio, while intuitive, may be less informative than the ratio of retiree liability to total accrued liability above.
For comparison, the support ratio for all CalPERS pu blic agency plans as of June 30, 202 3, was 0.78 and was calculated
consistently with how it is for the individual rate plan. Note that to calculate the support ratio for all public agency plan s, a retiree
with service from more than one CalPERS agency is c ounted as a retiree more than once .
Support Ratio June 30, 2023 June 30, 2024
1. Number of Actives 164 159
2. Number of Retirees 458 464
3. Support Ratio [(1) ÷ (2)] 0.36 0.34
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 127 Packet Pg. 131 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 29
Maturity Measures (continued)
The actuarial calculations supplied in this communication are based on various assumptions about long -term demographic and
economic behavior. Unless these assumptions (e.g., terminations, deaths, disabilities, retirements, salary increases, investment
return) are exactly realized each year, there will be differences on a year -to-year basis. The year-to-year differences between
actual experience and the assumptions are called actuarial gains and losses and serve to lower or raise required employer
contributi ons from one year to the next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and
downs of investment returns.
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of market value of assets to payroll. Plans that have
a higher AVR experience more volatile employer contributions (as a percentage of payroll) due to investment return. For
example, a plan with an AVR of 8 may experience twice the contribution volatility due to investment return volatility than a plan
with an AVR of 4. It should be noted that this ratio is a measure of the current situation. It increases over time but generally
tends to stabilize as a plan matures.
Liability Volatility Ratio
Also shown in the table below is the liability volatility ratio (LVR), which is the ratio of accrued liability to payroll. Plans that ha ve
a higher LVR experience more volatile employer contributions (as a percentage of payroll) due to changes in liability. For
example, a plan with an LVR of 8 is expected to have twice the contribution volatility of a plan with an LVR of 4 when there is a
change in accrued liability, such as when there is a change in actuarial assumptions . It should be noted that this ratio indicates a
longer-term potential for contribution volatility, since the AVR, described above, will tend to move closer to the LVR as the
funded ratio approaches 100%.
Contribution Volatility June 30, 2023 June 30, 2024
1. Market Value of Assets without Receivables $331,561,327 $355,701,659
2. Payroll 27,941,899 30,132,343
3. Asset Volatility Ratio (AVR) [(1) ÷ (2)] 11.9 11.8
4. Accrued Liability $555,403,195 $582,389,782
5. Liability Volatility Ratio (LVR) [(4) ÷ (2)] 19.9 19.3
Maturity Measures History
Valuation Date
Ratio of
Retiree Accrued Liability
to
Total Accrued Liability Support Ratio
Asset
Volatility
Ratio
Liability
Volatility
Ratio
6/30/2017
72%
0.40
11.4
18.0
6/30/2018
74%
0.39
11.9
19.1
6/30/2019
71%
0.39
11.3
18.5
6/30/2020
71%
0.40
10.8
18.0
6/30/2021
71%
0.37
13.7
19.8
6/30/2022
72%
0.34
12.7
21.3
6/30/2023
73%
0.36
11.9
19.9
6/30/2024
71%
0.34
11.8
19.3
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 128 Packet Pg. 132 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 30
Funded Status – Termination Basis
The funded status measured on a termination basis is an estimate d range for the financial position of the plan had the contract
with CalPERS been terminated as of June 30, 2024 . The accrued liability on a termination basis (termination liability) is
calculated differently from the p lan’s ongoing funding liability. For th e termination liability calculation, both compensation and
service are frozen as of the valuation date and no future pay increases or service accruals are assumed. This measure of
funded status is not appropriate for assessing the need for future employer contributions in the case of an ongoing plan, that is,
for an employer that continues to provide CalPERS retirement benefits to active employees. Unlike the actuarial cost method
used for ongoing plans, the terminatio n liability is the present value of the benefits earned through the valuation date.
A more conservative investment policy and asset allocation strategy was adopted by the board for the Terminated Agency Pool.
The Terminated Agency Pool has limited funding sources since no future employer contributions will be made. Therefore,
expected benefit payments are secured by risk-free assets and benefit security for members is increased while limiting the
funding risk. However, this asset allocation has a lower expected rate of return than the re mainder of the PERF and
consequently, a lower discoun t rate assumption. The lower discount rate for the Terminated Agency Pool results in higher
liabilities for terminated plans.
The discount rate used for actual termination valuations is a weighted average of the 10 -year and 30 -year Treasury yields where
the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the
following analysis is based on 20 -year Treasury bonds , which is a good proxy for most plans. The discount rate upon contract
termination will depend on actual Treasury rates on the date of termination , which varies over time, as demonstrated below.
Valuation 20-Year Valuation 20-Year
Date Treasury Rate Date Treasury Rate
06/30/201 5 2.83% 06/30/2020 1.18%
06/30/201 6 1.86% 06/30/2021 2.00%
06/30/201 7 2.61% 06/30/2022 3.38%
06/30/201 8 2.91% 06/30/2023 4.06%
06/30/201 9 2.31% 06/30/2024 4.61%
As Treasury rates are variable, the table below shows a range for the termination liability using discount rates 1% below and
above the 20-year Treasury rate on the valuation date. The price inflation assumption is the 20 -year Treasury breakeven
inflation rate, that is, the difference between the 20 -year inflation indexed bond and the 20 -year fixed -rate bond.
The Market Value of Assets (MVA) also varies with interest rates and will fluctuate depending on other market conditions on the
date of termination . Since i t is not possible to approximate how the MVA will change in different interest rate environments, th e
results below use the MVA as of the valuation date.
Discount Rate: 3.61 %
Price Inflation: 2.45%
Discount Rate: 5.61%
Price Inflation: 2.45%
1. Termination Liability1 $874,060,922 $661,766,866
2. Market Value of Assets (MVA) 355,816,276 355,816,276
3. Unfunded Termination Liability [(1) – (2)] $518,244,646 $305,950,590
4. Funded Ratio [(2) ÷ (1)] 40.7% 53.8%
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial
assumptions can be found in Appendix A.
In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent to Termin ate. The
completed Resolution will allow a CalPERS actuary to provide a preliminary termination valuation with a more up -to-date
es timate of the plan ’s assets and liabilities. Before beginning this process, please consult with a CalPERS actuary.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 129 Packet Pg. 133 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 31
Funded Status – Low-Default-Risk Basis
Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or
Contributions, requires the disclosure of a low -default-risk obligation measure (LDROM) of benefit costs accrued as of the
valuation date using a discount rate based on the yields o f high quality fixed income securities with cash flows that replicate
expected benefit payments. Conceptually, this measure represents the level at which financial markets would value the accrued
plan costs, and would be approximately equal to the cost of a portfolio of low-default-risk bonds with similar financial
characteristics to accrued plan costs.
As permitted in ASOP No. 4, the Actuarial Office uses the Entry Age Actuarial Cost Method to calculate the LDROM. This
methodology is in line with the measure of “benefit entitlements” calculated by the Bureau of Economic Analysis and used by the
Federal Reserve to report the indebtedness due to pensions of plan sponsors and, conversely, the household wealth due to
pensions of plan members.
As shown below, the discount rate used for the LDROM is 5.35%, which is the Standard FTSE Pension Liability Index1 discount
rate as of June 30, 2024 .
Selected Measures on a Low -Default-Risk Basis June 30, 2024
Discount Rate 5.35%
1. Accrued Liability – Low -Default-Risk Basis (LDROM)
a) Active Members $184,413,772
b) Transferred Members 19,661,697
c) Separated Members 10,340,281
d) Members and Beneficiaries Receiving Payments 481,944,422
e) Total $696,360,172
2. Market Value of Assets (MVA) 355,816,276
3. Unfunded Accrued Liability – Low-Default-Risk Basis [(1e) – (2)] $340,543,896
4. Unfunded Accrued Liability – Funding Policy Basis 226,573,506
5. Present Value of Unearned Investment Risk Premium [(3) – (4)] $113,970,390
The difference between the unfunded liabilities on a low -default-risk basis and on the funding policy basis represents the present
value of the investment risk premium that must be earned in future years to keep future contributions for currently accrued p lan
costs at the levels anticipated by the funding policy.
Benefit security for members of the plan relies on a combination of the assets in the plan, the investment income generated f rom
those assets and the ability of the plan sponsor to make necessary future contributions. If future returns fall short of 6.8%,
benefit security could be at risk without higher than currently anticipated future contributions.
The funded status on a low -default-risk basis is not appropriate for assessing the sufficiency o f plan assets to cover the cost of
settling the plan’s benefit obligations (see Funded Status – Termination Basis), nor is it appropriate for assessing the need for
future contributions (see Funded Status – Funding Policy Basis ).
1 This index is based on a yield curve of hypothetical AA -rated zero-coupon corporate bonds whose maturities range
from 6 months to 30 years. The index represents the single discount rate that would produce the same present value
as discounting a standardized set of liabilit y cash flows for a fully open pension plan using the yield curve. The liability
cash flows are reasonably consistent with the pattern of benefits expected to be pa id from the entire Public
Employees’ Retirement Fund for current and former plan members. A different index, hence a different discount rate,
may be needed to measure the LDROM for a subset of the fund, such as a single rate plan or a group o f retirees.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 130 Packet Pg. 134 of 321
Supplementary Information
• Normal Cost by Benefit Group 33
• Summary of Valuation Data 34
• Status of PEPRA Transition 35
• Plan's Major Benefit Options 36
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 131 Packet Pg. 135 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 33
Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2026-27. The Total Normal Cost is the
annual cost of service accrual for the fiscal year for active employees and can be viewed as the long -term contribution rate for
the benefits contracted. Generally, the normal cost for a benefit group subject to more generous benefit provisions will exceed
the normal cost for a group with less generous benefits. However, based on the characteristics of the members (particularly
when the number of actives is small), this may not be the case. Future measurements of the Total Normal Cost for each group
may differ significantly from the current values due to such factors as: changes in the demographics of the group, changes in
economic and demographic assumptions, changes in plan be nefits or applicable law.
Rate
Plan
Identifier Benefit Group Name
Total
Normal
Cost
FY 2026-27
Offset due to
Employee
Contributions
FY 2026-27
Employer
Normal
Cost1
FY 2026-27
Number
of
Actives
Payroll on
6/30/2024
5080 Safety Police First Level 38.31% 9.00% 29.31% 27 $6,405,272
30705 Safety Fire First Level N/A N/A N/A 0 0
30706 Safety Fire Second Level 34.07% 9.00% 25.07% 38 8,321,401
30707 Safety Fire Third Level 30.79% 9.00% 21.79% 8 1,585,152
30708 Safety Police Second Level 35.42% 9.00% 26.42% 2 533,933
25006 Safety Fire PEPRA Level 20.54% 11.75% 8.79% 41 6,373,891
25007 Safety Police PEPRA Level 25.65% 11.75% 13.90% 43 6,912,695
Plan Total 29.88% 10.24% 19.64% 159 $30,132,344
1 The employer normal cost for individual rate plans is provided for illustrative purposes only. The employer normal cost rate for
contribution purposes is the blended rate shown in the Plan Total row and is the employer normal cost contribution rate that applies to
the covered payroll of members in every rate plan shown above.
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benef its
such as Employer Paid Member Contributions, then the Normal Cost shown for the respective benefit level does not reflect
those differences. Additionally, if a Second Level Benefit Group amended to the same benefit formula as a First Level Benefit
Group, their Normal Costs may be diss imilar due to demographic or other population differences. For questions in these
situations, please contact a CalPERS actuary.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 132 Packet Pg. 136 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 34
Summary of Valuation Data
June 30, 2023 June 30, 2024
1. Active Members
a) Counts 164 159
b) Average Attained Age
40.02 40.28
c) Average Entry Age to Rate Plan 29.65 29.43
d) Average Years of Credited Service 10.46 10.93
e) Average Annual Covered Payroll $170,377 $189,512
f) Annual Covered Payroll $27,941,899 $30,132,343
g) Projected Annual Payroll for Contribution Year $30,355,352 $32,734,993
h) Present Value of Future Payroll $271,205,520 $282,440,619
2. Transferred Members
a) Counts 61 63
b) Average Attained Age 42.23 42.48
c) Average Years of Credited Service 4.08 4.08
d) Average Annual Covered Payroll $147,916 $155,381
3. Separated Members
a) Counts 65 72
b) Average Attained Age 42.84 43.69
c) Average Years of Credited Service 3.07 2.88
d) Average Annual Covered Payroll $99,985 $102,686
4. Retired Members and Beneficiaries Receiving Payments
a) Counts 458 464
b) Average Attained Age 69.26 69.61
c) Average Annual Benefits $67,186 $68,805
d) Total Annual Benefits $30,771,193 $31,925,393
5. Active to Retired Ratio [(1a) ÷ (4a)] 0.36 0.34
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist
for those who have service in more than one valuation group. This does not result in double counting of liabilities.
Average Annual Benefits represe nts benefit amounts payable by this plan only. Some members may have service with
another agency and would therefore have a larger total benefit than would be included as part of the average shown here.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 133 Packet Pg. 137 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 35
Status of PEPRA Transition
The California Public Employees' Pension Reform Act of 2013 (PEPRA), which took effect in January 2013, changed
CalPERS retirement benefits and placed compensation limits on new members joining CalPERS o n or after January 1, 2013.
One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their
members. While such changes can reduce future benefit costs in a meaningful way, the full impact on empl oyer contributions
will not occur until all active members are subject to the rules and provisions of PEPRA. The table below illustrates the sta tus
of this transition as of June 30, 2024 .
Classic PEPRA
PEPRA
as a Percent
of Total
Active Members
Count 75 84 52.8%
Average Attained Age 47.66 33.70
Average Entry Age 29.32 29.52
Average Years of Credited Service 18.46 4.21
Average Annual Covered Payroll $224,610 $158,174
Annual Covered Payroll $16,845,758 $13,286,585 44.1%
Present Value of Future Payroll $110,611,521 $171,829,098 60.8%
Transferred Members
Count 37 26 41.3%
Separated Members
Count 45 27 37.5%
Retired Members and Beneficiaries Receiving Payments
Count 461 3 0.6%
Average Annual Benefit $68,962 $44,597
Total Annual Benefits $31,791,603 $133,790 0.4%
Accrued Liabilities
Active Members $132,629,111 $13,602,183 9.3%
Transferred Members 12,172,033 2,240,547 15.5%
Separated Members 7,345,114 747,815 9.2%
Retired Members and Beneficiaries 411,245,222 2,407,757 0.6%
Total $563,391,480 $18,998,302 3.3%
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 134 Packet Pg. 138 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 36
Plan's Major Benefit Options
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Police Fire Fire Police Fire Fire Police
Demographics
Actives Yes Yes No No No Yes Yes
Transfers/Separated Yes Yes Yes Yes No Yes Yes
Receiving Yes Yes Yes No Yes Yes Yes
Benefit Group Key 105397 105398 105400 111263 111265 1112 68 111269
Benefit Provision
Benefit Formula 3% @ 50 3% @ 50 3% @ 50 2.7% @ 57 3% @ 55 3% @ 55
Social Security Coverage No No No No No No
Full/Modified Full Full Full Full Full Full
Employee Contribution Rate 9.00% 9.00% 9.00% 9.00%
Final Average Compensation Period One Year One Year One Year Three Year Three Year Three Year
Sick Leave Credit No No No No No No
Non-Industrial Disability Standard Standard Standard Standard Standard Standard
Industrial Disability Standard Standard Standard Standard Standard Standard
Pre-Retirement Death Benefits
Optional Settlement 2 No Yes Yes No Yes No
1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Level 1 Level 1
Special Yes Yes Yes Yes Yes Yes
Alternate (firefighters) No No No No No No
Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
Item 1
Attachment C - CalPERS Safety
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 135 Packet Pg. 139 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 37
Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and op tional plan provisions is in
Appendix B.
Benefit Group
Member Category Fire Police Fire Fire Fire Fire Police
Demographics
Actives Yes Yes No No No No No
Transfers/Separated Yes Yes No No No No No
Receiving No Yes Yes Yes Yes Yes Yes
112653 217220 217221 217224 217225 217226 217231
Benefit Provision
Benefit Formula 2.7% @ 57 2.7% @ 57
Social Security Coverage No No
Full/Modified Full Full
Employee Contribution Rate 11.75% 11.75%
Final Average Compensation Period Three Year Three Year
Sick Leave Credit No No
Non-Industrial Disability Standard Standard
Industrial Disability Standard Standard
Pre-Retirement Death Benefits
Optional Settlement 2 Yes No
1959 Survivor Benefit Level Level 1 Level 1
Special Yes Yes
Alternate (firefighters) No No
Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
Item 1
Attachment C - CalPERS Safety
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 136 Packet Pg. 140 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 38
Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal stand ard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Police Police Police
Demographics
Actives No No No
Transfers/Separated No No No
Receiving Yes Yes Yes
217234 217235 217236
Benefit Provision
Benefit Formula
Social Security Coverage
Full/Modified
Employee Contribution Rate
Final Average Compensation Period
Sick Leave Credit
Non-Industrial Disability
Industrial Disability
Pre-Retirement Death Benefits
Optional Settlement 2
1959 Survivor Benefit Level
Special
Alternate (firefighters)
Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No
COLA 2% 2% 2%
Item 1
Attachment C - CalPERS Safety
Valuation as of June 30, 2024
Item 1: Staff Report Pg. 137 Packet Pg. 141 of 321
Appendix A - Actuarial Methods and Assumptions
• Actuarial Data 40
• Actuarial Methods 40
• Actuarial Assumptions 44
• Miscellaneous 64
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 138 Packet Pg. 142 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 40
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the various
CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and appropriate in aggregate. We
are unaware of any potential data issues that would have a material effect on the results of this valuation, except that data does
not always contain the latest salary information for former members now in reciprocal systems and does not recognize the
potential for unusually large salary deviation in certain cases such as elected officials. Therefore, salary inf ormation in these
cases may not be accurate. These situations are relatively infrequent, however, and generally do not have a material impact o n
the required employer contributions.
Actuarial Methods
Actuarial Cost Method
With one exception, the actuarial cost method use d in this valuation is the Entry Age Actuarial Cost Method. This method is
used to calculate the required employer contributions and the PEPRA member contribution rate. Under this method, the cost of
the projected benefits is allocated on an individual basis as a level percent of earnings for the individual between entry age and
retirement age. The portion allocated to the year following the valuation date is the normal cost. This method yields a total
normal cost rate, expressed as a percentage of payroll, which is designed to remain level throughout the member’s career.
The actuarial accrued liability for active members is then calculated as the present value of benefits minus the present value of
future normal cost, or the portion of the total present value of benefits allocated to prior years. The actuarial accrued liability for
members currently receiving benefits and for members entitled to deferred benefits is equal to the present value of the benef its
expected to be paid. No normal costs are applicable for these pa rticipants.
To calculate the accrued liability on termination basis, this valuation use d the Traditional Unit Credit Actuarial Cost Method. This
method differs from the entry age method only for active members where the accrued liability is the present va lue of benefits
assuming no future pay increases or service accruals.
Amortization of Unfunded Actuarial Accrued Liability
The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded actuarial acc rued
l iability (UAL). Funding requirements are determined by adding the normal cost and a payment toward the UAL. The UAL
payment is equal to the sum of individual amortization payments, each representing a different source of UAL for a given
measurement period.
Amortization payments are determined according to the CalPERS Actuarial Amortization Policy. The board adopted a new
policy effective for the June 30, 2019 , actuarial valua tion. The new policy applies prospectively only; amortization bases
(sources of UAL) established prior to the June 30, 2019 , valuation will continue to be amortized according to the prior policy.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 139 Packet Pg. 143 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 41
Amortization of Unfunded Actuarial Accrued Liability (continued)
Prior Policy (Bases Established on or after June 30, 2013 , and prior to June 30, 2019)
Amortization payments are determined as a level percentage of payroll whereby the payment increases each year at an
escalation rate. Gains or losses are amorti zed over a fixed 30 -year period with a 5 -year ramp up at the beginning and a 5 -year
ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden
handshakes) are amortized over a 20 -year period with no ramp. Changes in actuarial assumptions or changes in actuarial
methodology are amortized over a 20 -year period with a 5 -year ramp up at the beginning and a 5 -year ramp down at the end of
the amortization period. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five
years (20 years prior to June 30, 2014). A summary is provided in the following table:
Driver
Source
(Gain)/Loss
Assumption/Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 30 Years 30 Years 20 Years
20
Years 5 Years
Escalation Rate
- Active Plans
- Inactive Plans
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
Ramp Up 5 5 5 0 0
Ramp Down 5 5 5 0 0
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of
the “full” payment which begins in year five. The 5 -year ramp down means that the reverse is true in the final four years of the
amortization period.
Current Policy (Bases Es tablished on or after June 30, 2019)
Amortization payments are determined as a level dollar amount. Investment gains or losses are amortized over a fixed 20 -year
period with a 5 -year ramp up at the beginning of the amortization period. Non -investment gain s or losses are amortized over a
fixed 20 -year period with no ramps. All changes in liability due to plan amendments (other than golden handshakes) are
amortized over a 20 -year period with no ramps. Changes in actuarial assumptions or changes in actuarial methodology are
amortized over a 20 -year period with no ramps. Changes in unfunded accrued liability due to a Golden Handshake are
amortized over a period of five years. A summary is provided in the table below:
Driver
Source
(Gain)/Loss
Assumption/
Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 20 Years 20 Years 20 Years 20 Years 5 Years
Escalation Rate 0% 0% 0% 0% 0%
Ramp Up 5 0 0 0 0
Ramp Down 0 0 0 0 0
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%, 60% and 80% of
the “full” payment which begins in year five.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 140 Packet Pg. 144 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 42
Amortization of Unfunded Actuarial Accrued Liability (continued)
Exceptions for Inconsistencies
An exception to the amortization rules above is used whenever their application results in inconsistencies. In these cases, a
“fresh start” approach is used. This means that the current unfunded actuarial liability is projected and amortized over a se t
number of years. For example, a fresh start is needed in the following situations:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period, and results in
a large change in the employer contribution requirement .
It should be noted that the actuary may determine that a fresh start is necessary under other circumstances. In all cases of a
fresh start, the period is set by the actuary at what is deemed appropriate; however, the period will not be greater than 20 years.
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Market Value of Assets exceeds the plan’s accrued liability) any prior amortization layers shall be
considered fully amortized, and the surplus shall not be amortized.
In the event of any subsequent unfunded liability, a Fresh Start shall be used with an amortization period of 20 years or les s.
Exceptions for Small Amounts
Where small unfunded liabilities are identi fied in annual valuations which result in small payment amounts, the actuary may
shorten the remaining period for these bases.
• When the balance of a single amortization base has an absolute value less than $250, the amortization period is
reduced to one year.
• When the entire unfunded liability is a small amount , the actuary may perform a Fresh Start and use an appropriate
amortization period.
Exceptions for Inactive Plans
The following exceptions apply to plans classified as Inactive. These plans have no active members and no expectation to have
active members in the future.
• Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay” basis. For
amortization layers, which utilize a ramp up and ramp down, the “u ltimate” payment is constant.
• Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods that are deemed
too long given the duration of the liability. The specific demographics of the plan will be used to deter mine if shorter
periods may be more appropriate.
Exceptions for Inactive Agencies
For a public agency with no active members in any CalPERS rate plan, the unfunded liability shall be amortized over a closed
amortization period of no more than 15 years.
Asset Valuation Method
The Actuarial Value of Assets is set equal to the m arket value of assets. Asset values include accounts receivable.
PEPRA Normal Cost Rate Methodology
Per Government Code s ection 7522.30(b), the “normal cost rate” shall mean the annual actuarially determined normal cost for
the plan of retirement benefits provided to the new member and shall be established based on actuarial assumptions used to
determine the liabilities and costs as part of the annual actuarial valuation. The plan of retirement benefits shall include any
elements that would impact the actuarial determination of the normal cost, including, but not limited to, the retirement form ula,
eligibility and vesting criteria, ancillary benefit provisions, and any automatic co st-of-living adjustments as determined by the
public retirement system.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 141 Packet Pg. 145 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 43
PEPRA Normal Cost Rate Methodology (continued)
For purposes of setting member rates, it is preferable to determine total normal cost using a large active population so that the
rate remains relatively stable. While each CalPERS non -pooled plan has a sufficiently large active population for this purpose,
the PEPRA active population by itself may not be sufficiently large enough yet. The total PEPRA normal cost for each PEPRA
benefit tier will be determined based on the entire active plan population (both PEPRA and Classic) only until the number of
members covered under the PEPRA formula meets either:
1. 50% of the active population, or
2. 25% of the active population and 100 or more PEPRA members
Once one of these conditions is met, the total PEPRA normal cost for each PEPRA benefit tier will be determined using the
entire active PEPRA population.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 142 Packet Pg. 146 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 44
Actuarial Assumptions
In 2021, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic
asset allocation. In November 2021, the board adopted changes to the asset allocation that increased the expec ted volatility of
returns. The adopted asset allocation was expected to have a long -term blended return that continued to support a discount rate
assumption of 6.80%. The board also approved several changes to the demographic assumptions that more closely aligned with
actual experience.
For more details and additional rationale for the selection of the actuarial assumptions, please refer to the 2021 CalPERS
Experience Study and Review of Actuarial Assumptions that can be found on the CalPERS website under: Forms and
Publications. Click on “View All” and search for Experience Study.
All actuarial assumptions (except the discount rates and price inflation ass umption used for the accrued liability on a termination
basis and the interest rate used for the low -default-risk obligation measure ) represent an estimate of future experience rather
than observations of the estimates inherent in market data.
Economic As sumptions
Discount Rate
The prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80% compounded annually (net of
investment and administrative expenses) as of June 30, 2024. The discou nt rate is based on the long-term expected rate of
return on assets using a building -block method in which expected future real rates of return (expected returns, net of pension
plan investment expense and inflation) are developed for each major a s set clas s. The current assumption, originally based on
capital market assumptions developed by the Investment Office in 2021, has been reviewed for this valuation based on capital
market assumptions developed by the Investment Office in 2023.
Termination Liability Discount Rate
The current discount rate assumption used for termination valuations is a weighted average of the 10 -year and 30 -year U.S.
Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The accrued
liabilities on a termination basis in this report use discount rates that are based on the 20-year Treasury rate on the valuation
date.
To illustrate the impact of the variability of interest rates, the accrued liabilities on a termination basis in this report use discount
rates 1% below and 1% above the 20-year Treasury rate on the valuation date. The 20-year Treasury rate was 4.61% on June
30, 2024.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 143 Packet Pg. 147 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 45
Salary Increases
Annual increases vary by category, entry age, and duration of service. A sample of assumed increases due to seniority, merit
and promotion are shown below. Assumed wage inflation is combined with these factors to develop the total expected salary
increases.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0764 0.0621 0.0521
1 0.0663 0.0528 0.0424
2 0.0576 0.0449 0.0346
3 0.0501 0.0381 0.0282
4 0.0435 0.0324 0.0229
5 0.0378 0.0276 0.0187
10 0.0201 0.0126 0.0108
15 0.0155 0.0102 0.0071
20 0.0119 0.0083 0.0047
25 0.0091 0.0067 0.0031
30 0.0070 0.0054 0.0020
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1517 0.1549 0.0631
1 0.1191 0.1138 0.0517
2 0.0936 0.0835 0.0423
3 0.0735 0.0613 0.0346
4 0.0577 0.0451 0.0284
5 0.0453 0.0331 0.0232
10 0.0188 0.0143 0.0077
15 0.0165 0.0124 0.0088
20 0.0145 0.0108 0.0101
25 0.0127 0.0094 0.0115
30 0.0112 0.0082 0.0132
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1181 0.1051 0.0653
1 0.0934 0.0812 0.0532
2 0.0738 0.0628 0.0434
3 0.0584 0.0485 0.0353
4 0.0462 0.0375 0.0288
5 0.0365 0.0290 0.0235
10 0.0185 0.0155 0.0118
15 0.0183 0.0150 0.0131
20 0.0181 0.0145 0.0145
25 0.0179 0.0141 0.0161
30 0.0178 0.0136 0.0179
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 144 Packet Pg. 148 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 46
Salary Increases (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1238 0.1053 0.0890
1 0.0941 0.0805 0.0674
2 0.0715 0.0616 0.0510
3 0.0544 0.0471 0.0387
4 0.0413 0.0360 0.0293
5 0.0314 0.0276 0.0222
10 0.0184 0.0142 0.0072
15 0.0174 0.0124 0.0073
20 0.0164 0.0108 0.0074
25 0.0155 0.0094 0.0075
30 0.0147 0.0083 0.0077
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0275 0.0275 0.0200
1 0.0422 0.0373 0.0298
2 0.0422 0.0373 0.0298
3 0.0422 0.0373 0.0298
4 0.0388 0.0314 0.0245
5 0.0308 0.0239 0.0179
10 0.0236 0.0160 0.0121
15 0.0182 0.0135 0.0103
20 0.0145 0.0109 0.0085
25 0.0124 0.0102 0.0058
30 0.0075 0.0053 0.0019
• The Miscellaneous salary scale is used for Local Prosecutors.
• The Police salary scale is used for Other Safety, Local Sheriff, and School Police.
Price Inflation
2.30% compounded annually.
Termination Liability Price Inflation
The breakeven inflation rate for 20 -year Treasuries on the valuation date, 2.45%.
Wage Inflation
2.80% compounded annually. This is used in projecting individual salary increases.
Payroll Growth
2.80% compounded annu ally. This is used as the escalation rate of the amortization payments on level percent of payroll
amortization bases , that is, on any amortization bases established prior to 2019 for plans that currently have active members.
Miscellaneous Loading Factors
Credit for Unused Sick Leave
Total years of service is increased by 1% for those plans that have adopted the provision of providing Credit for Unused Sick
Leave.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 145 Packet Pg. 149 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 47
Conversion of Employer Paid Member Contributions (EPMC)
Total years of service is increase d by the Employee Contribution Rate for those plans with the provision providing for the
Conversion of Employer Paid Member Contributions (EPMC) during the final compensation period.
Norris Decision (Best Factors)
Employees hired prior to July 1, 1982 , have projected benefit amounts increased in order to reflect the use of “Best Factors” in
the calculation of optional benefit forms. This is due to a 1983 Supreme Court decision, known as the Norris decision, which
required males and females to be treated equally in the determination of benefit amounts. Consequently, anyone already
employed at that time is given the best possible conversion factor when optional benefits are determined. No loading is
necessary for employees hired after July 1, 1982.
Termination Liability
The termination liabilities include a 5% contingency load. This load is for unforeseen improvements in mortality.
Demographic Assumptions
Pre -Retirement Mortality
The mortality assumptions are based on mortality rates resulting from the m ost recent CalPERS Experience Study adopted by
the CalPERS Board in November 2021. For purposes of the mortality rates, the rates incorporate generational mortality to
capture ongoing mortality improvement. Generational mortality explicitly assumes that me mbers born more recently will live
longer than the members born before them thereby capturing the mortality improvement seen in the past and expected
continued improvement. For more details, please refer to the 2021 CalPERS Experience Study and Review of Actuarial
Assumptions report that can be found on the CalPERS website .
Rates vary by age and gender. This table only contains a sample of the 2017 base tab le rates for illustrative purposes. The non -
industrial death rates are used for all plans. The industrial death rates are used for Safety plans , except for local Safety
members described in Government Code s ection 20423.6 where the agency has not specifica lly contracted for industrial death
benefits.
Miscellaneous Safety
Non-Industrial Death Non-Industrial Death Industrial Death
(Not Job-Related) (Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
20 0.00039 0.00014 0.00038 0.00014 0.00004 0.00002
25 0.00033 0.00013 0.00034 0.00018 0.00004 0.00002
30 0.00044 0.00019 0.00042 0.00025 0.00005 0.00003
35 0.00058 0.00029 0.00048 0.00034 0.00005 0.00004
40 0.00075 0.00039 0.00055 0.00042 0.00006 0.00005
45 0.00093 0.00054 0.00066 0.00053 0.00007 0.00006
50 0.00134 0.00081 0.00092 0.00073 0.00010 0.00008
55 0.00198 0.00123 0.00138 0.00106 0.00015 0.00012
60 0.00287 0.00179 0.00221 0.00151 0.00025 0.00017
65 0.00403 0.00250 0.00346 0.00194 0.00038 0.00022
70 0.00594 0.00404 0.00606 0.00358 0.00067 0.00040
75 0.00933 0.00688 0.01099 0.00699 0.00122 0.00078
80 0.01515 0.01149 0.02027 0.01410 0.00225 0.00157
• The pre -retirement mortality rates above are for 2017 and are projected generationally for future years using 80% of
the Society of Actuaries’ Scale MP -2020.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for
industrial death benefits. If so, each non -industrial death rate shown above will be split into two components : 99% will
become the non-industrial death rate and 1% will become the industrial death rate.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 146 Packet Pg. 150 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 48
Post-Retirement Mortality
Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are used for all plans.
Service Retirement
Non-Industrial Disability Industrial Disability
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00267 0.00199 0.01701 0.01439 0.00430 0.00311
55 0.00390 0.00325 0.02210 0.01734 0.00621 0.00550
60 0.00578 0.00455 0.02708 0.01962 0.00944 0.00868
65 0.00857 0.00612 0.03334 0.02276 0.01394 0.01190
70 0.01333 0.00996 0.04001 0.02910 0.02163 0.01858
75 0.02391 0.01783 0.05376 0.04160 0.03446 0.03134
80 0.04371 0.03403 0.07936 0.06112 0.05853 0.05183
85 0.08274 0.06166 0.11561 0.09385 0.10137 0.08045
90 0.14539 0.11086 0.16608 0.14396 0.16584 0.12434
95 0.24665 0.20364 0.24665 0.20364 0.24665 0.20364
100 0.36198 0.31582 0.36198 0.31582 0.36198 0.31582
105 0.52229 0.44679 0.52229 0.44679 0.52229 0.44679
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
• The post-retirement mortality rates above are for 2017 and are projected generationally for future years using 80% of
the Society of Actuaries’ Scale MP -2020.
Marital Status
For active members, a percentage who are married upon retirement is assumed according to the member category as shown in
the following table.
Member Category Percent Married
Miscellaneous Member 70%
Local Police 85%
Local Fire 85%
Other Local Safety 70%
School Police 85%
Local County Peace Officers 75%
Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all plans.
Separated Members
It is assumed that separated members refund immediately if non -vested. Separated members who are vested are assumed to
retire at age 59 for Miscellaneous members and age 54 for Safety members.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 147 Packet Pg. 151 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 49
Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tables
below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.1851 0.1944 0.1769 0.1899 0.1631 0.1824 0.1493 0.1749 0.1490 0.1731 0.1487 0.1713
1 0.1531 0.1673 0.1432 0.1602 0.1266 0.1484 0.1101 0.1366 0.1069 0.1323 0.1037 0.1280
2 0.1218 0.1381 0.1125 0.1307 0.0970 0.1183 0.0815 0.1058 0.0771 0.0998 0.0726 0.0938
3 0.0927 0.1085 0.0852 0.1020 0.0727 0.0912 0.0601 0.0804 0.0556 0.0737 0.0511 0.0669
4 0.0672 0.0801 0.0616 0.0752 0.0524 0.0670 0.0431 0.0587 0.0392 0.0523 0.0352 0.0459
5 0.0463 0.0551 0.0423 0.0517 0.0358 0.0461 0.0292 0.0404 0.0261 0.0350 0.0230 0.0296
10 0.0112 0.0140 0.0101 0.0129 0.0083 0.0112 0.0064 0.0094 0.0048 0.0071 0.0033 0.0049
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1022 0.1317 0.1298 0.1389 0.1086 0.1284
1 0.0686 0.1007 0.0789 0.0904 0.0777 0.0998
2 0.0441 0.0743 0.0464 0.0566 0.0549 0.0759
3 0.0272 0.0524 0.0274 0.0343 0.0385 0.0562
4 0.0161 0.0349 0.0170 0.0206 0.0268 0.0402
5 0.0092 0.0214 0.0113 0.0128 0.0186 0.0276
10 0.0015 0.0000 0.0032 0.0047 0.0046 0.0038
15 0.0000 0.0000 0.0000 0.0000 0.0023 0.0036
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• The police termination and refund rates are also used for Public Agency Local Prosecutors, Other Safety, Local
Sheriff, and School Police.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 148 Packet Pg. 152 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 50
Termination with Refund (continued)
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.2054 0.2120 0.1933 0.1952 0.1730 0.1672 0.1527 0.1392 0.1423 0.1212 0.1318 0.1032
1 0.1922 0.2069 0.1778 0.1883 0.1539 0.1573 0.1300 0.1264 0.1191 0.1087 0.1083 0.0910
2 0.1678 0.1859 0.1536 0.1681 0.1298 0.1383 0.1060 0.1086 0.0957 0.0934 0.0853 0.0782
3 0.1384 0.1575 0.1256 0.1417 0.1042 0.1155 0.0829 0.0893 0.0736 0.0774 0.0643 0.0656
4 0.1085 0.1274 0.0978 0.1143 0.0800 0.0925 0.0622 0.0707 0.0542 0.0620 0.0462 0.0533
5 0.0816 0.0991 0.0732 0.0887 0.0590 0.0713 0.0449 0.0539 0.0383 0.0476 0.0317 0.0413
10 0.0222 0.0248 0.0200 0.0221 0.0163 0.0174 0.0125 0.0128 0.0094 0.0100 0.0063 0.0072
15 0.0106 0.0132 0.0095 0.0113 0.0077 0.0083 0.0058 0.0052 0.0040 0.0039 0.0021 0.0026
20 0.0059 0.0065 0.0050 0.0054 0.0035 0.0036 0.0021 0.0019 0.0010 0.0009 0.0000 0.0000
25 0.0029 0.0034 0.0025 0.0029 0.0018 0.0020 0.0010 0.0012 0.0005 0.0006 0.0000 0.0000
30 0.0012 0.0015 0.0011 0.0013 0.0011 0.0011 0.0010 0.0009 0.0005 0.0005 0.0000 0.0000
35 0.0006 0.0007 0.0006 0.0007 0.0005 0.0006 0.0005 0.0005 0.0003 0.0002 0.0000 0.0000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 149 Packet Pg. 153 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 51
Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tables
below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0381 0.0524 0.0381 0.0524 0.0358 0.0464 0.0334 0.0405 0.0301 0.0380
10 0.0265 0.0362 0.0265 0.0362 0.0254 0.0334 0.0244 0.0307 0.0197 0.0236
15 0.0180 0.0252 0.0180 0.0252 0.0166 0.0213 0.0152 0.0174 0.0119 0.0132
20 0.0141 0.0175 0.0141 0.0175 0.0110 0.0131 0.0079 0.0087 0.0000 0.0000
25 0.0084 0.0108 0.0084 0.0108 0.0064 0.0076 0.0000 0.0000 0.0000 0.0000
30 0.0047 0.0056 0.0047 0.0056 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0038 0.0041 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0272 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0198 0.0126 0.0189
15 0.0048 0.0120 0.0083 0.0144 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0105 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0073 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0037 0.0021 0.0031
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• After termination with vested benefits, a Miscellaneous member is assumed to retire at age 59 and a Safety
member at age 54.
• The Police termination with vested benefits rates are also used for Public Agency Local Prosecutors, Other Safety,
Local Sheriff, and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0359 0.0501 0.0359 0.0501 0.0332 0.0402 0.0305 0.0304 0.0266 0.0272
10 0.0311 0.0417 0.0311 0.0417 0.0269 0.0341 0.0228 0.0265 0.0193 0.0233
15 0.0193 0.0264 0.0193 0.0264 0.0172 0.0220 0.0151 0.0175 0.0123 0.0142
20 0.0145 0.0185 0.0145 0.0185 0.0113 0.0141 0.0080 0.0097 0.0000 0.0000
25 0.0089 0.0123 0.0089 0.0123 0.0074 0.0093 0.0000 0.0000 0.0000 0.0000
30 0.0057 0.0064 0.0057 0.0064 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0040 0.0049 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 150 Packet Pg. 154 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 52
Non-Industrial (Not Job -Related) Disability
Rates vary by age and gender for Miscellaneous plans. Rates vary by age and category for Safety plans.
Miscellaneous Fire Police County Peace Officer Schools
Age Male Female All All All Male Female
20 0.0001 0.0000 0.0001 0.0001 0.0001 0.0000 0.0002
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0002
30 0.0002 0.0003 0.0001 0.0001 0.0001 0.0002 0.0002
35 0.0004 0.0007 0.0001 0.0002 0.0003 0.0005 0.0004
40 0.0009 0.0012 0.0001 0.0002 0.0006 0.0010 0.0008
45 0.0015 0.0019 0.0002 0.0003 0.0011 0.0019 0.0015
50 0.0015 0.0019 0.0004 0.0005 0.0016 0.0027 0.0021
55 0.0014 0.0013 0.0006 0.0007 0.0009 0.0024 0.0017
60 0.0012 0.0009 0.0006 0.0011 0.0005 0.0020 0.0010
• The Miscellaneous non -industrial disability rates are used for Local Prosecutors.
• The police non -industrial disability rates are also used for Other Safety, Local Sheriff, and School Police.
Industrial (Job -Related) Disability
Rates vary by age and category.
Age Fire Police County Peace Officer
20 0.0001 0.0000 0.0004
25 0.0002 0.0017 0.0013
30 0.0006 0.0048 0.0025
35 0.0012 0.0079 0.0037
40 0.0023 0.0110 0.0051
45 0.0040 0.0141 0.0067
50 0.0208 0.0185 0.0092
55 0.0307 0.0479 0.0151
60 0.0438 0.0602 0.0174
• The police industrial disability rates are also used for Local Sheriff and Other Safety.
• 50% of the police industrial disability rates are used for School Police.
• 1% of the police industrial disability rates are used for Local Prosecutors.
• Normally, rates are zero for Miscellaneous plans unless the agency has specifically contracted for industrial
disability benefits. If so, each Miscellaneous non -industrial disability rate will be split into two compone nts: 50% will
become the non -industrial disability rate and 50% will become the industrial disability rate.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 151 Packet Pg. 155 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 53
Service Retirement
Retirement rates vary by age, service, and formula, except for the Safety Half Pay at 55 and 2% at 55 formulas, where
retirement rates vary by age only.
Public Agency Miscellaneous 1.5% at age 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248
Public Agency Miscellaneous 2% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.011 0.014 0.014 0.017 0.017
51 0.017 0.013 0.014 0.010 0.010 0.010
52 0.014 0.014 0.018 0.015 0.016 0.016
53 0.015 0.012 0.013 0.010 0.011 0.011
54 0.006 0.010 0.017 0.016 0.018 0.018
55 0.012 0.016 0.024 0.032 0.036 0.036
56 0.010 0.014 0.023 0.030 0.034 0.034
57 0.006 0.018 0.030 0.040 0.044 0.044
58 0.022 0.023 0.033 0.042 0.046 0.046
59 0.039 0.033 0.040 0.047 0.050 0.050
60 0.063 0.069 0.074 0.090 0.137 0.116
61 0.044 0.058 0.066 0.083 0.131 0.113
62 0.084 0.107 0.121 0.153 0.238 0.205
63 0.173 0.166 0.165 0.191 0.283 0.235
64 0.120 0.145 0.164 0.147 0.160 0.172
65 0.138 0.160 0.214 0.216 0.237 0.283
66 0.198 0.228 0.249 0.216 0.228 0.239
67 0.207 0.242 0.230 0.233 0.233 0.233
68 0.201 0.234 0.225 0.231 0.231 0.231
69 0.152 0.173 0.164 0.166 0.166 0.166
70 0.200 0.200 0.200 0.200 0.200 0.200
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 152 Packet Pg. 156 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 54
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.014 0.017 0.021 0.023 0.024
51 0.013 0.017 0.017 0.018 0.018 0.019
52 0.013 0.018 0.018 0.020 0.020 0.021
53 0.013 0.019 0.021 0.024 0.025 0.026
54 0.017 0.025 0.028 0.032 0.033 0.035
55 0.045 0.042 0.053 0.086 0.098 0.123
56 0.018 0.036 0.056 0.086 0.102 0.119
57 0.041 0.046 0.056 0.076 0.094 0.120
58 0.052 0.044 0.048 0.074 0.106 0.123
59 0.043 0.058 0.073 0.092 0.105 0.126
60 0.059 0.064 0.083 0.115 0.154 0.170
61 0.087 0.074 0.087 0.107 0.147 0.168
62 0.115 0.123 0.151 0.180 0.227 0.237
63 0.116 0.127 0.164 0.202 0.252 0.261
64 0.084 0.138 0.153 0.190 0.227 0.228
65 0.167 0.187 0.210 0.262 0.288 0.291
66 0.187 0.258 0.280 0.308 0.318 0.319
67 0.195 0.235 0.244 0.277 0.269 0.280
68 0.228 0.248 0.250 0.241 0.245 0.245
69 0.188 0.201 0.209 0.219 0.231 0.231
70 0.229 0.229 0.229 0.229 0.229 0.229
Public Agency Miscellaneous 2.5% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.017 0.027 0.035 0.046 0.050
51 0.019 0.021 0.025 0.030 0.038 0.040
52 0.018 0.020 0.026 0.034 0.038 0.037
53 0.013 0.021 0.031 0.045 0.052 0.053
54 0.025 0.025 0.030 0.046 0.057 0.068
55 0.029 0.042 0.064 0.109 0.150 0.225
56 0.036 0.047 0.068 0.106 0.134 0.194
57 0.051 0.047 0.060 0.092 0.116 0.166
58 0.035 0.046 0.062 0.093 0.119 0.170
59 0.029 0.053 0.072 0.112 0.139 0.165
60 0.039 0.069 0.094 0.157 0.177 0.221
61 0.080 0.077 0.086 0.140 0.167 0.205
62 0.086 0.131 0.149 0.220 0.244 0.284
63 0.135 0.135 0.147 0.214 0.222 0.262
64 0.114 0.128 0.158 0.177 0.233 0.229
65 0.112 0.174 0.222 0.209 0.268 0.273
66 0.235 0.254 0.297 0.289 0.321 0.337
67 0.237 0.240 0.267 0.249 0.267 0.277
68 0.258 0.271 0.275 0.207 0.210 0.212
69 0.117 0.208 0.266 0.219 0.250 0.270
70 0.229 0.229 0.229 0.229 0.229 0.229
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 153 Packet Pg. 157 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 55
Service Retirement (continued)
Public Agency Miscellaneous 2.7% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.011 0.016 0.022 0.033 0.034 0.038
51 0.018 0.019 0.023 0.032 0.031 0.031
52 0.019 0.020 0.026 0.035 0.034 0.037
53 0.020 0.020 0.025 0.043 0.048 0.053
54 0.018 0.030 0.040 0.052 0.053 0.070
55 0.045 0.058 0.082 0.138 0.208 0.278
56 0.057 0.062 0.080 0.121 0.178 0.222
57 0.045 0.052 0.071 0.106 0.147 0.182
58 0.074 0.060 0.074 0.118 0.163 0.182
59 0.058 0.067 0.086 0.123 0.158 0.187
60 0.087 0.084 0.096 0.142 0.165 0.198
61 0.073 0.084 0.101 0.138 0.173 0.218
62 0.130 0.133 0.146 0.187 0.214 0.249
63 0.122 0.140 0.160 0.204 0.209 0.243
64 0.104 0.124 0.154 0.202 0.214 0.230
65 0.182 0.201 0.242 0.264 0.293 0.293
66 0.272 0.249 0.273 0.285 0.312 0.312
67 0.182 0.217 0.254 0.249 0.264 0.264
68 0.223 0.197 0.218 0.242 0.273 0.273
69 0.217 0.217 0.217 0.217 0.217 0.217
70 0.227 0.227 0.227 0.227 0.227 0.227
Public Agency Miscellaneous 3% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.025 0.039 0.040 0.044
51 0.041 0.034 0.032 0.041 0.036 0.037
52 0.024 0.020 0.022 0.039 0.040 0.041
53 0.018 0.024 0.032 0.047 0.048 0.057
54 0.033 0.033 0.035 0.051 0.049 0.052
55 0.137 0.043 0.051 0.065 0.076 0.108
56 0.173 0.038 0.054 0.075 0.085 0.117
57 0.019 0.035 0.059 0.088 0.111 0.134
58 0.011 0.040 0.070 0.105 0.133 0.162
59 0.194 0.056 0.064 0.081 0.113 0.163
60 0.081 0.085 0.133 0.215 0.280 0.333
61 0.080 0.090 0.134 0.170 0.223 0.292
62 0.137 0.153 0.201 0.250 0.278 0.288
63 0.128 0.140 0.183 0.227 0.251 0.260
64 0.174 0.147 0.173 0.224 0.239 0.264
65 0.152 0.201 0.262 0.299 0.323 0.323
66 0.272 0.273 0.317 0.355 0.380 0.380
67 0.218 0.237 0.268 0.274 0.284 0.284
68 0.200 0.228 0.269 0.285 0.299 0.299
69 0.250 0.250 0.250 0.250 0.250 0.250
70 0.245 0.245 0.245 0.245 0.245 0.245
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 154 Packet Pg. 158 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 56
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.005 0.008 0.012 0.015 0.019 0.031
53 0.007 0.011 0.014 0.018 0.021 0.032
54 0.007 0.011 0.015 0.019 0.023 0.034
55 0.010 0.019 0.028 0.036 0.061 0.096
56 0.014 0.026 0.038 0.050 0.075 0.108
57 0.018 0.029 0.039 0.050 0.074 0.107
58 0.023 0.035 0.048 0.060 0.073 0.099
59 0.025 0.038 0.051 0.065 0.092 0.128
60 0.031 0.051 0.071 0.091 0.111 0.138
61 0.038 0.058 0.079 0.100 0.121 0.167
62 0.044 0.074 0.104 0.134 0.164 0.214
63 0.077 0.105 0.134 0.163 0.192 0.237
64 0.072 0.101 0.129 0.158 0.187 0.242
65 0.108 0.141 0.173 0.206 0.239 0.300
66 0.132 0.172 0.212 0.252 0.292 0.366
67 0.132 0.172 0.212 0.252 0.292 0.366
68 0.120 0.156 0.193 0.229 0.265 0.333
69 0.120 0.156 0.193 0.229 0.265 0.333
70 0.120 0.156 0.193 0.229 0.265 0.333
Public Agency Fire Half Pay at age 55 and 2% at age 55
Age Rate
Age Rate
50 0.016 56 0.111
51 0.000 57 0.000
52 0.034 58 0.095
53 0.020 59 0.044
54 0.041 60 1.000
55 0.075
Public Agency Police Half Pay at age 55 and 2% at age 55
Age Rate
Age Rate
50 0.026 56 0.069
51 0.000 57 0.051
52 0.016 58 0.072
53 0.027 59 0.070
54 0.010 60 0.300
55 0.167
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 155 Packet Pg. 159 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 57
Service Retirement (continued)
Public Agency Police 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.018 0.077 0.056 0.046 0.043 0.046
51 0.022 0.087 0.060 0.048 0.044 0.047
52 0.020 0.102 0.081 0.071 0.069 0.075
53 0.016 0.072 0.053 0.045 0.042 0.046
54 0.006 0.071 0.071 0.069 0.072 0.080
55 0.009 0.040 0.099 0.157 0.186 0.186
56 0.020 0.051 0.108 0.165 0.194 0.194
57 0.036 0.072 0.106 0.139 0.156 0.156
58 0.001 0.046 0.089 0.130 0.152 0.152
59 0.066 0.094 0.119 0.143 0.155 0.155
60 0.177 0.177 0.177 0.177 0.177 0.177
61 0.134 0.134 0.134 0.134 0.134 0.134
62 0.184 0.184 0.184 0.184 0.184 0.184
63 0.250 0.250 0.250 0.250 0.250 0.250
64 0.177 0.177 0.177 0.177 0.177 0.177
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.054 0.054 0.056 0.080 0.064 0.066
51 0.020 0.020 0.021 0.030 0.024 0.024
52 0.037 0.037 0.038 0.054 0.043 0.045
53 0.051 0.051 0.053 0.076 0.061 0.063
54 0.082 0.082 0.085 0.121 0.097 0.100
55 0.139 0.139 0.139 0.139 0.139 0.139
56 0.129 0.129 0.129 0.129 0.129 0.129
57 0.085 0.085 0.085 0.085 0.085 0.085
58 0.119 0.119 0.119 0.119 0.119 0.119
59 0.167 0.167 0.167 0.167 0.167 0.167
60 0.152 0.152 0.152 0.152 0.152 0.152
61 0.179 0.179 0.179 0.179 0.179 0.179
62 0.179 0.179 0.179 0.179 0.179 0.179
63 0.179 0.179 0.179 0.179 0.179 0.179
64 0.179 0.179 0.179 0.179 0.179 0.179
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 156 Packet Pg. 160 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 58
Service Retirement (continued)
Public Agency Police 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.019 0.053 0.045 0.054 0.057 0.061
51 0.002 0.017 0.028 0.044 0.053 0.060
52 0.002 0.031 0.037 0.051 0.059 0.066
53 0.026 0.049 0.049 0.080 0.099 0.114
54 0.019 0.034 0.047 0.091 0.121 0.142
55 0.006 0.115 0.141 0.199 0.231 0.259
56 0.017 0.188 0.121 0.173 0.199 0.199
57 0.008 0.137 0.093 0.136 0.157 0.157
58 0.017 0.126 0.105 0.164 0.194 0.194
59 0.026 0.146 0.110 0.167 0.195 0.195
60 0.155 0.155 0.155 0.155 0.155 0.155
61 0.210 0.210 0.210 0.210 0.210 0.210
62 0.262 0.262 0.262 0.262 0.262 0.262
63 0.172 0.172 0.172 0.172 0.172 0.172
64 0.227 0.227 0.227 0.227 0.227 0.227
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.006 0.013 0.019 0.025 0.028
51 0.004 0.008 0.017 0.026 0.034 0.038
52 0.005 0.011 0.022 0.033 0.044 0.049
53 0.005 0.034 0.024 0.038 0.069 0.138
54 0.007 0.047 0.032 0.051 0.094 0.187
55 0.010 0.067 0.046 0.073 0.134 0.266
56 0.010 0.063 0.044 0.069 0.127 0.253
57 0.135 0.100 0.148 0.196 0.220 0.220
58 0.083 0.062 0.091 0.120 0.135 0.135
59 0.137 0.053 0.084 0.146 0.177 0.177
60 0.162 0.063 0.099 0.172 0.208 0.208
61 0.598 0.231 0.231 0.231 0.231 0.231
62 0.621 0.240 0.240 0.240 0.240 0.240
63 0.236 0.236 0.236 0.236 0.236 0.236
64 0.236 0.236 0.236 0.236 0.236 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 157 Packet Pg. 161 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 59
Service Retirement (continued)
Public Agency Police 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.124 0.103 0.113 0.143 0.244 0.376
51 0.060 0.081 0.087 0.125 0.207 0.294
52 0.016 0.055 0.111 0.148 0.192 0.235
53 0.072 0.074 0.098 0.142 0.189 0.237
54 0.018 0.049 0.105 0.123 0.187 0.271
55 0.069 0.074 0.081 0.113 0.209 0.305
56 0.064 0.108 0.113 0.125 0.190 0.288
57 0.056 0.109 0.160 0.182 0.210 0.210
58 0.108 0.129 0.173 0.189 0.214 0.214
59 0.093 0.144 0.204 0.229 0.262 0.262
60 0.343 0.180 0.159 0.188 0.247 0.247
61 0.221 0.221 0.221 0.221 0.221 0.221
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.233 0.233 0.233 0.233 0.233 0.233
64 0.234 0.234 0.234 0.234 0.234 0.234
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.095 0.048 0.053 0.093 0.134 0.175
51 0.016 0.032 0.053 0.085 0.117 0.149
52 0.013 0.032 0.054 0.087 0.120 0.154
53 0.085 0.044 0.049 0.089 0.129 0.170
54 0.038 0.065 0.074 0.105 0.136 0.167
55 0.042 0.043 0.049 0.085 0.132 0.215
56 0.133 0.103 0.075 0.113 0.151 0.209
57 0.062 0.048 0.060 0.124 0.172 0.213
58 0.124 0.097 0.092 0.153 0.194 0.227
59 0.092 0.071 0.078 0.144 0.192 0.233
60 0.056 0.044 0.061 0.131 0.186 0.233
61 0.282 0.219 0.158 0.198 0.233 0.260
62 0.292 0.227 0.164 0.205 0.241 0.269
63 0.196 0.196 0.196 0.196 0.196 0.196
64 0.197 0.197 0.197 0.197 0.197 0.197
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 158 Packet Pg. 162 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 60
Service Retirement (continued)
Public Agency Police 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.040 0.040 0.040 0.040 0.040 0.080
51 0.028 0.028 0.028 0.028 0.040 0.066
52 0.028 0.028 0.028 0.028 0.043 0.061
53 0.028 0.028 0.028 0.028 0.057 0.086
54 0.028 0.028 0.028 0.032 0.069 0.110
55 0.050 0.050 0.050 0.067 0.099 0.179
56 0.046 0.046 0.046 0.062 0.090 0.160
57 0.054 0.054 0.054 0.072 0.106 0.191
58 0.060 0.060 0.060 0.066 0.103 0.171
59 0.060 0.060 0.060 0.069 0.105 0.171
60 0.113 0.113 0.113 0.113 0.113 0.171
61 0.108 0.108 0.108 0.108 0.108 0.128
62 0.113 0.113 0.113 0.113 0.113 0.159
63 0.113 0.113 0.113 0.113 0.113 0.159
64 0.113 0.113 0.113 0.113 0.113 0.239
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.005 0.005 0.005 0.008 0.012
51 0.006 0.006 0.006 0.006 0.009 0.013
52 0.012 0.012 0.012 0.012 0.019 0.028
53 0.033 0.033 0.033 0.033 0.050 0.075
54 0.045 0.045 0.045 0.045 0.069 0.103
55 0.061 0.061 0.061 0.061 0.094 0.140
56 0.055 0.055 0.055 0.055 0.084 0.126
57 0.081 0.081 0.081 0.081 0.125 0.187
58 0.059 0.059 0.059 0.059 0.091 0.137
59 0.055 0.055 0.055 0.055 0.084 0.126
60 0.085 0.085 0.085 0.085 0.131 0.196
61 0.085 0.085 0.085 0.085 0.131 0.196
62 0.085 0.085 0.085 0.085 0.131 0.196
63 0.085 0.085 0.085 0.085 0.131 0.196
64 0.085 0.085 0.085 0.085 0.131 0.196
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 159 Packet Pg. 163 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 61
Service Retirement (continued)
Public Agency Police 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.038 0.038 0.038 0.038 0.055 0.089
52 0.038 0.038 0.038 0.038 0.058 0.082
53 0.036 0.036 0.036 0.036 0.073 0.111
54 0.036 0.036 0.036 0.041 0.088 0.142
55 0.061 0.061 0.061 0.082 0.120 0.217
56 0.056 0.056 0.056 0.075 0.110 0.194
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.072 0.072 0.072 0.079 0.124 0.205
59 0.072 0.072 0.072 0.083 0.126 0.205
60 0.135 0.135 0.135 0.135 0.135 0.205
61 0.130 0.130 0.130 0.130 0.130 0.153
62 0.135 0.135 0.135 0.135 0.135 0.191
63 0.135 0.135 0.135 0.135 0.135 0.191
64 0.135 0.135 0.135 0.135 0.135 0.287
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.012 0.018
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.042 0.042 0.042 0.042 0.064 0.096
54 0.057 0.057 0.057 0.057 0.088 0.132
55 0.074 0.074 0.074 0.074 0.114 0.170
56 0.066 0.066 0.066 0.066 0.102 0.153
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.071 0.071 0.071 0.071 0.110 0.164
59 0.066 0.066 0.066 0.066 0.101 0.151
60 0.102 0.102 0.102 0.102 0.157 0.235
61 0.102 0.102 0.102 0.102 0.157 0.236
62 0.102 0.102 0.102 0.102 0.157 0.236
63 0.102 0.102 0.102 0.102 0.157 0.236
64 0.102 0.102 0.102 0.102 0.157 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 160 Packet Pg. 164 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 62
Service Retirement (continued)
Public Agency Police 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.040 0.040 0.040 0.040 0.058 0.094
52 0.038 0.038 0.038 0.038 0.058 0.083
53 0.038 0.038 0.038 0.038 0.077 0.117
54 0.038 0.038 0.038 0.044 0.093 0.150
55 0.068 0.068 0.068 0.091 0.134 0.242
56 0.063 0.063 0.063 0.084 0.123 0.217
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.080 0.080 0.080 0.088 0.138 0.228
59 0.080 0.080 0.080 0.092 0.140 0.228
60 0.150 0.150 0.150 0.150 0.150 0.228
61 0.144 0.144 0.144 0.144 0.144 0.170
62 0.150 0.150 0.150 0.150 0.150 0.213
63 0.150 0.150 0.150 0.150 0.150 0.213
64 0.150 0.150 0.150 0.150 0.150 0.319
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other
Safety.
Public Agency Fire 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.044 0.044 0.044 0.044 0.068 0.102
54 0.061 0.061 0.061 0.061 0.093 0.140
55 0.083 0.083 0.083 0.083 0.127 0.190
56 0.074 0.074 0.074 0.074 0.114 0.171
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 161 Packet Pg. 165 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 63
Service Retirement (continued)
Schools 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.004 0.006 0.007 0.010 0.010
51 0.004 0.005 0.007 0.008 0.011 0.011
52 0.005 0.007 0.008 0.009 0.012 0.012
53 0.007 0.008 0.010 0.012 0.015 0.015
54 0.006 0.009 0.012 0.015 0.020 0.021
55 0.011 0.023 0.034 0.057 0.070 0.090
56 0.012 0.027 0.036 0.056 0.073 0.095
57 0.016 0.027 0.036 0.055 0.068 0.087
58 0.019 0.030 0.040 0.062 0.078 0.103
59 0.023 0.034 0.046 0.070 0.085 0.109
60 0.022 0.043 0.062 0.095 0.113 0.141
61 0.030 0.051 0.071 0.103 0.124 0.154
62 0.065 0.098 0.128 0.188 0.216 0.248
63 0.075 0.112 0.144 0.197 0.222 0.268
64 0.091 0.116 0.138 0.180 0.196 0.231
65 0.163 0.164 0.197 0.232 0.250 0.271
66 0.208 0.204 0.243 0.282 0.301 0.315
67 0.189 0.185 0.221 0.257 0.274 0.287
68 0.127 0.158 0.200 0.227 0.241 0.244
69 0.168 0.162 0.189 0.217 0.229 0.238
70 0.191 0.190 0.237 0.250 0.246 0.254
Schools 2% at age 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.004 0.007 0.010 0.011 0.013 0.015
53 0.004 0.008 0.010 0.013 0.014 0.016
54 0.005 0.011 0.015 0.018 0.020 0.022
55 0.014 0.027 0.038 0.045 0.050 0.056
56 0.013 0.026 0.037 0.043 0.048 0.055
57 0.013 0.027 0.038 0.045 0.050 0.055
58 0.017 0.034 0.047 0.056 0.062 0.069
59 0.019 0.037 0.052 0.062 0.068 0.076
60 0.026 0.053 0.074 0.087 0.097 0.108
61 0.030 0.058 0.081 0.095 0.106 0.119
62 0.053 0.105 0.147 0.174 0.194 0.217
63 0.054 0.107 0.151 0.178 0.198 0.222
64 0.053 0.105 0.147 0.174 0.194 0.216
65 0.072 0.142 0.199 0.235 0.262 0.293
66 0.077 0.152 0.213 0.252 0.281 0.314
67 0.070 0.139 0.194 0.229 0.255 0.286
68 0.063 0.124 0.173 0.205 0.228 0.255
69 0.066 0.130 0.183 0.216 0.241 0.270
70 0.071 0.140 0.196 0.231 0.258 0.289
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 162 Packet Pg. 166 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 64
Miscellaneous
Models
The valuation results are based on proprietary actuarial valuation models. The models are centralized and maintained by a
specialized team to achieve a high degree of accuracy and consistency. The Actuarial Office is responsible for confirming the
appropriateness of the inputs (such as participant data, actuarial methods and assumptions, and plan provisions) as well as
performing tests and validating the reasonableness of the output. The results of our models are independently confirmed by
parallel valuations performed by outside actuaries o n a periodic basis using their models. In our professional judgment, our
actuarial valuation models produce comprehensive pension funding information consistent with the purposes of the valuation
and have no material limitations or known weaknesses.
Internal Revenue Code Section 415 (b)
The limitations on benefits imposed by Internal Revenue Code s ection 415(b) are taken into account in this valuation. Each
year, the impact of any changes in this limitation other than assumed since the prior valuation is included and amortized as part
of the non-investment gain or loss base. This results in lower contributions for those employers contributing to the Replacement
Benefit Fund and protects CalPERS from prefunding expected benefits in excess of limits imposed by federal tax law. The
Section 415(b) dollar limit for the 2024 calendar year is $2 75,000.
Internal Revenue Code Section 401(a)(17)
The limitations on compensation imposed by Internal Revenue Code s ection 401(a)(17) are taken into account in this valuation.
Each year, the impact of any changes in the compensation limitation other than assumed since the prior valuation is included
and amortized as part of the non -investment gain or loss base. The compensation limit for classic members for the 2024
calendar year is $345,000.
PEPRA Compensation Limits
The limitations on compensation for PEPRA members imposed by Government Code section 7522.10 are taken into account in
this valuation. Each year, the impact of any changes in the comp ensation limitation other than assumed since the prior valuation
is included and amortized as part of the non-investment gain or loss base. The PEPRA compensation limit for 2024 is $151,446
for members who participate in Social Security and $181,734 for those who do not. The limits are adjusted annually based on
changes to the CPI for all urban consumers.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 163 Packet Pg. 167 of 321
Appendix B - Principal Plan Provisions
• Service Retirement 66
• Vested Deferred Retirement 68
• Non-Industrial Disability Retirement 68
• Industrial Disability Retirement 69
• Post-Retirement Death Benefit 70
• Form of Payment for Retirement Allowance 70
• Pre-Retirement Death Benefits 71
• Cost-of-Living Adjustments (COLA) 73
• Purchasing Power Protection Allowance (PPPA) 73
• Employee Contributions 74
• Refund of Employee Contributions 74
• 1959 Survivor Benefit 75
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 164 Packet Pg. 168 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 66
The following is a description of the principal plan pr ovisions used in calculating costs and liabilities. We have indicated whether
a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits vary among
employers. Optional benefits that apply to a single p eriod of time, such as Golden Handshakes, have not been included. Many
of the statements in this summary are general in nature, and are intended to provide an easily understood summary of the
Public Employees’ Retirement Law and the California Public Emplo yees’ Pension Reform Act of 2013 . The law itself governs in
all situations.
Service Retirement
Eligibility
A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of age 50 with
at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with
which Ca lPERS has reciprocity agreements). For employees hired into a plan with the 1.5% at age 65 formula, eligibility for
service retirement is age 55 with at least 5 years of service. PEPRA Miscellaneous members become eligible for service
retirement upon attai nment of age 52 with at least 5 years of service.
Benefit
The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final
compensation. The benefit factor depends on the benefit formula specified in the agency’s contract. The table below shows the
factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors for retire ment
at whole year ages:
Miscellaneo us Plan Formulas
Retirement
Age
1.5% at
age 65
2% at
age 60
2% at
age 55
2.5% at
age 55
2.7% at
age 55
3% at
age 60
PEPRA
2% at
age 62
50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A
51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A
52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000%
53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100%
54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200%
55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300%
56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400%
57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500%
58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600%
59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700%
60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800%
61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900%
62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000%
63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100%
64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200%
65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300%
66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400%
67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500%
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 165 Packet Pg. 169 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 67
Classic Safety Plan Formulas
Retirement Age Half Pay at
age 55* 2% at age 55 2% at age 50 3% at age 55 3% at age 50
50 1.783% 1.426% 2.000% 2.400% 3.000%
51 1.903% 1.522% 2.140% 2.520% 3.000%
52 2.035% 1.628% 2.280% 2.640% 3.000%
53 2.178% 1.742% 2.420% 2.760% 3.000%
54 2.333% 1.866% 2.560% 2.880% 3.000%
55 & Up 2.500% 2.000% 2.700% 3.000% 3.000%
* For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of 35 or
greater. If entry age is less than 35, then the age 55 benefit factor is 50% divided by the difference between age 55 and entry
age. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in the above table.
PEPRA Safety Plan Formulas
Retirement Age 2% at age 57 2.5% at age 57 2.7% at age 57
50 1.426% 2.000% 2.000%
51 1.508% 2.071% 2.100%
52 1.590% 2.143% 2.200%
53 1.672% 2.214% 2.300%
54 1.754% 2.286% 2.400%
55 1.836% 2.357% 2.500%
56 1.918% 2.429% 2.600%
57 & Up 2.000% 2.500% 2.700%
• The years of service is the amount credited by CalPERS to a member while he or she is employed in this group (or for other
periods that are recognized under the employer’s contract with CalPERS). For a member who has earned service with
multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s
contract, and then added together for the total allowance. An agency may contract for an optional benefit where any unused
sick leave accumulated at the time of retirement will be co nverted to credited service at a rate of 0.004 years of service for
each day of sick leave.
• The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full -time equivalent
monthly pay (no matter which CalPERS emplo yer paid this compensation). The standard benefit is 36 months. Employers
had the option of providing a final compensation equal to the highest 12 consecutive months for classic plans only. Final
compensation must be defined by the highest 36 consecutive m onths’ pay under the 1.5% at age 65 formula. PEPRA
members have a limit on the annual compensation that can be used to calculate final compensation . The limits are adjusted
annually based on changes to the CPI for all urban consumers.
• PEPRA benefit formul as have no Social Security offsets and Social Security coverage is optional . For Classic benefit
formulas, employees must be covered by Social Security with the 1.5% at age 65 formula. Social Security is optional for all
other Classic benefit formulas. For employees covered by Social Security, the modified formula is the standard benefit.
Under this type of formula, the final compensation is offset by $133.33 (or by one third if the final compensation is less th an
$400). Employers may contract for the full benefit with Social Security that will eliminate the offset applicable to the final
compensation. For employees not covered by Social Security, the full benefit is paid with no offsets. Auxiliary organizations
of the CSUC system may elect reduced contribution rates, in which case the offset is $317 if members are not covered by
Social Security or $513 if members are covered by Social Security.
• The Miscellaneous and PEPRA Safety service retirement benefit is not capped. The Classic Safety service retirement
benefit is capped at 90% of final compensation.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 166 Packet Pg. 170 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 68
Vested Deferred Retirement
Eligibility for Deferred Status
CalPERS members becomes eligible for a deferred vested retirement benefit when they leave employment, keep their
contribution account balance on deposit with CalPERS, and have earned at least 5 years of credited service (total service
across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements).
Eligibility to Start Receiving Benefits
The CalPERS classic members and PEPRA Safety members become eligible to receive the deferred retirement benefit upon
satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired into a 1.5% at
age 65 plan). PEPRA Miscellaneous members become eligible to receive the deferred retirement benefit upon satisfying the
eligibility requirements for deferred status and upon attainment of age 52.
Benefit
The vested deferre d retirement benefit is the same as the service retirement benefit, where the benefit factor is based on the
member’s age at allowance commencement. For members who have earned service with multiple CalPERS employers, the
benefit from each employer is calc ulated separately according to each employer’s contract, and then added together for the total
allowance.
Non-Industrial Disability Retirement
Eligibility
A CalPERS member is eligible for Non -Industrial (non-job related) Disability Retirement if he or she becomes disabled and has
at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems w ith
which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to
perform their job because of an illness or injury, which is expected to be permanent or to last indefinitely. The illness or injury
does n ot have to be job related. A CalPERS member must be actively employed by any CalPERS employer at the time of
disability in order to be eligible for this benefit.
Standard Benefit
The standard Non -Industrial Disability Retirement benefit is a monthly allo wance equal to 1.8% of final compensation, multiplied
by service, which is determined as follows:
• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of
service; or
• Service is CalPERS credited service plus the additional number of years that the member would have worked until age
60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in this case is
33⅓% of final compensation.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 167 Packet Pg. 171 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 69
Improved Benefit
Employers have the option of providing the improved Non -Industrial Disability Retirement benefit. This benefit provides a
monthly allowance equal to 30% of final compensation for the first 5 years of service, plus 1% for eac h additional year of service
to a maximum of 50% of final compensation.
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability b enefit.
Members eligible to retire, and who have attained the normal retirement age determined by their service retirement benefit
formula, will receive the same dollar amount for disability retirement as that payable for service retirement. For members wh o
have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowance
multiplied by the ratio of service with a particular employer to the total CalPERS service.
Industrial Disability Retirement
This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all
Miscellaneous members, employers have the option of providing this benefit. An employer may choose to provide the increased
benefit option or the improved benefit option.
Eligibility
An employee is eligible for Industrial (job related) Disability Retirement if he or she becomes disabled while working, where
disabled means the member is unable to perform the duties of the job because of a work-related illness or injury, which is
expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group is not
eligible for this benefit, except to the extent described below.
Standard Benefit
The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50% of final compensation.
Increased Benefit (75% of Final Compensation)
The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75% of final com pensation for total
disability.
Improved Benefit (50% to 90% of Final Compensation)
The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation Appeals
Board permanent disability rate percentage (if 5 0% or greater, with a maximum of 90%) times the final compensation.
For a CalPERS member not actively employed in this group who became disabled while employed by some other CalPERS
employer, the benefit is a return of accumulated member contributions wit h respect to employment in this group. With the
standard or increased benefit, a member may also choose to receive the annuitization of the accumulated member
contributions.
If a member is eligible for service retirement and if the service retirement bene fit is more than the industrial disability retirement
benefit, the member may choose to receive the larger benefit.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 168 Packet Pg. 172 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 70
Post-Retirement Death Benefit
Standard Lump Sum Payment
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated survivor(s), or to the
retiree’s estate. The lump sum payment amount increases to $2,000 for any death occurring on or after July 1, 2023, due to SB
1168.
Optional Lump Sum Payment
In lieu of the standard lump sum death benefit, e mployers have the option of providing a lump sum death benefit of $600,
$3,000, $4,000 or $5,000.
Form of Payment for Retirement Allowance
Standard Form of Payment
Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The r etiree
may choose to provide for a portion of their allowance to be paid to any designated ben eficiary after the retiree’s death.
CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction in their retirement
allowance. Such reduction takes into account the amount to be provided to the beneficiary and the probable duration of
payments (based on the ages of the member and beneficiary) made subsequent to the member’s death.
Improved Form of Payment (Post-Retirement Survivor Allowance)
Employers have the option to contract for the post-retirement survivor allowance.
For retirement allowances with respect to service subject to a modified Classic formula, 25% of the retirement allowance will
automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in t he retiree’s
allowance. For retirement allowances with respect to service subject to a PEPRA formula or a full or supplemental Classic
formula, 50% of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the deat h of the
retiree, without a reduction in the retiree’s allowance. This additional benefit is referred to as post -retirement survivor allowance
(PRSA) or simply as survivor continuance.
In other words, 25% or 50% of the allowance, the continuance portion , is paid to the retiree for as long as he or she is alive, and
that same amount is continued to the retiree’s spouse (or if no eligible spouse, to unmarried child(ren) until they attain ag e 18;
or, if no eligible child(ren), to a qualifying dependent pare nt) for the rest of their lifetime. This benefit will not be discontinued in
the event the spouse remarries.
The remaining 75% or 50% of the retirement allowance, which may be referred to as the option portion of the benefit, is paid to
the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for some of this option portion to
be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the sam e as
those offe red with the standard form. The reduction is calculated in the same manner but is applied only to the option portion.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 169 Packet Pg. 173 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 71
Pre-Retirement Death Benefits
Basic Death Benefit
This is a standard benefit.
Eligibility
An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed. A
CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. A
member’s survivor who is eligible for any other pre -retirement death benefit may choose to receive that death benefit instead of
this basic death benefit.
Benefit
The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where interest is credited
annually at the greater of 6% or the prevailing discount rate through the date of death, plus a lump sum in the amount of one
month's salary for each completed year of current service, up to a maximum of six months ' salary. For purposes of this benefit,
one month's salary is defined as the member's average monthly full -time rate of compensation during the 12 months preceding
death.
1957 Survivor Benefit
This is a standard benefit.
Eligibility
An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed, has
attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has at
least 5 years of credited service (to tal service across all CalPERS employers and with certain other retirement systems with
which CalPERS has reciprocity agreements). A CalPERS member must be actively employed with the CalPERS employer
providing this benefit to be eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was
married at least one year before death or, if there is no eligible spouse, to the member's unmarried child(ren) under age 18. A
member’s survivor who is eligible for any other pre -retirement death benefit may choose to receive that death benefit instead of
this 1957 Survivor benefit.
Benefit
The 1957 Survivor benefit is a monthly allowance equal to one -half of the unmodified service retirement benefit that the member
would have been en titled to receive if the member had retired on the date of their death. If the benefit is payable to the spouse,
the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent child(ren), the benefit will be
discontinued upon death or attainment of age 18, unless the child(ren) is disa bled. The total amount paid will be at least equal to
the basic death benefit.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 170 Packet Pg. 174 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 72
Optional Settlement 2 Death Benefit
This is an optional benefit.
Eligibility
An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively employed,
has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members, and has
at least 5 years of credited service (total service across all CalPERS employers and with cert ain other retirement systems with
which CalPERS has reciprocity agreements). A CalPERS member who is no longer actively employed with any CalPERS
employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at
least one year before death. A member’s survivor who is eligible for any other pre -retirement death benefit may choose to
receive that death benefit instead of this Optional Settlement 2 Death benefit.
Benefit
The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member would
have received had the member retired on the date of their death and elected 100% to continue to the eligible survivor after the
mem ber’s death. The allowance is payable to the surviving spouse until death , at which time it is continued to any unmarried
child(ren), if applicable. The total amount paid will be at least equal to the basic death benefit.
Special Death Benefit
This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety members and all
Miscellaneous members, employers have the option of providing this benefit.
Eligibility
An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed and the
death is job -related. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this
benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or
illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under
age 22. An eligible survivor who chooses to receive this be nefit will not receive any other death benefit.
Benefit
The special death benefit is a monthly allowance equal to 50 % of final compensation and will be increased whenever the
compensation paid to active employees is increased but ceasing to increase wh en the member would have attained age 50. The
allowance is payable to the surviving spouse until death , at which time the allowance is continued to any unmarried child(ren)
under age 22. There is a guarantee that the total amount paid will at least equal t he basic death benefit.
If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the
performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried chil d(ren) under age 22)
in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following:
• if 1 eligible child: 12.5% of final compensation
• if 2 eligible children: 20.0% of final compensation
• if 3 or more eligible children: 25.0% of final compensation
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 171 Packet Pg. 175 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 73
Alternate Death Benefit for Local Fire Members
This is an optional benefit available only to local fire members.
Eligibility
An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957 Survivor
benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A CalPERS member who
is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the
surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no
eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 18.
Benefit
The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have receive d
had the member retired on the date of their death and elected Optional Settlement 2. (A retiree who elects Optional Settlement 2
receives an allowance that has been reduced so that it will continue to be paid after their death to a surviving beneficiary.) If the
member has not yet attained age 50, the benefit is equal t o that which would be payable if the member had retired at age 50,
based on service credited at the time of death. The allowance is payable to the surviving spouse until death , at which time it is
continued to any unmarried child(ren), if applicable. The t otal amount paid will be at least equal to the basic death benefit.
Cost-of-Living Adjustments (COLA)
Standard Benefit
Retirement and survivor allowances are adjusted each year in May for cost of livin g, beginning the second calendar year after
the year of retirement. The standard cost-of-living adjustment (COLA) is 2%. Annual adjustments are calculated by first
determining the lesser of 1) 2% compounded from the end of the year of retirement or 2) actu al rate of price inflation. The
resulting increase is divided by the total increase provided in prior years. For any given year, the COLA adjustment may be l ess
than 2% (when the rate of price inflation is low), may be greater than the rate of price inflation (when the rate of price inflation is
low after several years of high price inflation) or may even be greater than 2% (when price inflation is high after several years of
low price inflation).
Improved Benefit
Employers have the option of providing a COLA of 3 %, 4%, or 5%, determined in the same manner as described above for the
standard 2 % COLA. An improved COLA is not available with the 1.5% at age 65 formula.
Purchasing Power Protection Allowance (PPPA)
Retirement and survivor allowances are protected against price inflation by PPPA. PPPA benefits are cost-of-living adjustments
that are intended to maintain an individual’s allowance at 80 % of the initial allowance at retirement adjusted for price inflation
since retirement. The PPPA benefit will be coordinated with other cost -of-living adjustments provided under the plan.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 172 Packet Pg. 176 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 74
Employee Contributions
Each employee contributes toward their retirement based upon the retirement formula. The standard employee contribution is as
described below.
• The percent contributed below the monthly compensation breakpoint is 0 %.
• The monthly compensation breakpoint is $0 for all PEPRA members and Classic members covered by a full or
supplemental formula and $133.33 for Classic members covered by a modified formula.
• The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as shown in
the table below.
Benefit Formula Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Miscellaneous, 2% at age 62 50% of the Total Normal Cost
Miscellaneous, 1.5% at age 65 50% of the Total Normal Cost
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
Safety, 2% at age 57 50% of the Total Normal Cost
Safety, 2.5% at age 57 50% of the Total Normal Cost
Safety, 2.7% at age 57 50% of the Total Normal Cost
The employer may choose to “pick -up” these contributions for classic members (Employer Paid Member Contributions or
EPMC). EPMC is prohibited for new PEPRA members.
An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the employer
contribution. These co ntributions are paid in addition to the member contribution.
Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and the
contribution rate is 6 % if members are not covered by Social Security. If members are covered by Social Security, the offset is
$513 and the contribution rate is 5 %.
Refund of Employee Contributions
If the member’s service with the employer ends, and if the member does not sa tisfy the eligibility conditions for any of the
retirement benefits above, the member may elect to receive a refund of their employee contributions, which are credited with 6 %
interest compounded annually.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 173 Packet Pg. 177 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 75
1959 Survivor Benefit
This is a pre -retirement death benefit available only to members not covered by Social Security. Any agency joining CalPERS
subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The benefit is optional
for agencies joining CalPERS prior to 1994. Levels 1, 2 , and 3 are now closed. Any new agency or any agency wishing to add
this benefit or increase the current level may only choose the 4 th or Indexed Level.
This benefit is not included in the results presented in this valuation. More information on this benefit is available on the
CalPERS website.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 174 Packet Pg. 178 of 321
Appendix C - Participant Data
• Active Members 77
• Transferred and Separated Members 78
• Retired Members and Beneficiaries 79
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 175 Packet Pg. 179 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 77
Active Members
Counts of members included in the valuation are counts of the recor ds processed by the valuation. Multiple records may exist
for those who have service in more than one valuation group. This does not result in double counting of liabilities.
Distribution of Active Members by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 5 0 0 0 0 0 5
25-29 17 4 0 0 0 0 21
30-34 21 8 1 0 0 0 30
35-39 6 8 6 1 0 0 21
40-44 3 1 11 12 0 0 27
45-49 1 4 6 5 6 2 24
50-54 0 1 2 4 8 7 22
55-59 0 0 0 1 4 2 7
60-64 0 1 0 0 1 0 2
65 and Over 0 0 0 0 0 0 0
All Ages 53 27 26 23 19 11 159
Distribution of Average Annual Salaries by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-2 4 25+
Average
Salary
15-24 $133,213 $0 $0 $0 $0 $0 $133,213
25-29 139,595 172,721 0 0 0 0 145,905
30-34 152,154 175,930 179,691 0 0 0 159,412
35-39 152,749 181,168 192,543 217,536 0 0 178,030
40-44 164,026 179,691 190,161 239,252 0 0 208,687
45-49 128,565 219,768 216,886 197,438 235,299 300,630 221,216
50-54 0 197,141 201,296 241,500 221,859 244,895 229,767
55-59 0 0 0 197,253 197,423 243,754 210,636
60-64 0 179,691 0 0 228,500 0 204,096
65 and Over 0 0 0 0 0 0 0
Average $146,633 $184,566 $197,332 $227,783 $221,308 $254,821 $189,512
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 176 Packet Pg. 180 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 78
Transferred and Separated Members
Distribution of Transfers to Other CalPERS Plans by Age , Service, and average Salary
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 1 0 0 0 0 0 1 105,797
30-34 9 1 0 0 0 0 10 121,380
35-39 12 4 0 0 0 0 16 156,266
40-44 5 4 2 1 0 0 12 178,798
45-49 11 1 0 1 0 0 13 145,098
50-54 5 1 0 0 0 0 6 185,677
55-59 2 1 0 0 0 0 3 125,869
60-64 2 0 0 0 0 0 2 222,805
65 and Over 0 0 0 0 0 0 0 0
All Ages 47 12 2 2 0 0 63 $155,381
Distribution of Separated Participants with Funds on Deposit by Age, Service, and average Salary
Years of Service at Valuation Date
Attained Age 0-4 5-9 10-14 15-19 20-2 4 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 2 0 0 0 0 0 2 101,507
30-34 6 1 0 0 0 0 7 110,047
35-39 17 1 1 0 0 0 19 107,029
40-44 12 2 1 0 0 0 15 99,359
45-49 9 3 1 1 0 0 14 108,157
50-54 5 1 0 1 0 0 7 105,794
55-59 2 1 0 0 0 0 3 99,434
60-64 4 0 0 0 0 0 4 53,419
65 and Over 0 1 0 0 0 0 1 129,400
All Ages 57 10 3 2 0 0 72 $102,686
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 177 Packet Pg. 181 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 79
Retired Members and Beneficiaries
Distribution of Retirees and Beneficiaries by Age and Retirement Type*
Attained Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 30 0 0 1 0 0 2 3
30 -34 0 0 1 0 0 0 1
35 -39 0 0 0 0 0 1 1
40 -44 0 0 7 0 0 0 7
45 -49 0 0 9 0 0 0 9
50 -54 13 0 10 0 0 0 23
55 -59 50 1 11 0 0 1 63
60 -64 46 0 21 0 1 2 70
65 -69 46 2 18 0 2 3 71
70 -74 31 0 14 0 0 3 48
75 -79 26 1 16 0 0 9 52
80 -84 25 0 13 0 0 20 58
85 and Over 23 1 18 0 0 16 58
All Ages 260 5 139 0 3 57 464
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $54,129 $0 $0 $33,786 $40,567
30-34 0 0 1,884 0 0 0 1,884
35-39 0 0 0 0 0 31,093 31,093
40-44 0 0 77,076 0 0 0 77,076
45-49 0 0 60,963 0 0 0 60,963
50-54 73,908 0 60,307 0 0 0 67,995
55-59 75,782 101 85,498 0 0 27,352 75,508
60-64 102,371 0 83,448 0 61,679 29,729 94,037
65-69 89,302 20,515 84,966 0 44,278 36,622 82,771
70-74 92,638 0 59,761 0 0 35,790 79,496
75-79 66,398 20,949 60,407 0 0 40,370 59,176
80-84 48,498 0 31,319 0 0 46,554 43,977
85 and Over 50,528 18,254 40,233 0 0 34,631 42,391
All Ages $78,998 $16,067 $64,058 $0 $50,078 $39,495 $68,805
* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total counts may not
match information on C-1 of the report. Multiple records may exist for those who have service in more than one coverage group. This does not
result in double counting of liabilities.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 178 Packet Pg. 182 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 80
Retired Members and Beneficiaries (continued)
Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 5 Yrs 52 0 19 0 0 28 99
5-9 37 1 15 0 0 10 63
10-14 57 0 19 0 0 2 78
15-19 38 1 15 0 1 5 60
20-24 35 0 14 0 0 9 58
25-29 15 1 12 0 1 1 30
30 and Over 26 2 45 0 1 2 76
All Years 260 5 139 0 3 57 464
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 5 Yrs $79,034 $0 $73,438 $0 $0 $38,958 $66,625
5-9 80,458 2,447 67,804 0 0 18,438 66,362
10-14 102,583 0 112,612 0 0 29,442 103,151
15-19 73,303 101 80,949 0 61,679 48,444 71,729
20-24 78,330 0 63,600 0 0 57,287 71,509
25-29 38,209 38,582 54,825 0 54,601 61,396 46,187
30 and Over 57,900 19,602 35,322 0 33,955 48,976 42,974
All Years $78,998 $16,067 $64,058 $0 $50,078 $39,495 $68,805
* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total
counts may not match information on C -1 of the report. Multiple records may exist for those who have service in more than one
coverage group. This does not result in double counting of liabilities .
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 179 Packet Pg. 183 of 321
Appendix D - Glossary
Item 1
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Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 180 Packet Pg. 184 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 82
Glossary
Accrued Liability (Actuarial Accrued Liability)
The portion of the Present Value of Benefits allocated to prior years. It can also be expressed as the Present Value of
Benefits minus the present value of future Normal Cost. Different actuarial cost methods and different assumptions will lead
to different measures of Accrued Liability.
Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two
categories: demographic and economic. Demographic assumptions include such things as mortality, disability, and
retirement rates. Economic assumptions include discount rate, wage inflation , and price inflation.
Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include an
actuarial cost method, an amortizatio n policy, and an asset valuation method.
Actuarial Valuation
The determination as of a valuation date of the Normal Cost, Accrued Liability, and related actuarial present values for a
pension plan. These valuations are performed annually or when an employer is contemplating a change in plan provisions.
Actuary
A business professional proficient in mathematics and statistics who measures and manages risk. A public retirement
system actuary in California perform s actuarial valuation s necessary to properly fund a pension plan and disclose its
liabilities and must satisfy the qualification s tandards for actuaries issuing s tatements of actuarial opinion in the United
States with regard to pensions.
Amortization Bases
Separate payment schedules for different po rtions of the Unfunded Accrued Liability (UAL). The total UAL of a rate plan can
be segregated by cause. The impact of such individual causes on the UAL are quantified at the time of their occurrence,
resulting in new amortization bases. Each base is separately amortized and paid for over a specific period of time.
Generally, in an actuarial valuation, the separate bases consist of changes in UAL due to contract amendments, actuarial
assumption changes, method changes, and/or experience gains and losses.
Amortization Period
The number of years required to pay off an Amortization Base.
Classic Member (under PEPRA)
A member who joined a public retirement system prior to January 1, 2013 , and who is not defined as a new member under
PEPRA. (See definition of New Member below.)
Discount Rate
The rate used to discount the expected future benefit payments to the valuation date to determine the Projected Value of
Benefits. Different discount rates will produce different measures of the Projected Value of Benefits. The discount rate for
funding purposes is based on the assumed long-term rate of return on plan assets, net of investment and administrative
expenses. This rate is called the “actuarial interest rate” in Section 20014 of the California Public Employees’ Retirement
Law.
Entry Age
The earliest age at which a plan mem ber begins to accrue benefits under a defined benefit pension plan. In most cases, this
is the age of the member on their date of hire.
Entry Age Actuarial Cost Method
An actuarial cost method that allocates the cost of the projected benefits on an individual basis as a level percent of
earnings for the individual between entry age and retirement age. This method yields a total normal cost rate, expressed as
a percentage of payroll, which is designed to remain level throughout the member’s career.
Fresh Start
A Fresh Start is when multiple amortization bases are combined into a single base and amortized over a new Amortization
Period.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 181 Packet Pg. 185 of 321
CalPERS Actuarial Valuation - June 30, 2024
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 83
Glossary (continued)
Funded Ratio
Defined as the Market Value of Assets divided by the Accrued Liability. Different actuarial cost methods and different
assumptions will lead to different measures of Funded Ratio. The Funded Ratio with the Accrued Liability equal to the
funding target is a measure of how well funded a rate plan is. A ratio greater than 100% me ans the rate plan has more
assets than the funding target and the employer need only contribute the Normal Cost . A ratio less than 100% means
assets are less than the funding target and contributions in addition to Normal Cost are required.
Funded Status
Any comparison of a particular measure of plan assets to a particular measure of pension obligations. The methods and
assumptions used to calculate a funded status should be consistent with the purpose of the measurement.
Funding Target
The Accrued Liability measure upon which the funding requirements are based. The funding target is the Accrued Liability
under the Entry Age Actuarial Cost Method using the assumptions adopted by the board.
GASB 68
Statement No. 68 of the Governmental Acc ounting Standards Board ; the accounting standard governing a state or local
governmental employer’s accounting and financial reporting for pensions.
New Member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system for the first time on or after
January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject
to reciprocity with another public retirement system.
Normal Cost
The portion of the Present Val ue of Benefits allocated to the upcoming fiscal year for active employees. Different actuarial
cost methods and different assumptions will lead to different measures of Normal Cost. The Normal Cost under the Entry
Age Actuarial Cost Method , using the assumptions adopted by the board , plus the required amortization of the UAL, if any,
make up the required contributions.
PEPRA
The California Public Employees’ Pension Reform Act of 2013 .
Present Value of Benefits (PVB)
The total dollars needed as of the valu ation date to fund all benefits earned in the past or expected to be earned in the
future for current members.
Traditional Unit Credit Actuarial Cost Method
An actuarial cost method that sets the Accrued Liability equal to the Present Value of Benefits as suming no future pay
increases or service accruals. The Traditional Unit Credit Cost Method is used to measure the accrued liability on a
termination basis.
Unfunded Accrued Liability (UAL)
The Accrued Liability minus the Market Value of Assets. If the UAL for a rate plan is positive, the employer is required to
make contributions in excess of the Normal Cost.
Item 1
Attachment C - CalPERS
Safety Valuation as of June
30, 2024
Item 1: Staff Report Pg. 182 Packet Pg. 186 of 321
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Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Utilities
Meeting Date: September 16, 2025
Report #:2504-4520
TITLE
Recommendation to the City Council to Adopt a Resolution Amending Utilities Connection Fees
and Service Charges in Utilities Rate Schedules E-15 (Electric Service Connection Charges), W-5
(Water Service Connection Charges), G-5 (Gas Service Connection Charges), S-5 (Wastewater
Service Connection Charges) and C-1 (Utility Miscellaneous Charges), and to Approve
Corresponding Budget Appropriation Revisions for FY 2026. CEQA status: Not a Project.
RECOMMENDATION
Staff requests that the Finance Committee recommend that the City Council adopt a resolution
(Attachment A) amending five Utilities rate schedules which set forth charges for utility
connection charges and service call fees, effective January 1, 2026, and including an annual
increase based on the California Construction Cost Index (CCCI) in fiscal years when a cost of
service study is not performed:
a. E-15 (Electric Service Connection Charges),
b. W-5 (Water Service Connection Charges),
c. G-5 (Gas Service Connection Charges),
d. S-5 (Wastewater Service Connection Charges), and
a. C-1 (Utility Miscellaneous Charges).
EXECUTIVE SUMMARY
The Utilities Department has completed a comprehensive update of its service connection and
service call charges for electric, gas, water, and wastewater services. These revised fees are
designed to recover the full cost of installation, engineering, inspection, equipment, and labor
for standard projects—including new installations, upgrades, relocations, and abandonments.
Non-standard projects will continue requiring a customized work estimate prepared by the
Engineering Divisions.
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The last full cost-of-service study for electric and gas services was conducted in 2019 (Staff Report
#103131), rates have not been changed since that time. Material costs, labor rates, off hauling
costs, and job complexity have increased substantially. As part of the 2025 update, staff
modernized the cost model to improve accuracy and ensure scalability for future fee
adjustments. Beginning in FY 2027, utility connection and service-related fees will be
incorporated into the City’s municipal fee schedule for annual updates. In years without a formal
cost-of-service study, adjustments will follow the California Construction Cost Index (CCCI) as
published by the California Department of General Services (DGS)2. These actions are intended
to alleviate the large increases as recommended in this report in the future.
Key drivers of the fee updates:
Increased labor costs and updated time estimates based on actual field data;
Rising material and disposal expenses, particularly for sand, concrete, rock, and landfill
haul-away;
Updated construction standards and regulatory compliance requirements;
Addition of previously unaccounted services
While staff consistently seek out and implement cost saving measures for electric, water, gas,
and wastewater utility, the proposed increases to connection and service fees are essential to
ensure proper cost recovery, uphold quality service, and promote fairness by aligning fees with
the required work for customer utility services.
BACKGROUND
Staff determines connection charges based on the costs of labor, materials, equipment, changes
that impact the utility’s system requirements, street paving needs, meter costs (where
applicable), and landfill disposal charges.
Connection and service-related costs are recovered via a single charge based on standard
conditions, or a project-specific estimated charge based on unusual, non-standard field
conditions. Most service connection costs are recovered via a single charge, such as rate schedule
E-15’s electric service connection charge for small residential and commercial electric projects
like service panel upgrades. These typically require connection of service wires on the property,
without off-site work on the distribution system. The standard connection fee is based on the
typical engineering and construction labor costs, and material requirements for a standard utility
service connection or upgrade. Projects that do not qualify for a single charge are larger projects
that may require modifications to the electric, water, gas, or wastewater distribution and
collection system, therefore more analysis of design, capacity and construction requirements.
1 Council Meeting June 24, 2019, Item 34: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-
minutes-reports/reports/city-manager-reports-cmrs/year-archive/2019/id-10313-mini-packet-61319.pdf
2 California Construction Cost Index by DGS website: https://www.dgs.ca.gov/RESD/Resources/Page-Content/Real-
Estate-Services-Division-Resources-List-Folder/DGS-California-Construction-Cost-Index-CCCI
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These non-standard projects require a customized cost estimate, prepared by engineering staff
and approved by engineering managers.
ANALYSIS
The proposed connection and service call charges reflect changes in labor rates, material costs,
and time required to complete the work. Labor hours vary depending on the type of service
provided (overhead or underground) and the size of the customer’s new or upgraded service
panel. Underground services tend to cost more due to increased inspection costs for
underground conduits. Large electric panels (e.g. 400amp) tend to cost more due to increased
material costs. The proposed WGW connection charges include updated installation times based
on the average number of hours to complete the services. New items and services were also
added to the rate schedule to cover additional scenarios, new standards, and changing
conditions. A few services which are not common or have not been requested in the past several
years will be removed from the rate schedule. If these instances arise, staff will prepare
customized engineering estimates for non-standard projects to determine the appropriate
charges for special requirements as needed.
Whenever possible, staff see to implement cost saving measures to mitigate the cost for the
provision of these services. Examples include training in-house staff to perform minor saw-
cutting and minor traffic control services instead of hiring contractors. Staff applies boring or
drilling methods whenever possible instead of open trench, which is significantly more costly
and disruptive. For electric, customers are allowed to contract for and install substructures
which can help control project costs. For water, gas, and wastewater, the City reduces costs and
disruption due to economies of scale by consolidating new services, laterals, meters, and
abandonment under a single project. Rate Schedule E-15 (Electric Service Connection Charge) -
(Table 1 and Attachment B)
The updated electric connection fees reflect increased labor hours—particularly for underground
installations and larger service panels—along with higher material costs and inflationary changes
since 2019. Staff developed estimates of labor hours and material requirements necessary to
connect routine types of service connections, i.e. projects that are not complex and do not
require a project-specific engineering estimate. The electric connection fees are only applicable
for instances where the customer is not financially responsible for the cost of distribution
transformer upgrades and do not include the cost of installing or upgrading underground
conduits and substructure that are or will be owned by the City. When the customer is financially
responsible for a transformer upgrade or additional substructure, a project specific estimate will
be prepared for the customer. If the requested service upgrade requires a transformer upgrade,
but that upgrade would be covered by a funded CIP, such as Grid-Mod, the customer will only be
responsible for fees listed within E-15.
Schedule E-15’s fees recover the cost of labor and material necessary to effect the customer’s
request for new or upgraded electric services. Electric service connection charges increased an
average of 28% over a six-year period (average of 4.7% annually). Temporary power fees
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decreased due to fewer hours being required of typical temporary power services. The updated
fee is applicable to 200 amp single-phase temporary power services within 50-feet of a suitable
secondary system (adequate size and capacity to serve the temporary load). For larger temporary
services, or three-phase temporary services, a specific engineering estimate will be developed to
recover the City’s cost to provide these services.
Table 1 - Summary of Electric Common Connection Fee Changes
Type of Service Current Proposed Changes (%)
Underground 200 Amps, Single-Phase $1,040 $3,940 177.5%
Underground 400 Amps, Single-Phase N/A $4,360 NEW
Overhead 200 Amps, Single-Phase $1,040 $2,910 179.8%
Overhead 400 Amps, Single-Phase N/A $3,540 NEW
Temporary Power - Overhead 200A or less $1,190 $1,040 -12.6%
Temporary Power - Underground 200A or less $1,190 $1,060 -10.9%
Rate Schedule G-5 (Gas Service Connection Charges) - (Table 2 and Attachment C)
Revised gas service fees account for higher labor rates, longer installation times, traffic control
requirements, and increased material costs such as concrete, pipe fittings, and imported backfill.
New charges have been added for service abandonments and plan reviews for non-electrification
projects. The significant increase is primarily due to adding cost recovery for materials required
for haul-away, such as sand, concrete, and rock, which were previously unaccounted for in the
2019 fees as native materials may have been used, and to capture the elevated costs of these
services since 2019. On average, gas fees are increasing 35% over the past six years, or an average
of 5.3% annually. A new gas demolition fee for non-electrification project is added for
abandonment of gas service. For qualified electrification projects, customers may receive a
refund for their gas service demolition from Gas Cap and Trade funds.
Table 2 – Summary of Common Gas Service Connection Fees
Type of Service Current Proposed Changes (%)
Plan review for new/remodel commercial building $2,557 $3,536 38%
Install 1" PE gas service connection $5,892 $8,636 47%
Additional pipe for new gas svc 1"-2"$52/ft $69/ft 34%
Gas service pe riser relocation $1,920 $2,791 45%
Add gas meter (up to 630) with existing svc $1,412 $1,585 12%
400 cfh gas meter charge installation $1,191 $1,457 22%
630 cfh gas meter charge installation $1,602 $1,969 23%
Demolition of gas services 1”-2”N/A $6,092 New
Rate Schedule W-5 (Water Service Connection Charges) - (Table 3 and Attachment D)
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The revised water connection and meter installation fees reflect increased labor and material
costs, extended installation durations, and enhanced engineering requirements. Abandonment
and inspection costs have also risen due to updated construction standards. For connection fees
increasing more than 60%, such as the installation of 2” water service connect, the increase is
primarily due to adding cost-recovery for rising haul-away costs of materials such as sand,
concrete, and rock.
New commercial and residential utility installation and abandonment fees are being added,
including commercial 3” water meter installation, 1” and 2” copper water service installation,
and plan review for new or remodel single family residence.
Table 3 – Summary of Common Water Service Connection Fees
Type of Service Current Proposed Changes (%)
Plan review for new /remodel single family residence N/A $635 NEW
Plan review for new/remodel commercial building $3,369 $4,653 32%
1” Copper water service N/A $10,773 NEW
2” Copper water service N/A $11,965 NEW
Install 2" water service connection $7,671 $12,236 60%
Install 8" water service connection $13,170 $19,482 48%
1" water meter installation charge $1,002 $1,318 32%
2" water meter installation charge $1,945 $2,726 40%
3” water meter installation charge N/A $4,478 NEW
Add 2 water meter manifold 1"-2" service $868 $1,037 19%
Abandonment of 3/4"-2" water service $3,341 $6,593 97%
Abandonment of 3"-8" water service $4,439 $8,991 103%
Rate Schedule S-5 (Wastewater Service Connection Charges) - (Table 4 and Attachment E)
Wastewater connection fees have increased more than the other utilities due to deeper
excavation needs, additional labor hours, and higher haul-away costs. Wastewater services are
buried the deepest underground (5 to 10 feet) amongst the utilities. New fees have been
introduced for core drilling and manhole connections, along with updated inspection charges. A
new core drilling and manhole connection fee is added to ensure the City’s manholes are not
damaged when new connections are needed.
Table 4 - Summary of Common Wastewater Service Connection Fees
Type of Service Current Proposed Changes (%)
Plan review for new/remodel commercial building $2,547 $3,520 38%
Install 4" sewer lateral depth up to 6'$8,559 $15,615 82%
Install 6" sewer lateral depth up to 6' $9,846 $17,478 78%
Rehabilitate existing 4" - 6" sewer lateral $5,861 $9,694 65%
Abandonment of 4" or 6" lateral $3,261 $5,142 58%
Eng/inspection sewer lateral installation by other $2,564 $3,508 37%
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Eng/inspection abandon sewer lateral by other $1,603 $2,192 37%
Core drill and manhole connection 8” shallow N/A $5,488 NEW
Core drill and manhole connection 8” deep N/A $6,435 NEW
Utility Miscellaneous Charges (Utility Rate Schedule C-1) - (Attachment F)
Updates to Service charges
Utility Rate Schedule C-1 covers flat rate charges for service calls related to service disconnection
and restoration for non-payment, plus standalone engineering and inspection services. In
addition to the flat rate charges for service calls, Utility hourly labor rates have been revised to
reflect updated labor, benefits and overhead costs. The proposed C-1 hourly labor rate is
increasing by 36% (an average increase of 6% annually) from $152 to $207 for miscellaneous
services during regular business hours. The C-1 hourly rate was last updated in 2019.
Equipment charges
To recover costs associated with vehicles and equipment used during the repair resulting from
third-party damage, or other work performed at the request of the customer. Staff recommends
applying the Caltrans Equipment Rental Rates and Labor Surcharge schedule5 for equal or
comparable City equipment. These equipment rental fees would help offset the expenses for
service and maintenance, which have not been previously billed. Commonly used equipment
involved includes the FSR Van, Service Truck, Backhoe, Dump Truck, and Hydro Excavator.
New cross-connection fees (Table 5)
Staff recommends implementing non-compliance, inspection, and testing charges related to the
City's Cross-Connection Control Program. This program is mandated by the California Health and
Safety Code and the State's newly adopted Cross-Connection Control Policy. Its purpose is to
ensure that backflow prevention assemblies are installed correctly, tested annually, and
maintained as necessary to protect the public drinking water supply. To meet these
responsibilities, the City must monitor compliance, track annual test results, and follow up on
any overdue or failed tests.
The proposed fees are intended to offset the labor and administrative costs associated with
managing non-compliance, including field inspections, testing, reporting, scheduling, and
collections. These charges would apply only when the City must take additional action due to a
customer’s failure to meet program requirements—such as missing testing deadlines, failing to
submit passing test results, or not responding to official notices. This approach promotes fair cost
5 Caltrans Equipment Rental Rates website: https://dot.ca.gov/programs/construction/equipment-rental-rates-
and-labor-surcharge
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recovery, supports the long-term sustainability of the program, and ensures that compliant
customers are not unfairly burdened by the added costs of non-compliant accounts.
In cases where customers fail to respond to multiple notices, requiring site inspections, City-
initiated testing, and internal coordination, the total labor cost can reach approximately $735.56
per incident. The proposed fees aim to recover a portion of these costs while balancing fiscal
responsibility and affordability for customers.
Currently, the City oversees over 4,674 backflow prevention devices, which increases monthly.
There are 334 non-compliant units, including 68 that have been out of compliance for over three
years. These unresolved cases continue to strain City resources, highlighting the need for a fee
structure that promotes timely compliance. Establishing appropriate consequences for inaction
helps encourage responses from non-compliant customers and reduces enforcement burdens.
The City's approach reflects a cost-of-service model that aligns with regulatory expectations and
industry standards while prioritizing equity for compliant customers and supporting the long-
term viability of the Cross-Connection Control Program.
Table 5 – Summary of proposed cross-connection non-compliance fees
New Cross-Connection Control Non-Compliance Fees Per Unit
1.Delinquency Backflow Non-compliance Administration & Processing Fee $57.00
2.Test/certify 1/2”- 16" Reduced Pressure Principal Assemblies (RPPA); Double
Check Valve Assemblies (DC); and Pressure Vacuum Breaker Assemblies (PVB)
$310.00
3.Test/certify 2"- 16” Fire Service Reduced Pressure Principal Detector
Assemblies (RPDA); Double Check Detector Assemblies (DCDA)
$517.50
FISCAL/RESOURCE IMPACT
Based on the proposed rate changes and number of customer service orders in prior years, the
expected change in standard connection fee revenues for FY 2026 with an effective date of
January 1, 2026 is an estimated increase (prorated for 3 months) of approximately $55,000 in the
Electric Fund, $78,000 in the Gas Fund, $67,000 in Wastewater Collection Fund, and $267,000 in
the Water Fund. Staff will monitor activity and bring forward budget adjustments as necessary.
Annual increases to applicable fees and charges will be based on the California Construction Cost
Index (CCCI) as published by Department of General Services (DGS). In years without a formal
cost-of-service study. CCCI-based automatic increases for applicable fees and charges will be
effective annually on July 1st. Staff anticipates adding all utilities connection fees to the municipal
fee schedule beginning in FY 2027.
Staff was unable to identify comparable connection fee rates from other publicly owned utilities
and investor- owned utilities. Most of the agencies did not list standard connection fees because
they charge individually for each connection. Some agencies provided standard connection fees
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but those fees were for material only. The rates set by the Utilities Department includes labor,
materials, off-hauling, and overhead charges. Setting these fees for standard activities provides
greater transparency for customers planning infrastructure changes versus always relying on
individual charge calculations per project.
STAKEHOLDER ENGAGEMENT
Public Noticing
Staff developed the proposed charges in accordance with the Mitigation Fee Act (California
Government Code Section 66000 – 66008), which governs water and wastewater utility
connection and capacity charges. The Act sets forth notice and hearing procedures and requires
that charges be cost-based. Although the City’s gas and electric connection fees and service call
charges are not covered by the Act, the City has followed its procedural and substantive
requirements with respect to these cost-based fees, for transparency and ease of administration.
Government Code 66016 requires that prior to levying a new or increased fee or service charge;
the City Council must hold at least one public meeting to listen to any oral or written
presentations of the charges. Following the Finance Committee, Council will consider approval
of these revised utilities connection charges and service fees. The requested effective date of
January 1, 2026 will be more than 60 days after any Council action.
ENVIRONMENTAL REVIEW
The adoption of a resolution amending charges set forth in Utility Rate Schedule E-15, W-5, S-5,
and G-5 to meet operating expenses and provide service is not subject to the California
Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8)
and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report
and all attachments presented to Council, the Council incorporates these documents herein and
finds that sufficient evidence has been presented setting forth with specificity the basis for this
claim of CEQA exemption.
ATTACHMENTS
Attachment A: Resolution
Attachment B: Rate Schedule E-15_effective_2026-01-01_redline
Attachment C: Rate Schedule G-5_effective_2026-01-01_redline
Attachment D: Rate Schedule W-5_effective_2065-01-01_redline
Attachment E: Rate Schedule S-5_effective_2026-01-01_redline
Attachment F: Rate Schedule C-1_effective_2026-01-01_redline
APPROVED BY:
Alan Kurotori, Utilities Director
Staff: Anna Vuong, Senior Business Analyst
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027082025
Resolution No. _________
Resolution of the Council of the City of Palo Alto Amending Connection and Capacity
Fees for the Electric, Water, Gas, and Wastewater Utilities, and Amending Miscellaneous
Utility Charges (Utility Rate Schedules E-15, G-5, W-5, S-5, And C-1)
R E C I T A L S
A. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of
the City of Palo Alto may by resolution adopt rules and regulations governing
utility services, fees and charges.
B. On Month Day, 2025, at a noticed public hearing, the City Council heard and
approved the proposed amendments to utility connection and capacity fees,
and miscellaneous utility charges.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule E-15 (Electric Service Connection Charges) is hereby amended to
read as attached and incorporated. Utility Rate Schedule E-15, as amended, shall
become effective January 1, 2026.
SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule G-5 (Gas Service Connection Charges) is hereby amended to read
as attached and incorporated. Utility Rate Schedule G-5, as amended, shall become
effective January 1, 2026.
SECTION 3. Pursuant to section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule W-5 (Water Service Connection Charges) is hereby amended to
read as attached and incorporated. Utility Rate Schedule W-5, as amended, shall
become effective January 1, 2026.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule S-5 (Wastewater Service Connection Charges) is hereby amended
to read as attached and incorporated. Utility Rate Schedule S-5, as amended, shall
become effective January 1, 2026.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code,
Utility Rate Schedule C-1 (Utility Miscellaneous Charges) is hereby amended to read as
attached and incorporated. Utility Rate Schedule C-1, as amended, shall become
effective January 1, 2026.
SECTION 6. The Council finds that the revenue derived from the adoption of
this resolution shall be used only for the purpose set forth in Article VII, Section 2, of the
Charter of the City of Palo Alto.
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SECTION 7. The Council finds that the fees and charges adopted by this
resolution are charges imposed for a specific government service or product provided
directly to the payor that are not provided to those not charged, and do not exceed the
reasonable costs to the City of providing the service or product.
SECTION 8. Council finds that the adoption of this resolution is statutorily
exempt from the California Environmental Quality Act (CEQA), pursuant to California
Code of Regulations Title 14, Chapter 3, Section 15273(a), because the fees and charges
proposed are necessary to recover the cost of providing utility service and meet
operating expenses. After reviewing the report presented, the Council incorporates
these documents herein and finds that sufficient evidence has been presented setting
forth with specificity the basis for this claim of CEQA exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney
City Manager
Director of Utilities
Director of Administrative Services
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Attachments:
Utility Rate Schedule E-15
Utility Rate Schedule G-5
Utility Rate Schedule W-5
Utility Rate Schedule S-5
Utility Rate Schedule C-1
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ELECTRIC SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE E-15
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 0101-01-260
Supersedes Sheet No. E-15-1 dated 01-01-209-01-19 Sheet No.E-15-1
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A. APPLICABILITY:
This Rate Schedule applies to all connections, interconnections, expansions, and upgrades to
the City's Electric Distribution System, except connections that serve street lighting or traffic
signals.
B. TERRITORY:
This Rate Schedule applies anywhere the City of Palo Alto provides Electric Service.
C. CHARGES:
All Charges must be pre-paid by the Applicant prior to the scheduling of any construction or
connections to the City's Electrical Distribution System.
1. ADVANCE ENGINEERING FEES
The Applicant must pay all Advance Engineering Fees to start the engineering process which
are non-refundable. The Advance Engineering Fees will be credited against the estimated job
cost prior to the collection of construction fees. For Service connections that do not require a
job estimate, CPAU will not require Advance Engineering Fees.
2. UNDERGROUND SYSTEMS
(A) Service Connection Charges:
Service Connection Charges are required when the City connects any Customer to
the City’s electrical Distribution System. A one-time waiver of this fee may be
granted for Services connected during the construction of an underground conversion
district.
(1) Residential - Single Familyservice, single phase, 200 and 400 amp services
that do not require customer contribution for transformer upgrades.
These fees apply to a development in which Electric Metering will be on a single-
family service basis .
(a) For a 250 volt maximum, 200 amp or less service .............$1,0403,940.00
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ELECTRIC SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE E-15
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 0101-01-260
Supersedes Sheet No. E-15-2 dated 01-01-209-01-19 Sheet No.E-15-2
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(b) For a 250 volt maximum, 400 amp service …………………
$4,360.00 any connection requiring greater capacity the fee shall be
CPAU’s estimate of the installation cost or $1040, whichever is
greater.
(c) For a 250 volt maximum, 200 amp max service from a rear easement the
fee shall be CPAU’s estimate of the installation costs
.................................................................................. $2,330
(d) For any rear easement connection requiring greater capacity, the fee shall
be CPAU’s estimate of the installation cost or $2330, whichever is greater.
(2) Commercial/Industrial
These fees apply to commercial, industrial, and multi-family residential services.
(a) For a 250 volt maximum, 200 amp or less service shall be CPAU’s estimate
of the installation costs. ....................................................................$1,420
(b) For any connection requiring greater capacity, the fee shall be CPAU’s
estimate of the installation costs or $1420, whichever is greater.
(B) On-site Distribution System Charges:
Where CPAU installs or will install the underground conductors (primary or
secondary), switches or transformers in and on facilities provided by the developer
within the boundaries of a sub-division or other development, an on-site distribution
system fee shall be charged, based on CPAU’s estimate of all applicable installation
costs.
(C) Off-Site Distribution System Charges:
Where CPAU installs or will install an Electric Distribution system, system
extension, or system reinforcement outside the boundaries of a sub-division or other
development to be served, an off-site distribution system fee shall apply, based on
CPAU’s estimate of all applicable installation costs.
3. OVERHEAD SYSTEMS
Connection Charges shall apply for all new single-phase Services or Service upgrades
exceeding 2400 amps or less.
(A) Overhead Service Connection Replacement Charges:
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ELECTRIC SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE E-15
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 0101-01-260
Supersedes Sheet No. E-15-3 dated 01-01-209-01-19 Sheet No.E-15-3
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(1) Residential – Single Familyservice, single phase, for 200 amps and 400 amps
services that do not require customer contribution to transformer upgrades.
These fees apply to development in which Electric Metering will be on a single-
family service basis.
(a) For a 250 volt maximum, 200 amp or less, 3 and 4 wire services,
100 feet in length maximum services, and mid-span connection
............................................................................................$1,0402,910.00
(b) For a 250 volt maximum, 4200 amp or less, 3 and 4 wire
services,
100 feet in length maximum services, mid-span connection
$2,3703,540.00
(c) For all other connections, the fee shall be CPAU’s estimate of the
installation cost or $1040, whichever is greater.
(2) Commercial/Industrial
These fees apply to cCharges for commercial, industrial, multi-family
residential Services shall be based on CPAU’s estimate of applicable
costs.
(a) For a 250 volt maximum, 200 amp or less, 3 and 4 wire services,
100 feet in length maximum service ..............................................$1,440
(b) For all others the fee shall be CPAU’s estimate of the installation cost or
$1440, whichever is greater.
(3) Charges for replacement of Overhead Services not described above, shall be
based on CPAU’s estimate of applicable costs.
4. TEMPORARY SERVICE
(A) Overhead Temporary Service Charges:
(1) For a 250 volt, 200 amp or less, 3 wire service,
100 feet in length maximum service .........................................$1,1901,040.00
(2) Fees for a Temporary Service of greater length and capacity or voltage shall be
based on CPAU’s estimate of all applicable installation and removal costs, or
$1,040.001,190, whichever is greater.
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ELECTRIC SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE E-15
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 0101-01-260
Supersedes Sheet No. E-15-4 dated 01-01-209-01-19 Sheet No.E-15-4
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(B) Underground Temporary Service Charges:
(1) For a 250 volt, 200 amp or less, 3-wire maximum service,
If a Service box is available at the property .............................$1,1901,060.00
(2) If a Service box is not available at the property, the Customer will be
responsible for fees to provide a Service box.
(3) Fees for a Temporary Service of greater length and capacity or Voltage shall be
based on CPAU’s estimate of the installation and removal costs, or
$11901,060.00, whichever is greater.
5. GENERATOR INTERCONNECTION
CPAU shall charge a fee for evaluation of Generator (Photo Voltaic (PV), Energy Storage
System (ESS)) Interconnection Applications performed pursuant to Rule and Regulation
27.
(A) Advance Engineering Fees:
(1) Projects with a size less than or equal to 10kW in
capacity………………$520.00
(1) Net Energy Metering projects or projects with a size less than or equal to 10
kW taking Service under the Net Energy Metering Successor Program.........$0
(2) All Projects not covered under section 4(A)(1), which are greater than 10 kW
and less than 100 kW in capacity ................................................$8401,140.00
(3) All Projects not covered under section 4(A)(1), which are greater than or equal
to 100 kW and less than 500 kW in capacity ............................$5,5507,560.00
(4) All Projects not covered under section 4(A)(1), which are 500 kW or greater in
capacity .................................................................................$10,70014,500.00
(B) Detailed Study:
Net Energy Metering projects or projects with a size less than or equal to 10 kW taking Service under the
Net Energy Metering Successor Program)....................................................................................$0
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ELECTRIC SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE E-15
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 0101-01-260
Supersedes Sheet No. E-15-5 dated 01-01-209-01-19 Sheet No.E-15-5
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Detailed Study fees for all Net Energy Metering Projects not covered under
section 4(B)(1) shall be based on CPAU’s estimate of applicable costs.
(C) Interconnection Review Charges:
Net Energy Metering projects or projects taking Service under the Net Energy
Metering Successor Program).........................................................................$0
(1) All projects less than or equal to 10 kW not under section 4(C)(1)….
..........................................................................................................$152520.00
(2) Interconnection fees for all Projects not covered under section 4(C)(1) or
4(C)(2) will be based on CPAU’s estimate of applicable costs.
6. PALO ALTO CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM
Meter maintenance and administrative service Charge for Generators participating in the
Palo Alto Clean Local Energy Accessible Now (CLEAN) Program..............$34.73207.00
DG. CREDITS:
Rebates or credits may be available to defray electric service connection chargers, if the service
upgrade is a result of higher electrical loads caused by electric vehicle charging. For additional
information visit: https://www.paloalto.gov/Departments/Utilities
https://www.cityofpaloalto.org/gov/depts/utl/ or call 650-329-2241.
EH. NOTES:
1. These Charges apply to all vacant land except where the Charges are recorded as previously
paid.
2. CPAU can generally provide service availability from 30 to 45 days after all Charges are
paid except when long lead-time equipment or materials are required. Consult the City for
estimated lead-times.
3.All fees and minimum charges are subject to DGS California Construction Cost Index
(CCCI) adjustments, to be applied annually effective on July 1.
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ELECTRIC SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE E-15
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 0101-01-260
Supersedes Sheet No. E-15-6 dated 01-01-209-01-19 Sheet No.E-15-6
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3.4. CPAU is not responsible for delays in Service connection caused by conditions beyond its
control, including, but not limited to, delays in the arrival of equipment such as
transformers, switches and cable.
{End}
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GAS SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE G-5
Sheet No. G-5-1
Effective 09-01-201901-01-2026
Supersedes Sheet No.G-5-1
dated 05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
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A. TERRITORY:
This Rate Schedule applies everywhere the City of Palo Alto provides Gas Service.
B. CHARGES:
Customer must pay plan review and connection fees in full prior to scheduling any Utility
construction work or inspections. CPAU will mail send invoices to the responsible party listed on
the Service application. All invoices are valid for 90 days from date of issuance. Once CPAU
receives full payment, determines that all applicable Service requirements are met, and the Utilities
Inspector determines that the project is ready for utility installation, CPAU Water, -Gas, and-
Wastewater Utilities Operations (WGW Operations) staff will schedule the project for construction.
Depending on material availability and scheduling constraints, Utility Services are generally
installed 60 to 90 days later. While CPAU staff makes best efforts to install Services as planned,
construction delays may occur as a result of unforeseen conditions. Contact WGW Operations for
scheduling lead-time.
Regular CPAU work hours are 8 AM to 5 PM, Monday through Friday, excluding legal City
holidays. Any work the City deems necessary to be performed during non-regular work hours shall
be charged at the overtime rate per Utility Rate Schedule Rate C-1. Conditions in which work may
need to be performed during non-regular work hours may include, but are not limited to, performing
work on arterial streets, in business districts, in front of major commercial establishments, and near
schools.
1. COMMERCIAL PLAN REVIEW:
New commercial building or remodeling permit valuation greater than $200,000
...........................................................................................................................................$2,557.003
,536.00
New subdivision residential unit
.......................................................................................................................................$379.00520.0
0/unit
System extension of 2-inch polyethylene (PE) Gas main
.............................................................................................................................................$13.0020.
00/ft
2. RESIDENTIAL PLAN REVIEW:
New single-family residential (SFR) building or SFR remodeling permit valuation greater than
$100,000
Item 2
Attachment C Rate Schedule
G-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 19 Packet Pg. 205 of 321
GAS SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE G-5
Sheet No. G-5-2
Effective 09-01-201901-01-2026
Supersedes Sheet No.G-5-2
dated 05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
6
..............................................................................................................................................$924.001
,270.00
3.DISTRIBUTION SYSTEM EXTENSIONDESIGN:
Charge per linear footGas system design .........................................................................$205.00
/ftUtility Estimate
4. DISTRIBUTION SYSTEM EXTENSION:
Charge per linear foot.......................................................................................................$350.00/ft
4.5.CONNECTION FOR SERVICE INSTALLED ON EXISTING MAIN:
Service connection Charges include up to 40 feet of Service Line installation inside the property
line. Service Lines will be installed along the shortest most practical route, as determined by the
Utilities Department (perpendicular from the Gas main in the adjoining street, alley, lane road, or
easement to the nearest suitable Meter location at the building or structure).
Size
1-inch directionally bored connection
........................................................................................................................................$5,892.008
,636.00
2-inch directionally bored connection
........................................................................................................................................$6,999.001
3,439.00
Excess length Charge for directionally bored connection
..........................................................................................................................................$52.0069.0
0 /ft*
1-or 2-inch trenched connection
.......................................................................................................................................$7,126.008
,500.00
2-inch main installation in contractor-provided trench.......................................................$68.00245
/ft
Connections above 2-inches.....................................................................................Utility Estimate
1-or 2-inch excess flow valve (EFV) installation on PE service
.....................................................................................................................................$2,740.006
,713.00
*Excess Length Charge: An additional Charge ($52.0069.00 /foot) will apply to an extension
Item 2
Attachment C Rate Schedule
G-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 20 Packet Pg. 206 of 321
GAS SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE G-5
Sheet No. G-5-3
Effective 09-01-201901-01-2026
Supersedes Sheet No.G-5-3
dated 05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
6
greater than 40 feet from the property line closest to the street, to the Gas Meter location,
measured along a line perpendicular to the street property line.
Replacement of Service connections made necessary because of ordinary wear and deterioration
will be made without Charge. However, if the need for replacement arises due to meeting an
increase in load or relocation of a non- polyethylene (PE) pipe Service, the installation of the
Service will be charged as a new Service.
5. METERS:
250 Cubic Foot Per Hour (CFH) House Meter
............................................................................................................................................$1,012.001
,097.00
250 CFH Curb Meter
............................................................................................................................................$2,124.002
,601.00
400 CFH House Meter
............................................................................................................................................$1,191.001
,457.00
400 CFH Curb Meter
............................................................................................................................................$2,331.002
,782.00
630 CFH House Meter
............................................................................................................................................$1,602.001
,969.00
630 CFH Curb Meter
............................................................................................................................................$2,657.002
,796.00
800 CFH Diaphragm – Commercial House Meter
............................................................................................................................................$1,772.002
,782.00
1000 CFH Diaphragm - Commercial House Meter
............................................................................................................................................$2,213.003
,217.00
1500 CFH Rotary-Commercial House Meter
............................................................................................................................................$2,894.003
,202.00
2000 CFH Rotary-Commercial
............................................................................................................................................$3,924.004
,165.00
Item 2
Attachment C Rate Schedule
G-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 21 Packet Pg. 207 of 321
GAS SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE G-5
Sheet No. G-5-4
Effective 09-01-201901-01-2026
Supersedes Sheet No.G-5-4
dated 05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
6
3000 CFH Rotary-Commercial
...........................................................................................................................................$3,966.004
,278.00
5000 CFH Rotary-Commercial
...........................................................................................................................................$4,469.004
,827.00
7000 CFH Rotary-Commercial
...........................................................................................................................................$5,174.005
,594.00
11000 CFH Rotary-Commercial
.........................................................................................................................................$12,639.001
5,898.00
16000 CFH Rotary-Commercial
.........................................................................................................................................$13,980.001
8,314.00
23000 CFH Rotary-Commercial
.........................................................................................................................................$16,628.00
Utility Estimate
Electronic Volume Corrector System................................................................................Utility
Estimate$5,808.00
Automatic Meter Reading (AMR) Encoder Receiver Transmitter – Diaphragm Meter
..............................................................................................................................................$205.002
32.00
AMR Encoder Receiver Transmitter – Rotary Meter
..............................................................................................................................................$269.003
24.00
Vent line for Gas Regulator
..............................................................................................................................................$385.004
54.00
2-inch bollard (to protect Gas Meter) installation fee
...........................................................................................................................................$394.005
25.00
4-inch bollard (to protect Gas Meter) installation fee
..............................................................................................................................................$564.008
23.00
Other Meter sizes......................................................................................................Utility Estimate
6. ADDITIONAL METERS ON CONNECTION:
These Charges apply to Meters up to 630 CFH. Charges for Meters above 630 CFH will be
Item 2
Attachment C Rate Schedule
G-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 22 Packet Pg. 208 of 321
GAS SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE G-5
Sheet No. G-5-5
Effective 09-01-201901-01-2026
Supersedes Sheet No.G-5-5
dated 05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
6
based on the Utilities Department’s estimate.
Per Meter
With new connection
..............................................................................................................................................$578.006
48.00
On existing Metered connection
...........................................................................................................................................$1,412.001
,585.00
7. SERVICE RELOCATION:
Service riser relocation
...........................................................................................................................................$1,920.002
,791.00
Service riser relocations will only be performed on 1-inch and larger polyethylene (PE) pipe
Service Lines that have been approved by Utilities Department. All Service Lines made of non-
PE materials must be replaced from the main to the Meter at the Charges listed in Section B(64)
of this Rate Schedule.
Curb Meter- Riser relocation on existing 1-inch PE pipe
............................................................................................................................................$1,026.001
,337.00
Curb Meter- New Service from main to house
............................................................................................................................................$2,946.003
,887.00
8. RELOCATION OF FACILITIES:
Approved relocation of Service Lines and other facilities will be done at the cost of the
Applicant. Payment of estimated costs is required before relocation work begins.
9. TAPPING THE GAS MAIN FOR CONTRACTOR-INSTALLED SERVICES:
Tap Gas main for 1- to 2-inch Service
...........................................................................................................................................$1,799.002
,290.00
Tap Gas main for 4- to 6-inch Service
Item 2
Attachment C Rate Schedule
G-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 23 Packet Pg. 209 of 321
GAS SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE G-5
Sheet No. G-5-6
Effective 09-01-201901-01-2026
Supersedes Sheet No.G-5-6
dated 05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
6
...........................................................................................................................................$2,505.002
,864.00
1. ABANDONMENT OF GAS SERVICES:
1-inch to 2-inch Gas service abandonment ………………………………………………… $6,092
1.2.WORK PERFORMED BY OUTSIDE CONTRACTORS:
Engineering and inspection service Charges per Utility Rate Schedule C-1 will apply to utility
work performed by outside contractors, which may be done only with the prior written approval
of the Utilities Department.
C. NON-STANDARD CONDITIONS:
1. Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater, will
result in a cost higher than the Charges set forth in Section B will be classified as non-standard.
The Charge for a non-standard installation will be based on the Engineering Manager's estimate
of the total costs of all materials, labor, and other costs required to complete the installation.
2. In the event Gas Service to a Premise is requested and insufficient capacity exists to provide such
Service, the Applicant shall bear the total cost for designing and enlarging the Distribution
System to accommodate serving the Applicant. The Engineering Manager, Water-Gas-
Wastewater, may require the Applicant to make arrangements for the design and construction of
said expansion in accordance with applicable CPAU Rules and Regulations, standards and
specifications. Alternatively, CPAU may elect for City staff or contractors to design and install
such facilities at the Applicant's expense. Credit to the Applicant will be provided for any over
sizing or extra facilities installed to meet Service demands above the specific capacity needs of
the Applicant.
D. SPECIAL NOTES:
1. All fees and minimum charges are subject to DGS California Construction Cost Index (CCCI)
adjustments, to be applied annually effective on July 1.
{End}
Item 2
Attachment C Rate Schedule
G-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 24 Packet Pg. 210 of 321
WATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE W-5
Sheet No. W-5-1
Effective 09-01-201901-01-2026
Supersedes Sheet No. W-5-1
dated 09-01-201905-01-2015
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
5
A. TERRITORY:
This Rate Schedule applies anywhere the City of Palo Alto provides Water Service.
B. CHARGES:
Customer must pay plan review and connection fees in full prior to scheduling any Utility construction
work or inspections. The invoice will be mailed sent to the responsible party listed on the Service
application. All Invoices are valid for 90 days from date of issuance. Once CPAU receives full
payment, determines that all applicable Service requirements are met, and the Utilities Inspector
determines that the project is ready for utility installation, CPAU Water, Gas, and Wastewater Utilities
Operations (WGW Operations) staff will schedule the project for construction. Depending on material
availability and scheduling constraints, Utility Services will be installed between 60 and 90 days.
While CPAU staff makes best efforts to install Services as planned, construction delays may occur as
a result of unforeseen conditions. Contact WGW Operations for scheduling lead-time.
Regular CPAU work hours are 8 AM to 5 PM, Monday through Friday, excluding legal City holidays.
Any work the City deems necessary to be performed during non-regular work hours shall be charged
at the overtime rate per Utility Rate Schedule Rate C-1. These conditions include but are not limited
to performing work on arterial streets, in business districts, in front of major commercial
establishments, and near schools.
1. PLAN REVIEW:
New single family residence or residential remodel …………………………………………
$635.00
New commercial building or remodeling permit valuation greater than $200,000...........…
$3,369.004,653.00
New subdivision residential unit
……………………………………………………...$378.00526.00/unit
System extension of 8-inch high-density polyethylene (HDPE) Water main
.............................................................................................................................................$13.0019.
00/ft
2. DESIGN:
Water System Design ………………………………………………………………Utility Estimate
2.3.DISTRIBUTION SYSTEM EXTENSION:
City standard 8-inch main, Charge per linear foot
..............................................................................................................................................$252.003
83.00
Item 2
Attachment D Rate
Schedule W-
5_effective_2065-01-
01_redline
Item 2: Staff Report Pg. 25 Packet Pg. 211 of 321
WATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE W-5
Sheet No. W-5-2
Effective 09-01-201901-01-2026
Supersedes Sheet No. W-5-2
dated 09-01-201905-01-2015
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
5
3. SERVICE CONNECTIONS:
Water Service: Domestic, Irrigation, and Fire
Size Amount
1-inch copper connection ………………………………………………………………$10,773.00
2-inch copper connection ………………………………………………………………$11,965.00
2-inch connection
............................................................................................................................................$7,671.001
2,236.00
4-inch connection
............................................................................................................................................$9,932.001
5,030.00
6-inch connection
..........................................................................................................................................$11,274.001
7,.920.00
8-inch connection
..........................................................................................................................................$13,170.001
9,482.00
10-inch connection
..........................................................................................................................................$14,669.002
1,826.00
Replacement of Service connection made necessary because of ordinary wear and deterioration
will be made without Charge. Replacement due to inadequacy because of additional demand or
load will be charged as a new Service connection.
Additional Domestic or Irrigation Services
For Service installations connecting to a pre-existing Service or installations of a new, larger
Service.
2-inch connection
............................................................................................................................................$3,523.005
,626.00
4-inch connection
............................................................................................................................................$4,663.007
,956.00
Item 2
Attachment D Rate
Schedule W-
5_effective_2065-01-
01_redline
Item 2: Staff Report Pg. 26 Packet Pg. 212 of 321
WATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE W-5
Sheet No. W-5-3
Effective 09-01-201901-01-2026
Supersedes Sheet No. W-5-3
dated 09-01-201905-01-2015
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
5
Combination Domestic or Irrigation Water Service and Fire Service
Combination Water Service connections require CPAU approval. If approved, connection
Charges for both the fire Service and the domestic or irrigation Service connection will apply.
Master Water Service
Connections that serve domestic Water Service and fire protection through a detector Meter require
CPAU approval. Applicable Charges for master Water Service connections will be based on
CPAU’s estimate of the total costs, including materials, labor, metering, and all other costs
required for the installation.
4. METERS:
5/8-inch x 3/4-inch Meter
...............................................................................................................................................$795.001
,193.00
1-inch Meter
........................................................................................................................................$1,002.001
,318.00
1 ½-inch Meter
............................................................................................................................................$1,593.002
,509.00
2-inch Meter
........................................................................................................................................$1,945.002
,726.00
3-inch Meter
…………………………………………………………………………………$4,478.00
4-inch Meter
............................................................................................................................................$6,561.007
,259.00
6-inch Meter
............................................................................................................................................$9,324.009
,805.00
Automatic Meter Reading - AMR Encoder Receiver Transmitter
...............................................................................................................................................$108.002
16.00
Item 2
Attachment D Rate
Schedule W-
5_effective_2065-01-
01_redline
Item 2: Staff Report Pg. 27 Packet Pg. 213 of 321
WATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE W-5
Sheet No. W-5-4
Effective 09-01-201901-01-2026
Supersedes Sheet No. W-5-4
dated 09-01-201905-01-2015
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
5
5. CAPACITY CHARGES:
Capacity Charges apply to new Utility Services and added demand on existing Services.
Domestic:
5/8-inch x 3/4-inch Meter...................................................................................................$3,750.00
1-inch Meter.......................................................................................................................$6,250.00
1 ½-inch Meter.................................................................................................................$18,850.00
2-inch Meter.....................................................................................................................$31,250.00
4-inch Meter and larger........................................................By estimate at $125/fixture unit (FU)*
*These charges vary and are based on the total number of fixture units (FU) estimated for the water
supply demand. Water supply fixture units are estimated per California Uniform Plumbing Code.
Fire Service Capacity Charges:
2-inch.....................................................................................................................................$750.00
4-inch..................................................................................................................................$8,425.00
6-inch................................................................................................................................$18,250.00
8-inch................................................................................................................................$30,950.00
10-inch..............................................................................................................................$48,110.00
If a Customer is upgrading the capacity of an existing Service, then the capacity Charge will be
the difference between the new Service size and the existing Service size.
6. ADDITIONAL METERS:
With new connection, up to 2-inch
...........................................................................................................................................$1,381.001
,823.00
With existing connection, up to 2-inch …………………………………………………….2,463
2 Meter Manifold on 2” PE or 1” CU service
..............................................................................................................................................$868.001
,037.00
7. RELOCATION OF FACILITIES:
The costs of CPAU-approved relocation of Services, hydrants, or other facilities will be the
responsibility of the Applicant. Payment of estimated cost is required before relocation work
begins.
Item 2
Attachment D Rate
Schedule W-
5_effective_2065-01-
01_redline
Item 2: Staff Report Pg. 28 Packet Pg. 214 of 321
WATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE W-5
Sheet No. W-5-5
Effective 09-01-201901-01-2026
Supersedes Sheet No. W-5-5
dated 09-01-201905-01-2015
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
5
8. FIRE HYDRANT:
(A) Install new hydrant without lateral
...................................................................................................................................$3,542.005
,135.00
(B) Install new hydrant with lateral
.................................................................................................................................$15,285.002
4,341.00
(C) Relocation behind curb (up to 5 feet)
...................................................................................................................................$8,585.001
3,518.00
Relocations more than 5 feet will require a new lateral and the existing lateral will be disconnected
and abandoned at the main.
9. TAPPING THE WATER MAIN FOR CONTRACTOR-INSTALLED SERVICES:
(A) Tap Water main for 2-inch Service
...................................................................................................................................$1,929.002
,435.00
(B) Tap Water main for 4-inch Service
...................................................................................................................................$2,539.003
,137.00
(C) Tap Water main for 6-inch Service
...................................................................................................................................$3,852.005
,170.00
(D) Tap Water main for 8-inch Service
...................................................................................................................................$5,244.006
,959.00
10. ABANDONMENT:
(A) Small Service 2-inch and less
...................................................................................................................................$3,341.006
,593.00
(B) Large Service more than 2-inch
...................................................................................................................................$4,439.008
,991.00
11. WORK PERFORMED BY OUTSIDE CONTRACTORS:
Engineering and inspection service Charges per Utility Rate Schedule C-1 will apply to utility
work performed by outside contractors, which may be done only with the prior written approval
Item 2
Attachment D Rate
Schedule W-
5_effective_2065-01-
01_redline
Item 2: Staff Report Pg. 29 Packet Pg. 215 of 321
WATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE W-5
Sheet No. W-5-6
Effective 09-01-201901-01-2026
Supersedes Sheet No. W-5-6
dated 09-01-201905-01-2015
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
5
of the Utilities Department.
(A) Engineering and inspection for new 2-inch Service
...................................................................................................................................$1,923.002
,631.00
(B) Engineering and inspection for new 2-inch Service connected to larger Service
...................................................................................................................................$1,282.001
,754.00
(C) Engineering and inspection for new 4-inch to 8-inch Service
...................................................................................................................................$2,885.003
,946.00
(D) Engineering and inspection for new hydrant and Service
...................................................................................................................................$2,885.003
,946.00
(E) Engineering and inspection for abandonment of 2-inch and smaller Service
......................................................................................................................................$962.001
,315.00
(F) Engineering and inspection for abandonment of 3-inch and larger Service
...................................................................................................................................$1,282.001
,754.00
(G) Engineering and inspection for new 8-inch main (per linear foot)
........................................................................................................................................$32.004
4.00
C.NON-STANDARD CONDITIONS:
1. Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater, will
result in a cost higher than the Charges set forth in Section B will be classified as non-standard.
The Charge for a non-standard installation will be based on the Engineering Manager’s estimate
of the total costs of all materials, labor, and other costs required to complete the installation.
2. If CPAU determines that insufficient capacity exists to provide Water Service to an Applicant,
Applicant will be responsible for the CPAU’s costs to complete a hydraulic system capacity study
to determine whether Distribution System upgrades will be required to serve the Applicant, as well
the costs of completing the upgrades deemed necessary by CPAU.
D. SPECIAL NOTES:
1. All fees and minimum charges are subject to DGS California Construction Cost Index (CCCI)
adjustments, to be applied annually effective on July 1.
{End}
Item 2
Attachment D Rate
Schedule W-
5_effective_2065-01-
01_redline
Item 2: Staff Report Pg. 30 Packet Pg. 216 of 321
WASTEWATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE S-5
Sheet No. S-5-1
Effective 09-01-2019 01-01-2026Supersedes Sheet No. S-5-1 dated
05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
4
A. TERRITORY:
This Rate Schedule applies anywhere the City of Palo Alto provides Wastewater Service.
B. CHARGES:
Customer must pay plan review and connection fees in full prior to scheduling any Utility construction
work or inspections. CPAU will mail send invoices to the responsible party listed on the Service
application. All Invoices are valid for 90 days from date of issuance. Once CPAU receives full
payment, determines that all applicable Service requirements are met, and the Utilities Inspector
determines that the project is ready for utility installation. CPAU Water, Gas, and Wastewater Utilities
Operations (WGW Operations) staff will schedule the project for construction. Depending on material
availability and scheduling constraints, Utility Services are generally installed between
60 and 90 days later. While CPAU staff makes best efforts to install Services as planned, construction
delays may occur as a result of unforeseen conditions. Contact WGW Operations for scheduling lead-
time.
Regular CPAU work hours are 8 AM to 5 PM, Monday through Friday, excluding legal City holidays.
Any work the City deems necessary to be performed during non-regular work hours shall be charged
at the overtime rate per Utility Rate Schedule Rate C-1. Conditions in which work may need to be
performed during non-regular work hours may include, but are not limited to, performing work on
arterial streets, in business districts, in front of major commercial establishments, and near schools.
1. PLAN REVIEW:
New single family residential building or remodel ………………………………………...
$635.00
New commercial building or remodeling permit valuation greater than $200,000
.........................................................................................................................................$2,547.003
,520.00
New subdivision residential unit
....................................................................................................................................$172.00232.0
0/unit
System extension 8-inch HDPE Wastewater main
..........................................................................................................................................$24.0034.
00/ft
2. DESIGN:
Wastewater system design fee …………………………………………………… Utility Estimate
Item 2
Attachment E Rate Schedule
S-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 31 Packet Pg. 217 of 321
WASTEWATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE S-5
Sheet No. S-5-2
Effective 09-01-2019 01-01-2026Supersedes Sheet No. S-5-2 dated
05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
4
2. COLLECTION SYSTEM EXTENSIONS:
City standard 8-inch main, Charge per linear foot
........................................................................................................................................$248.00479
.00/ft
3. CONNECTIONS:
4-inch connection, depth at 6 feet and below
.........................................................................................................................................$8,559.001
5,615.00
6-inch connection, depth at 6 feet and below
.........................................................................................................................................$9,846.001
7,478.00
4-inch lateral, depth between 6 feet and 10 feet
.......................................................................................................................................$11,456.002
1,858.00
6-inch lateral, depth between 6 feet and 10 feet
......................................................................................................................................$12,186.002
2,938.00
Rehabilitation of existing lateral by pipe bursting
........................................................................................................................................$5,861.009
,694.00
Connections of sewer laterals over 25 feet in length will be charged for the additional footage at
a rate of $106206/linear foot for 4-inch connections and $110213/linear foot for 6-inch
connections.
Special arrangements must be made for connections larger than 6-inch. CPAU will estimate the
cost which will serve as the basis for a Customer deposit. Upon receipt of this deposit CPAU
will install the connection and the Customer will be responsible for the actual costs that exceed
the deposit amount.
4. REPLACEMENT OR RELOCATION OF FACILITIES:
Replacement of Lateral connections made necessary because of ordinary wear and
deterioration will be made without Charge. Replacement due to inadequacy because of increased
demand or load, relocation due to location will be charged as a new connection.
Item 2
Attachment E Rate Schedule
S-5_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 32 Packet Pg. 218 of 321
WASTEWATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE S-5
Sheet No. S-5-3
Effective 09-01-2019 01-01-2026Supersedes Sheet No. S-5-3 dated
05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
4
Costs associated with CPAU-approved relocation of lateral, and other facilities are the
responsibility of the Applicant. Payment of estimated costs is required before relocation work
begins.
5. CAPACITY CHARGES:
4-inch connection with 5/8-inch Water Meter (WM).....................................................$5,250.00
4-inch connection with 1-inch WM..............................................................................$10,500.00
4- or 6-inch connection with 1-1/2-inch WM...............................................................$31,668.00
6-inch connection with 2-inch WM..............................................................................$52,500.00
6-inch and larger connection with 4-inch or larger WM.........................By estimate at $210/FU*
* FU = fixture unit (1 FU = 15 gallons per day).
Capacity upgrades to an existing Lateral will be calculated as the difference between the new
Lateral size and the existing Lateral size.
6. INSTALL AND CORE DRILL MANHOLE:
(A) Depth, 6 feet or less
..............................................................................................................................$12,952.001
8,404.00
(B) Depth, greater than 6 feet
..............................................................................................................................$16,346.002
4,812.00
(C) Core Drill and Connection Tap to Manhole (Shallow) ……………………………...
$5,488.00
(D) Core Drill and Connection Tap to Manhole (Deep) …………………………………
$6,435.00
7. ABANDONMENT AND DEMOLITION:
(A) Sewer Lateral
................................................................................................................................$3,261.005
,142.00
8. INSTALL SEWER CLEANOUT
........................................................................................................................................$2,523.004
,240.00
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WASTEWATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE S-5
Sheet No. S-5-4
Effective 09-01-2019 01-01-2026Supersedes Sheet No. S-5-4 dated
05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
4
9. WORK PERFORMED BY OUTSIDE CONTRACTORS:
Engineering and inspection service Charges per Utility Rate Schedule C-1 will apply to utility
work performed by outside contractors, which may be done only with the prior written approval of
the Utilities Department.
(A) Engineering and inspection for new lateral
................................................................................................................................$2,564.003
,508.00
(B) Engineering and inspection for new main (per lineal foot)
.....................................................................................................................................$40.005
5.00
(C) Engineering and inspection for new manhole
................................................................................................................................$3,205.004
,385.00
(D) Engineering and inspection for lateral abandonment
................................................................................................................................$1,603.002
,192.00
C. NON-STANDARD CONDITIONS
1. Any condition which, in the opinion of the Engineering Manager, Water-Gas-Wastewater,
will result in a cost higher than the Charges set forth in Section B will be classified as non-
standard. The Charge for a non-standard installation will be based on the Engineering
Manager’s estimate of the total costs of all materials, labor, and other costs required to
complete the installation.
2. In the event Wastewater Service to a Premise is requested and insufficient capacity exists to
provide such Service, the Applicant shall bear the total cost for flow monitoring the existing
main to determine remaining capacity, design of new sewer main and construction cost for
enlarging the collection system to accommodate serving the Applicant. The Engineering
Manager, Water-Gas-Wastewater may require the Applicant to make arrangements for the
design and construction of said expansion in accordance with applicable CPAU Rules and
Regulations, standards and specifications. Alternatively, CPAU may elect for City staff or
contractors to design and install such facilities at the Applicant’s expense.
3. PUMPING PLANTS:
If the development requires a pumping facility to drain into the City’s Wastewater collection
system, the developer is responsible for the cost of construction of the pumping plant and the on-
going plant operation and maintenance costs.
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WASTEWATER SERVICE CONNECTION CHARGES
UTILITY RATE SCHEDULE S-5
Sheet No. S-5-5
Effective 09-01-2019 01-01-2026Supersedes Sheet No. S-5-5 dated
05-01-201509-01-2019
CITY OF PALO ALTO UTILITIES
Issued by the City Council
8
6
6
4
A. SPECIAL NOTES:
1. All fees and minimum charges are subject to DGS California Construction Cost Index (CCCI)
adjustments, to be applied annually effective on July 1.
{End}
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S-5_effective_2026-01-
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Item 2: Staff Report Pg. 35 Packet Pg. 221 of 321
UTILITY MISCELLANEOUS CHARGES
UTILITY RATE SCHEDULE C-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 04/03/2301/01/26
Supersedes Sheet No.C-1-1 dated 09/1/1904/03/23 Sheet No.C-1-1
8
6
6
2
Charges under this Rate Schedule may be either mailed sent to the responsible party in a
form of invoice or added to the regular monthly Utilities bill of the Customer receiving the
Service, and non-payment may result in termination of Service.
Charges During Charges After
Regular Hours1 Regular Hours
A. SERVICE CALLS AND OTHER SERVICE WORK:
1.Setting Electric Meter2 No Charge
$204.00263.00
Disconnection of Service
for non-payment of Utilities Charges $152.00207.00
Not applicable
Restoration of Service following
disconnection for non-payment of Utilities Charges $152.00 $207.00
$204.00 263.00
Restoration of Electric Service at power pole following
disconnection for non-payment of Utilities Charges $390.00304.00
$526.00 408.00
B. LABOR, ENGINEERING AND INSPECTION RATES PER HOUR PER
PERSON:
1. Service provided during regular work hours $152.00 $207.00
Not applicable
2. Service provided on overtime basis where the
overtime is scheduled at the City's convenience. Not applicable
$178.00243.00
3. Service provided on overtime basis where the
overtime is scheduled at the Customer's convenience. Not applicable
$204.00279.00
1 Regular hours are 8am to 5pm, Monday through Friday, excluding legal City holidays.
2 For Water Meters see Utility Rate Schedule W-5, for Gas Meters see Utility Rate Schedule G-5.
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C-1_effective_2026-01-
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UTILITY MISCELLANEOUS CHARGES
UTILITY RATE SCHEDULE C-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 04/03/2301/01/26
Supersedes Sheet No.C-1-1 dated 09/1/1904/03/23 Sheet No.C-1-1
8
6
6
2
C. EQUIPMENT CHARGES SeeCPAU will charge the latest published
Caltrans Equipment Rental Rates and Labor Surcharge for equal or comparable City
equipment. See at
https://dot.ca.gove/programs/construction/equipment-rental- r
ates-and-labor-surcharges
D. RETURNED PAYMENTS: See City of Palo Alto Municipal Fee
Schedule.
DE. LATE PAYMENTS: Two percent (2%) of unpaid balance of Utilities
Charges
EF. DEPOSITS:
Customer deposit for Meter accuracy test $0-300.00 Not
applicable
GF. AMI OPT-OUT FEES:
1. Set Up Charge $100.00 Not applicable
2. Monthly $25.00 Not applicable
H. CROSS-CONNECTION CONTROL NON-COMPLIANCE FEES Charge Per
Unit
1. Delinquency Backflow Prevention Assembly Non-Compliance Administrative &
Processing Fee
$57.00
2. Test/certify 1/2”- 16" Reduced Pressure Principle Assemblies (RPPA);
Double Check Valve Assemblies (DCVA);
and Pressure Vacuum Breaker Assemblies (PVB)
$310.00
3. Test/certify 2"- 16” Fire Service Reduced Pressure Principle Assemblies (RPDA);
Fire Service
Double Check Detector Assemblies (DCDA)
$517.50
Item 2
Attachment F Rate Schedule
C-1_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 37 Packet Pg. 223 of 321
UTILITY MISCELLANEOUS CHARGES
UTILITY RATE SCHEDULE C-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 04/03/2301/01/26
Supersedes Sheet No.C-1-1 dated 09/1/1904/03/23 Sheet No.C-1-1
8
6
6
2
I. SPECIAL NOTES:
1. All fees and minimum charges are subject to California Construction Cost Index
(CCCI) adjustments, to be applied annually effective on July 1.
{End}
Item 2
Attachment F Rate Schedule
C-1_effective_2026-01-
01_redline
Item 2: Staff Report Pg. 38 Packet Pg. 224 of 321
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: IT Department
Meeting Date: September 16, 2025
Report #:2507-5015
TITLE
Recommendation to City Council to Approve Purchase Order C26195416 with Carahsoft,
Utilizing a General Services Administration Blanket Purchase Agreement, to Procure SAP S/4
HANA Suite of Products and Corresponding Software and Hosting Services for a 5-Year Term for
a Not-To-Exceed Amount of $6,640,429; and Approve a Budget Amendment in the Technology
Fund; CEQA Status - Not a Project
RECOMMENDATION
Staff recommend that the Finance Committee recommend the City Council:
a. Approve and authorize the City Manager or their designee to execute PO C26195416
with Carahsoft, utilizing a General Services Agreement (GSA) Blanket Purchase
Agreement Contract Number 47QSWA18D008F, to procure SAP S/4HANA suite of
products and corresponding software and hosting services for a 5-year term (December
31, 2025 to December 31, 2030), with a total not-to-exceed amount of $6,640,429
(Attachment A).
b. Amend the Fiscal Year 2026 Budget Appropriation for the Technology Fund by [requires
a two-thirds approval by the Council]:
a. Increasing the expenditure appropriation for the Enterprise Resource Planning
Upgrade 2026 Project (TE-19000) in the Information Technology Department by
$1,660,000
b. Decreasing the Technology Reserve by $1,660,000
EXECUTIVE SUMMARY
Approval of this contract and subsequent consulting services would result in the upgrade of the
City’s Enterprise Resource Planning (ERP) system, currently SAP, to the most current version.
Support for the version of the SAP ERP platform the City operates on will end on January 1,
2028 requiring the City to either upgrade or replace the system or assume increased risk on an
unsupported platform which is not recommended. In total, this upgrade is estimated to cost
$13.6 million over five years, net of incentives estimated to save the City $3.4 million if contract
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is signed by the end of September 2025. Once transitioned, this new licensing contract will
increase ongoing annual costs, approximately $660,000 above the current $1 million baseline
(this is expected in years three through five).
BACKGROUND
The City has relied on SAP as its core Enterprise Resource Planning (ERP) system since 2003,
enabling integration and support for key business functions such as Finance, Human Resources,
Payroll, Procurement, Budgeting, and Utilities. Over time, the City has continued to invest in the
platform—most notably with a major upgrade in 2021 that transitioned the system to SAP
HANA, enabled cloud hosting, improved performance, and introduced single sign-on (SSO).
These improvements have delivered meaningful gains in efficiency, accuracy, and user
experience.
In 2017, the City evaluated the feasibility of replacing SAP through a formal RFP process.
However, after reviewing vendor proposals, it was determined that the cost of a full system
replacement significantly exceeded capacity to procure and support the implementation of a
new system. The City chose to continue with SAP and invest in strategic upgrades to extend the
value of its existing system.1
SAP has announced that support for the current SAP ERP platform will end on January 1, 2028.
Running the system beyond this date would introduce increased risk, including the loss of
vendor support, potential security vulnerabilities, and limited access to future enhancements.
Staff recommends migrating to SAP S/4HANA—SAP’s latest cloud-based ERP platform along
with other SAP’s latest components. This next-generation system will preserve existing
customizations and enhancements, while offering expanded capabilities such as enhanced
cybersecurity, browser-based access, and built-in artificial intelligence and machine learning
features. These tools can support further automation, better data insights, and improved
service delivery across departments.
SAP will be hosting their S/4HANA ERP system and other related components on private cloud
infrastructure. As part of this migration, SAP will now offer support on both software and their
associate infrastructure.
To achieve this, staff recommends procuring various SAP ERP components and associated cloud
infrastructure through Carahsoft, a vendor leveraging General Service Agreement (GSA)
Contract Number 47QSWA18D008F1.2 A cooperative purchasing agreement allows multiple
1 Informational ERP System Status Report
https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-
cmrs/year-archive/2019/id-9826-info-report-erp-system-status.pdf?t=49717.34
2 GSA Contract: 47QSWA18D008F
https://www.gsaadvantage.gov/ref_text/47QSWA18D008F/100V5C.3VR800_47QSWA18D008F_47QSWA18D008F-
11-24-2024-565316.PDF
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entities to purchase goods and services at negotiated rates and are created by combining the
buying needs of multiple entities to achieve a more economical purchase.
Professional expertise is required to successfully implement S/4 HANA and related software
solutions. To support this migration the City is looking to enter into an agreement with an SAP
authorized professional services provider that will provide technical support for this upgrade,
the contract is estimated to be four to five million in one-time costs. Once the business
requirements are finalized, staff will return to Council with the contract and necessary budget
actions to appropriate funds from the Technology Reserve for this project.
ANALYSIS
Approval of this purchase order will enable the City to meet critical compliance, support, and
security needs with regards to City’s Enterprise Resource Planning software suite. Migrating to
S/4HANA aligns with the City’s long-term IT strategy and mitigates the risk of operating
unsupported systems after SAP ends maintenance for the current ERP in 2028.
SAP has offered the City a Transformation Incentive for its cloud services — a cloud credit
valued at $1,583,053 as well as no annual cost increase over the term — available through
SAP’s partner, Carahsoft. In total, this incentive is estimated to save the City $3.4 million if
contract is signed by the end of September 2025. Carahsoft is a technology solutions provider
that services the public sector. The agreement includes language allowing the city to cancel for
convenience prior to the start date if needed.
Table #1: Cost Summary (December 2025 – December 2030)
Year Annual Cost
Year 1 (2025–2026)$1,659,489
Year 2 (2026–2027)$1,660,107
Year 3 (2027–2028)$1,660,107
Year 4 (2028–2029)$1,660,107
Year 5 (2029–2030)$1,660,107
Cloud Credit ($1,583,053)
Total (5 Years)$6,640,429
FISCAL/RESOURCE IMPACT
The ERP system upgrade is expected to cost the City a total of $13.6 million over the first 5
years, including implementation and transition costs as well as the recommended software and
hosting services costs. The recommended agreement will add approximately $660,000 in
additional SAP licensing costs on top of the current $1 million baseline in years three through
five, upon full implementation. During the initial year, the City must maintain its existing SAP
licensing, hosting, and maintenance agreements; total costs in the first year will be higher than
in subsequent years. In addition, staff anticipates returning to Council with a separate contract
for one-time implementation and migration services associated with S/4 HANA, which will also
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be funded primarily from the Technology Reserve. Once fully implemented, the legacy licenses,
hosting, and maintenance agreements will be retired and no longer required.
Funding for the first and second year, including this purchase order, is available in the
Technology Fund, specifically the Technology Reserve. This Reserve is intended to cover system
upgrades costs such as these. The FY 2026 forecasted ending balance for the Technology
Reserve is $18 million. If this budget amendment is approved, the reserve balance is anticipated
to be $16.4 million at year-end. For years 3–5, the costs will be allocated to City departments
through the Internal Service Fund process and appropriated annually, subject to Council
approval as part of the annual budget process.
The Information Technology (IT) Department is funded by an Internal Service Fund (ISF) that
allocates costs across the City to provide technology-related services to other departments and
funds. Approximately 49% of services are provided to the General Fund, with the remaining
51% supporting Enterprise, special revenue, and other internal service funds.
STAKEHOLDER ENGAGEMENT
The services were coordinated with internal stakeholders and the service provider.
ENVIRONMENTAL REVIEW
The approval of these contracts is exempt from review under the California Environmental
Quality Act (CEQA) under CEQA Guidelines section 15061(c)(3) because it can be seen that
there is no possibility that the activity in question may have a significant effect on the
environment.
ATTACHMENTS
Attachment A: Purchase Order with Carahsoft – C26195416 for S4 HANA
APPROVED BY:
Darren Numoto, Chief Information Officer;
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Item 3: Staff Report Pg. 4 Packet Pg. 228 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
TO:Jitendra Kulkarni
IT Enterprise Systems Manager
City Of Palo Alto
250 Hamilton Ave
2nd Floor
Palo Alto, CA 94301 USA
EMAIL:jitendra.kulkarni@cityofpaloalto.org
PHONE: (925) 216-6256
FROM:Jonathan Gutierrez
Carahsoft Technology Corp.
11493 Sunset Hills Road
Suite 100
Reston, Virginia 20190
EMAIL:Jonathan.Gutierrez@carahsoft.com
PHONE: (571) 662-3375 FAX: (703) 871-8505
TERMS:GSA Schedule No: 47QSWA18D008F
Term: August 22, 2018 - August 21, 2028
FTIN: 52-2189693
Shipping Point: FOB Destination
Credit Cards: VISA/MasterCard/AMEX
Remit To: Same as Above
Payment Terms: Net 30 (On Approved Credit)
Cage Code: 1P3C5
DUNS No: 088365767
UEI: DT8KJHZXVJH5
Business Size: Other than Small
Sales Tax May Apply
QUOTE NO:57709533
QUOTE DATE:07/17/2025
QUOTE EXPIRES:09/30/2025
RFQ NO:
SHIPPING:ESD
TOTAL PRICE:$1,659,489.13
TOTAL QUOTE:$1,659,489.13
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
BASE YEAR
1 8008678a-611 SAP S/4HANA Cloud, Digital Access, private edition (1-
1000 Tier; Block Of 1000 Document; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008678a
Start Date: 12/31/2025
End Date: 12/30/2026
$52.63 GSA 50 $2,631.50
2 8011726-1-Infinite-611 SAP Cloud, memory extension for productive tiers, private
edition (1-Infinite Tier; Block Of 256 Gigabyte; Minimum of
1 Block; Per Year)
SAP Industries, Inc. - 8011726-1-Infinite
Start Date: 12/31/2025
End Date: 12/30/2026
$26,315.79 GSA 1 $26,315.79
3 8011727-1-Infinite-611 SAP Cloud, memory extension for non-productive tiers,
private edition (1-Infinite Tier; Block Of 256 Gigabyte;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011727-1-Infinite
Start Date: 12/31/2025
End Date: 12/30/2026
$15,789.47 GSA 1 $15,789.47
4 8008794-611 SAP Additional File Storage, private cloud edition (1-
Infinite Tier; Block Of 128 Gigabyte; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008794
Start Date: 12/31/2025
End Date: 12/30/2026
$1,052.63 GSA 12 $12,631.56
5 8008910a-611 SAP Core Human Capital Management Cloud, private
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8008910a
Start Date: 12/31/2025
End Date: 12/30/2026
$22.97 GSA 1,100 $25,267.00
6 8008911a-611 SAP Time Tracking Cloud, private edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008911a
Start Date: 12/31/2025
End Date: 12/30/2026
$19.15 GSA 1,100 $21,065.00
CONFIDENTIAL
PAGE 1 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 5 Packet Pg. 229 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
7 8008783a-611 SAP Payroll Processing, private cloud edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008783a
Start Date: 12/31/2025
End Date: 12/30/2026
$36.37 GSA 1,100 $40,007.00
8 8011504-1-2000-611 SAP U.S. Payroll Tax Calculation by BSI, private cloud
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8011504-1-2000
Start Date: 12/31/2025
End Date: 12/30/2026
$13.59 GSA 1,100 $14,949.00
9 8018116-1-100-611 SAP S/4HANA Cloud Private Edition, utilities (1-100 Tier;
Block Of 1000 Point of Delivery; Minimum of 25 Blocks;
Per Year)
SAP Industries, Inc. - 8018116-1-100
Start Date: 12/31/2025
End Date: 12/30/2026
$372.05 GSA 100 $37,205.00
10 8008690-611 SAP S/4HANA Cloud, additional non-productive tier,
private edition (S) (1-Infinite Tier; Block Of 1 Tenant;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8008690
Start Date: 12/31/2025
End Date: 12/30/2026
$110,526.32 GSA 1 $110,526.32
11 8011084-611 SAP long-term backup, monthly cloud backup with 1-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011084
Start Date: 12/31/2025
End Date: 12/30/2026
$3,789.47 GSA 2 $7,578.94
12 8011088-611 SAP long-term backup, yearly backup with 4-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011088
Start Date: 12/31/2025
End Date: 12/30/2026
$1,368.42 GSA 2 $2,736.84
13 8019271-1-infinite-611 SAP Business Data Cloud, core capacity (1-Infinite Tier;
Block Of 1 Capacity Unit; Minimum of 640 Block; Per Year)
SAP Industries, Inc. - 8019271-1-infinite
Start Date: 01/01/2026
End Date: 12/31/2026
$9.9311 GSA 31,762 $315,431.60
14 8019709-1-Infinite-611 Customer-Managed Data Products (1-Infinite Tier;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8019709-1-Infinite
Start Date: 01/01/2026
End Date: 12/31/2026
$15,771.45 GSA 1 $15,771.45
15 8019361-271-410-611 SAP Cloud ERP Private (271-410 Tier; Block Of 1 Full Use
Equivalent; Minimum of 60 Block; Per Year)
SAP Industries, Inc. - 8019361-271-410
Start Date: 12/31/2025
End Date: 12/30/2026
$2,650.22 GSA 313 $829,518.86
16 8016532-1-Infinite-611 SAP AI Unit (1-Infinite Tier; Block of 100 Capacity Unit; Per
Year)
SAP Industries, Inc. - 8016532-1-Infinite
Start Date: 12/31/2025
End Date: 12/30/2026
$586.47 GSA 140 $82,105.80
17 8010751-611 Cloud Platform Enterprise Agreement, reseller edition
($12121-Infinite Tier; Block of 1 Spend Volumes; Per Year)
SAP Industries, Inc. - 8010751
Start Date: 12/31/2025
End Date: 12/30/2026
$1.05 GSA 20,000 $21,000.00
CONFIDENTIAL
PAGE 2 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 6 Packet Pg. 230 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
18 8019676-1001-5000-611 WalkMe Premium for SAP S/4HANA Private Cloud Edition
(1001-5000 Tier; Block Of 1 Active User; Minimum of 100
Block; Per Year)
SAP Industries, Inc. - 8019676-1001-5000
Start Date: 12/31/2025
End Date: 12/30/2026
$71.78 GSA 1,100 $78,958.00
BASE YEAR SUBTOTAL:$1,659,489.13
SUBTOTAL:$1,659,489.13
TOTAL PRICE:$1,659,489.13
TOTAL QUOTE:$1,659,489.13
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
YEAR 2
19 8008678a-611 SAP S/4HANA Cloud, Digital Access, private edition (1-
1000 Tier; Block Of 1000 Document; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008678a
Start Date: 12/31/2026
End Date: 12/30/2027
$52.63 GSA 50 $2,631.50
20 8011726-1-Infinite-611 SAP Cloud, memory extension for productive tiers, private
edition (1-Infinite Tier; Block Of 256 Gigabyte; Minimum of
1 Block; Per Year)
SAP Industries, Inc. - 8011726-1-Infinite
Start Date: 12/31/2026
End Date: 12/30/2027
$26,315.79 GSA 1 $26,315.79
21 8011727-1-Infinite-611 SAP Cloud, memory extension for non-productive tiers,
private edition (1-Infinite Tier; Block Of 256 Gigabyte;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011727-1-Infinite
Start Date: 12/31/2026
End Date: 12/30/2027
$15,789.47 GSA 1 $15,789.47
22 8008794-611 SAP Additional File Storage, private cloud edition (1-
Infinite Tier; Block Of 128 Gigabyte; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008794
Start Date: 12/31/2026
End Date: 12/30/2027
$1,052.63 GSA 12 $12,631.56
23 8008910a-611 SAP Core Human Capital Management Cloud, private
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8008910a
Start Date: 12/31/2026
End Date: 12/30/2027
$22.97 GSA 1,100 $25,267.00
24 8008911a-611 SAP Time Tracking Cloud, private edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008911a
Start Date: 12/31/2026
End Date: 12/30/2027
$19.15 GSA 1,100 $21,065.00
25 8008783a-611 SAP Payroll Processing, private cloud edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008783a
Start Date: 12/31/2026
End Date: 12/30/2027
$36.37 GSA 1,100 $40,007.00
CONFIDENTIAL
PAGE 3 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 7 Packet Pg. 231 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
26 8011504-1-2000-611 SAP U.S. Payroll Tax Calculation by BSI, private cloud
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8011504-1-2000
Start Date: 12/31/2026
End Date: 12/30/2027
$13.59 GSA 1,100 $14,949.00
27 8018116-1-100-611 SAP S/4HANA Cloud Private Edition, utilities (1-100 Tier;
Block Of 1000 Point of Delivery; Minimum of 25 Blocks;
Per Year)
SAP Industries, Inc. - 8018116-1-100
Start Date: 12/31/2026
End Date: 12/30/2027
$372.05 GSA 100 $37,205.00
28 8008690-611 SAP S/4HANA Cloud, additional non-productive tier,
private edition (S) (1-Infinite Tier; Block Of 1 Tenant;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8008690
Start Date: 12/31/2026
End Date: 12/30/2027
$110,526.32 GSA 1 $110,526.32
29 8011084-611 SAP long-term backup, monthly cloud backup with 1-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011084
Start Date: 12/31/2026
End Date: 12/30/2027
$3,789.47 GSA 2 $7,578.94
30 8011088-611 SAP long-term backup, yearly backup with 4-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011088
Start Date: 12/31/2026
End Date: 12/30/2027
$1,368.42 GSA 2 $2,736.84
31 8019271-1-infinite-611 SAP Business Data Cloud, core capacity (1-Infinite Tier;
Block Of 1 Capacity Unit; Minimum of 640 Block; Per Year)
SAP Industries, Inc. - 8019271-1-infinite
Start Date: 01/01/2027
End Date: 12/31/2027
$9.95 GSA 31,762 $316,031.90
32 8019709-1-Infinite-611 Customer-Managed Data Products (1-Infinite Tier;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8019709-1-Infinite
Start Date: 01/01/2027
End Date: 12/31/2027
$15,789.47 GSA 1 $15,789.47
33 8019361-271-410-611 SAP Cloud ERP Private (271-410 Tier; Block Of 1 Full Use
Equivalent; Minimum of 60 Block; Per Year)
SAP Industries, Inc. - 8019361-271-410
Start Date: 12/31/2026
End Date: 12/30/2027
$2,650.22 GSA 313 $829,518.86
34 8016532-1-Infinite-611 SAP AI Unit (1-Infinite Tier; Block of 100 Capacity Unit; Per
Year)
SAP Industries, Inc. - 8016532-1-Infinite
Start Date: 12/31/2026
End Date: 12/30/2027
$586.47 GSA 140 $82,105.80
35 8010751-611 Cloud Platform Enterprise Agreement, reseller edition
($12121-Infinite Tier; Block of 1 Spend Volumes; Per Year)
SAP Industries, Inc. - 8010751
Start Date: 12/31/2026
End Date: 12/30/2027
$1.05 GSA 20,000 $21,000.00
CONFIDENTIAL
PAGE 4 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 8 Packet Pg. 232 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
36 8019676-1001-5000-611 WalkMe Premium for SAP S/4HANA Private Cloud Edition
(1001-5000 Tier; Block Of 1 Active User; Minimum of 100
Block; Per Year)
SAP Industries, Inc. - 8019676-1001-5000
Start Date: 12/31/2026
End Date: 12/30/2027
$71.78 GSA 1,100 $78,958.00
YEAR 2 SUBTOTAL:$1,660,107.45
YEAR 3
37 8008678a-611 SAP S/4HANA Cloud, Digital Access, private edition (1-
1000 Tier; Block Of 1000 Document; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008678a
Start Date: 12/31/2027
End Date: 12/30/2028
$52.63 GSA 50 $2,631.50
38 8011726-1-Infinite-611 SAP Cloud, memory extension for productive tiers, private
edition (1-Infinite Tier; Block Of 256 Gigabyte; Minimum of
1 Block; Per Year)
SAP Industries, Inc. - 8011726-1-Infinite
Start Date: 12/31/2027
End Date: 12/30/2028
$26,315.79 GSA 1 $26,315.79
39 8011727-1-Infinite-611 SAP Cloud, memory extension for non-productive tiers,
private edition (1-Infinite Tier; Block Of 256 Gigabyte;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011727-1-Infinite
Start Date: 12/31/2027
End Date: 12/30/2028
$15,789.47 GSA 1 $15,789.47
40 8008794-611 SAP Additional File Storage, private cloud edition (1-
Infinite Tier; Block Of 128 Gigabyte; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008794
Start Date: 12/31/2027
End Date: 12/30/2028
$1,052.63 GSA 12 $12,631.56
41 8008910a-611 SAP Core Human Capital Management Cloud, private
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8008910a
Start Date: 12/31/2027
End Date: 12/30/2028
$22.97 GSA 1,100 $25,267.00
42 8008911a-611 SAP Time Tracking Cloud, private edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008911a
Start Date: 12/31/2027
End Date: 12/30/2028
$19.15 GSA 1,100 $21,065.00
43 8008783a-611 SAP Payroll Processing, private cloud edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008783a
Start Date: 12/31/2027
End Date: 12/30/2028
$36.37 GSA 1,100 $40,007.00
44 8011504-1-2000-611 SAP U.S. Payroll Tax Calculation by BSI, private cloud
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8011504-1-2000
Start Date: 12/31/2027
End Date: 12/30/2028
$13.59 GSA 1,100 $14,949.00
CONFIDENTIAL
PAGE 5 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 9 Packet Pg. 233 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
45 8018116-1-100-611 SAP S/4HANA Cloud Private Edition, utilities (1-100 Tier;
Block Of 1000 Point of Delivery; Minimum of 25 Blocks;
Per Year)
SAP Industries, Inc. - 8018116-1-100
Start Date: 12/31/2027
End Date: 12/30/2028
$372.05 GSA 100 $37,205.00
46 8008690-611 SAP S/4HANA Cloud, additional non-productive tier,
private edition (S) (1-Infinite Tier; Block Of 1 Tenant;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8008690
Start Date: 12/31/2027
End Date: 12/30/2028
$110,526.32 GSA 1 $110,526.32
47 8011084-611 SAP long-term backup, monthly cloud backup with 1-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011084
Start Date: 12/31/2027
End Date: 12/30/2028
$3,789.47 GSA 2 $7,578.94
48 8011088-611 SAP long-term backup, yearly backup with 4-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011088
Start Date: 12/31/2027
End Date: 12/30/2028
$1,368.42 GSA 2 $2,736.84
49 8019271-1-infinite-611 SAP Business Data Cloud, core capacity (1-Infinite Tier;
Block Of 1 Capacity Unit; Minimum of 640 Block; Per Year)
SAP Industries, Inc. - 8019271-1-infinite
Start Date: 01/01/2028
End Date: 12/31/2028
$9.95 GSA 31,762 $316,031.90
50 8019709-1-Infinite-611 Customer-Managed Data Products (1-Infinite Tier;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8019709-1-Infinite
Start Date: 01/01/2028
End Date: 12/31/2028
$15,789.47 GSA 1 $15,789.47
51 8019361-271-410-611 SAP Cloud ERP Private (271-410 Tier; Block Of 1 Full Use
Equivalent; Minimum of 60 Block; Per Year)
SAP Industries, Inc. - 8019361-271-410
Start Date: 12/31/2027
End Date: 12/30/2028
$2,650.22 GSA 313 $829,518.86
52 8016532-1-Infinite-611 SAP AI Unit (1-Infinite Tier; Block of 100 Capacity Unit; Per
Year)
SAP Industries, Inc. - 8016532-1-Infinite
Start Date: 12/31/2027
End Date: 12/30/2028
$586.47 GSA 140 $82,105.80
53 8010751-611 Cloud Platform Enterprise Agreement, reseller edition
($12121-Infinite Tier; Block of 1 Spend Volumes; Per Year)
SAP Industries, Inc. - 8010751
Start Date: 12/31/2027
End Date: 12/30/2028
$1.05 GSA 20,000 $21,000.00
54 8019676-1001-5000-611 WalkMe Premium for SAP S/4HANA Private Cloud Edition
(1001-5000 Tier; Block Of 1 Active User; Minimum of 100
Block; Per Year)
SAP Industries, Inc. - 8019676-1001-5000
Start Date: 12/31/2027
End Date: 12/30/2028
$71.78 GSA 1,100 $78,958.00
YEAR 3 SUBTOTAL:$1,660,107.45
CONFIDENTIAL
PAGE 6 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 10 Packet Pg. 234 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
YEAR 4
55 8008678a-611 SAP S/4HANA Cloud, Digital Access, private edition (1-
1000 Tier; Block Of 1000 Document; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008678a
Start Date: 12/31/2028
End Date: 12/30/2029
$52.63 GSA 50 $2,631.50
56 8011726-1-Infinite-611 SAP Cloud, memory extension for productive tiers, private
edition (1-Infinite Tier; Block Of 256 Gigabyte; Minimum of
1 Block; Per Year)
SAP Industries, Inc. - 8011726-1-Infinite
Start Date: 12/31/2028
End Date: 12/30/2029
$26,315.79 GSA 1 $26,315.79
57 8011727-1-Infinite-611 SAP Cloud, memory extension for non-productive tiers,
private edition (1-Infinite Tier; Block Of 256 Gigabyte;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011727-1-Infinite
Start Date: 12/31/2028
End Date: 12/30/2029
$15,789.47 GSA 1 $15,789.47
58 8008794-611 SAP Additional File Storage, private cloud edition (1-
Infinite Tier; Block Of 128 Gigabyte; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008794
Start Date: 12/31/2028
End Date: 12/30/2029
$1,052.63 GSA 12 $12,631.56
59 8008910a-611 SAP Core Human Capital Management Cloud, private
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8008910a
Start Date: 12/31/2028
End Date: 12/30/2029
$22.97 GSA 1,100 $25,267.00
60 8008911a-611 SAP Time Tracking Cloud, private edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008911a
Start Date: 12/31/2028
End Date: 12/30/2029
$19.15 GSA 1,100 $21,065.00
61 8008783a-611 SAP Payroll Processing, private cloud edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008783a
Start Date: 12/31/2028
End Date: 12/30/2029
$36.37 GSA 1,100 $40,007.00
62 8011504-1-2000-611 SAP U.S. Payroll Tax Calculation by BSI, private cloud
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8011504-1-2000
Start Date: 12/31/2028
End Date: 12/30/2029
$13.59 GSA 1,100 $14,949.00
63 8018116-1-100-611 SAP S/4HANA Cloud Private Edition, utilities (1-100 Tier;
Block Of 1000 Point of Delivery; Minimum of 25 Blocks;
Per Year)
SAP Industries, Inc. - 8018116-1-100
Start Date: 12/31/2028
End Date: 12/30/2029
$372.05 GSA 100 $37,205.00
64 8008690-611 SAP S/4HANA Cloud, additional non-productive tier,
private edition (S) (1-Infinite Tier; Block Of 1 Tenant;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8008690
Start Date: 12/31/2028
End Date: 12/30/2029
$110,526.32 GSA 1 $110,526.32
CONFIDENTIAL
PAGE 7 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 11 Packet Pg. 235 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
65 8011084-611 SAP long-term backup, monthly cloud backup with 1-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011084
Start Date: 12/31/2028
End Date: 12/30/2029
$3,789.47 GSA 2 $7,578.94
66 8011088-611 SAP long-term backup, yearly backup with 4-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011088
Start Date: 12/31/2028
End Date: 12/30/2029
$1,368.42 GSA 2 $2,736.84
67 8019271-1-infinite-611 SAP Business Data Cloud, core capacity (1-Infinite Tier;
Block Of 1 Capacity Unit; Minimum of 640 Block; Per Year)
SAP Industries, Inc. - 8019271-1-infinite
Start Date: 01/01/2029
End Date: 12/31/2029
$9.95 GSA 31,762 $316,031.90
68 8019709-1-Infinite-611 Customer-Managed Data Products (1-Infinite Tier;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8019709-1-Infinite
Start Date: 01/01/2029
End Date: 12/31/2029
$15,789.47 GSA 1 $15,789.47
69 8019361-271-410-611 SAP Cloud ERP Private (271-410 Tier; Block Of 1 Full Use
Equivalent; Minimum of 60 Block; Per Year)
SAP Industries, Inc. - 8019361-271-410
Start Date: 12/31/2028
End Date: 12/30/2029
$2,650.22 GSA 313 $829,518.86
70 8016532-1-Infinite-611 SAP AI Unit (1-Infinite Tier; Block of 100 Capacity Unit; Per
Year)
SAP Industries, Inc. - 8016532-1-Infinite
Start Date: 12/31/2028
End Date: 12/30/2029
$586.47 GSA 140 $82,105.80
71 8010751-611 Cloud Platform Enterprise Agreement, reseller edition
($12121-Infinite Tier; Block of 1 Spend Volumes; Per Year)
SAP Industries, Inc. - 8010751
Start Date: 12/31/2028
End Date: 12/30/2029
$1.05 GSA 20,000 $21,000.00
72 8019676-1001-5000-611 WalkMe Premium for SAP S/4HANA Private Cloud Edition
(1001-5000 Tier; Block Of 1 Active User; Minimum of 100
Block; Per Year)
SAP Industries, Inc. - 8019676-1001-5000
Start Date: 12/31/2028
End Date: 12/30/2029
$71.78 GSA 1,100 $78,958.00
YEAR 4 SUBTOTAL:$1,660,107.45
YEAR 5
73 8008678a-611 SAP S/4HANA Cloud, Digital Access, private edition (1-
1000 Tier; Block Of 1000 Document; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008678a
Start Date: 12/31/2029
End Date: 12/30/2030
$52.63 GSA 50 $2,631.50
74 8011726-1-Infinite-611 SAP Cloud, memory extension for productive tiers, private
edition (1-Infinite Tier; Block Of 256 Gigabyte; Minimum of
1 Block; Per Year)
SAP Industries, Inc. - 8011726-1-Infinite
Start Date: 12/31/2029
End Date: 12/30/2030
$26,315.79 GSA 1 $26,315.79
CONFIDENTIAL
PAGE 8 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 12 Packet Pg. 236 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
75 8011727-1-Infinite-611 SAP Cloud, memory extension for non-productive tiers,
private edition (1-Infinite Tier; Block Of 256 Gigabyte;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011727-1-Infinite
Start Date: 12/31/2029
End Date: 12/30/2030
$15,789.47 GSA 1 $15,789.47
76 8008794-611 SAP Additional File Storage, private cloud edition (1-
Infinite Tier; Block Of 128 Gigabyte; Minimum of 1 Block;
Per Year)
SAP Industries, Inc. - 8008794
Start Date: 12/31/2029
End Date: 12/30/2030
$1,052.63 GSA 12 $12,631.56
77 8008910a-611 SAP Core Human Capital Management Cloud, private
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8008910a
Start Date: 12/31/2029
End Date: 12/30/2030
$22.97 GSA 1,100 $25,267.00
78 8008911a-611 SAP Time Tracking Cloud, private edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008911a
Start Date: 12/31/2029
End Date: 12/30/2030
$19.15 GSA 1,100 $21,065.00
79 8008783a-611 SAP Payroll Processing, private cloud edition (1-2000 Tier;
Block Of 1 User; Minimum of 500 Blocks; Per Year)
SAP Industries, Inc. - 8008783a
Start Date: 12/31/2029
End Date: 12/30/2030
$36.37 GSA 1,100 $40,007.00
80 8011504-1-2000-611 SAP U.S. Payroll Tax Calculation by BSI, private cloud
edition (1-2000 Tier; Block Of 1 User; Minimum of 500
Blocks; Per Year)
SAP Industries, Inc. - 8011504-1-2000
Start Date: 12/31/2029
End Date: 12/30/2030
$13.59 GSA 1,100 $14,949.00
81 8018116-1-100-611 SAP S/4HANA Cloud Private Edition, utilities (1-100 Tier;
Block Of 1000 Point of Delivery; Minimum of 25 Blocks;
Per Year)
SAP Industries, Inc. - 8018116-1-100
Start Date: 12/31/2029
End Date: 12/30/2030
$372.05 GSA 100 $37,205.00
82 8008690-611 SAP S/4HANA Cloud, additional non-productive tier,
private edition (S) (1-Infinite Tier; Block Of 1 Tenant;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8008690
Start Date: 12/31/2029
End Date: 12/30/2030
$110,526.32 GSA 1 $110,526.32
83 8011084-611 SAP long-term backup, monthly cloud backup with 1-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011084
Start Date: 12/31/2029
End Date: 12/30/2030
$3,789.47 GSA 2 $7,578.94
84 8011088-611 SAP long-term backup, yearly backup with 4-year
retention, private edition (1-Infinite Tier; Block Of 256
Gigabyte; Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8011088
Start Date: 12/31/2029
End Date: 12/30/2030
$1,368.42 GSA 2 $2,736.84
CONFIDENTIAL
PAGE 9 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 13 Packet Pg. 237 of 321
GOVERNMENT - PRICE QUOTATION
SAP GOVERNMENT AT CARAHSOFT
11493 SUNSET HILLS ROAD | SUITE 100 | RESTON, VIRGINIA 20190
PHONE (703) 871-8500 | FAX (703) 871-8505 | TOLL FREE (888) 66CARAH
WWW.CARAHSOFT.COM | SAP@CARAHSOFT.COM
SUGGESTED OPTIONS
LINE NO.PART NO.DESCRIPTION -QUOTE PRICE QTY EXTENDED PRICE
85 8019271-1-infinite-611 SAP Business Data Cloud, core capacity (1-Infinite Tier;
Block Of 1 Capacity Unit; Minimum of 640 Block; Per Year)
SAP Industries, Inc. - 8019271-1-infinite
Start Date: 01/01/2030
End Date: 12/31/2030
$9.95 GSA 31,762 $316,031.90
86 8019709-1-Infinite-611 Customer-Managed Data Products (1-Infinite Tier;
Minimum of 1 Block; Per Year)
SAP Industries, Inc. - 8019709-1-Infinite
Start Date: 01/01/2030
End Date: 12/31/2030
$15,789.47 GSA 1 $15,789.47
87 8019361-271-410-611 SAP Cloud ERP Private (271-410 Tier; Block Of 1 Full Use
Equivalent; Minimum of 60 Block; Per Year)
SAP Industries, Inc. - 8019361-271-410
Start Date: 12/31/2029
End Date: 12/30/2030
$2,650.22 GSA 313 $829,518.86
88 8016532-1-Infinite-611 SAP AI Unit (1-Infinite Tier; Block of 100 Capacity Unit; Per
Year)
SAP Industries, Inc. - 8016532-1-Infinite
Start Date: 12/31/2029
End Date: 12/30/2030
$586.47 GSA 140 $82,105.80
89 8010751-611 Cloud Platform Enterprise Agreement, reseller edition
($12121-Infinite Tier; Block of 1 Spend Volumes; Per Year)
SAP Industries, Inc. - 8010751
Start Date: 12/31/2029
End Date: 12/30/2030
$1.05 GSA 20,000 $21,000.00
90 8019676-1001-5000-611 WalkMe Premium for SAP S/4HANA Private Cloud Edition
(1001-5000 Tier; Block Of 1 Active User; Minimum of 100
Block; Per Year)
SAP Industries, Inc. - 8019676-1001-5000
Start Date: 12/31/2029
End Date: 12/30/2030
$71.78 GSA 1,100 $78,958.00
YEAR 5 SUBTOTAL:$1,660,107.45
SUGGESTED OPTIONS SUBTOTAL:$6,640,429.80
Quote Notes:
City of Palo Alto must reference Carahsoft Quote Number 57709533 and GSA MAS 8F : 47QSWA18D008F on any resulting purchase order.
City of Palo Alto's access to and use of the SAP Cloud Services, and SAP's obligations thereto, are subject to the following, which are collectively referred to as the "Customer
Cloud Agreement", and which are given priority in the order listed:
1) Appendix A - Additional Terms Document (attached hereto)
2) Exhibit 1 - End User Selected SAP BW Capacity Services (attached hereto)
2) SAP Product Development Schedule (attached hereto)
3) Cloud Services Supplement (will vary based on solution) (attached hereto)
4) SAP Support Schedule (attached hereto)
5) SAP Service Level Agreement (attached hereto)
6) SAP GSA Data Processing Agreement (attached hereto)
7) SAP GSA General Terms and Conditions for SAP Cloud Services (attached hereto)
CONFIDENTIAL
PAGE 10 of 10
QUOTE DATE:07/17/2025
QUOTE NO:57709533
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APPENDIX A - ADDITIONAL TERMS
1.ADDITIONAL TERMS
The Agreement is subject to the following modifications:
1.1. Product Development Schedule
The Product Development Schedule (attached hereto) is incorporated into and becomes an integral part of the Order Form.
1.EXPORT RESTRICTIONS
SAP's Export Control and Sanctions Compliance:
SAP software products and services are subject to the export control and sanctions laws of various countries, including witho ut
limitation, the laws of Germany, the European Union, and the United States of America.
Destination Restrictions:
Taking into account overall business risks, SAP products and services are not available for export, reexport, transfer and/or use
in the following countries/regions (subject to change without notice):
•Crimea Region / Sevastopol
•the so-called Donetsk People’s Republic (DNR) / Luhansk People’s Republic (LNR)
•the non-government controlled areas of Ukraine in the oblasts of Kherson and Zaporizhzhia
•Cuba
•Iran
•North Korea
•Syria
In the light of various tightened sanctions, some SAP products and services may not be available in Russia and Belarus.
Additionally, transactions with or related to certain destinations that pose an elevated export control or sanctions risk for SAP
are subject to enhanced due diligence requirements, which may include authorization from the competent authorities.
End-User Restrictions:
SAP products and services are not available to entities and individuals with whom transactions are prohibited under applicabl e
export control and sanctions laws, including those listed on any applicable sanctioned party lists (e.g., European Union Sanc tions
List, U.S. Specially Designated National (SDN) lists, U.S. Denied Persons List, BIS Entity List, United Nations Security Coun cil
Sanctions).
End-Use Restrictions:
A license, authorization or other documentation may be required to proceed with transactions involving restricted end -uses,
including:
•Military end-uses that may implicate an arms embargo or similar restriction;
•Certain civil nuclear end-uses; or
•Industry-specific end-use restrictions, such as those related to certain energy and financial sectors.
All such transactions are subject to enhanced due diligence and licensing determinations are made on a case -by-case basis.
SAP software and services may not be used for end-uses relating to the development, design, manufacture or production of
nuclear, chemical or biological weapons (“Weapons of Mass Destruction”).
Export Classification:
SAP products are classified for export under the Annex I of the Regulation 2021/821 ("EU Dual -use Regulation")/EC and U.S.
Export Administration Regulations (US EAR). A listing of U.S. and EU Export Control Classification Numbers (ECCN), applicable
U.S. license exceptions and CCATS (where applicable) is available at the SAP ECCN MATRIX link below. All information
provided in the SAP ECCN Matrix may be subject to change without notice. Please contact
ExportControlClassification@sap.com with any questions regarding the SAP ECCN Matrix.
2.CLOUD PLATFORM ENTERPRISE AGREEMENT
2.1. Application
This Section applies only to CPEA Cloud Services as defined below.
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2.2. Definitions
2.2.1. “Active Cloud Service” means an Eligible Cloud Service that End User activated and has not deactivated.
2.2.2. “Cloud Credits” means the monetary amount available for the relevant Cloud Credits Period, as specified under “Usage Metric
Limitation/Volume” in Schedule 1 in this Order Form for the Initial Term and calculated accordingly for each Cloud Credits Period
thereafter.
2.2.3. “Cloud Credits Period” means:
2.2.3.1. for the Initial Term, each period starting on a Product Start Date and ending on the next Product End Date as set forth for t he
CPEA Cloud Services and the Cloud Platform Voucher in Schedule 1 in this Order Form; and
2.2.3.2. for each Renewal Subscription Term,
(a) every 12 months period,
(b) unless the remaining part of the current Renewal Subscription Term is shorter than 12 months, in which case the last period
will be equal to the remaining part of the Renewal Subscription Term,
whereby each period starts on the first day after the previous Cloud Credits Period ended.
2.2.4. “CPEA Cloud Services” means Cloud Services designated as "Cloud Platform Enterprise Agreement" in Schedule 1 in this
Order Form.
2.2.5. “Eligible Cloud Services” means the cloud services listed in the Eligible Cloud Services List.
2.2.6. “Eligible Cloud Services List” is the list of Eligible Cloud Services found on the SAP Business Technology Platform Website
here https://cloudplatform.sap.com/capabilities/price-list.cpea-resell.html.
2.2.7. "Free Tier Cloud Services" means designated Eligible Cloud Services provided for no fee and marked with “Service Plan:
Free” in the Eligible Cloud Services List.
2.3. Excess Use
2.3.1. The terms and conditions of the Cloud Resell Agreement apply to the CPEA Cloud Services as well as to the Cloud Platform
Voucher. However, any terms relating to excess use in particular Article 4 “Changes to Usage Metric”, Section 3. “Over usage
of Usage Metric” of the Sell Cloud Model shall not apply.
2.4. Consumption of Cloud Credits
2.4.1. During any Cloud Credits Period, Cloud Credits can be used by End User to activate any of the Eligible Cloud Services through
the administrative cockpit of the SAP Business Technology Platform. Each Active Cloud Service is deemed a Cloud Service as
defined in the Cloud Resell Agreement and is subject to its product -specific Supplemental Terms.
2.4.2. If End User has Cloud Credits available for the current Cloud Credits Period, SAP will:
(a) deduct fees for the activation and/or use of the Active Cloud Services by End User from the Cloud Credits based on the
corresponding metric, range, if applicable, and per-unit list price as specified in the Eligible Cloud Services List; and
(b) provide a monthly balance statement reflecting the activation and/or use of the Active Cloud Services by End User for the
preceding calendar month and the remaining balance of Cloud Credits.
2.4.3. If the Cloud Credits for the current Cloud Credits Period have been fully consumed, SAP will invoice End User monthly in arrears
for the activation and/or use of the Active Cloud Services instead.
2.4.4. Cloud Credits will only be available during the current Cloud Credits Period. SAP may increase the Cloud Credits during a Cloud
Credits Period by executing an order form for additional Cloud Credits.
2.4.5. Any unused Cloud Credits are forfeited by End User at the end of the current Cloud Credits Period and will not be available for
use in any subsequent Cloud Credits Period.
2.4.6. SAP reserves the right to inform End User directly of such consumption of Cloud Credits.
2.5. Activation and Deactivation of Active Cloud Services
2.5.1. During any Cloud Credits Period, End User can activate any of the Eligible Cloud Services through the administrative cockpit of
the SAP Business Technology Platform. Each Active Cloud Service is deemed a Cloud Service as defined in the Cloud Resell
Agreement and is subject to its product specific Supplemental Terms.
2.5.2. SAP confirms that:
(a) End User is solely responsible for deactivating any Active Cloud Service.
(b) the technical administrator set out in this Order Form (and any successor designated by End User) is authorized by End
User to activate and deactivate Eligible Cloud Services. End User is solely responsible for any acts or omissions taken by
such administrators.
2.6. Fee Changes
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Deviating from the relevant terms of the Cloud Resell Agreement, SAP may increase the fees as follows:
2.7. Changes to Eligible Cloud Services List
Deviating from the relevant terms of the Cloud Resell Agreement, SAP may increase the per-unit list prices as follow:
2.7.1. Changes to Per-Unit List Prices
Increases in the per-unit list prices for Eligible Cloud Services will not exceed 3.3%. SAP shall give notice of price increases to
End User by email at least 45 days before the start of the next Renewal Term. The increased per-unit list prices shall apply to the
Eligible Cloud Services at the beginning of the next Renewal Term. If SAP notifies End User of an increase less than 45 days
prior to upcoming Renewal Term, the increase shall not apply at the start of the upcoming Renewal Term but from the one
thereafter onwards.
2.7.2. Reductions in Per-Unit List Prices
SAP shall reflect reductions in per-unit list prices for Eligible Cloud Services on the next full monthly report or invoice if such
reduced per-unit list price is lower than the per-unit list price in effect on the later of the Effective Date of the Order Form or the
date the Cloud Service becomes an Eligible Cloud Service.
2.7.3. Information of End User
SAP may inform the End User of increases or reductions in the per-unit list prices for Eligible Cloud Services by email or through
the administrative cockpit of the SAP Business Technology Platform.
2.7.4. Adding and Removing Eligible Cloud Services
2.7.4.1. SAP may add Cloud Services and associated per-unit list prices to the Eligible Cloud Services List during the Initial Term and
any Renewal Term. SAP may remove any Eligible Cloud Service from the Eligible Cloud Services List by giving the End User 6
months’ prior notice. SAP shall give such notice by email or through the administrative cockpit of the SAP Business Technology
Platform. However, End User may keep such Eligible Cloud Services activated for the remainder of its then-current Initial Term
or Renewal Term.
2.7.4.2. Notwithstanding the above, the following Eligible Cloud Services in the region/data center marked as “Neo” on the Eligible Cloud
Services List are being sunset on December 31, 2028 (“Sunset Services”); Carahsoft has to inform End User and ensure that
irrespective of End User’s Initial Term or Renewal Term, End User may activate and keep such Sunset Services subscription
no longer than December 31, 2028:
Alert Notification
Bandwidth
Custom Domain
Data Quality Services
Document Service
Event Mesh
Forms Service by Adobe
Identity Authentication
Java Server
Portal
SAP ASE
SAP Fiori Cloud
SAP HANA Service
SAP Integration (Process Integration)
SAP Translation Hub
SAP Web IDE
Dynatrace Agent Activation service for SAP BTP
SAP Mobile Services, Agentry component
SAP Authorization and Trust Management service
SAP Connectivity service
Identity Provisioning service
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SAP Keystore service
SAP Monitoring service for SAP BTP
OAuth 2.0 on SAP BTP
SAP Solution Lifecycle Management service for SAP BTP
2.8. Relationship to Subscription Cloud Services
Any use of a Cloud Service by End User in excess of the Usage Metric stated in the Order Form will be regarded as use of an
Active Cloud Service and End User will be billed accordingly.
2.9. Free Tier Cloud Services
SAP may provide End User with Free Tier Cloud Services based on the following restrictions:
2.9.1. Free Tier Cloud Service may only be used for non-productive testing and evaluation and may not be used to process Personal
Data.
2.9.2. End User's use of the Free Tier Cloud Services is subject to the specifications in the administrative cockpit of the SAP Business
Technology Platform ("Cockpit Specifications"). SAP may modify the Cockpit Specifications at any time without notice. SAP
may terminate End User's use of the Free Tier Cloud Services without advance notice for failure to adhere to the Cockpit
Specifications.
2.9.3. SAP may remove any Free Tier Cloud Service from the Eligible Cloud Services List upon one month's prior notice. SAP shall
give such notice by email or through the administrative cockpit of the SAP Business Technology Platform.
2.9.4. SAP may deactivate End User's Free Tier Cloud Services if, in SAP's sole determination, End User is not actively using the
services.
2.9.5. SAP will not provide any support for the Free Tier Cloud Services and the Support Schedule does not apply.
3. PRICE PROTECTION
At any time during the Initial Subscription Term, Customer may purchase additional Usage Metrics of the Cloud Service(s) or
subscribe to additional Cloud Services as listed below by signing an “Add/Upsell” Order Form and paying the annual fee specif ied
in the table below.
Product Name Usage Metric Price Per Unit
SAP S/4HANA Cld, Digital Access, priv ed 1000 Document $52.63
SAP Cld, mem ext f. prod tiers, priv ed 256 Gigabyte $26,315.79
SAP Cld, mem ext f. non-prd, Priv Ed 256 Gigabyte $15,789.47
SAP Addit File Storage, priv cld ed 128 Gigabyte $1,052.63
SAP Core HCM Cld, priv ed 1 User $22.97
SAP Time Track Cld, priv ed 1 User $19.15
SAP Payroll Processing, pce 1 User $36.37
SAP S/4HANA Cloud Pr. Ed., utilities 1000 Point of Delivery $372.05
S/4 Cld, addt non-prod tier, priv ed (S) 1 Tenant $110,526.32
SAP LT Backup, monthly and 1 yr, PE 256 Gigabyte $3,789.47
SAP LT Backup, yearly backup and 4 yr,PE 256 Gigabyte $1,368.42
SAP Business Data Cloud core capacity 1 Capacity Unit $9.95
Customer Managed Data Products 1 Flat Fee $15,789.47
SAP Cloud ERP Private 1 Full Use Equivalent $2,650.22
SAP AI Unit 100 Capacity Unit $586.47
WalkMe Premium for SAP S/4HANA Priv Cl 1 Active User $71.78
4. TRANSFORMATION INCENTIVE
4.1. End User is not in default of any payments to SAP, SAP grants a credit in the amount set forth herein ("Cloud Credit"). The
Cloud Credit is applied towards fees in future invoices issued under this Order Form.
4.2. SAP grants the Cloud Credit as follows: (i) the initial Cloud Credit is granted on the Product Start Date for the Private Clo ud
Services (as defined below) (“Phase 1”), and (ii) the remaining Cloud Credit is granted when End User (or Carahsoft on behalf
of End User) submits the completed clean core questionnaire via SAP Cloud ALM and makes a selection to use (a) SAP
professional services; (b) a Qualified Partner; or (c) End User’s own resources to support End User’s conversion, migration, or
greenfield implementation of the RISE Cloud Services and eligible Cloud Services under the Transformation Incentive (“Phase
2”). A “Qualified Partner” is an implementation partner listed on https://www.sap.com/partners/find.html, which has a minimum
competency level of “Essential” for the Private Cloud Services. “Private Cloud Services” means SAP Cloud ERP Private, AND
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RISE with SAP S/4HANA Cloud, private edition.
4.3. SAP grants a Cloud Credit in the amount of USD $ 791,526.63 in Phase 1.
4.4. SAP grants a Cloud Credit in the amount of USD $ 791,526.63 in Phase 2.
4.5. Subject to the immediately subsequent section below, the Cloud Credit shall be applied towards the fees in such future invoices
for SAP Cloud Services until the Cloud Credit has been fully applied. Any remaining balance of the Cloud Credit after the
termination or expiration of the subscription to SAP Cloud Services shall be forfeited.
4.6. The Cloud Credit must be fully applied within 24 months of the Order Form Effective Date, after which the Cloud Credit shall
expire, and no refund or remuneration will be provided.
5. ADDITIONAL TERMS FOR SAP BUSINESS DATA CLOUD, CORE CAPACITY
5.1.1. Management of End User Capacity Service Selection and SAP Provisioning and Delivery
End User’s selection of specific Capacity Services from those available with the SAP Business Data Cloud, core capacity Cloud
Service (as set forth in the SAP Business Data Cloud Supplement) and SAP’s provisioning and delivery thereof (all subject to
the Usage Metric Limitation and Subscription Term for the SAP Business Data Cloud, core capacity Cloud Service) will be
documented and managed using:
(a) for Capacity Services (other than SAP BW Capacity Services), the Customer portal found at https://me.sap.com/home
(inclusive of any successor site(s) made available by SAP, “SAP for Me”) will be used; and
(b) for SAP BW Capacity Services, “Exhibit 1, End User Selected SAP BW Capacity Services”, which is incorporated herein
and made a part hereof as “Exhibit 1” to the Order Form.
For purposes of clarity, if End User does not select any SAP BW Capacity Services as of the effective date of the Order Form:
(i) only a “shell” Exhibit 1 will be included as of the effective date of this Order Form;
(ii) should End User subsequently (i.e., during the Subscription Term) desire any SAP BW Capacity Services, End User
will notify SAP of the same and the parties will work in good faith to complete the Exhibit 1 shell and incorporate such
completed Exhibit 1 as part of this Order Form via written amendment; and
(iii) no SAP BW Capacity Services will be provisioned or delivered hereunder until the requirements in (ii) are complete.
5.1.2. Regarding SAP BW Capacity Services
Provisioning and availability of SAP BW Capacity Services may be delayed beyond the Product Start Date for SAP Business
Data Cloud, core capacity. Applicable product start dates for SAP BW Capacity Services will be as set forth in Exhibit 1.
5.1.3. Regarding SAP Databricks Capacity Services (all of which are non-SAP developed cloud services)
5.1.3.1. Special Terms Applicable to SAP Databricks Capacity Services
Notwithstanding anything in the Agreement to the contrary, the following special terms apply to all SAP Databricks Capacity
Services in the SAP Business Data Cloud Supplement:
5.1.3.1.1. End User has the option to consume SAP Databricks Capacity Services, provided that End User first accepts a separate
agreement with Databricks (“Databricks Agreement”), which is provided for acceptance during provisioning of the SAP
Databricks Capacity Services. A reference copy of the Databricks Agreement is available for preview at
https://www.databricks.com/legal/sap-databricks-tos. End User has no entitlement to and cannot use the SAP Databricks
Capacity Services if it does not enter into a Databricks Agreement.
5.1.3.1.2. SAP is not a party to the Databricks Agreement and has no control over the Databricks Agreement.
5.1.3.1.3. The following subject matter is governed exclusively by the Databricks Agreement:
(a) all data protection obligations applicable to processing of Personal Data by or within SAP Databricks Capacity Services;
and
(b) all administrative, physical, and technical safeguards to protect the security and confidentiality of SAP Databricks Capacity
Services and the Databricks Customer Data.
“Databricks Customer Data” means any Customer Data processed by or within SAP Databricks Capacity Services.
5.1.3.1.4. For clarity, the DPA in the Agreement with SAP does not apply to SAP Databricks Capacity Services.
5.1.3.1.5. SAP is not a processor or subprocessor of any Personal Data by or within SAP Databricks Capacity Services, and SAP
is not responsible for any processing of Personal Data by Databricks, or for Databricks complying with any data protection or
privacy laws applicable to Personal Data.
5.1.3.1.6. The Security Measures of the SAP Cloud Services apply to SAP Cloud Services independently processing Customer
Data outside of SAP Databricks Capacity Services, and do not apply to SAP Databricks Capacity Services. SAP is not
responsible for providing or maintaining any security or technical and organizational me asures of any kind for SAP Databricks
Capacity Services or Databricks Customer Data in SAP Databricks Capacity Services. The security and data protection
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commitments for SAP Databricks Capacity Services and Databricks Customer Data are made solely between End User and
Databricks pursuant to the Databricks Agreement. References to SAP Cloud Services in this section do not include SAP
Databricks Capacity Services.
5.1.3.1.7. All responsibility, liability, any regulatory requirements, and allocation of risk for Databricks Customer Data in SAP
Databricks Capacity Services are exclusively between End User and Databricks pursuant to the Databricks Agreement, and
SAP has no responsibility or liability for damages of any kind relating to Databricks Customer Data in SAP Databricks Capacity
Services except to the extent caused by SAP.
5.1.3.1.8. Electing to use SAP Databricks Capacity Services is an option for customers with a subscription for the SAP Business
Data Cloud, core capacity Cloud Service; Carahsoft does not have any right of refund on the basis that End User has elected
not to enter into the Databricks Agreement to use SAP Databricks Capacity Services.
5.1.3.1.9. If Databricks notifies SAP that it is terminating the Databricks Agreement due to a material uncured breach by End
User, End User’s subscription to all SAP Databricks Capacity Services will automatically terminate upon the termination effective
date of the Databricks Agreement and Databricks will de-activate End User’s access to all SAP Databricks Capacity Services.
End User will not be entitled to a refund or reduction of the Capacity Units as a result of an SAP Databricks Capacity Ser vices
termination, but End User may instead allocate the remaining balance of the Capacity Units to consume other eligible non-SAP
Databricks Capacity Services as set forth in the SAP Business Data Cloud Supplemental Terms.
5.1.3.1.10. Without limiting the foregoing, no term in the Databricks Agreement will be deemed to modify the Agreement or any
other agreement between End User and SAP, unless otherwise expressly agreed in writing by SAP.
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EXHIBIT 1
END USER SELECTED
SAP BW CAPACITY SERVICES
Single Phase
[00-Jan-1900 - 00-Jan-1900]
Business Data Cloud - Capacity Service
In Blocks
Of
Sales Unit Metric
DR
Relevant
Quantity
CU Rate Per
Block
Monthly
CUs
SAP BW/4HANA Cloud, base package, private edition 1 Tenant Y
SAP BW/4HANA Cloud, additional non-productive, base package, private
edition
256 Gigabytes of
Memory
N
SAP BW NetWeaver Cloud, base package, private edition 1 Tenant Y
SAP BW NetWeaver Cloud, additional non-productive, base package, private
edition
256 Gigabytes of
Memory
N
SAP BI Java Server Cloud, private edition (8 cores) 1 Tenant Y
SAP BI Java Server Cloud, additional non-productive, private edition (8 cores) 32 Gigabytes of
Memory
N
SAP Cloud, memory extension for product tiers, private edition 256 Gigabytes of
Memory
Y
SAP Cloud, memory extension for non-productive tiers, private edition 256 Gigabytes of
Memory
N
SAP S/4HANA Cloud Private Edition Application Server for Linux, additional
production tenant
1 Tenant Y
SAP S/4HANA Cloud Private Edition Application Server for Linux, additional
production tenant, upgrade
64 Gigabytes of
Memory
Y
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SAP S/4HANA Cloud Private Edition Application Server for Linux, additional
non-production tenant
1 Tenant N
SAP S/4HANA Cloud Private Edition Application Server for Linux, additional
non-production tenant, upgrade
64 Gigabytes of
Memory
N
SAP IaaS Server Linux Cloud, private edition (128GB) 1 Tenant N
SAP Additional Database Storage, private cloud edition 128 Gigabytes of
Storage
Y
SAP Additional File Storage, private cloud edition 128 Gigabytes of
Storage
N
SAP Connection Package for productive tiers, private cloud edition 1 Tenant Y
SAP Connection Package for non-productive tiers, private cloud edition 1 Tenant N
SAP Business Planning and Consolidation, professional edition for SAP
BW/4HANA Cloud (planning only), private edition
1 User Y
SAP Business Planning and Consolidation, professional edition for SAP
BW/4HANA Cloud, private edition
1 User Y
SAP Business Planning and Consolidation, standard edition for SAP
BW/4HANA Cloud, private edition
1 User Y
SAP Business Planning and Consolidation, standard edition for SAP
BW/4HANA Cloud (planning only), private edition
1 User Y
SAP Business Planning and Consolidation, professional edition for SAP
NetWeaver Cloud (planning only), private edition
1 User Y
SAP Business Planning and Consolidation, professional edition for SAP
NetWeaver Cloud, private edition
1 User Y
SAP Business Planning and Consolidation, standard edition for SAP
NetWeaver Cloud, private edition
1 User Y
SAP Business Planning and Consolidation, standard edition for SAP
NetWeaver Cloud (planning only), private edition
1 User Y
SAP S/4HANA Cloud, disaster recovery, private edition 1 % of Net
Recurring Fee
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(1) The minimum duration for SAP BW/4HANA Cloud, base package, private edition and SAP BW NetWeaver Cloud, base package, private edition Capacity Services is 1 year.
(2) The maximum system size supported for a HANA DB is 12 terabytes of memory.
(3) If the end date for any SAP BW Capacity Service(s) precedes expiration of the Subscription Term for SAP Business Data Cloud, core capacity, End User must provide SAP
at least 60 days advance written notice of End User’s desire to extend the end date for such SAP BW Capacity Services. If timely End User notice is not received, or if timely nd
User notice is received but the parties do not subsequently enter into a timely written amendment extending the end date for such SAP BW Capacity Services, then such SAP
BW Capacity Services will be decommissioned based upon the original end date.
The following footnotes only apply if the quantity is blank and no dates are reflected in the above table:
(4) As of the effective date of this Order Form, End User has not selected any SAP BW Capacity Services. As such, this is a “shell” Exhibit 1.
(5) This “shell” Exhibit 1 only shows a single phase. If in the future the parties agree, via written amendment, to enable any SAP BW Capacity Services, additional phase(s) may
be possible.
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SAP Product Development Schedule enGLOBAL.v.3-2021 Page 1 of 1
SAP Product Development Schedule
This Product Development Schedule details how SAP, SAP SE, or SAP Affiliates (“SAP Group”) uses
Customer Data for general product research and development, including creating new products, services, or
components not specific to a given service or customer (together, “Product Development”).
1. PRODUCT DEVELOPMENT PROCESSING
Notwithstanding anything in the Agreement, the SAP Group may also process Customer Data in accordance
with this Product Development Schedule for Product Development purposes globally, provided the output of
such processing does not identify Customer, Authorized Users, natural persons, or otherwise reveal Customer
Confidential Information (“Product Development Processing”). The following additional rules shall apply to
Product Development Processing:
a) Personal Data used for Product Development Processing must be either (i) anonymized during or directly
after extraction from Customer’s instance of the Cloud Service before being further used for Product
Development, or (ii) extracted for immediate Product Development Processing using automated
extraction and processing technologies (e.g., algorithms or software), and then automatically deleted
thereafter. Except as set out above or otherwise set out in the Agreement, Personal Data is only used to
provide and support the Cloud Service and Consulting Service.
b) During Product Development Processing, the SAP Group will not (a) use Personal Data revealing racial
or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetic data,
biometric data processed for the purpose of uniquely identifying a natural person, data concerning health
or data concerning a natural person’s sex life or sexual orientation or (b) isolate the content of Customer
Data in a manner that puts the SAP Group in a position to identify individual data subjects during or after
Product Development Processing.
c) Product Development Processing is subject to the same confidentiality and non-disclosure protections
applicable to Customer Data.
d) Product Development Processing will be performed using appropriate technical and organizational
measures to provide a level of security appropriate to the risk of Product Development Processing.
e) Any result, output or derivative of Product Development or Product Development Processing shall be
treated as Cloud Materials. Customer shall retain all ownership rights in Customer Data.
f) Notwithstanding anything in the Agreement, only the data processing, non-disclosure, and security terms
identified in this Product Development Schedule shall apply to Product Development Processing.
2. PERMISSION MANAGEMENT
Where SAP makes such functionality available to Customer (e.g., customer dashboard), Customer may
remove Product Development Processing permissions under this Product Development Schedule.
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SAP Cloud ERP Private and RISE with SAP S/4HANA Cloud, private edition
Supplement enGLOBAL.v.4-2025 Page 1 of 10
SAP Cloud ERP Private and RISE with SAP S/4HANA Cloud, private edition
Supplemental Terms and Conditions
This Supplement is part of an Agreement for SAP Cloud Services between SAP and Customer and applies only
to SAP Cloud ERP Private; SAP Cloud ERP Private, base option; RISE with SAP S/4HANA Cloud, private
edition, base; RISE with SAP S/4HANA Cloud, private edition and experience management; RISE with SAP
S/4HANA Cloud, private edition, premium and premium plus; SAP extended services for SAP S/4HANA Cloud,
private edition; and RISE with SAP S/4HANA Cloud, private edition, upgrade option Cloud Services and their
optional add-ons to which Customer is subscribed (the “Cloud Service”). Any documents referenced in this
Supplement are available upon request.
1. CLOUD SERVICE
1.1. The Usage Metrics and additional terms of the Cloud Service are described in the SAP Cloud ERP Private and
RISE with SAP S/4HANA Cloud, private edition Service Description Guide (“SDG”) available at
https://www.sap.com/about/trust-center/agreements/cloud/cloud-services.html?tag=agreements:product-use-
support-terms/service-description-guides&sort=latest_desc (“Service Description Guide”).
1.2. Certain features integrated in the Cloud Service and described as “Cloud Features” as described in the SDG
and/or the then-current Documentation may be provisioned on the SAP Business Technology Platform, a multi -
tenant cloud platform (“BTP”).
1.3. Cloud Service Software may only be accessed and used as a part of the Cloud Service subscribed to by
Customer. “Cloud Service Software” means the software included in the Cloud Service as part of the Cloud
Service.
1.4. If Customer subscribes to the RISE with SAP S/4HANA Cloud, private edition base, premium, or premium plus
Cloud Service, Customer will receive access to the following additional, multi -tenant cloud services subject to
the limitations indicated herein (collectively, “Bundled Cloud Services”). Use of each Bundled Cloud Service is
subject to the supplemental terms located at http://www.sap.com/agreements-cloud-supplement.
Bundled Cloud
Service
RISE with
SAP S/4HANA
Cloud, private
edition, base
RISE with SAP
S/4HANA
Cloud, private
edition,
premium
(“Premium”)
RISE with SAP
S/4HANA Cloud,
private edition,
premium plus
(“Premium
Plus”)*
Bundled Cloud Services
Limitation
SAP Build
Work Zone,
standard
edition
X X X For each Full Usage Equivalent
of RISE with SAP S/4HANA
Cloud, private edition, Customer
is entitled to 1 Active User
SAP Build
Apps,
Enterprise
Edition
X X See table in Section 1.4.1
SAP Build
Process
Automation
X X See table in Section 1.4.1
CPEA Voucher If specified in
the Order Form
If specified in the
Order Form
As indicated in the Order Form
SAP S/4HANA
Cloud for
Group
Reporting,
private edition
X X X For Base and Premium, 50
Objects. For Premium Plus, see
table in Section 1.4.1
SAP Group
Reporting Data
Collection
X X X For Base and Premium, 50
Objects. For Premium Plus, see
table in Section 1.4.1
SAP Analytics
Cloud for
planning,
X X 10 Standard Users and 1
Professional User
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predictive
standard and
professional
edition,
dedication
option
SAP S/4HANA
Cloud for Cash
Management
X See table in Section 1.4.1
SAP S/4HANA
Cloud for
Receivables
Management
X See table in Section 1.4.1
SAP Business
Network
Supplier Portal
X X 100,000 Documents
SAP
Sustainability
Control Tower
X 10 Records
SAP
Sustainability
Footprint
Management
X 10 Records
SAP
Datasphere
X X See table in Section 1.4.1
SAP AI Unit If specified in
the Order Form.
X For Premium, as indicated in the
Order Form. For Premium Plus,
see Section 2
Joule X X X 2,500 Messages Per FUE Per
Contract Year
*If Customer subscribes to RISE with SAP S/4HANA Cloud, private edition, upgrade option, Customer is eligible
to receive the difference in Bundled Cloud Services between those received under the RISE with SAP S/4HANA
Cloud, premium order form and those specified herein for RISE with SAP S/4HANA Cloud, premium plus based
on the usage volume under the RISE with SAP S/4HANA Cloud, premium order form .
1.4.1. Additional access limitations apply to Bundled Cloud Services as noted in the tables immediately below.
FUEs
SAP Build Apps, Enterprise Edition*
SAP Build Process Automation*
Standard
Users
Advanced
Users
Attended
Automation
Unattended
Automation
1 - 135 1 Base Package 20 5 1 2
136 - 550 1 Base Package 20 5 1 2
551 – 1,000 2 Base Packages 50 10 2 4
1,001 – 2,000 2 Base Packages 50 10 2 4
2,001 – 4,000 2 Base Packages 50 10 2 4
4,001 – 6,000 3 Base Packages plus 25 Active Users 100 20 4 8
6,001 – 12,000 3 Base Packages plus 25 Active Users 100 20 4 8
12,001 – 25,000 3 Base Packages plus 75 Active Users 150 75 4 8
25,000 + 3 Base Packages plus 225 Active Users 300 100 5 10
*Use is subject to the BTP Supplement.
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FUEs SAP S/4HANA Cloud for Group
Reporting, private edition and SAP
Group Reporting Data Collection
SAP S/4HANA Cloud for Cash Management,
private edition and SAP S/4HANA Cloud for
Receivables Management, private edition
1 - 135 50 Objects 2 Users and 2 Revenue
136 - 550 50 Objects 2 Users and 2 Revenue
551 – 1,000 100 Objects 4 Users and 4 Revenue
1,001 – 2,000 100 Objects 4 Users and 4 Revenue
2,001 – 4,000 150 Objects 4 Users and 4 Revenue
4,001 – 6,000 150 Objects 8 Users and 8 Revenue
6,001 – 12,000 200 Objects 8 Users and 8 Revenue
12,001 – 25,000 400 Objects 12 Users and 12 Revenue
25,000 + 625 Objects 16 Users and 16 Revenue
FUEs
SAP Datasphere (per Month)
1 - 135 1,700 Capacity Units
136 - 550 1,700 Capacity Units
551 – 1,000 3,400 Capacity Units
1,001 – 2,000 3,400 Capacity Units
2,001 – 4,000 5,100 Capacity Units
4,001 – 6,000 5,100 Capacity Units
6,001 – 12,000 6,800 Capacity Units
12,001 – 25,000 6,800 Capacity Units
25,000 + 6,800 Capacity Units
1.4.2. For RISE with SAP S/4HANA Cloud, private edition; RISE with SAP S/4HANA Cloud, private edition and
experience management; RISE with SAP S/4HANA Cloud, private edition, base; RISE with SAP S/4HANA
Cloud, private edition, premium; and RISE with SAP S/4HANA Cloud, private edition, premium plus renewals,
Customer is entitled to the same Bundled Cloud Services and subject to the same Bundled Cloud Services
limitations as referenced in the RISE with SAP S/4HANA Cloud, private edition Supplemental Terms and
Conditions in effect at the effective date of the initial order form for the Cloud Service.
1.5. Embedded Launch Activities. Embedded Launch Activities are included for a first-time subscription of SAP
Cloud ERP Private, RISE with SAP S/4HANA Cloud, private edition, premium and premium plus and RISE with
SAP S/4HANA Cloud, base, as specified in the corresponding SAP Cloud ERP Private or SAP S/4HANA Cloud
private edition Embedded Launch Activities Specifications Documentation.
1.6. Transformation Preparation Services. During the Initial Subscription Term, SAP will provide the consulting
services described in the corresponding scope document available at https://www.sap.com/about/trust-
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center/agreements.html#services (“Transformation Preparation Services for SAP Business Suite”) as a one-time
inclusion with Customer’s initial subscription to SAP Cloud ERP Private, subject to Customer’s execution of a
corresponding Services Order Form.
2. ARTIFICIAL INTELLIGENCE
2.1. Artificial Intelligence. Artificial intelligence (“AI”) features and technologies, that are made available under the
Agreement, are subject to the SAP AI Terms available at the following (or a successor) link SAP Agreements |
SAP Trust Center | About SAP SE.
2.2. Joule and SAP AI Unit. The SAP AI Services and AI Unit Supplemental Terms and Conditions (“SAP AI Unit
Supplement”) apply to the SAP AI Unit and Joule Bundled Cloud Services. All capitalized terms used in this
Section but not defined shall have the meaning stated in the SAP AI Unit Supplement. For SAP AI Unit, Customer
is entitled to the Capacity Unit amount specified below based on the Cloud Service Usage Metric volume as
indicated in the Order Form. Customer may exercise the Capacity Units on AI Services as listed on the then-
current AI Services List titled “AI Services List” and accessible at
https://www.sap.com/about/agreements/policies/cloud-service-specifications.html?sort=latest_desc or as made
available through the administrative cockpit of the respective platform.
Full Use Equivalents (FUEs) Capacity Units Per Contract Year
1 - 135 20,000
136 - 550 30,000
551 – 1,000 90,000
1,001 – 2,000 150,000
2,001 – 4,000 200,000
4,001 – 6,000 250,000
6,001 – 12,000 275,000
12,001 – 25,000 450,000
25,000 + 900,000
2.3. If Customer exceeds use of the Capacity Units referenced in this Supplement, SAP will require Customer to
purchase SAP AI Unit in addition to pay fees for excess use that have accrued from the date the excess use
began.
2.4. If Customer exceeds the Message quantity for Joule referenced in this Supplement, Customer must pay fees in
excess use that have accrued from the date the excess use began based on SAP’s prices on the date the excess
use began and purchase SAP AI Units for continued use of Joule.
3. ADDITIONAL TERMS
3.1. Starter System. With a subscription to the Cloud Service, SAP shall grant the Customer access to a sandbox
environment for a limited duration (“Starter System”). The Starter System shall remain accessible for a period of
ninety (90) days from the Product Start Date or thirty (30) days following the provisioning of the Cloud Service
development (DEV) environment by SAP, whichever comes later. Thereafter, SAP will deactivate the Starter
System, and any data residing on the servers hosting the Starter System shall be permanently removed. For the
avoidance of doubt, the Starter System is a non-production environment to be used solely for testing purposes
and may have limited support, as further described in Documentation.
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3.2. SAP Cloud ALM. With a subscription to the Cloud Service, Customer may access SAP Cloud ALM. Use of
SAP Cloud ALM is subject to the Usage Rights located at https://support.sap.com/en/alm/usage-rights.html. The
support services for SAP Cloud ALM are governed by SAP Enterprise Support, cloud editions as described in
the Cloud Support Schedule. All references to “Cloud Services” in the Cloud Support Schedule are replaced
with “SAP Cloud ALM.”
3.3. System Maintenance
3.3.1. SAP performs regular, scheduled maintenance activities to maintain the Cloud Service, including OS security
patch levels, database and application patches, infrastructure maintenance and other scheduled proactive
activities. Such maintenance activities will be scheduled by SAP in collaboration with Customer and will occur
once a month during a 4-hour window on a weekday and/or a weekend (for production environments)
(“Scheduled Downtime”). SAP will provide Customer at least seven (7) business days’ advance notice before
any Scheduled Downtime. If Customer object to such Scheduled Downtime within five (5) days of SAP’s notice,
SAP and Customer will reasonably schedule maintenance activities for a date, time, and duration as mutually
agreed between SAP and Customer based on requirements and resources. If SAP and Customer do not agree
on a schedule within seven (7) business days from the date of SAP’s notice, SAP shall perform based on the
Scheduled Downtime. If Customer fails to cooperate with the scheduling and/or performance of such
maintenance activities in a timely manner as recommended by SAP, Customer shall be solely responsible for
any resulting issues in the Cloud Service, including unexpected downtime.
3.3.2. Notwithstanding the foregoing, SAP reserves the right to perform Emergency Maintenance activities at any time
without Customer’s prior consent. SAP will use reasonable efforts to provide Customer with forty-eight (48) hours
advance notice regarding performance of Emergency Maintenance. In case of Cloud Service downtime during
such Emergency Maintenance, such downtime will be considered “Emergency Downtime” as defined in the SLA
(defined in Section 3.4 below). “Emergency Maintenance” are maintenance activities reasonably necessary to
prevent or mitigate circumstances that may otherwise pose a significant impact to the Cloud Service.
3.3.3. Customer is responsible for requesting and coordinating with SAP the application of security patches (all security
patches with priorities “critical,” “high,” “medium,” or “low”) by way of a service request ticket. Such patches will
be applied during Scheduled Downtime or other Agreed Downtime, as defined in the SLA.
Support. Support for the Cloud Service will be provided by SAP as described in the Support Policy or Schedule
for SAP Cloud Services referenced in the Order Form, as supplemented by the description in Attachment 1 to
this Supplement. For the avoidance of doubt, the support services described in the Agreement may only be used
to support Cloud Services to which this Agreement applies, as specified in the Order Form, and may not be used
to support any other SAP products or third-party solutions, including SAP products purchased under a separate
agreement between an affiliate of Customer and SAP (or a distributor of SAP products). Customer acknowledges
that if Customer uses any such services for other SAP products or third-party solutions without a separate SAP
support agreement for such products, SAP will invoice Customer the applicable accrued fees associated with
such time period of use plus a reinstatement fee for support for such products.
3.4. Service Level Agreement. The Service Level Agreement applicable to the SAP S/4HANA Private Cloud Edition
Cloud Services is the Service Level Agreement for Private Cloud Edition Services and Tailored Option Services
(“SLA”), except the 99.5% System Availability service level in the SLA is replaced with 99.7% unless otherwise
indicated in the Order Form. The Service Level Agreement for SAP Cloud Services applies to Bundled Cloud
Services that are not RISE with SAP S/4HANA Cloud, private edition Cloud Services.
3.4.1. Section 3 of the SLA (Backup and Computing Environment Incident Reaction Time) shall apply only to Incidents
(defined in the SLA) associated with SAP tasks and services applicable to the Computing Environment (defined
in the SLA) as identified in the RISE with SAP S/4HANA Cloud, Private Edition Roles and Responsibilities
Documentation made available to Customer on SAP’s website, at https://help.sap.com/, or upon request.
3.5. Modifications and Add-Ons.
3.5.1. Definitions.
3.5.1.1. “Add-on” means any development that adds new and independent functionality to the SAP Cloud Service
Software, but does not modify existing SAP functionality, and is developed using SAP application programming
interfaces or other integration points or other SAP code that allows other software products to communicate with
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or call on SAP Cloud Service Software. All Add-ons developed by SAP, independently or jointly with Customer,
shall be considered Cloud Material and as such, all intellectual property rights in and related to the Add -ons
developed by SAP (independently or jointly with Customer) including any derivatives thereof are owned by SAP,
SAP SE, their Affiliates or licensors.
3.5.1.2. “Customer ABAP Add-on” means an Add-on developed in the ABAP programming language and developed by
or on behalf of Customer without SAP’s participation.
3.5.1.3. “SAP-provided Add-on” means any Add-on that is not a Customer ABAP Add-on and is an Add-on made
available for the Cloud Service.
3.5.1.4. “Additional Add-on” means any Add-on that is published by SAP as an SAP certified Add-on on the SAP Certified
Solutions Directory.
3.5.1.5. "Modification" means (i) a change to the delivered source code or metadata; or (ii) any development, other than
a change to the delivered source code or metadata, that customizes, enhances or changes existing functionality
of the SAP Cloud Service Software. For purposes of this Cloud Service, Cloud Materials include all Modifications.
For the avoidance of doubt, all intellectual property rights in and related to the Modifications and derivatives
thereof are owned by SAP, SAP SE, their Affiliates or licensors.
Customer has the right to develop and/or use Customer ABAP Add-ons, SAP-provided Add-ons, and Additional
Add-ons to the SAP Cloud Service Software in furtherance of its permitted use of the Cloud Service under this
Agreement. Where Customer is also subscribed to SAP extended services for SAP S/4 HANA Cloud, private
edition, Customer is only permitted to use SAP-provided Add-ons and Additional Add-ons.
For RISE with SAP S/4HANA Cloud, private edition; RISE with SAP S/4HANA Cloud, private edition, base; RISE
with SAP S/4HANA Cloud, private edition and experience management; and RISE with SAP S/4HANA Cloud,
private edition, premium only, Customer has the right to develop and use Modifications to the SAP Cloud Service
Software in furtherance of its permitted use of the Cloud Service under this Agreement. Where Customer is also
subscribed to SAP extended services for SAP S/4HANA Cloud, private edition, Custom er is not permitted to
make Modifications.
Customer is responsible for all installation, management and support for any Modifications, Customer ABAP
Add-ons, and Additional Add-ons. Customer is responsible for testing and resolving source code issues,
compatibility issues, security vulnerabilities or other conflicts that may arise from Modifications, Customer ABAP
Add-ons, and/or Additional Add-ons permitted under this Agreement and any patches or workarounds, or other
changes provided by SAP for the Cloud Service Software, in a timely manner. The SLA and Support Schedule
shall not apply to any Customer ABAP Add-ons. Modifications, Customer ABAP Add-ons, and Additional Add-
Ons must not enable the circumventing of any restrictions set forth in the Agreement, nor impair or degrade the
performance, system availability, operability, or security of the Cloud Service. Customer will inform SAP without
undue delay about any issues or vulnerabilities with the Modifications, Customer ABAP Add-ons, or Additional
Add-ons that may impair or degrade the Cloud Service. SAP shall not be responsible for any such impairments
or degradations of the Cloud Service caused by Customer ABAP Add-ons. For the avoidance of doubt, SAP
reserves the right to restrict or require the removal any Add -ons that (i) it determines may pose any such risk to
the Cloud Service and/or (ii) it determines does not meet the quality standards for SAP-provided Add-ons; or (iii)
where Customer is in breach of the Agreement. In exchange for the right to develop Customer ABAP Add-ons
under the Agreement, Customer covenants, on behalf of itself, successors and assigns, not to assert against
SAP SE, their Affiliates or licensors, any rights in any Customer ABAP Add-ons, or any claims of any rights,
against any SAP product, service, or future SAP development.
Customer ABAP Add-ons and all rights associated therewith, shall be the exclusive property of Customer
subject to SAP’s rights in and to the Cloud Service and Cloud Materials as indicated in this Agreement; provided
Customer shall not commercialize any such Customer ABAP Add-ons developed under this Agreement.
Customer grants to SAP (including SAP SE, its Affiliates, and subcontractors) a non -exclusive right to process,
use, and display Customer ABAP Add-ons to provide and support the Cloud Service and as set out in the
Agreement. In exchange for the right to develop Customer ABAP Add-ons under the Agreement, Customer
covenants, on behalf of itself, successors, and assigns, not to assert against SAP SE, their Affiliates or licensors,
any rights in Customer ABAP Add-on, or any claims of any rights, against any SAP product, service, or future
SAP development.
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3.6. Other Customer-Provided Software. Except as set forth above in connection with Add-ons, Customer may not
use any other Customer-provided software in the Cloud Service, including on the operating system. If SAP, on
an exceptional basis, permits Customer to use any such Customer-provided software, each of the requirements
and restrictions applicable to Add-Ons set forth above shall apply to such Customer provided software. Customer
is responsible for obtaining all necessary rights from third parties required for SAP to run and host any Customer-
provided software in the Cloud Service environment. Customer will, at SAP’s request, provide written verification
of such rights. Customer grants to SAP the nonexclusive right to use the Customer-provided software for the
sole purpose of and only to the extent necessary for SAP to provide the Cloud Service. Customer acknowledges
that additional fees may apply in connection with management and support of such Customer-provided software
in the Cloud Service.
3.7. Customer Data Return. Prior to termination or expiration of the Subscription Term, at Customer`s request, SAP
shall provide to Customer, within a reasonable time period and in a reasonable backup media format utilized by
SAP, a final export of the Customer Data in the Cloud Service. Customer must verify the usability of this export
within two weeks of receipt. In the event Customer does not provide verification within the two -week period, the
exported Customer Data shall be deemed usable.
3.8. Additional Services. Customer may request Additional Services (or the SAP Services Team may request such
services on Customer’s behalf) through a service request on the SAP Service Request Platform or an equivalent
platform. SAP will inform Customer (or Partner, if applicable) of the fees for the requested Additional Service,
and Customer (or Partner) shall confirm the purchase of such service. Any Additional Services completed by
SAP will be invoiced monthly in arrears. “Additional Services” are tasks rela ted to the Cloud Service systems
identified in the RISE with SAP S/4HANA Cloud, Private Edition Roles and Responsibilities Documentation
(available to Customer on SAP’s website or upon request) as “Additional Service.”
4. CUSTOMER RESPONSIBILITIES
4.1. SAP`s provision, operation and support of the Cloud Service is subject to Customer`s reasonable cooperation
and providing, no later than five (5) business days from the effective date of the Order Form, necessary
information (including any on-boarding documentation), authorizations and qualified resources for such
activities. Customer authorizes SAP to set up and use an administrative user in the Cloud Service systems as
needed to provision and confirm Customer’s subscribed usage and technical compliance of the Cloud Service.
SAP shall be permitted to audit (at least once annually and in accordance with SAP standard procedures, which
may include an on-site and/or remote audit) the Customer’s use of the Cloud Service and the Bundled Cloud
Service(s) to verify compliance with Usage Metrics, volume, and the Agreement. Customer shall cooperate
reasonably in the conduct of such audits.
4.2. Customer may only process, transmit, and store cardholder data, or Customer Data that includes a unique
payment card number that identifies an issuer and a particular cardholder account , in the Cloud Service with a
subscription to the SAP Digital Payments, base package cloud service and SAP Firewall Service, private cloud
edition.
4.3. In connection with Customer’s obligations related to Customer Data under the Agreement, Customer Data
includes all Customer-provided Software used in the Cloud Service environment.
4.4. Customer is responsible for the definition, documentation, and execution of its business processes in the Cloud
Service, including, but not limited to configuration of systems ’ management and application and data security
policies and batch processing requirements. Customer is responsible for providing SAP necessary and sufficient
documentation of its applicable processes and Customer ABAP Add-ons for SAP to perform its responsibilities
under the Agreement.
4.5. Upgrades and Releases
4.5.1. Customer is responsible for having upgrades and new releases of the Cloud Service Software installed.
Technical installation of such upgrades and new releases is performed by SAP on request. Customer must only
use a version or release of the Cloud Service Software for which software maintenance and support are current,
as provided by SAP. For purposes of this Section, “current” means it is covered by Mainstream Maintenance or
as otherwise identified in the Release Strategy. Such support is provided according to the current maintenance
phases of SAP software releases as described in the SAP Release and Maintenance Strategy, available at
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https://support.sap.com/releasestrategy (“Release Strategy”). For all Additional and Customer ABAP Add-ons,
simplification and incompatibility checks must be executed by Customer. Customer is responsible for evaluating
the results of such checks to ensure that implemented business processes, backend and frontend applications
and integrations are running after changes to the Cloud Service Software.
SAP’s obligations under the Agreement and Documentation are dependent on Customer maintaining the Cloud
Service Software as current. SAP is not responsible for the reliability, performance, availability, functionality,
security, or any other related issues experienced with the Cloud Service Software that may result from running
a release that is not current and is not liable to Customer for any loss or damage that might arise from a Cloud
Service Software’s inoperability or unavailability because it is not current.
4.5.2. Where Customer is also subscribed to SAP extended services for SAP S/4HANA Cloud, private edition,
upgrades to the then-current version of the Cloud Service Software are required every two contract years.
4.5.3. If SAP is not able to perform upgrades due to the lack of Customer’s cooperation, (i) SAP’s ability to provide
support may be limited and SAP assumes no responsibilities for such limitations and (ii) the System Availability
Service Levels in the SLA shall not apply.
4.6. Customer is responsible for the connection to the Cloud Service, including the Internet connection to the Point
of Demarcation. SAP’s responsibility shall not extend beyond the Point of Demarcation. Point of Demarcation
means the outbound firewall (or, in case of a VPN for access, the point of connection of the SAP network to the
VPN) of SAP’s computing environment used to provide the Cloud Service.
4.7. If Customer fails to fulfil any Customer obligations set forth in this Supplement, Customer is responsible for the
ramifications of such failure including delays, subsequent costs, and any performance, availability, functionality,
support, and/or security issues experienced with the Cloud Service Software.
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Attachment 1 to
RISE with SAP S/4HANA Cloud, private edition Supplemental Terms and Conditions
Support Services
This Attachment sets forth the support services provided in addition to the support services of the Support
Schedule for Cloud Services under the Agreement. This Attachment does not apply to Cloud Features.
1. SCOPE OF ADDITIONAL SUPPORT SERVICES.
The additional support services apply to Cloud Service Software excluding software to which special support
agreements apply exclusively (“Enterprise Support Solutions”).
1.1. Continuous Improvement and Innovation
1.1.1. SAP may make available ABAP source code for SAP software applications included in Enterprise Support
Solutions (excluding third-party software) and additionally released and supported function modules.
1.1.2. Software change management including changed configuration settings or Enterprise Support Solutions
software upgrades, is supported, with content, tools, and additional information.
1.2. Global Support Backbone
1.2.1. SAP Notes on SAP’s Customer Support Website document software malfunctions and contain information on
how to remedy, avoid and bypass errors. SAP Notes may contain coding corrections. SAP Notes also document
related issues, customer questions, and recommended solutions (e.g. customizing settings).
1.2.2. SAP Note Assistant, a tool to install specific corrections and improvements to SAP components, is included.
1.3. Mission Critical Support
For Customer custom code built with the SAP development workbench, SAP provides mission -critical support
root-cause analysis (Root Cause Analysis for Custom Code), according to the Global Incident Handling process
and response levels for priority “very high” and priority “high” cases as set forth in the Support Schedule for
Cloud Services. If the Customer custom code is documented according to SAP’s then -current standards
available at http://support.sap.com/supportstandards, SAP may provide guidance to assist Customer in issue
resolution.
1.4. SAP Application Lifecycle Management
1.4.1. Subject to Customer’s purchase of one of the SAP Solution Manager for SAP S/4HANA Cloud, private edition
add-ons, Customer may access and use SAP Solution Manager Enterprise Edition (and any successor thereto)
during the Subscription Term solely for the following purposes: (i) delivery of SAP Enterprise Support, cloud
editions, and (ii) application lifecycle management for Enterprise Support Solutions and other SAP cloud or on-
premise solutions for which Customer has a current support agreement with SAP. Su ch application lifecycle
management is limited to:
(i) implementation, configuration, testing, operations, continuous improvement, and diagnostics;
(ii) case management (service desk), problem management and change request management as enabled
using SAP CRM technology integrated in SAP Solution Manager Enterprise Edition (Customer does
not require a separate package license to SAP CRM);
(iii) mobile application lifecycle management scenarios using SAP NetWeaver Gateway (or equivalent
technology) integrated in SAP Solution Manager Enterprise Edition;
(iv) management of application lifecycle management projects for Enterprise Support Solutions and any
other software licensed by Customer from third parties and included in the Customer’s Cloud Service
environment and for hardware systems, supported by Customer’s IT team (“Customer IT Solutions”)
using the project management functionality of SAP Project and Portfolio Management integrated in
SAP Solution Manager Enterprise Edition except that the portfolio management functionality of SAP
Project and Portfolio Management is not in scope of SAP Solution Manager Enterprise Edition and will
need to be licensed separately by Customer; and
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(v) administration, monitoring, reporting and business intelligence as enabled using SAP NetWeaver
technology integrated in SAP Solution Manager Enterprise Edition. Business intelligence may also be
performed provided the appropriate SAP BI software is licensed by Customer as part of the Enterprise
Support Solutions.
1.4.2. SAP Solution Manager Enterprise Edition may not be used for purposes other than those stated above.
1.4.3. SAP in its sole discretion may from time to time on SAP’s Customer Support Website (available at
https://support.sap.com) under http://support.sap.com/solutionmanager update the use cases for SAP Solution
Manager Enterprise Edition under this Section.
1.4.4. SAP Solution Manager Enterprise Edition shall only be used during the term of the Agreement subject to the
rights set forth herein and exclusively for Customer's SAP-related support purposes in support of Customer’s
internal business operations. The right to use any SAP Solution Manager Enterprise Edition capabilities under
this Attachment 1 other than those listed above is subject to a separate written agreement with SAP, even if
such capabilities are accessible through or related to SAP Solution Manager E nterprise Edition. Customer shall
be entitled to allow any of its employees to use web self-services in the SAP Solution Manager Enterprise Edition
during the term of the Agreement such as creating support tickets, requesting support ticket status, ticket
confirmation and change approvals directly related to Customer IT Solutions.
1.4.5. Use of SAP Solution Manager Enterprise Edition may not be offered by Customer as a service to third parties;
provided, third parties authorized to access Cloud Services under the Agreement may have access to SAP
Solution Manager Enterprise Edition solely for SAP-related support purposes in support of Customer’s internal
business operations in accordance with the terms of the Agreement.
1.5. Other Components, Methodologies, and Content.
1.5.1. Process descriptions and process content that may be used as pre-configured test templates and test cases via
the SAP Solution Manager Enterprise Edition. In addition, the SAP Solution Manager Enterprise Edition assists
Customer’s testing activities.
1.5.2. Tools and content for SAP Application Lifecycle Management (accessible via SAP Solution Manager Enterprise
Edition and/or the Enterprise Support Solutions and/or the applicable Documentation for Enterprise Support
Solutions and/or SAP’s Customer Support Website) to help increase efficiency:
(i) Tools for implementation, configuration, testing, operations, and system administration.
(ii) Best practices, guidelines, methodologies, process descriptions and process content. This content
supports the usage of the tools for SAP Application Lifecycle Management.
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SAP U.S. Payroll Tax Calculation by BSI
SAP U.S. Payroll Tax Calculation by BSI, private cloud edition
SAP U.S. Payroll Tax Calculation by BSI, option for government organizations
SAP U.S. Payroll Tax Calculation by BSI, add-on for SAP SuccessFactors Payroll
Supplemental Terms and Conditions
This Supplement is part of an Agreement between SAP and Customer and applies solely to the (i) SAP U.S. Payroll
Tax Calculation by BSI, Cloud Service and (ii) SAP U.S. Payroll Tax Calculation by BSI, private cloud edition Cloud
Service, (iii) SAP U.S. Payroll Tax Calculation by BSI, option for government organizations Cloud Service, and (iv) SAP
U.S. Payroll Tax Calculation by BSI, add-on for SAP SuccessFactors Payroll Cloud Service (each individually as the
“Cloud Service”).
1. USAGE METRIC
The Usage Metric for the Cloud Service is User. “User” is any individual authorized to access the Cloud Service. For
the Cloud Service, an individual with a unique active profile and whose data is processed by the Cloud Service is
counted.
2. ADDITIONAL TERMS
2.1. Prerequisite. A current subscription to SAP SuccessFactors Employee Central Payroll is a prerequisite to a subscription
to SAP U.S. Payroll Tax Calculation by BSI and SAP U.S. Payroll Tax Calculation by BSI, option for government
organizations. A current subscription to SAP SuccessFactors Payroll is a prerequisite to a subscription to SAP U.S.
Payroll Tax Calculation by BSI, add-on for SAP SuccessFactors Payroll. A current subscription to SAP Payroll Cloud,
private edition is a prerequisite to a subscription to SAP U.S. Payroll Tax Calculation by BSI, private cloud edition.
2.2. Limitations. Customer is limited to a maximum of ten (10) designated contacts (“Administrative Users”).
2.3. Downloadable Component. In addition to the hosted portion of the Cloud Service, SAP may make available for
download by Customer a connector to be used to connect on-premise HCM solutions to the Cloud Service (the
“Integration Component”). The use of the Integration Component is limited to use with the Cloud Service and Customer
may not use the Integration Component for any other purpose. The Integration Component is part of the Cloud Service
and Customer’s use is limited to use by Named Users and only for the term of the Order Form. The Integration
Component may not be modified or altered in any way except by SAP. Any such modifications will negate SAP’s
obligation to provide Support and void SAP’s warranty obligations under this Agreement. Customer shall utilize the most
current version of the Integration Component made available by SAP, and Customer acknowledges that failure to use
the most current version may result in diminished performance of the Cloud Service. Customer is solely responsible for
the security of the Integration Component and is responsible for maintaining a dequate security measures, including
firewalls, to prevent unauthorized access to the Integration Component. Upon termination or expiration of the Order
Form, Customer’s right to use the Integration Component shall cease.
2.4. Exclusions. Customer shall be solely responsible for any inaccuracy or delay in tax calculations, payments, filings, or
reports to the extent directly caused by inaccurate or corrupt Customer Data, misuse, overrides, or taxing or regulatory
authorities. SAP and its licensors shall have no liability under this Agreement to any third party for any errors or delays
in located taxes, errors or delays in calculations, payments, filing or reports and SAP and its licensors shall have
no liability to taxing authorities or individuals whose payroll data is processed using the Cloud Service (or a part thereof)
for underpayments or non-payments, interest or penalties.
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3. MAINTENANCE WINDOWS
SAP can use the following maintenance windows for planned downtimes:
Maintenance Windows
Regular Maintenance Windows Saturday 12:00 a.m. to 4:00 a.m. Eastern U.S. time zone
4. SYSTEM AVAILABILITY.
Downtime required for updates due to changed regulatory requirements shall not be counted against the System
Availability SLA.
5. DATA RETENTION.
Incremental and full database back-ups occur daily. A full back-up is performed each Friday, in place of the daily
incremental back-up, with the last full back-up at the end of each month retained in offsite storage for no less than one
(1) year. The retention period for Customer Data is 30 days after contract termination. Customer Data will be made
available in .pdf format during such period.
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SAP Business Data Cloud Cloud Service
Supplemental Terms and Conditions
This Supplement is part of an Agreement between SAP and Customer and applies solely to the SAP Business
Data Cloud Cloud Service, which includes the SAP Business Data Cloud, core capacity and the SAP Business
Data Cloud Intelligent Applications Cloud Services.
1. DEFINITIONS
1.1. “Add-on” means any development that adds new and independent functionality to the SAP BW Capacity
Services (as defined below), but does not modify existing SAP functionality, and is developed using SAP
application programming interfaces or other integration points or other SAP code that allows other software
products to communicate with or call on the SAP BW Capacity Service.
1.2. “Additional Add-on” means any Add-on that is published by SAP as an SAP certified Add-on in the SAP
Certified Solutions Directory.
1.3. “API Calls” are the communication of an action to or from the Cloud Service to or from another system /
technology that occurs via a defined application programming interface.
1.4. “Capacity Service Category” is a logical grouping of the SAP Datasphere Capacity Services.
1.5. “Capacity Service(s)” means the services identified in Attachment A of this Supplement, as may be updated
by SAP from time-to-time with additional Capacity Services.
1.6. “Capacity Unit” is a ratio of services consumed via the Capacity Service and is calculated as set forth in this
Supplement.
1.7. “Capacity Units of Measure” is a block used to measure consumption of a Capacity Service.
1.8. “Capacity Unit Value” is the numerical value assigned to a specific Capacity Service that, when multiplied by
the number of used Capacity Units of Measure, results in the consumed Capacity Units.
1.9. “Customer ABAP Add-on” means an Add-on developed in the ABAP programming language and developed
by or on behalf of Customer without SAP’s participation.
1.10. “Data Sources” means certain software product(s) and/or certain SAP database instance(s) for which
Customer has secured an enumerated license that specifically lists or names the permitted activities or actions
allowed under a valid license agreement including but not limited to, for example, SAP’s General Terms and
Conditions for SAP Software and Support agreement.
1.11. “Databricks Unit” or “DBU” is a normalized unit of processing power used for measurement and pricing SAP
Databricks Capacity Services.
1.12. “Databricks Storage Unit” or “DSU” is a standardized unit for measuring storage usage across multiple
Databricks products. DSUs consumed by different Databricks products may vary by region, storage type,
volume of data stored, or transactions.
1.13. “Flat Fee” is a fixed fee for the Cloud Service.
1.14. “Full Use Equivalent” or “FUE” is the aggregation method by which Customer may allocate individuals access
to the Capacity Service in accordance with the ratios set forth in this Supplement.
1.15. “Gigabyte” or “GB” is the amount of capacity in the Capacity Service.
1.16. “Hour” is the total hours the SAP Databricks Enterprise SAP Private Connectivity Endpoint Capacity Services
are provisioned, rounded up to the nearest whole hour (i.e., 60 minutes).
1.17. "Modification" means (i) a change to the delivered source code or metadata; or (ii) any development, other
than a change to the delivered source code or metadata, that customizes, enhances or changes existing
functionality of the SAP BW Capacity Services.
1.18. “SAP Data Product(s)” means enriched Customer Data, where enrichment is any type of reorganization,
summarization, reporting or enhancement with metadata.
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1.19. “SAP-provided Add-on” means any Add-on that is not a Customer ABAP Add-on and is an Add-on made
available for the SAP BW Capacity Services.
1.20. “Tenant” is a customer-specific instance of the Capacity Service.
1.21. “User” is any individual authorized to access the Capacity Service. Users are counted separately per customer-
specific instance.
1.22. “% of Net Recurring Fee” is a calculation based on the stated percentage multiplied by the stated net recurring
Capacity Unit Value per month.
2. GENERAL TERMS
2.1. Any Capacity Service provided as a non-productive environment, such as a test tenant, or for quality assurance
may only be used for non-productive development and testing.
2.2. The Service Level Agreement for Cloud Services referred to in the Order Form, is amended so that each
reference to the “Cloud Service” therein is deleted and replaced with “Capacity Services” for the Capacity
Services that are set forth in Attachment A, Tables 1 and 2, to this Supplement.
2.3. In the event that SAP adds new services to the SAP Business Data Cloud Cloud Service, during Customer’s
Subscription Term: (a) SAP will release a new Supplement reflecting such new services (“Updated
Supplement”); (b) Customer’s use of such new services will be subject to any applicable new terms in the
Updated Supplement; and (c) any Customer use of such new services will be deemed Customer’s acceptance
of the Updated Supplement, solely as applicable to such new services. For purposes of clarification, all services
other than new services will remain governed by the applicable Supplement(s) in effect under the Agreement
prior to the Updated Supplement.
2.4. Data Extraction / APIs
2.4.1. APIs and similar connectors, tools, or interfaces developed for or by SAP or its affiliated companies (“SAP
APIs”) may only be used to extract data from the Cloud Services as described in the documentation for the
respective SAP API. The use of SAP APIs to extract data from the Cloud Service to third-party applications or
products (e.g. non-SAP software, data warehouses or data lakes) is not permitted, unless this is explicitly
described as a function of the SAP API in the documentation for the SAP API.
2.4.2. Customer and third-party applications (e.g. APIs that are not SAP APIs) may not be used to extract data from
the Cloud Services.
2.4.3. SAP may verify whether access of the Cloud Services via API(s) originates from SAP software. It is not
permitted to circumvent this authentication, including, but not limited to, using technical means that identify a
third-party application or product as SAP software during authentication.
2.5. Artificial intelligence (“AI”) features and technologies, that are made available under the Agreement, are subject
to the SAP AI Terms available at the following (or a successor) link: SAP Agreements | SAP Trust Center |
About SAP SE.
2.6. No Waiver. SAP’s failure to enforce any provision of this Agreement shall not be construed as a waiver of
SAP’s right to enforce such provision at any later time.
3. SAP BUSINESS DATA CLOUD, CORE CAPACITY USAGE METRIC
3.1. The SAP Business Data Cloud, core capacity Cloud Service is made up of the Capacity Services set forth in
Attachment A, Tables 1-4.
3.2. The Usage Metric for this Cloud Service is Capacity Unit per month except for the SAP Datasphere Capacity
Services, which are measured as set forth in Attachment A, Table 1, and the SAP Databricks Capacity
Services, which are measured as set forth in Attachment A, Table 4.
3.3. For Capacity Services that use Gigabytes, where storage or memory capacity is counted, the metric entitlement
is not time-bound and does not deplete with usage, unless otherwise specified in th is Supplement.
3.4. Each Capacity Service in Attachment A, Tables 1, 2, and 3 has a corresponding Capacity Unit of Measure and
Capacity Unit Value. To calculate the number of Capacity Units consumed through use of a Capacity Service,
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the total amount of Capacity Units of Measure used during a month is multiplied by the Capacity Unit Value to
arrive at the number of Capacity Units consumed by that Capacity Service. Customer may consume Capacity
Units up to the total amount stated in the Order Form for each month. Unused Capacity Units may not be
carried over into any subsequent month.
Calculation example: In Table 1, for the "Disk Storage" Capacity Service, if 256GB (16
blocks) were consumed for 730 hours in one month, the resulting consumption would
be 46.72 Capacity Units (i.e., 16 blocks x 0.004 Capacity Unit Value x 730 hours =
46.72 Capacity Units).
3.5. For clarification, in Schedule 1 of the Order Form, the clause that reads “Usage Metric Limitation shows the
maximum quantity that Customer may use over a 12-month period, unless:” includes a drafting error and
instead should read as follows: “Usage Metric Limitation shows the maximum quantity that Customer may use
over a 1-month period, unless:”.
3.6. The Cloud Service includes 16GB of Catalog Storage.
4. SAP DATASPHERE CAPACITY SERVICES
4.1. Availability of these Capacity Services and the amount of Memory differs by Subprocessor, which is detailed
in the product specific documentation.
4.2. The SAP Datasphere, SAP BW Bridge Capacity Service includes SAP BTP ABAP environment, runtime, which
may only be used with the Capacity Services listed in Attachment A, Table 1.
4.3. Certain SAP Datasphere Capacity Services include data marketplace functionality that allows Customers to
buy, sell or share data products stored in such Capacity Services. SAP is not party to any transaction or
contractual arrangement between Customers in relation to the exchange of data products, and SAP shall not
be liable for any damages incurred by a Customer related to any such transaction.
4.4. These Capacity Services must not be used to access, directly or indirectly, a third -party database(s) licensed
under an SAP, SAP Affiliates’, or any of their respective resellers’ or distributors’ runtime license, except
communication (including data transfers) via application-level APIs between the Capacity Service and software
applications, running on any such third-party database.
4.5. Customer may use up to 2,000 OData API Calls per 1 GB of compute memory, per Tenant, per month. SAP
reserves the right to charge additional fees for use that exceeds the stated amount. Use of OData APIs for
data extraction is prohibited.
4.6. Use of the OpenSQL interface is limited to 1 GB of network data transfer per 1 GB of compute memory, per
Tenant, per month. SAP reserves the right to charge additional fees for use that exceeds the stated amount.
4.7. These Capacity Services include the optional use of the on -premise component, SAP Landscape
Transformation Replication Server (“SLT”), which use is limited solely to loading data into these Capacity
Services.
4.8. Customer may only use the data product generator available under Customer’s subscription to SAP BW
Capacity Services to automate the publication of data to the SAP Datasphere Capacity Services set forth in
Attachment A, Table 1.
5. SAP DATABRICKS CAPACITY SERVICES
5.1. Use of the SAP Databricks Capacity Services, as set forth in Attachment A, Table 4 of this Supplement, are
subject to the terms of this Supplement and the SAP Databricks Capacity Services terms in the applicable
Order Form under which the SAP Business Data Cloud, core capacity Cloud Service is subscribed to.
5.2. The Service Level Agreement for Cloud Services, referenced in the Order Form, applies to the SAP Databricks
Capacity Service, except as set forth in this Section 5.2.
5.2.1. “Databricks Gateway” means the infrastructure connecting Customer with the SAP Databricks Capacity
Services.
5.2.2. “Downtime” is the total minutes in the Month during which SAP Databricks Capacity Services does not respond
to a request from the Databricks Gateway, excluding Excluded Downtime. SAP Databricks Capacity Services
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are considered to “not respond” for a given Workspace for a minute, if all continual attempts within the minute
to establish connectivity between the Workspace and the Databricks Gateway fail.
5.2.3. “Excluded Downtime” means the total minutes in the Month attributable to a Maintenance Window; or
unavailability caused by factors outside of SAP’s reasonable control, such as unpredictable and unforeseeable
events that could not have been avoided if reasonable care had been exercised. For clarity, such events
include cloud/hyperscaler or internet service provider outages and services interruptions t hat cannot be
reasonably worked around (such as region-wide outages).
5.2.4. “Maintenance Window” is a pre-announced period when the SAP Databricks Capacity Services are not
available due to scheduled maintenance and upgrades, as notified by SAP, who will provide notice to
subscribed Customers of such periods at least 72 hours in advance (such notification will be through SAP
Customer communication channel(s), such as SAP for Me), and each scheduled maintenance period will last
a maximum of 60 minutes.
5.2.5. “Month” means each full calendar month. The SLA is only applicable to full Months.
5.2.6. “System Availability SLA” is a 99.93% System Availability Percentage during each Month for the production
version of the SAP Databricks Capacity Service and calculated in accordance with the formula defined under
System Availability Percentage.
5.2.7. “Workspace” means an SAP Databricks Capacity Service environment.
6. SAP BW NETWEAVER CLOUD PRIVATE EDITION AND SAP BW/4HANA CLOUD PRIVATE EDITION
CAPACITY SERVICES (“SAP BW CAPACITY SERVICES”)
6.1. SAP HANA, runtime edition
6.1.1. SAP HANA, runtime edition (“runtime edition”) is a runtime database included in certain SAP BW Capacity
Services. The runtime edition includes the components set forth in Sections 6.1.2. and 6.1.3. The runtime
edition and said components may only be used in conjunction with Customer's use of the SAP BW Capacity
Services.
6.1.2. SAP HANA PLATFORM EDITION (includes);
(a) SAP HANA Rules Framework;
(b) SAP HANA, data privacy option;
(c) SAP HANA, predictive option;
(d) SAP HANA, spatial and graph option;
(e) SAP HANA, search and text option;
(f) SAP HANA, smart data quality;
(g) SAP Smart Data Integration; and
(h) SAP HANA, native storage extension.
6.1.2.1. SAP HANA PLATFORM EDITION includes the SAP HANA Studio, SAP HANA Cockpit and SAP Web IDE
components. All data modeling, distribution, creation and extension of data structures, including tables and
virtual tables via SAP HANA smart data access used in the runtime edition must be performed via the SAP BW
Capacity Services. Use of SAP Smart Data Integration is limited solely to loading data into the runtime edition
or the SAP BW Capacity Services. Data may be loaded from an appropriately licensed Data Source via SAP
Smart Data Integration or via the SAP BW Capacity Services. SAP Smart Data Integration may also be used
with SAP HANA smart data access in a data federation scenario. Any bypass or circumvention of access
restrictions is strictly prohibited.
6.1.3. The optional, limited use of the following on -premise components: SAP Data Integrator, SLT, SAP HANA
Studio, and SAP HANA Cockpit. Use of SAP Data Integrator and SLT is limited solely to loading data into the
runtime edition or the SAP BW Capacity Service.
6.1.4. Customer is expressly prohibited from performing the mass extraction of any data, except where such data
extraction is explicitly permitted via the use of licensed SAP tools, such as, but not limited to, the SAP Data
Services and SLT. Such data may only be extracted to and consumed by one or more of the following:
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(a) SAP HANA, enterprise edition;
(b) SAP HANA, standard edition;
(c) SAP Cloud Platform, SAP HANA service;
(d) SAP HANA Cloud;
(e) SAP HANA, EE Cloud; and
(f) SAP Datasphere Capacity Services.
6.2. Use of the SAP HANA Studio, SAP HANA Cockpit, SAP Web IDE components, and SAP Business Application
Studio is limited solely to administering, monitoring and creating custom views for the runtime edition database
instance. All reporting must be performed via the SAP BW Capacity Service or via custom views created using
SAP HANA Studio, SAP Web IDE, or SAP Business Application Studio. Such custom views may be accessed
by SAP business intelligence tools. Use of SAP Web IDE may require an additional infrastructure subscription
and is limited to the creation of views for reporting purposes only.
6.3. Disaster Recovery
6.3.1. Customer must subscribe to the SAP S/4HANA Cloud, disaster recovery, private edition Capacity Service, in
order for the SAP BW Capacity Services to be eligible for the Disaster Recovery services as described and
available in the document entitled “Disaster Recovery Services and Customer Invoked Failover Services for
Private Cloud Edition Services, Tailored Option Services, and SAP BW Capacity Services Service Description
Documentation” and available at: https://www.sap.com/about/agreements/policies/hec-
services.html?sort=latest_desc&search=disaster%20recovery&tag=language:english, subject to this Section
6.3.
6.3.2. In order for Customer to be eligible for the 4-hour recovery time objective services (“RTO”), as described in the
document entitled “Disaster Recovery Services and Customer Invoked Failover Services for Private Cloud
Edition Services, Tailored Option Services, and SAP BW Capacity Services Service Description
Documentation” and available at: https://www.sap.com/about/agreements/policies/hec-
services.html?sort=latest_desc&search=disaster%20recovery&tag=language:english, in addition to
subscribing to the SAP S/4HANA Cloud, disaster recovery, private edition Capacity Service, Customer must
also subscribe to the SAP S/4HANA Cloud Private Edition, 4-hour recovery time objective Capacity Service,
subject to this Section 6.3.
6.3.3. Disaster Recovery and 4-hour recovery time objective services do not apply to a) those SAP BW Capacity
Services specifically marked as not eligible for Disaster Recovery or RTO in Table 3; or b) any non-productive
environments.
6.4. Storage on Servers
6.4.1. HANA Servers. The usable storage amount for HANA servers, unless otherwise stated, is equal to the HANA
memory size.
6.4.2. Application Servers. The allocated storage on application servers must only be used for system operation and
must not be used to store Customer Data.
6.5. Maximum Database Sizes
6.5.1. The maximum tenant size supported for HANA database servers, as well as the tenant size limits depend on
the availability of services in a specific data center with a specific subprocessor.
6.5.2. The standard maximum system size supported for a HANA database is 12 terabytes of memory.
6.5.3. Only single-node HANA databases are supported.
6.6. Maintenance. Support for the SAP BW Capacity Services is provided by SAP as described in the Support
Schedule for Cloud Services referenced in the Order Form, and as further detailed in Attachment C to this
Supplement.
6.7. Service Level Agreement. The Service Level Agreement for Cloud Services referenced in the Order Form
does not apply to the SAP BW Capacity Services. Instead, it is replaced with the Service Level Agreement set
forth in the Attachment B.
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6.8. Additional Service(s). Customer may request additional service(s) (or the SAP services team may request
such services on Customer’s behalf) through a service request on the SAP service request platform or an
equivalent platform. SAP will inform Customer of the fees for the requested additional service, and Customer
shall confirm the purchase of such service. Any additional services completed by SAP will be invoiced by SAP
monthly in arrears.
6.9. Add-ons and Modifications
6.9.1. Customer has the right to use Customer ABAP Add-ons, SAP-provided Add-ons, and Additional Add-ons, and
the right to develop Customer ABAP Add-ons for the SAP BW Capacity Services in furtherance of its permitted
use of such Capacity Services. Where Customer is also subscribed to SAP extended services for SAP BW
Capacity Services, Customer is only permitted to use SAP-provided Add-ons and Additional Add-ons.
6.9.2. For the following SAP BW Capacity Services: (a) SAP S/4HANA Cloud Private Edition; (b) SAP S/4HANA
Cloud, private edition, base; (c) SAP S/4HANA Cloud, private edition and experience management; and (d)
SAP S/4HANA Cloud, private edition, premium only, Customer has the right to develop and use Modifications
to these Capacity Services in furtherance of its permitted use of such Capacity Services. Where Customer is
also subscribed to SAP extended services for SAP BW Capacity Services, Customer is not permitted to
develop or use Modifications.
6.9.3. Customer is responsible for all installation, management and support for any Modifications, Customer ABAP
Add-ons, and Additional Add-ons. Customer is responsible for testing and resolving source code issues,
compatibility issues, security vulnerabilities or other conflicts that may arise from Modifications, Customer
ABAP Add-ons, and/or Additional Add-ons in a timely manner. The SLA and Support Schedule shall not apply
to any Customer ABAP Add-ons. Modifications, Customer ABAP Add-ons, and Additional Add-ons must not
enable the circumventing of any restrictions set forth in the Agreement, nor impair or degrade the performance,
system availability, operability, or security of the SAP S/BW Capacity Services. Customer shall notify SAP,
without undue delay, of any issues or vulnerabilities in the Modifications, Customer ABAP Add-ons, or
Additional Add-ons that may impair or degrade the SAP BW Capacity Services. SAP shall not be responsible
for any such impairments or degradations of the SAP BW Capacity Services caused by Customer ABAP Add-
ons. SAP reserves the right to restrict or require the removal of any Add-ons and Modifications if SAP
determines that: (i) the Add-on or Modification may pose a risk to the SAP BW Capacity Services; (ii) the Add-
ons does not meet SAP’s published quality standards; (iii) are in breach of the Agreement by Customer; or (iv)
enable the extraction of SAP Data Products to non-SAP applications via SAP APIs.
6.9.4. Customer ABAP Add-ons and all rights associated thereto, shall be the exclusive property of Customer, subject
to SAP’s rights in and to the SAP BW Capacity Services and Cloud Materials as indicated in this Agreement;
provided Customer shall not commercialize any such Customer ABAP Add -ons developed under this
Agreement. Customer grants to SAP (including SAP SE, its Affiliates, and subcontractors) a non -exclusive
right to process, use, and display Customer ABAP Add-ons to provide and support the SAP BW Capacity
Services and as set out in the Agreement. In exchange for Customer’s right to develop, subject to the
Agreement, Customer ABAP Add-ons, Customer covenants, on behalf of itself, successors, and assigns, not
to assert against SAP SE, their Affiliates or licensors, any rights in Customer ABAP Add -on, or any claims of
any rights, against any SAP product, service, or future SAP development.
6.9.5. For the purposes of this Cloud Service, Cloud Materials shall include: (i) all Add-ons developed by SAP,
independently or jointly with Customer, and (ii) all Modifications. All intellectual property rights in and related
to such Add-ons and Modifications, including any derivatives thereof are owned by SAP, SAP SE, their
Affiliates or licensors.
6.9.6. Except as set forth above in connection with Add-ons and Modifications, Customer may not use any other
Customer-provided software in the SAP BW Capacity Services, including on the operating system. If SAP, on
an exceptional basis, permits Customer to use any such Customer -provided software, each of the
requirements and restrictions applicable to Add-ons and Modifications set forth above shall apply, in addition
to the following terms: (a) Customer is responsible for obtaining all necessary rights from third parties required
for SAP to run and host any Customer-provided software in conjunction with the SAP BW Capacity Services;
(b) Customer will, at SAP’s request, provide written verification of such rights; (c) Customer grants to SAP the
non-exclusive right to use the Customer-provided software for the sole purpose of and only to the extent
necessary for SAP to provide the SAP BW Capacity Services; and (d) Customer acknowledges that additional
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fees may apply in connection with management and support of such Customer-provided software in the
Capacity Services.
6.10. Customer Data Return. Prior to termination or expiration of the Subscription Term, at Customer’s request, SAP
shall provide to Customer, within a reasonable time period and in a reasonable backup media format utilized
by SAP, a final export of the Customer Data in the SAP BW Capacity Service. Customer must verify the
usability of this export within two weeks of receipt. In the event Customer does not provide verification within
the two-week period, the exported Customer Data shall be deemed usable.
6.11. Customer Responsibilities
6.11.1. SAP’s provision, operation and support of the SAP BW Capacity Service is subject to Customer`s reasonable
cooperation and providing necessary information (including any on -boarding documentation), authorizations
and qualified resources for such activities no later than 5 business days from the Order Form Eff ective Date.
Customer authorizes SAP to set up and use an administrative user in the SAP BW Capacity Service systems
as needed to provision and confirm Customer’s subscribed usage and technical complianc e of the SAP BW
Capacity Service. SAP shall be permitted to audit (at least once annually and in accordance with SAP standard
procedures, which may include an on-site and/or remote audit) the Customer’s use of the SAP BW Capacity
Service to verify compliance with Usage Metrics, volume, and the Agreement. Customer shall cooperate
reasonably in the conduct of such audits.
6.11.2. Customer is responsible for the definition, documentation, and execution of its business processes in the SAP
BW Capacity Service, including, but not limited to configuration of systems’ management and application and
data security policies and batch processing requirements. Customer is responsible for providing SAP
necessary and sufficient documentation of its appli cable processes and Customer ABAP Add-ons for SAP to
perform its responsibilities under the Agreement.
6.12. Upgrades and Releases
6.12.1. Customer is responsible for arranging technical installations by SAP of upgrades and new releases of the SAP
BW Capacity Services. Customer must only use a version or release of the SAP BW Capacity Service for
which software maintenance and support are current, as provided by SAP. For purposes of this Section,
“current” means it is covered by mainstream maintenance as identified and available at: SAP Release and
Maintenance Strategy.
6.12.2. For all additional and Customer ABAP Add-ons, simplification and incompatibility checks must be executed by
Customer. Customer is responsible for evaluating the results of such checks to ensure that implemented
business processes, backend and frontend applications and integrations are running after changes to the SAP
BW Capacity Service.
6.12.3. SAP’s obligations under the Agreement and Documentation are dependent on Customer maintaining the SAP
BW Capacity Service as current. SAP is not responsible for the reliability, performance, availability,
functionality, security, or any other related issues experienced with the SAP BW Capacity Service that may
result from running a release that is not current and is not liable to Customer for any loss or damage that might
arise from a SAP BW Capacity Service’s inoperability or unavailability because it is n ot current.
6.12.4. If SAP is not able to perform upgrades due to the lack of Customer’s cooperation, (i) SAP’s ability to provide
support may be limited and SAP assumes no responsibilities for such limitations and (ii) the System Availability
Service Levels in the SLA shall not apply.
6.12.5. Customer is responsible for the connection to the SAP BW Capacity Services, including the internet connection
to the Point of Demarcation. SAP’s responsibility shall not extend beyond the Point of Demarcation. “Point of
Demarcation” means the outbound firewall (or, in case of a VPN for access, the point of connection of the
SAP network to the VPN) of SAP’s computing environment used to provide the SAP BW Capacity Services.
6.12.6. If Customer fails to fulfil any Customer obligations set forth in this Supplement, Customer is responsible for the
ramifications of such failure including delays, subsequent costs, and any performance, availability,
functionality, support, and/or security issues experienced with the SAP BW Capacity Services.
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6.13. Connection Package for Productive Tiers, Private Edition
For this SAP BW Capacity Service, customers must select one of the services, from the table below, that must
be installed in the same location as the applicable SAP BW/4HANA Cloud, base package, private edition
Capacity Service or the SAP BW NetWeaver Cloud, base package, private edition Capacity Service:
Service Included
01 VPN Connection Set of 5 up to VPN connections
02 Direct line connection point Infrastructure deployed:
Depending on the datacenter of choice the following will be
delivered:
SAP DC: 1 x MPLS, 400Mbit/s
Azure: 1 x Expressroute, 200 Mbit/s
AWS: 1 x Direct Connect, 200Mbit/s
GCP: 1 x Interconnect, 2 x 100Mbit/s (Redundant)
03 SAP Router Infrastructure deployed:
1 x Productive Server (8GiB memory)
04 SAP Web Dispatcher Infrastructure deployed:
1 x Productive Server (8GiB memory)
05 SAP Data Services Agent (DS Agent) Infrastructure deployed:
2 x Productive Servers (16GiB memory)
06 Data Provision Agent (DP Agent) Infrastructure deployed:
2 x Productive Servers (16GiB memory)
07 SAP Analytics Cloud Agent (SAC Agent) Infrastructure deployed:
1 x Productive Server (16GiB memory)
08 SAP Cloud Connector
Infrastructure deployed:
2 x Productive Servers (8GiB memory)
09 Redwood RunMyJobs Agent Infrastructure deployed:
1 x Productive Server (8GiB memory)
10 OpenText ADA Core Archive Connector Infrastructure deployed:
1 x Productive Server (16GiB memory)
11 SCM Optimizer Infrastructure deployed:
Choose between:
1 x Productive Server (64GiB memory) or
1 x Non-productive Server (64GiB memory)
12 Separate ERS/CS Used to separate the ERS (Enqueue Replication Service) and CS
(Central Services) onto dedicated servers.
Infrastructure deployed:
2 x Productive Servers (8GiB memory)
13 Load Balancer Infrastructure deployed:
Up to 5 Load Balancers depending on hyperscaler and usage type
14 Customer Integration Server Support all 3 scenarios:
• SMTP Relay (Outbound)
• Samba
• SFTP
Infrastructure deployed:
2 x Productive Servers (8GiB memory each) active-passive mode.
Note: Storage included is only for the operating system. User file
storage needs to be added in addition.
15 Additional egress data Not available
16 Extra Bandwidth Service delivers only one of below options:
AWS Direct Connect: 1000Mbit/s
Azure ExpressRoute: 1000Mbit/s
GCP Interconnect: 1000Mbit/s
17 VPC/VNET Peering Not available
18 AWS Transit Gateway Not available
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6.14. Connection Package for Non-Productive Tiers, Private Edition
6.14.1. For this SAP BW Capacity Service, customers must select one of the following Capacity Services that must
be installed in the same location as the applicable non-productive tier:
(a) SAP BW/4HANA Cloud, base package, private edition,
(b) SAP BW/4HANA Cloud, additional non-productive, base package, private edition,
(c) SAP BW NetWeaver Cloud, base package, private edition, or
(d) SAP BW NetWeaver Cloud, additional non-productive, base package, private edition.
Service Included
01 VPN Connection Set of up to 5 VPN connections
02 Direct line connection point Infrastructure deployed:
Depending on the datacenter of choice the following will be
delivered:
SAP DC: 1 x Cloud Peering, 400Mbit/s or
SAP DC: 1 x MPLS, 1Gbit port speed
Azure: 1 x Expressroute, 200 Mbit/s
AWS: 1 x Direct Connect, 200Mbit/s
GCP: 1 x Interconnect, 2 x 100Mbit/s (Redundant)
03 SAP Router Infrastructure deployed:
1 x Non-productive Server (8GiB memory, 10GB storage)
04 SAP Web Dispatcher Infrastructure deployed:
1 x Non-productive Server (8GiB memory, 50GB storage)
05 SAP Data Services Agent (DS Agent) Infrastructure deployed:
1 x Non-productive Server (16GiB memory, 20GB storage)
06 Data Provision Agent (DP Agent) Infrastructure deployed:
1 x Non-productive Server (16GiB memory, 50GB storage)
07 SAP Analytics Cloud Agent (SAC Agent) Infrastructure deployed:
1 x Non-productive Server (16GiB memory, 50GB storage)
08 SAP Cloud Connector
Infrastructure deployed:
1 x Non-productive Server (8GiB memory, 20GB storage)
09 Redwood RunMyJobs Agent Infrastructure deployed:
1 x Non-productive Server (8GiB memory, 256GB storage)
10 OpenText ADA Core Archive Connector Infrastructure deployed:
1 x Non-productive Server (16GiB memory, 150GB storage)
11 SCM Optimizer Not available
12 Separate ERS/CS Not available
13 Load Balancer Not available
14 Customer Integration Server Not available
15 Additional egress data Service delivers only one of below options:
AWS: 10TB/month
Azure VPN: 5TB/month or
Azure ExpressRoute: 10TB/month
GCP: 2TB/month
16 Extra Bandwidth Service delivers only one of below options:
AWS Direct Connect: 500Mbit/s
Azure ExpressRoute: 500Mbit/s
GCP Interconnect: 500Mbit/s
17 VPC/VNET Peering Up to 10 Connections
18 AWS Transit Gateway Service delivers only one of below options:
AWS Transit Gateway Attachment: 1 or
AWS Transit Gateway Package: 1
6.15. SAP S/4HANA Cloud, Disaster Recovery, Private Edition
6.15.1. Disaster Recovery Services Setup. This SAP BW Capacity Service entails detailed planning which, as part of
Customer's implementation project for the applicable productive systems, will be mutually agreed upon by SAP
and Customer.
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6.16. SAP S/4HANA Cloud Private Edition Application Server for Linux, Additional Production Tenant
6.16.1. This SAP BW Capacity Service includes access to one application server with 64GB of memory. The
application server size is based on the respective system landscape usage tiers where it is added and may
require additional memory.
6.17. SAP S/4HANA Cloud Private Edition Application Server for Linux, Additional Nonproduction Tenant
6.17.1. This SAP BW Capacity Service includes access to one application server with 64GB of memory. The
application server size is based on the respective system landscape usage tiers where it is added and may
require additional memory.
6.18. SAP S/4HANA Cloud Private Edition Application Server for Linux, Additional Production Tenant,
Upgrade
6.18.1. The maximum available memory to upgrade is up to 512GiB.
6.19. SAP S/4HANA Cloud Private Edition Application Server for Linux, Additional Nonproduction Tenant,
Upgrade
6.19.1. The maximum available memory to upgrade is up to 512GiB.
6.20. SAP BW/4HANA Cloud, Base Package, Private Edition
6.20.1. System sizing:
Size Database
/Application System Productive Tier System Non-Productive Tier
One
Size HANA DB 1 x 256GiB memory, 256GB usable
storage
1 x 256GiB memory, 256GB usable storage
App Server 1 x 64GiB memory 1 x 32GiB memory
6.20.2. This Capacity Service includes:
(a) SAP Web Dispatcher (productive and non-productive) (8GiB memory each, installed on dedicated
servers),
(b) SAP Cloud Connector (productive and non-productive) (8GiB memory each, installed on dedicated
servers) per customer’s virtual network (VNET), unless Customer already has SAP Cloud Connector
via another subscription,
(c) Common transport folder of 100GB of storage for all transport files,
(d) SAP Analytics Cloud Agent (productive and non-productive) (16GiB memory each, installed on
dedicated servers, available on customer request), and
(e) SAP Data Provisioning Agent (productive and non-productive) (16GiB MEMORY each, installed on
dedicated servers, available on customer request).
6.21. SAP BW/4HANA Cloud, Additional Non-Productive, Base Package, Private Edition
6.21.1. System sizing:
Size Database
/Application System Non-Productive Tier
One
Size HANA DB 1 x 256GiB memory, 256GB usable storage
App Server 1 x 64GiB memory
6.21.2. This Capacity Service includes SAP Web Dispatcher (non-productive) (8GiB memory, installed on dedicated
server).
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6.22. SAP BW NetWeaver Cloud, Base Package, Private Edition
6.22.1. System sizing:
Size Database
/Application System Productive Tier System Non-Productive Tier
One
Size HANA DB 1 x 256GiB memory, 256GB usable
storage
1 x 256GiB memory, 256GB usable storage
App Server 1 x 64GiB memory 1 x 32GiB memory
6.22.2. This Capacity Service includes:
(a) SAP Web Dispatcher (productive and non-productive) (8GiB memory each, installed on dedicated
servers),
(b) SAP Cloud Connector (productive and non-productive) (8GiB memory each, installed on dedicated
servers) per customer’s virtual network (VNET), unless Customer already has SAP Cloud Connector
via another subscription,
(c) Common transport folder of 100GB of storage for all transport files,
(d) SAP Analytics Cloud Agent (productive and non-productive) (16GiB memory each, installed on
dedicated servers, available on customer request), and
(e) SAP Data Provisioning Agent (productive and non-productive) (16GiB MEMORY each, installed on
dedicated servers, available on customer request).
6.23. SAP BW NetWeaver Cloud, Additional Non-Productive Base Package, Private Edition
6.23.1. System sizing:
Size Database
/Application System Non-Productive Tier
One
Size HANA DB 1 x 256GiB memory, 256GB usable storage
App Server 1 x 64GiB memory
6.23.2. This Capacity Service includes SAP Web Dispatcher (non-productive) (8GiB memory, installed on dedicated
server).
6.24. SAP BI Java Server Cloud, Private Edition
6.24.1. System sizing:
Size Database
/Application System Productive Tier System Non-Productive Tier
8 cores Java Application Server 1 x 32GiB memory 1 x 32GiB memory
6.25. SAP BI Java Server Cloud, additional non-productive, Private Edition
6.25.1. System sizing:
Size Database
/Application System Non-Productive Tier
8 cores Java Application Server 1 x 32 GiB memory
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6.26. SAP IaaS Server Linux Cloud, private edition
6.26.1. System sizing:
Size Database/Application System Size
128 GiB IAAS Server 1 x 128 GiB memory
6.27. SAP Business Planning and Consolidation Professional Edition for SAP BW/4HANA Cloud (Planning
Only), Private Edition
6.27.1. This Capacity Service may be used solely for the creation and calculation of budget, plan, or forecast data .
The calculation and reporting of the consolidated financial results of a group of companies or for separate
financial statement reporting where the application is being used to calculate and report investments at equity,
applying generally accepted accounting concepts related to accounting for business combinations and/or
equity accounting for investments, is not permitted. Customer must license this Capacity Service whenever
data extraction to third-party systems is required, with the exception of use cases involving data extraction in
the form of static reports (i.e. PDF).
6.28. SAP Business Planning and Consolidation, Professional Edition for SAP BW/4HANA Cloud, Private
Edition
6.28.1. Customer must license this Capacity Service whenever data extraction to third-party systems is required, with
the exception of use cases involving data extraction in the form of static reports (i.e. PDF).
6.29. SAP Business Planning and Consolidation, Standard Edition for SAP BW/4HANA Cloud, Private
Edition
6.29.1. Use of this Capacity Service is limited to:
(a) direct input and/or editing of quantitative and qualitative data into the application;
(b) execution of existing reports or creation of reports on existing data structures;
(c) execution of changes to workflow tasks; and
(d) viewing data, except that users accessing the package through an interface are limited to viewing
data only.
6.29.2. The consolidation functionality is limited to running controls on data submitted by Users.
6.29.3. The planning functionality is limited to performing planning tasks only on existing models.
6.30. SAP Business Planning and Consolidation Standard Edition for SAP BW/4HANA Cloud (Planning
Only), Private Edition
6.30.1. Use of this Capacity Service is limited to:
(a) direct input and/or editing of quantitative and qualitative data into the application;
(b) execution of existing reports or creation of reports on existing data structures;
(c) execution of changes to workflow tasks; and
(d) viewing data, except that users accessing the package through an interface are limited to viewing
data only.
6.30.2. The consolidation functionality is limited to running controls on data submitted by Users.
6.30.3. The planning functionality is limited to performing planning tasks only on existing models.
6.31. SAP Business Planning and Consolidation Professional Edition for SAP NetWeaver Cloud (Planning
Only), Private Edition
6.31.1. This Capacity Service may be used solely for the creation and calculation of budget, plan, or forecast data.
The calculation and reporting of the consolidated financial results of a group of companies or for separate
financial statement reporting where the application is being used to calculate and report investments at equity ,
applying generally accepted accounting concepts related to accounting for business combinations and / or
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equity accounting for investments, is not permitted. Customer must license this Capacity Service whenever
data extraction to third-party systems is required, with the exception of use cases involving data extraction in
the form of static reports (i.e. PDF).
6.32. SAP Business Planning and Consolidation Professional Edition for SAP NetWeaver Cloud, Private
Edition
6.32.1. Customer must license this Capacity Service whenever data extraction to third-party systems is required, with
the exception of use cases involving data extraction in the form of static reports (i.e. PDF).
6.33. SAP Business Planning and Consolidation Standard Edition for SAP NetWeaver Cloud, Private Edition
6.33.1. For this Capacity Service, use is limited to:
(a) direct input and/or editing of quantitative and qualitative data into the application;
(b) execution of existing reports or creation of reports on existing data structures;
(c) execution of changes to workflow tasks; and
(d) viewing data, except that users accessing the package through an interface are limited to viewing
data only.
6.33.2. The consolidation functionality is limited to running controls on data submitted by Users.
6.33.3. The planning functionality is limited to performing planning tasks only on existing models.
6.34. SAP Business Planning and Consolidation Standard Edition for SAP NetWeaver Cloud (Planning Only),
Private Edition
6.34.1. For this Capacity Service, use is limited to:
(a) direct input and/or editing of quantitative and qualitative data into the application;
(b) execution of existing reports or creation of reports on existing data structures;
(c) execution of changes to workflow tasks; and
(d) viewing data, except that users accessing the package through an interface are limited to viewing
data only.
6.34.2. The consolidation functionality is limited to running controls on data submitted by Users.
6.34.3. The planning functionality is limited to performing planning tasks only on existing models.
6.35. SAP HANA, EE Cloud, upgrade, private edition
6.35.1. SAP HANA, EE Cloud, upgrade, private edition ("HANA Enterprise") is an upgrade to the SAP HANA database
from runtime edition (see Section 6.1) to HANA Enterprise. The required number of blocks is based on the
productive system size.
6.35.2. HANA Enterprise may be used with an unlimited number of Data Sources, subject to the applicable licensed
level.
6.35.3. HANA Enterprise includes the following runtime edition components:
(a) SAP HANA Operation Process Intelligence;
(b) SAP HANA, information management option;
(c) SAP HANA, data privacy option;
(d) SAP HANA, spatial and graph option;
(e) SAP HANA, predictive option;
(f) SAP HANA, search and text option; and
(g) SAP HANA native storage extension (use of HANA Native Storage Extension Buffer Cache
component is subject to the applicable licensed level).
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6.35.4. Customer may use SAP HANA smart data access to query data from any Data Sources, provided HANA
Enterprise has been appropriately sized for all such data that is queried and joined with other Data Sources
via SAP HANA smart data access.
6.35.5. SAP HANA, information management option includes SAP HANA smart data integration and SAP HANA smart
data quality.
6.35.6. Use of SAP HANA, data privacy option is limited solely to the SAP HANA Data Masking Engine, SAP HANA
Data anonymization Engine, Column Encryption, and Shared SAP Business Application Authorizations.
6.35.7. Use of SAP HANA, predictive option is limited solely to the HANA PAL/R engine, Automated Predictive Library
(APL), and TensorFlow integration.
6.35.8. Use of SAP HANA, search and text option is limited solely to the SAP HANA Search Engine and Text Analysis
Engine.
6.36. SAP Cloud, large memory extension for productive tiers, private edition
6.36.1. This SAP BW Capacity Service extends productive SAP HANA systems beyond 12 terabytes, to an SAP-
supported size.
6.37. SAP Cloud, large memory extension for non-productive tiers, private edition
6.37.1. This SAP BW Capacity Service extends non-productive HANA database beyond 12 terabytes, to an SAP-
supported size.
6.38. SAP IQ cold store Cloud, base package, private edition
6.38.1. System sizing:
Database System Productive Tier System Non-Productive Tier
IQ DB Usable DB Size 512GB Server size,
1 x 64GiB memory
Usable DB Size 512GB Server size,
1 x 64GiB memory
6.39. SAP IQ cold store Cloud, upgrade, private edition
6.39.1. Use of this SAP BW Capacity Service must conform to the following sizing: 512GB, 1TB, 3TB, 5TB, 10TB,
20TB, 30TB.
6.40. SAP IQ cold store Cloud, additional non-productive tier, base package, private edition
6.40.1. System sizing:
Database System Non-Productive Tier
IQ DB Usable DB Size 512GB Server size,
1 x 64GiB memory
6.41. SAP IQ cold store Cloud, additional non-productive tier, upgrade, private edition
6.41.1. Use of this SAP BW Capacity Service must conform to the following sizing: 512GB, 1TB, 3TB, 5TB, 10TB,
20TB, 30TB.
6.42. RISE with SAP, private edition 99.9% Service Level Agreement (SLA)
6.42.1. Unless otherwise indicated in Table 3 of Attachment A, the SAP BW Capacity Services are eligible to upgrade
the System Availability Percentage for productive environments stated in Section 1.15 of Attachment B from
99.7% to 99.9%.
6.43. SAP Business Warehouse Cloud, GxP, Private Edition
6.43.1. This SAP BW Capacity Service is solely available for the Capacity Services as specified in Table 3, Attachment
A.
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7. SAP BUSINESS DATA CLOUD INTELLIGENT APPLICATIONS CLOUD SERVICES
7.1. Customer must have a current subscription to the SAP Business Data Cloud, core capacity Cloud Service in
order to use any of the Cloud Services listed in this Section 7.
7.1.1. Provided Customer has a current subscription to the SAP HANA Cloud Cloud Service, Customer may consume
SAP Data Products solely to be used within the SAP Hana Cloud Cloud Service.
7.2. Cloud ERP Intelligence Cloud Service
7.2.1. The Usage Metric for this Cloud Service is FUE.
7.2.2. Use of this Cloud Service is subject to the terms of the Agreement and conditioned on:
7.2.2.1. Customer subscribing to one of the Cloud Services listed in Section 7.2.2.3. (a-d), and
7.2.2.2. Customer’s subscription to this Cloud Service must be equal to or greater than the same number of FUEs as
Customer subscribes to in the corresponding application for one of the Cloud Services in Section 7.2.2.3.(a)-
(g).
7.2.2.3. Separately subscribed Cloud Services:
(a) RISE with SAP S/4HANA Cloud Private Edition, base;
(b) RISE with SAP S/4HANA Cloud Private Edition, premium;
(c) RISE with SAP S/4HANA Cloud Private Edition, premium plus;
(d) RISE with SAP S/4HANA Cloud, private edition, core, tailored option;
(e) SAP Cloud ERP Private;
(f) SAP Cloud ERP Private, base option; or
(g) SAP Cloud ERP Private, tailored option.
7.3. Customer-Managed Data Products Cloud Service
7.3.1. The Usage Metric for this Cloud Service is Flat Fee.
7.3.2. Subject to Section 7.1 of this Supplement, Customer is entitled to an increase of 1,000 Capacity Units per
month of the SAP Business Data Cloud, core capacity Cloud Service, which may only be used on Capacity
Services listed in Attachment A, Tables 1, 2, 3, and 4.
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ATTACHMENT A
to
SAP Business Data Cloud Supplemental Terms and Conditions
Table 1: SAP Datasphere Capacity Services
Capacity Service
Category
Capacity Service Capacity Unit of Measure Capacity Unit Value
SAP Datasphere
Foundation Datasphere SaaS Foundation Tenant per hour 0.926
High-Performance
Workload
Memory-Optimized Compute 16 GB Memory per hour 0.570
High Memory-Optimized Compute 16 GB Memory per hour 0.485
CPU-Optimized Compute 16 GB Memory per hour 0.715
High CPU-Optimized Compute 16 GB Memory per hour 1.065
Memory-Optimized Elastic Compute 16 GB Memory per hour 0.798
CPU-Optimized Elastic Compute 16 GB Memory per hour 1.028
High CPU-Optimized Elastic Compute 16 GB Memory per hour 1.488
High-Scale
Workload
Spark Compute 4 GB Memory per hour 0.149
Object Store 1 TB Storage per hour 0.103
Object Store Requests 1,000 API Calls 0.026
Storage Disk Storage 16 GB Storage per hour 0.004
Catalog Catalog Storage (512MB included each
month) 1 GB Storage per hour 1.096
SAP Datasphere,
SAP BW Bridge
Data Lake Relational Engine 1 TB per hour 0.767
SAP Datasphere, SAP BW Bridge 128 GB Storage per hour 1.447
Integration
Data Integration (200 hours included
each month) 5 GB Memory per hour 0.784
Premium Outbound Integration 20 GB Variable
Premium Outbound Integration is priced according to blocks, as set forth below:
Premium Outbound Integration
Blocks of 20 GB Capacity Unit Value Per Block
First 10 500
Next 15 350
Next 25 200
Next 50 100
Next 9999+ 35
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Table 2: SAP Analytics Cloud Capacity Services
Capacity Service Capacity Unit of
Measure Tier Capacity Unit
Value
SAP Analytics Cloud for business intelligence, public
system option User
25 - 200 25.60
201 - 500 21.60
501 - 1,000 17.38
1,001 - 3,000 15.95
3,001 - 5,000 12.64
5,001+ 10.54
SAP Analytics Cloud for planning, standard edition, public
system option User
10 - 200 72.85
201 - 500 57.98
501 - 1,000 46.70
1,001+ 41.57
SAP Analytics Cloud for planning, professional edition,
public system option User 1+ 820.43
SAP Analytics Cloud, test tenant, public system option User 20+ 47.05
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Table 3: SAP BW Capacity Services
Capacity Service Capacity Unit
of Measure Block
“Standard”
Capacity Unit
Value
Promotion
Period 1:
Capacity Unit
Value
Promotion
Period 2:
Capacity Unit
Value
SAP BW/4HANA Cloud, base
package, private edition3 Tenant 1 35,346.15 27,029.41 30,633.33
SAP BW/4HANA Cloud,
additional non-productive,
base package, private
edition1,2,3
GB Memory 256 8,466.10 6,474.08 7,337.29
SAP Business Planning and
Consolidation professional
edition for SAP BW/4HANA
Cloud (planning only), private
edition
User 1 166.62 166.62 166.62
SAP Business Planning and
Consolidation, professional
edition for SAP BW/4HANA
Cloud, private edition
User 1 244.35 244.35 244.35
SAP Business Planning and
Consolidation, standard
edition for SAP BW/4HANA
Cloud, private edition
User
6 - 200 97.09 97.09 97.09
201 - 500 80.91 80.91 80.91
501 -
1000 64.73 64.73 64.73
1001+ 50.10 50.10 50.10
SAP Business Planning and
Consolidation standard edition
for SAP BW/4HANA Cloud
(planning only), private edition
User
8 - 200 65.70 65.70 65.70
201 - 500 52.07 52.07 52.07
501 -
1000 41.65 41.65 41.65
1001+ 32.25 32.25 32.25
SAP BW NetWeaver Cloud,
base package, private edition3 Tenant 1 35,346.15 27,029.41 30,633.33
SAP BW NetWeaver Cloud,
additional non-productive,
base package, private
edition1,2,3
GB Memory 256 8,466.10 6,474.08 7,337.29
SAP Business Planning and
Consolidation professional
edition for SAP NetWeaver
Cloud (planning only), private
edition
User 1 166.62 166.62 166.62
SAP Business Planning and
Consolidation professional
edition for SAP NetWeaver
Cloud, private edition
User 1 244.35 244.35 244.35
SAP Business Planning and
Consolidation standard edition
for SAP NetWeaver Cloud,
private edition
User
6 - 200 97.09 97.09 97.09
201 - 500 80.91 80.91 80.91
501 -
1000 64.73 64.73 64.73
1001+ 50.10 50.10 50.10
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Capacity Service Capacity Unit
of Measure Block
“Standard”
Capacity Unit
Value
Promotion
Period 1:
Capacity Unit
Value
Promotion
Period 2:
Capacity Unit
Value
SAP Business Planning and
Consolidation standard edition
for SAP NetWeaver Cloud
(planning only), private edition
User
8 - 200 65.70 65.70 65.70
201 - 500 52.07 52.07 52.07
501 -
1000 41.65 41.65 41.65
1001+ 32.25 32.25 32.25
SAP Cloud, memory extension
for productive tiers, private
edition
GB Memory 256 2,950.82 2,256.51 2,557.38
SAP Cloud, memory extension
for non-productive tiers,
private edition1
GB Memory 256 1,541.61 1,178.88 1,336.07
SAP Cloud, large memory
extension for productive tiers,
private edition2
GB Memory 1,024 32,035.61 24,497.82 27,764.20
SAP Cloud, large memory
extension for non-productive
tiers, private edition1,2
GB Memory 1,024 13,881.03 10,614.90 12,030.22
SAP S/4HANA Cloud Private
Edition Application Server for
Linux, additional production
tenant
Tenant 1 2,567.07 2,567.07 2,567.07
SAP S/4HANA Cloud Private
Edition Application Server for
Linux, additional production
tenant, upgrade2
GB Memory 64 732.54 732.54 732.54
SAP S/4HANA Cloud Private
Edition Application Server for
Linux, additional
nonproduction tenant1,2
Tenant 1 2,103.39 1,608.48 1,822.94
SAP S/4HANA Cloud Private
Edition Application Server for
Linux, additional
nonproduction tenant,
upgrade1,2
GB Memory 64 732.54 732.54 732.54
SAP BI Java Server Cloud,
private edition (8 cores) Tenant 1 7,098.49 5,428.26 6,152.03
SAP BI Java Server Cloud,
additional non-productive,
private edition (8 cores)1,2
GB Memory 32 2,671.76 2,043.11 2,315.52
SAP HANA, EE Cloud,
upgrade, private edition 256 GB
Memory
1 - 2 16,904.33 16,904.33 16,904.33
3 - 6 12,294.24 12,294.24 12,294.24
7 - 15 9,220.20 9,220.20 9,220.20
16 - 31 6,916.12 6,916.12 6,916.12
32+ 3,586.69 3,586.69 3,586.69
SAP Additional Database
Storage, private cloud edition3 GB Storage 128 476.49 387.15 412.96
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Capacity Service Capacity Unit
of Measure Block
“Standard”
Capacity Unit
Value
Promotion
Period 1:
Capacity Unit
Value
Promotion
Period 2:
Capacity Unit
Value
SAP Additional File Storage,
private cloud edition1,2 GB Storage 128 124.40 95.13 107.82
SAP IQ cold store Cloud, base
package, private edition1,2
Tenant 1 7,822.50 7,822.50 7,822.50
SAP IQ cold store Cloud,
additional non-productive tier,
base package, private
edition1,2
Tenant 1 2,537.41 2,537.41 2,537.41
SAP IQ cold store Cloud,
upgrade, private edition1,2
GB Storage 512 1,391.12 1,391.12 1,391.12
SAP IQ cold store Cloud,
additional non-productive tier,
upgrade, private edition1,2
GB Storage 512 738.25 738.25 738.25
SAP IaaS server Linux Cloud,
private edition (128GB)1,2 Tenant 1 1,735.53 1,504.13 1,504.13
connection package for
productive tiers, private edition Tenant 1 2,658.97 2,033.13 2,304.44
connection package for non-
productive tiers, private cloud
edition1,2
Tenant 1 1,061.37 811.64 919.85
SAP Profitability and
Performance Management
Cloud, private edition
GB Memory 1 47.60 47.60 47.60
SAP S/4HANA Cloud, disaster
recovery, private edition1,2
% of Net
Recurring Fee 1 17% 17% 17%
RISE with SAP, private edition
99.9% Service Level
Agreement (SLA)1,2
% of Net
Recurring Fee 1 50.1% 50.1% 50.1%
SAP S/4HANA Cloud, 4-hour
recovery time objective,
private edition1,2
% of Net
Recurring Fee 1 5% 5% 5%
SAP Business Warehouse
Cloud, GxP, private edition1,2
% of Net
Recurring Fee 1 11% 11% 11%
1 Not eligible for the SAP S/4HANA Cloud, disaster recovery, private edition or SAP S/4HANA Cloud, 4-hour recovery
time objective, private edition Capacity Services
2 Not eligible for the RISE with SAP, private edition 99.9% Service Level Agreement (SLA) Capacity Service.
3Eligible for the SAP Business Warehouse Cloud, GxP, private edition capacity service.
SAP BW Capacity Services Promotion: Customers are eligible to subscribe to the SAP BW Capacity Services
Promotion during the “Promotion Periods” as indicated in Table 3 of this Attachment A. “Promotion Period 1” is valid
through and including December 31, 2025. “Promotion Period 2” is valid from January 1, 2026 through and including
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December 31,2026. So long as the applicable Order Form Effective Date is a date within a Promotion Period, the
applicable Promotion Period Capacity Unit Value shall apply for the duration of Customer’s Initial Subscription Term.
After Customer’s Initial Subscription Term expires, the applicable Promotion Period Capacity Unit Value terminates and
will adjust to the “Standard” Capacity Unit Value. For the purposes of the SAP BW Capacity Services, the “Standard”
Capacity Unit Value refers to the non-promotional rate charged for the applicable SAP BW Capacity Services.
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Table 4: SAP Databricks Capacity Services
Capacity Service Hyper-
scaler Region
Capacity
Unit of
Measure
Block
“Standard”
Capacity
Unit Value
Promotion
Period (valid
through April
30, 2026):
Capacity Unit
Value
Enterprise SAP Automated
Serverless Compute
AWS AP
(Seoul)
DBU
1
0.888 0.533
Enterprise SAP Automated
Serverless Compute
AWS AP
(Singapore)
DBU
1
0.888 0.533
Enterprise SAP Automated
Serverless Compute
AWS AP
(Tokyo)
DBU
1
0.888 0.533
Enterprise SAP Automated
Serverless Compute
AWS Europe
(Frankfurt)
DBU
1
0.888 0.533
Enterprise SAP Automated
Serverless Compute
AWS US East
(N. Virginia)
DBU
1
0.799 0.48
Enterprise SAP Public Connectivity
Data Processed
AWS AP
(Seoul)
GB
1
0.105 0.063
Enterprise SAP Public Connectivity
Data Processed
AWS AP
(Singapore)
GB
1
0.105 0.063
Enterprise SAP Public Connectivity
Data Processed
AWS AP
(Tokyo)
GB
1
0.111 0.067
Enterprise SAP Public Connectivity
Data Processed
AWS Europe
(Frankfurt)
GB
1
0.093 0.056
Enterprise SAP Public Connectivity
Data Processed
AWS US East
(N. Virginia)
GB
1
0.08 0.048
Enterprise SAP Private Connectivity
Endpoint
AWS AP
(Seoul) Hour 1
0.024 0.015
Enterprise SAP Private Connectivity
Endpoint
AWS AP
(Singapore) Hour 1
0.024 0.015
Enterprise SAP Private Connectivity
Endpoint
AWS AP
(Tokyo) Hour 1
0.025 0.015
Enterprise SAP Private Connectivity
Endpoint
AWS Europe
(Frankfurt) Hour 1
0.022 0.014
Enterprise SAP Private Connectivity
Endpoint
AWS US East
(N. Virginia) Hour 1
0.018 0.011
Enterprise SAP Databricks Storage AWS AP
(Seoul)
DSU 1 0.045 0.027
Enterprise SAP Databricks Storage AWS AP
(Singapore)
DSU 1 0.045 0.027
Enterprise SAP Databricks Storage AWS AP
(Tokyo)
DSU 1 0.045 0.027
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Capacity Service Hyper-
scaler Region
Capacity
Unit of
Measure
Block
“Standard”
Capacity
Unit Value
Promotion
Period (valid
through April
30, 2026):
Capacity Unit
Value
Enterprise SAP Databricks Storage AWS Europe
(Frankfurt)
DSU 1 0.045 0.027
Enterprise SAP Databricks Storage AWS US East
(N. Virginia)
DSU 1 0.041 0.025
Enterprise SAP Inter-Availability
Zone Egress
AWS Global
GB 1
0.018 0.011
Enterprise SAP Inter-Region Egress
From
AWS AP
(Seoul)
GB
1
0.143 0.086
Enterprise SAP Inter-Region Egress
From
AWS AP
(Singapore)
GB
1
0.16 0.096
Enterprise SAP Inter-Region Egress
From
AWS AP
(Tokyo)
GB
1
0.16 0.096
Enterprise SAP Inter-Region Egress
From
AWS Europe
(Frankfurt)
GB
1
0.036 0.022
Enterprise SAP Inter-Region Egress
From
AWS US East
(N. Virginia)
GB
1
0.036 0.022
Enterprise SAP Interactive
Serverless Compute
AWS AP
(Seoul)
DBU
1
1.776 1.066
Enterprise SAP Interactive
Serverless Compute
AWS AP
(Singapore)
DBU
1
1.864 1.119
Enterprise SAP Interactive
Serverless Compute
AWS AP
(Tokyo)
DBU
1
1.864 1.119
Enterprise SAP Interactive
Serverless Compute
AWS Europe
(Frankfurt)
DBU
1
1.776 1.066
Enterprise SAP Interactive
Serverless Compute
AWS US East
(N. Virginia)
DBU
1
1.687 1.013
Enterprise SAP Internet Egress
From
AWS AP
(Seoul)
GB
1
0.224 0.135
Enterprise SAP Internet Egress
From
AWS AP
(Singapore)
GB
1
0.214 0.129
Enterprise SAP Internet Egress
From
AWS AP
(Tokyo)
GB
1
0.203 0.122
Enterprise SAP Internet Egress
From
AWS Europe
(Frankfurt)
GB
1
0.16 0.096
Enterprise SAP Internet Egress
From
AWS US East
(N. Virginia)
GB
1
0.16 0.096
Enterprise SAP Model Serving AWS AP
(Seoul)
DBU 1 0.153 0.092
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Capacity Service Hyper-
scaler Region
Capacity
Unit of
Measure
Block
“Standard”
Capacity
Unit Value
Promotion
Period (valid
through April
30, 2026):
Capacity Unit
Value
Enterprise SAP Model Serving AWS AP
(Singapore)
DBU 1 0.157 0.095
Enterprise SAP Model Serving AWS AP
(Tokyo)
DBU 1 0.16 0.096
Enterprise SAP Model Serving AWS Europe
(Frankfurt)
DBU 1 0.15 0.09
Enterprise SAP Model Serving AWS US East
(N. Virginia)
DBU 1 0.125 0.075
Enterprise SAP Model Training AWS AP
(Seoul)
DBU 1 1.509 0.906
Enterprise SAP Model Training AWS AP
(Singapore)
DBU 1 1.509 0.906
Enterprise SAP Model Training AWS AP
(Tokyo)
DBU 1 1.509 0.906
Enterprise SAP Model Training AWS Europe
(Frankfurt)
DBU 1 1.385 0.831
Enterprise SAP Model Training AWS US East
(N. Virginia)
DBU 1 1.154 0.693
Enterprise SAP Private Connectivity
Data Processed
AWS Global
GB 1
0.018 0.011
Enterprise SAP Serverless SQL
Compute
AWS AP
(Seoul)
DBU
1
1.687 1.013
Enterprise SAP Serverless SQL
Compute
AWS AP
(Singapore)
DBU
1
1.563 0.938
Enterprise SAP Serverless SQL
Compute
AWS AP
(Tokyo)
DBU
1
1.776 1.066
Enterprise SAP Serverless SQL
Compute
AWS Europe
(Frankfurt)
DBU
1
1.616 0.97
Enterprise SAP Serverless SQL
Compute
AWS US East
(N. Virginia)
DBU
1
1.243 0.746
Enterprise SAP Enhanced Security
and Compliance - for Workspaces
AWS Global % of all
SAP
Databrick
s
Capacity
Unit
value
1 15% 15%
Enterprise SAP Anthropic Model
Serving AWS Global DBU 1 0.125 0.075
Object Storage for SAP Databricks ALL Global
TB
Storage
per hour
1 0.103 0.103
Object Store Requests for SAP
Databricks ALL Global API Calls 1,000 0.026 0.026
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SAP Databricks Capacity Services Promotion: Customers are eligible to subscribe to the SAP Databricks Capacity
Services Promotion during the “Promotion Period” as indicated in Table 4 of this Attachment A. The “Promotion Period”
is valid from the start of the SAP Databricks Capacity Service consumption through and including April 30, 2026 at
which time the Promotion Period terminates and adjusts to the “Standard” Capacity Unit Value. For the purposes of the
SAP Databricks Capacity Services, the “Standard” Capacity Unit Value refers to the non -promotional rate charged for
the applicable SAP Databricks Capacity Services.
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ATTACHMENT B
to
SAP Business Data Cloud Supplemental Terms and Conditions
Service Level Agreement for SAP BW Capacity Services
This Service Level Agreement applies solely to the SAP BW Capacity Services.
1. DEFINITIONS
1.1. “Agreed Downtime” means any downtime requested by SAP or Customer and mutually agreed by the parties.
1.2. “Business Day” means any day from Monday to Friday with the exception of the public holidays observed at
Customer’s address identified in the Order Form.
1.3. “Computing Environment” means the data center facilities, servers, networking equipment, operating
systems, and data storage mechanisms selected and used by SAP to provide the SAP BW Capacity Service(s)
for the Customer and includes the productive Computing Environment (“PRD”), and any other Computing
Environment used for non-productive purposes (“NON-PRD”), as agreed in the Order Form.
1.4. “Credit” means 2% of the Monthly Capacity Unit Value consumed for the affected SAP BW Capacity Service(s)
for each 1% below the SA SLA, not to exceed 100% of the Capacity Unit Value consumed by the Customer
for the relevant Month for the affected SAP BW Capacity Service(s), but subject to section 5 of this Service Level
Agreement.
1.5. “Downtime” means the Total Minutes in the Month during which the SAP BW Capacity Service does not
respond to a request from SAP’s Point of Demarcation for the data center providing the Capacity Service,
excluding Excluded Downtime.
1.6. “Emergency Downtime” means downtime during emergency patch deployment and emergency operating
system upgrades as described in the Attachment C.
1.7. “Excluded Downtime” means the Total Minutes in the Month attributable to: Scheduled Downtime; or Agreed
Downtime; or Emergency Downtime; or downtime caused by factors outside of SAP’s reasonable control such
as unpredictable and unforeseeable events that could not have been avoided even if reasonable care had
been exercised (see examples in Section 2); or downtime of a NON-PRD system caused by using the NON-
PRD for failover/to repair to a PRD system.
1.8. “Incident” means unplanned interruptions or material reduction in service quality to the Computing
Environment that is reported by Authorized Users.
1.9. “Incident Reaction Time” means the amount of time (e.g. in hours or minutes) between when the SAP Support
Level 1 organization is notified of the Customer-reported Incident and the first action is taken by an SAP support
person, familiar with the Customer’s environment, to repair the Incident.
1.10. “Local Time” means the time zone in Customer’s address identified in the Order Form.
1.11. “Month” means a calendar month.
1.12. “Scheduled Downtime” means downtime scheduled at a mutually agreed time as described in the Attachment
C.
1.13. “System” means one or more interrelated and interdependent components such as databases, servers,
networks, load balancers, web dispatchers, tenants, etc. which when taken as a whole are used to operate a
tier. Each combination of components used within each tier is equivalent to one System. System Availability
Percentage is measured at the tier level.
1.14. “System Availability Percentage” for each System is calculated and defined as follows:
=(Total Minutes in the Month− Downtime
Total Minutes in the Month )∗100
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1.15. “System Availability Service Level” or “SA SLA” means the applicable System Availability Percentage
specified below during each Month for the Computing Environment (and Server for Server Provisioning, if
applicable) after System handover to the Customer:
a) 99.7% System Availability Percentage for productive environments (PRD) unless a higher System
Availability Percentage is identified in the Order Form;
b) 95.0% System Availability Percentage for non-productive environments (NON-PRD) unless a higher
System Availability Percentage is identified in the Order Form.
1.16. “Total Minutes in the Month” are measured 24 hours at 7 days a week during a Month.
2. SYSTEM AVAILABILITY
2.1. The SA SLA shall not apply to Customer-provided software unless otherwise expressly set forth in the Order
Form.
2.2. Excluded Downtime includes downtime caused by factors outside of SAP’s reasonable control include, but is
not limited to the following:
2.3. Customer’s failure to meet Customer’s responsibilities as set forth in the Agreement.
2.4. Downtime caused by Customer.
2.5. Interruptions as a result of requirements stipulated by a third-party manufacturer of the Customer-provided
software.
2.6. Interruptions or shutdowns of the Computing Environment, or portions thereof resulting from the quality of the
Customer-provided software and/or Customer’s customizations or modifications of the Customer-provided
software or Computing Environment (or Servers for Server Provisioning), unless this is the responsibility of
SAP under this Agreement.
2.7. Restore times of user data (recovery of database data from a media backup) where SAP was not the root
cause for the required restoration.
3. BACKUP AND COMPUTING ENVIRONMENT INCIDENT REACTION TIME
Description Computing
Environment
Service Levels
Backup Frequency and
retention period for
Databases
PRD Daily full backup and log file backup per SAP product
standard. 30 days retention time. Backup of the PRD will be
replicated to an alternate data center or location.
NON-PRD Weekly full backup and log file backup per SAP product
standard. 14 days retention time. Backup of the NON-PRD
will be replicated to an alternate data center or location.
Long Term Backup* PRD and/or NON-PRD Monthly full back up – 1 year retention time
Quarterly full back up – 1 year retention time
Yearly full back up – up to 5 years retention time
Backup Frequency and
retention period for File
systems
PRD Monthly full backup and daily incremental. Two Months
retention time. Backup of the PRD will be replicated to an
alternate data center or location.
NON-PRD Monthly full backup and daily incremental. Two Months
retention time. Backup of the NON-PRD will be replicated to
an alternate data center or location.
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Description Computing
Environment
Service Levels
Incident Reaction Time
for Incident
Management
Incident Priority Very
High
20 minutes (7x24) and (i) resolution or (ii) workaround or (iii)
action plan within 4hrs for PRD
Incident Priority High 2 hours (7x24) for PRD
4 hours [Local Time on Business Days] for NON-PRD
Incident Priority
Medium
4 hours [Local Time on Business Days] for PRD and NON-
PRD
Incident Priority Low 1 Business Day for PRD and NON-PRD
*Applies if this optional service is purchased in an Order Form. The retention periods for Long Term Backup
will end at the earlier of the retention time set forth herein or the end of Customer’s Cloud Service subscription
term.
3.1. Incident Priorities. The following priority levels apply to all Incidents (such priority to be assigned by Customer,
and which may be re-assigned by SAP based on the criteria below and acting reasonably):
3.1.1. Very High: An Incident should be categorized with the priority "Very High" if the incident reported has very
serious consequences for normal business processes or IT processes related to core business processes, and
urgent work cannot be performed. This is generally caused by the following circumstances:
3.1.1.1. A PRD system is completely down.
3.1.1.2. The imminent go-live or upgrade is jeopardized.
3.1.1.3. The core business processes of Customer are seriously affected.
3.1.1.4. A workaround is not available.
3.1.1.5. The Incident requires immediate processing because the malfunction may cause serious losses.
3.1.2. High: An Incident should be categorized with the priority "High" if normal business processes are seriously
affected. Necessary tasks cannot be performed. This is caused by incorrect or inoperable functions in the
Computing Environment that are required immediately. The Incident is to be processed as quickly as possible
because a continuing malfunction can seriously disrupt the entire productive business flow.
3.1.3. Medium: An Incident should be categorized with the priority "Medium" if normal business processes are
affected. The problem is caused by incorrect or inoperable functions in the Computing Environment. A
message should be categorized with the priority "Medium" if normal business transactions are affected.
3.1.4. Low: An Incident should be categorized with the priority "Low" if the problem has little or no effect on normal
business processes. The problem is caused by incorrect or inoperable functions in the Computing Environment
that are not required daily or are rarely used.
3.2. This section does not apply to Server Provisioning.
3.3. This section shall only apply to Incidents associated with any additional services that Customer orders through
a service request for SAP tasks and services applicable to the Computing Environment as identified in
documents pertaining to those additional services .
4. SERVICE LEVEL REPORTING
4.1. SAP shall track and report to Customer the Service Levels set forth herein in a monthly summary report.
4.2. In the event that one or more of the Service Levels set forth herein are not met, Customer may notify the
assigned SAP account manager and request to analyze the Service Level metric statistics based on the
monthly summary report provided by SAP.
4.3. SAP will then promptly:
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4.3.1. determine the root cause or possible root cause of the failure (if known) to meet the Service Level; and
4.3.2. unless failure is excused, develop a corrective action plan, and submit such plan to Customer for written
approval (which will not be unreasonably withheld or delayed) and, following Customer’s written approval
implement the plan in a reasonable period of time (and in accordance with any agreed timescales).
4.4. If applicable, SAP will provide the specific Credit as described in Section 5 below.
4.5. SAP will be relieved of its obligation to pay any applicable Credits and will not be in breach of the Service Level
where the root cause analysis (as reasonably performed by SAP) indicates the failure to meet the relevant
Service Level was caused by Customer and shall therefore be treated as Excluded Downtime. In the event
that Customer disagrees with the root cause analysis, the parties will discuss the root cause analysis.
5. SERVICE LEVEL FAILURES
5.1. Credits
5.1.1. If SAP fails to meet the applicable SA SLA, Customer is entitled to claim a Credit , which is calculated as the
sum of the Credits for NON-PRD, PRD and Server Provisioning (as applicable), for SAP’s failure to meet the
respective SA SLA for the affected Capacity Services. Claims for a Credit must be made in good faith through
a documented submission of a support case within 30 Business Days after receipt of the monthly SA SLA
report.
5.1.2. When Customer’s entitlement of the Credit is confirmed by SAP in writing (email permitted), SAP will apply
such Credit to a future invoice relating to the Cloud Service or provide a refund if no future invoice is due under
the Agreement.
5.1.3. Customer acknowledges that the Credits are the sole and exclusive remedy for SAP’s failure to meet the
specified Service Level, except to the extent prohibited by applicable law.
5.1.4. Customers who have not subscribed to the Capacity Service directly from SAP must claim the Credit from their
applicable SAP partner.
5.2. Termination. In the event SAP fails to meet the SA SLA for PRD Computing Environments for (i) 3 consecutive
Months, or (ii) 5 or more Months during any 12-month period, Customer may terminate its subscription to the
affected Cloud Service by providing SAP with written notice within 30 days of Customer’s receipt of the
respective summary monthly report. Termination shall become effective 1 Month after SAP’s receipt of such
notice (or any later date set out by Customer in its notice). For the avoidance of dou bt, this termination right
shall supersede any and all other termination provision in the GTC for failure to meet an SA SLA, and such
termination right from the GTC shall not apply.
6. SERVICE REQUESTS
6.1. Customers may request specific tasks related to the Computing Environment via the SAP Service Request
Platform (“Service Request”). To the extent Service Requests are distinct from an Incident, SAP will address
Service Requests during the following hours of operations:
PRD 24x7 subject to Excluded Downtime
NON-PRD 24x5 (Business Days) subject to Excluded
Downtime
6.2. The services are provided in English only.
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ATTACHMENT C
to
SAP Business Data Cloud Supplemental Terms and Conditions
Maintenance and Additional Support Services for SAP BW Capacity Services
This Attachment C Maintenance and Additional Support Services for SAP BW Capacity Services applies solely
to the SAP BW Capacity Services.
1. ADDITIONAL SUPPORT SERVICES
1.1. Additional support services are provided beyond those in the Support Schedule for Cloud Services. The
additional support services apply to the SAP BW Capacity Services excluding any software to which special
support agreements apply exclusively (“Enterprise Support Solutions”).
1.1.1. Continuous Improvement and Innovation
a) SAP may make available ABAP source code for SAP software applications included in Enterprise
Support Solutions (excluding third-party software) and additionally released and supported function
modules.
b) Software change management including changed configuration settings or Enterprise Support
Solutions software upgrades, is supported, with content, tools, and additional information.
1.1.2. Global Support Backbone
a) SAP Notes on SAP’s Customer Support Website document software malfunctions and contain
information on how to remedy, avoid and bypass errors. SAP Notes may contain coding corrections.
SAP Notes also document related issues, customer questions, and recommen ded solutions (e.g.
customizing settings).
b) SAP Note Assistant, a tool to install specific corrections and improvements to SAP components, is
included.
1.1.3. Mission Critical Support. For Customer custom code built with the SAP development workbench, SAP provides
mission-critical support root-cause analysis (Root Cause Analysis for Custom Code), according to the Global
Incident Handling process and response levels for priority “very high” and priority “high” cases as set forth in
the Support Schedule for Cloud Services. If the Customer custom code is documented according to SAP’s
then-current standards available at http://support.sap.com/supportstandards, SAP may provide guidance to
assist Customer in issue resolution.
2. MAINTENANCE
2.1. This section describes maintenance activities (“Maintenance”) that include but are not limited to, operating
system security patch levels, database and application patches, infrastructure maintenance and other
activities.
2.2. Maintenance will be scheduled by SAP in collaboration with Customer and will occur once a month during a 4 -
hour window on a weekday and for productive environments on a weekend (“Scheduled Downtime”). SAP
will provide Customer at least 7 business days’ advance notice before any Scheduled Downtime. If Customer
objects to such Scheduled Downtime within 5 business days of SAP’s notice, SAP and Customer will mutually
agree on another reasonable date, time, and duration for Maintenance based on applicable requirements and
available resources. If SAP and Customer do not agree on a Scheduled Downtime within 7 business days from
the date of SAP’s notice, SAP shall perform Maintenance based on the originally Scheduled Downtime.
2.3. If Customer fails to cooperate with the scheduling and/or performance of Maintenance, recommended by SAP,
or in a timely manner, Customer shall be solely responsible for any resulting issues in SAP BW Capacity
Services, including unexpected downtime.
2.4. Notwithstanding the foregoing, SAP reserves the right to perform Emergency Maintenance (as defined herein)
activities at any time without Customer’s prior consent. SAP will use reasonable efforts to provide Customer
with at least 48 hours’ advance notice for Emergency Maintenance. In case of SAP BW Capacity Service
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downtime during such Emergency Maintenance, such downtime will be considered “Excluded Downtime” as
defined in the SLA for SAP BW Capacity Services (Attachment B). “Emergency Maintenance” is Maintenance
that is reasonably necessary to prevent or mitigate circumstances that may otherwise pose a significant impact
to the SAP BW Capacity Services, other Capacity Services or to the Cloud Service.
2.5. Customer must request and coordinate with SAP application of security patches with priorities “critical,” “high,”
“medium,” or “low” via a service request ticket. Such patches will be applied during Scheduled Downtime or
other Agreed Downtime, as defined in the Attachment B.
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SAP AI Units Supplement enGLOBAL.v.5-2025 Page 1 of 1
SAP AI Units
Supplemental Terms and Conditions
This Supplement is part of an Agreement between SAP and Customer and applies to SAP AI Units.
1. USAGE METRICS
1.1. The Usage Metric for SAP AI Units is Capacity Unit.
1.2. As defined in the Order Form, a Capacity Unit refers to the number of units available for a given Availability
Period and includes a ratio of services consumed via the Cloud Service, calculated using the applicable Per -
Unit Factor as set forth in the AI Features Guide.
1.2.1. The Capacity Unit consumption for each Eligible AI Service, as specified in the AI Features Guide, is measured
using one of the three methods below:
1.2.2. A “Record” is an individual data object of supported file types ingested by the Cloud Service and/or available
for retrieval.
1.2.3. A “Request” is a response or action that uses AI to retrieve information or perform tasks. The number of
requests consumed is a measure of the time and effort per use of the AI feature.
1.2.4. A “User” is an individual authorized to use the AI feature.
2. ADDITIONAL TERMS
Use of SAP AI Units is subject to the SAP AI Terms, which are hereby incorporated into the Agreement and
accessible at https://www.sap.com/about/trust-center/agreements.html.
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WalkMe Supplement enGLOBAL.v.4-2025 Page 1 of 3
WalkMe Cloud Services
Supplemental Terms and Conditions
This Supplement is part of an Agreement between SAP and Customer and applies solely to the WalkMe Cloud Services
listed below (each individually a “WalkMe Cloud Service”). Each WalkMe Cloud Service is a Cloud Service under the
GTC. WalkMe Cloud Services listed under numbers 1 to 12 may also be collectively referred to as WalkMe Premium
Cloud Services.
1. WalkMe Premium for finance
2. WalkMe Premium for supply chain
3. WalkMe Premium for SAP Business Network solutions
4. WalkMe Premium for SAP BTP solutions
5. WalkMe Premium for SAP Business Data Cloud
6. WalkMe Premium for SAP CX solutions
7. WalkMe Premium for SAP S/4HANA Cloud Public Edition
8. WalkMe Premium for SAP S/4HANA Cloud Private Edition
9. WalkMe Premium for SAP Signavio solutions
10. WalkMe Premium for SAP LeanIX solutions
11. WalkMe Premium for SAP SuccessFactors HCM
12. WalkMe Premium for SAP Ariba solutions
13. WalkMe Digital Adoption Platform
14. WalkMe Discovery
1. USAGE METRIC
1.1. The Usage Metric for the WalkMe Cloud Services is Active User. “Active User” is any individual who accesses
the Cloud Service. Such individual must also qualify as an Authorized User as defined in the GTC. For
avoidance of doubt, any individual who views, consumes, is presented with, or otherwise accesses and
engages with:
(a) SAP Materials provided as part of the WalkMe Cloud Service; and/or
(b) the Content (as defined below)
shall be deemed an Active User.
“Content” means content created by or for Customer and published using WalkMe Cloud Services.
1.2. Except for the WalkMe Cloud Services specified in sections 1.3 and 1.4, Customer shall subscribe to a
minimum block of 100 Active Users.
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1.3. Customer shall subscribe to a minimum block of 500 Active Users for the WalkMe Digital Adoption Platform
Cloud Service.
1.4. There is no minimum block subscription requirement for the WalkMe Premium for SAP SuccessFactors HCM,
WalkMe Premium for SAP Ariba solutions, or WalkMe Discovery Cloud Services.
1.5. Customer shall implement unique user identification (“UUID”) for Active Users as specified in the
Documentation. Failure to implement UUIDs will result in SAP performing a usage calculation based on per-
session cookies to calculate the number of Active Users, potentially leading to higher fees and reduced data
quality. Customer acknowledges the imprecision and potential adverse effects of cookie -based tracking.
1.6. For the purposes of evaluating Customer’s excess use of a WalkMe Cloud Service, SAP will count all Active
Users in the previous 6 (six) full calendar months with the data updated on the first of each month. Any use
that exceeds the contractually agreed Usage Metric volume will be considered.
2. ADDITIONAL TERMS
2.1. WalkMe Premium Cloud Services.
2.1.1 Customer acknowledges and agrees that a) a valid subscription to the corresponding SAP Cloud Service(s) is
a prerequisite for the use of the respective WalkMe Premium Cloud Service and b) the details of the
corresponding SAP Cloud Service(s) are specified in the name of the WalkMe Premium Cloud Service in
question and the Documentation. The WalkMe Premium Cloud Service(s) shall be added to the existing
Agreement via an amendment. The term of the WalkMe Premium Cloud Service(s) shall be co-terminus with
the corresponding SAP Cloud Service subscription, unless otherwise specified in the amendment.
2.1.2 Customer is authorized to use such WalkMe Premium Cloud Service, SAP Materials, Documentation, and
Content only in connection with the corresponding SAP Cloud Service.
2.2. WalkMe Digital Adoption Platform and WalkMe Discovery Cloud Service.
2.2.1 If Customer wishes to access and use WalkMe Digital Adoption Platform Cloud Service and/or WalkMe
Discovery Cloud Service in connection with any SAP Cloud Service, then Customer must maintain valid
subscriptions to such SAP Cloud Service(s). These SAP Cloud Service subscriptions are not included and
must be licensed separately.
2.2.2 Customer may access and use WalkMe Digital Adoption Platform Cloud Service and WalkMe Discovery Cloud
Service in connection with a) SAP Cloud Services and b) Permitted Target Applications.
"Permitted Target Applications" include any supported software applications that are Customer-developed
or third-party applications to which Customer has valid licenses or subscriptions. It is Customer’s sole
responsibility to verify that access and use of these Cloud Services on Permitted Target Applications is
technically feasible and legally permissible.
2.2.3 Third-party Terms for Permitted Target Applications. For Permitted Target Applications that are subject to
third-party license or subscription terms, Customer acknowledges and agrees to comply with all terms and
conditions, including but not limited to, any applicable license agreements, terms of service, or other
contractual obligations. Customer is solely responsible for compliance with such third-party terms. SAP is not
responsible, without limitation, for any infringement of any third-party rights or terms resulting from Customer’s
use of the WalkMe Digital Adoption Platform Cloud Service and WalkMe Discovery Cloud Service with
Permitted Target Applications.
2.3. AI Technology. AI Technology provided with the WalkMe Cloud Services is subject to the SAP AI Terms
accessible at https://www.sap.com/about/trust-center/agreements.html.
2.4. Personal Data Processing. Customer will not use the analytics capabilities of any WalkMe Cloud Service for
any prohibited employee monitoring, other electronic surveillance technique or any violation of anti-wiretap or
similar laws and regulations. Customer will reimburse SAP for any damages suffered resulting from Customer’s
noncompliance with the usage restrictions mentioned in the preceding sentence.
2.5. Use of Content. Customer may only use the Content in connection with its subscription to the WalkMe Cloud
Services. For the avoidance of doubt, the Content may not be distributed or otherwise shared with third partie s
other than Active Users for use in connection with the Customer and its Affiliates’ internal business operations.
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SAP, SAP SE, their Affiliates or licensors own and shall retain all rights, including ownership and IP Rights to
the default Content designs and "look and feel" thereof.
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SUPPORT SCHEDULE FOR CLOUD SERVICES
This Support Schedule is part of the Agreement for Cloud Services between SAP and Customer.
1. DEFINITIONS
1.1. "Go-Live" marks the point in time from when, after set-up of the Cloud Services for Customer, the Cloud
Services can be used by Customer for processing real data in live operation mode and for running Customer's
internal business operations in accordance with its agreement for such Cloud Services.
1.2. "Local Business Hours" means 8 a.m. (08:00) to 6 p.m. (18:00) Monday to Friday excluding local holidays,
in accordance with local time zone applicable to the Customer's address.
1.3. "SAP's Customer Support Website" means SAP's customer facing support website (see:
https://support.sap.com unless a different support website is listed in the Agreement or
https://support.sap.com/contactus). In selected Cloud Services, support can also be accessed via the
application itself.
2. SCOPE OF SUPPORT AND SUCCESS OFFERINGS
2.1. General
2.1.1. SAP offers the following:
a) SAP Enterprise Support, cloud editions: Foundational engagement support as part of the Cloud Service
with focus on customer interaction and case resolution.
b) SAP Preferred Success: An add-on to SAP Enterprise Support, cloud editions that includes strategic
guidance, solution-specific best practices and success programs to help drive consumption and value
realization.
c) SAP Enterprise Support, cloud editions is included in the subscription fees for the Cloud Services stated
in the Order Form unless alternative support terms are agreed. SAP Preferred Success may be purchased
for eligible Cloud Services for an additional fee, as an add-on to SAP Enterprise Support, cloud editions.
SAP Preferred Success is not available, and not provided, for any third-party cloud services purchased
through SAP.
2.1.2. Beginning on the effective date of Customer's agreement for Cloud Services, Customer may contact SAP's
support organization as the primary point of contact for support services.
2.1.3. Customer Interaction Center languages: SAP provides initial telephone contact for Customer Contacts through
the SAP one support phone number "CALL-1-SAP" (see CALL-1-SAP page:
https://support.sap.com/contactus) or via other solution specific hotlines in the following languages: English
(24x7) and, depending on local office hours and availability, in German, French, Italian, Spanish, Polish,
Russian (during European office hours); Japanese, Chinese, Korean, Bahasa (during Asia/Pacific office
hours); Portuguese and Spanish (during Latin America office hours). Issues which lead to a support case which
is processed by specialized technical or third party support engineers worldwide are handled in English only.
2.2. Mission Critical Support
Feature SAP Enterprise Support, cloud editions SAP Preferred Success
24x7 mission critical
support for P1 and P2
cases (English only)
Global case handling by SAP for issues
related to support, including Service Level
Agreements for Initial Response, Ongoing
Communications and Corrective Action
Targets (as set forth in Section 3 below).
24x7 prioritized case handling and
enhanced Initial Response and Corrective
Action Targets (as set forth in Section 3
below).
Non-mission critical
support for P3 and P4
cases (English only)
Available during Local Business Hours(as set
forth in Section 3 below).
Enhanced Initial Response Targets (as set
forth in Section 3 below).
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Feature SAP Enterprise Support, cloud editions SAP Preferred Success
24x7 Customer interaction
center
Support center that customers may contact
for general support related inquiries through
the contact channels described in Section
2.1.3.
Delivered as part of SAP Enterprise
Support, cloud editions.
Global support backbone SAP's knowledge database and extranet
where SAP makes available content and
services to customers and partners of SAP
only. This includes SAP's Customer Support
Website.
End-to-end supportability Support for cases that occur in integrated
business scenarios consisting of SAP Cloud
Services or both SAP Cloud Services and
SAP Software with a valid SAP support
agreement.
2.3. Learning and Empowerment
Feature SAP Enterprise Support, cloud editions SAP Preferred Success
Remote SAP support
content and services
Remote support content and services (e.g.,
Meet-the-Expert sessions) in various formats
which may include live and recorded
webinars, tutorials, best practices, self-paced
learning materials and workshop-style
interactive remote sessions. Content and
session schedules are stated on SAP's
Customer Support Website in the SAP
Enterprise Support Academy section.
Scheduling, availability and delivery
methodology is at SAP's discretion.
Access to demo systems, live sessions
with instructors, examinations and
certifications specific to the Cloud Service
for up to 5 Customer Contacts.
SAP Preferred Success exclusive learning
content related to the Cloud Service in
various formats which may include live
and recorded webinars, best practices,
and workshop-style interactive remote
sessions.
Scheduling, availability and delivery
methodology is at SAP's discretion.
Release update
information
Generally available documented summaries,
webinars and videos provided by SAP to
inform and instruct customers on new product
release changes.
Self-service through web and community.
Release guidance specific to the Cloud
Service.
2.4. Collaboration
Feature SAP Enterprise Support, cloud editions SAP Preferred Success
SAP support advisory
services
Access to experts who help customers with
support-related requests and advise on the
appropriate SAP Enterprise Support content
and services for their needs.
Delivered as part of SAP Enterprise
Support, cloud editions.
Support via chat Available during business hours in English
language for non-Mission Critical Support
issues, where available for the Cloud Service.
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Feature SAP Enterprise Support, cloud editions SAP Preferred Success
Support via web and
platform for social
business collaboration
Access to SAP's Customer Support Website,
including social media-based empowerment
and collaboration, with peers and SAP
experts.
Access to exclusive SAP Preferred
Success collaboration platform.
Support and success
reporting
SAP Enterprise Support reporting: A report or
dashboard analyzing and documenting the
status of support services and achievements
hereunder.
Reports, dashboards, or other reporting
components and capabilities regarding the
overall engagement, full customer
lifecycle, and productive use of the
solution, including relevant feature
adoption, technical and product usage
and status of support services and
achievements hereunder, specific to the
Cloud Service.
Preferred Success
resources and guidance
Access to success resources to provide
guidance on onboarding, product adoption
and usage, best practices and operational
excellence. This may include a customer
success partner as the primary contact for
ongoing success management, success
planning, technical guidance and
mentorship, and support case oversight
throughout the Customer lifecycle.
Assignment of a customer success
partner is at SAP's discretion.
Regular checkpoint Periodic review of Cloud Service, success
plan, critical issues, reporting and best
practices. May include in-person delivery,
at SAP's discretion.
Success Plan A success plan outlines steps towards
achieving key business milestones and
objectives throughout the customer
lifecycle. Focus topics include challenges,
consumption, adoption and cycle
planning.
2.5. Innovation and Value Realization
Feature SAP Enterprise Support, cloud editions SAP Preferred Success
Proactive checks
proposed by SAP
Support services, providing recommendations
for the specific customer situation. Such
services are delivered remotely upon
Customer request.
Expert-led checks, providing
recommendations based on SAP best
practices or recommended
configuration(s).
Product roadmaps Self-service through web. Delivered as part of SAP Enterprise
Support, cloud editions.
Refresh of test instance Self-service or request through web for
initiating the refresh as offered and required
by respective solution.
Access to SAP assistance with managing
the refreshing of test instances up to 2
times per year, where applicable.
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2.6. Application Lifecycle Management
Feature SAP Enterprise Support, cloud editions SAP Preferred Success
Application lifecycle
management ("ALM")
Software or online services for application
lifecycle management made available by
SAP. Feature scope and availability details
are set forth on SAP's Customer Support
Website (see: https://support.sap.com/en/alm)
and usage rights (see:
https://support.sap.com/en/alm/usage-rights).
Delivered as part of SAP Enterprise
Support, cloud editions.
3. CUSTOMER RESPONSE LEVELS
3.1. SAP responds to submitted support cases as described in the table below.
Priority Definition Response Level
P1 Very High
A case should be categorized with the priority
"very high" if the problem has very serious
consequences for normal business processes or
IT processes related to core business processes.
Urgent work cannot be performed.
This is generally caused by the following
circumstances:
a) a productive service is completely
down;
b) the imminent system Go-Live or
upgrade of a production system
cannot be completed;
c) the customer's core business
processes are seriously affected
A workaround is not available for each
circumstance.
The case requires immediate processing because
the malfunction may cause serious losses.
Initial Response: Within 1 hour of case submission.
Ongoing Communication: Unless otherwise
communicated by SAP, once every hour.
Corrective Action Target: SAP to provide for cases
either a resolution; or workaround; or action plan
within 4 hours.
P2 High
A case should be categorized with the priority
"high" if normal business processes are seriously
affected. Necessary tasks cannot be performed.
This is caused by incorrect or inoperable functions
in the SAP service that are required immediately.
The case is to be processed as quickly as
possible because a continuing malfunction can
seriously disrupt the entire productive business
flow.
Initial Response: Within 4 hours of case submission
for SAP Enterprise Support, cloud edition customers
and within 2 hours of case submission for SAP
Preferred Success customers.
Ongoing Communication: Unless otherwise
communicated by SAP, once every 6 hours.
Corrective Action Target: SAP to provide for cases
either a resolution; or workaround; or action plan
within 3 business days for SAP Preferred Success
customers only.
P3 Medium
A case should be categorized with the priority
"medium" if normal business processes are
affected. The problem is caused by incorrect or
inoperable functions in the SAP service.
Initial Response: Within 1 business day of case
submission for SAP Enterprise Support, cloud edition
customers, and within 4 business hours of case
being received for SAP Preferred Success
customers.
Ongoing Communication: Unless otherwise
communicated by SAP, once every 3 business days
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Priority Definition Response Level
for non-defect Issues and 10 business days for
product defect issues.
A non-defect issue is a reported support case that
does not involve a defect in the applicable Cloud
Service and does not require engineering,
development or operations personnel to resolve.
P4 Low
A case should be categorized with the priority
"low" if the problem has little or no effect on
normal business processes. The problem is
caused by incorrect or inoperable functions in the
SAP service that are not required daily or are
rarely used.
Initial Response: Within 2 business days of case
submission for SAP Enterprise Support, cloud
editions customers and within 1 business day of
case submission for SAP Preferred Success
customers.
Ongoing Communication: Unless otherwise
communicated by SAP, once every week.
3.2. The following types of cases are excluded from customer response levels as described above:
a) cases regarding a release, version or functionalities of Cloud Services developed specially for Customer
(including those developed by SAP Custom Development or by SAP subsidiaries or individual content
services);
b) the root cause behind the case is not a malfunction but missing functionality (development request);
c) the case is a consulting or how-to request.
4. CUSTOMER RESPONSIBILITIES
4.1. Customer Contact
4.1.1. Customer shall designate at least 2 and up to 5 qualified English-speaking contact persons per Cloud Service
(each a "Customer Contact"). Customer Contacts include designated support contact, authorized support
contact, key user, application administrator or system administrators whose roles within specific Cloud
Services are authorized to contact or access the Customer Interaction Center, SAP Support Advisory Services
and Mission Critical Support services.
4.1.2. The Customer Contact is responsible for managing all business-related tasks of the Cloud Service related to
Customer's business, such as:
a) support end users and manage their cases. This includes searching for known solutions in available
documentation and liaising with SAP in the event of new problems;
b) manage background jobs and the distribution of business tasks across users (if available);
c) manage and monitor connections to Customer's third-party systems (if available);
d) support the adoption of the Cloud Service.
4.2. Contact Details
Customer will provide contact details (in particular, e-mail address and telephone number) by which the
Customer Contact or the authorized representative of the Customer Contact can be contacted at any time.
Customer will update its Customer Contacts for a Cloud Service through SAP's Customer Support Website.
Only authorized Customer Contacts may contact SAP's support organization.
4.3. Cooperation
Customer Contact shall reasonably cooperate with SAP to resolve support cases,and will have adequate
technical expertise and knowledge of its configuration of the Cloud Services to provide relevant information to
enable SAP to reproduce, troubleshoot and resolve the experienced error.
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SERVICE LEVEL AGREEMENT FOR CLOUD SERVICES
1. DEFINITIONS
1.1. “Credit” means 2% of the Monthly Subscription Fees for the affected subscription-based Cloud Service or the monthly Cloud
Credits (as defined in the Order Form) consumed for the affected consumption-based Cloud Service, for each 1% below the
System Availability SLA, not to exceed 100% of the fees paid or Cloud Credit consumed by the Customer for the relevant Month
for the affected Cloud Service.
1.2. “Downtime” means the Total Minutes in the Month during which the production version of the Cloud Service is not available,
except for Excluded Downtimes.
1.3. “Excluded Downtime” means the Total Minutes in the Month attributable to a Maintenance Window; or any Major Upgrade
Window for which the Customer has been notified at least 5 business days in advance; or unavailability caused by factors outside
of SAP’s reasonable control, such as unpredictable and unforeseeable events that could not have been avoided even if
reasonable care had been exercised.
1.4. “Maintenance Window” means the weekly maintenance windows for the Cloud Service identified on
https://support.sap.com/maintenance-windows. SAP may update the Maintenance Window from time to time in accordance with
the Agreement.
1.5. “Major Upgrade Window” means the extended upgrade maintenance windows for the Cloud Service identified on
https://support.sap.com/maintenance-windows. SAP may update the Major Upgrade Window from time to time in accordance
with the Agreement.
1.6. “Month” means a calendar month.
1.7. “Monthly Subscription Fees” means the monthly (or 1/12 of the annual fee) subscription fees paid for the applicable Cloud
Service which did not meet the System Availability SLA.
1.8. “System Availability Percentage” is calculated and defined as follows:
� Total Minutes in the Month−Excluded Downtime − Downtime Total Minutes in the Month−Excluded Downtime �∗100
1.9. “System Availability SLA” means a 99.7% System Availability Percentage during each Month for the production version of the
Cloud Service.
1.10. “Total Minutes in the Month” are measured 24 hours at 7 days per week during a Month.
1.11. “UTC” means Coordinated Universal Time standard is the start time for the applicable Maintenance Window and Major Upgrade
Window.
2. SYSTEM AVAILABILITY SLA AND CREDITS
2.1. Credit
If SAP fails to meet the System Availability SLA for a particular Month, Customer may claim a Credit, which Customer may apply
to a future invoice for the Cloud Service that did not meet the System Availability SLA (subject to Sections 2.1.1 and 2.1.2 below).
2.1.1. Claims for a Credit must be made in good faith and through a documented submission of a support case within 30 business
days after the end of the relevant Month in which SAP did not meet the System Availability SLA for the Cloud Service.
2.1.2. Customers who have not subscribed to the Cloud Service directly from SAP must claim the Credit from their applicable SAP
partner.
2.2. System Availability Report
SAP will provide Customer with a monthly report describing the System Availability Percentage for the Cloud Service either by
email following a request to Customer’s assigned SAP account manager; through the Cloud Service; or through an online portal
made available to Customer, if and when such online portal is available.
3. CHANGES TO WINDOWS
3.1. SAP shall provide Customer 1 month’s advance notice before changing its Maintenance and Major Upgrade Windows (unless
such change is a reduction in the duration of the applicable Maintenance or Major Upgrade Windows). If Customer wishes to be
notified of changes to Maintenance Windows and Major Upgrade Windows via email, it must subscribe to receive notifications
at https://support.sap.com/maintenance-windows.
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DATA PROCESSING AGREEMENT FOR CLOUD SERVICES
1. DEFINITIONS
1.1. “Controller” means the natural or legal person, public authority, agency or other body which, alone or jointly
with others, determines the purposes and means of the processing of Personal Data; for the purposes of this
DPA, where Customer acts as processor for another controller, it shall in relation to SAP be deemed as
additional and independent Controller with the respective controller rights and obligations under t his DPA.
1.2. “Data Protection Law” means the applicable legislation protecting the fundamental rights and freedoms of
persons and their right to privacy with regard to the processing of Personal Data under the Agreement.
1.3. “Data Subject” means an identified or identifiable natural person as defined by Data Protection Law.
1.4. “EEA” means the European Economic Area, namely the European Union Member States along with Iceland,
Liechtenstein and Norway.
1.5. “GDPR” means the General Data Protection Regulation 2016/679.
1.6. “My Trust Center” means information available on the SAP support portal (see:
https://support.sap.com/en/my-support/trust-center.html) or the SAP agreements website (see:
https://www.sap.com/about/trust-center/agreements.html) or any subsequent website(s) made available by
SAP to Customer.
1.7. “New SCC Relevant Transfer” means a transfer (or an onward transfer) to a Third Country of Personal Data
that is either subject to GDPR or to applicable Data Protection Law and where any required adequacy means
under GDPR or applicable Data Protection Law can be met by entering into the New Standard Contractual
Clauses.
1.8. “New Standard Contractual Clauses” means the unchanged standard contractual clauses, published by the
European Commission, reference 2021/914 or any subsequent final version thereof which shall automatically
apply. To avoid doubt Modules 2 and 3 shall apply as set out in Section 8.
1.9. “Personal Data” means any information relating to a Data Subject which is protected under Data Protection
Law. For the purposes of the DPA, it includes only personal data which is:
a) entered by Customer or its Authorized Users into or derived from their use of the Cloud Service; or
b) supplied to or accessed by SAP or its Subprocessors in order to provide support under the Agreement.
Personal Data is a sub-set of Customer Data (as defined under the Agreement).
1.10. “Personal Data Breach” means a confirmed:
a) accidental or unlawful destruction, loss, alteration, unauthorized disclosure of or unauthorized third -party
access to Personal Data; or
b) similar incident involving Personal Data, in each case for which a Controller is required under Data
Protection Law to provide notice to competent data protection authorities or Data Subjects.
1.11. “Processor” means a natural or legal person, public authority, agency or other body which processes personal
data on behalf of the controller, be it directly as processor of a contro ller or indirectly as subprocessor of a
processor which processes personal data on behalf of the controller.
1.12. “Schedule” means the numbered Appendix with respect to the Standard Contractual Clauses (2010) and the
numbered Annex with respect to the New Standard Contractual Clauses.
1.13. “Standard Contractual Clauses (2010)” means the Standard Contractual Clauses (processors) published by
the European Commission, reference 2010/87/EU.
1.14. “Subprocessor” or “sub-processor” means SAP Affiliates, SAP SE, SAP SE Affiliates and third parties
engaged by SAP, SAP SE or SAP SE’s Affiliates in connection with the Cloud Service and which process
Personal Data in accordance with this DPA.
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1.15. “Technical and Organizational Measures” means the technical and organizational measures for the relevant
Cloud Service published on My Trust Center (see: https://www.sap.com/about/trust-
center/agreements/cloud/cloud-services.html?search=Technical%20Organizational%20Measures ).
1.16. “Third Country” means any country, organization or territory not acknowledged by the European Union under
Article 45 of GDPR as a safe country with an adequate level of data protection.
2. BACKGROUND
2.1. Purpose and Application
2.1.1. This document (“DPA”) is incorporated into the Agreement and forms part of a written (including in electronic
form) contract between SAP and Customer.
2.1.2. This DPA applies to Personal Data processed by SAP and its Subprocessors in connection with its provision
of the Cloud Service.
2.1.3. This DPA does not apply to non-production environments of the Cloud Service if such environments are made
available by SAP. Customer shall not store Personal Data in such environments.
2.2. Structure
Schedules 1 and 2 are incorporated into and form part of this DPA. They set out the agreed subject-matter,
the nature and purpose of the processing, the type of Personal Data, categories of data subjects (Schedule
1) and the applicable Technical and Organizational Measures (Schedule 2).
2.3. Governance
2.3.1. SAP acts as a Processor and Customer and those entities that it permits to use the Cloud Service act as
Controllers under the DPA.
2.3.2. Customer acts as a single point of contact and shall obtain any relevant authorizations, consents and
permissions for the processing of Personal Data in accordance with this DPA, including, where applicable
approval by Controllers to use SAP as a Processor. Where authorizations, consent, instructions or permissions
are provided by Customer these are provided not only on behalf of the Customer but also on behalf of any
other Controller using the Cloud Service. Where SAP informs or gives notice to Customer, such information
or notice is deemed received by those Controllers permitted by Customer to use the Cloud Service. Customer
shall forward such information and notices to the relevant Controllers.
2.4. For the avoidance of doubt, nothing in this DPA (including without limitation, Section 1.2 “Data Protection
Law”, 1.4 “EEA”, 1.5 “GDPR”, 1.7 “New SCC relevant Transfer”, 1.8 “New Standard Contractual Clauses”,
1.13 “Standard Contractual Clauses (2010)” and Section 1.16 “Third Country” and Section 8, “International
Processing” shall be construed as imposing GDPR compliance obligations on Customer in situations w here
Customer’s use of the SAP Cloud Services would not otherwise subject Customer to GDPR requirements as
a Controller.
3. SECURITY OF PROCESSING
3.1. Applicability of the Technical and Organizational Measures
SAP has implemented and will apply the Technical and Organizational Measures. Customer has reviewed
such measures and agrees that as to the Cloud Service selected by Customer in the Order Form the measures
are appropriate taking into account the state of the art, the costs of implementation, nature, scope, context
and purposes of the processing of Personal Data.
3.2. Changes
3.2.1. SAP applies the Technical and Organizational Measures to SAP’s entire customer base hosted out of the
same data center or receiving the same Cloud Service. SAP may change the Technical and Organizational
Measures at any time without notice so long as it maintains a comparable or better level of security. Individual
measures may be replaced by new measures that serve the same purpose without diminishing the security
level protecting Personal Data.
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3.2.2. SAP will publish updated versions of the Technical and Organizational Measures on My Trust Center and
where available Customer may subscribe to receive e-mail notification of such updated versions.
4. SAP OBLIGATIONS
4.1. Instructions from Customer
SAP will process Personal Data only in accordance with documented instructions from Customer . The
Agreement (including this DPA) constitutes such documented initial instructions and each use of the Cloud
Service then constitutes further instructions. SAP will use reasonable efforts to follow any other Customer
instructions, as long as they are required by Data Protection Law, technically feasible and do not require
changes to the Cloud Service. If any of the before-mentioned exceptions apply, or SAP otherwise cannot
comply with an instruction or is of the opinion that an instruction infrin ges Data Protection Law, SAP will
immediately notify Customer (email permitted).
4.2. Processing on Legal Requirement
SAP may also process Personal Data where required to do so by applicable law. In such a case, SAP shall
inform Customer of that legal requirement before processing unless that law prohibits such information on
important grounds of public interest.
4.3. Personnel
To process Personal Data, SAP and its Subprocessors shall only grant access to authorized personnel who
have committed themselves to confidentiality. SAP and its Subprocessors will regularly train personnel having
access to Personal Data in applicable data security and data privacy measures.
4.4. Cooperation
4.4.1. At Customer’s request, SAP will reasonably cooperate with Customer and Controllers in dealing with requests
from Data Subjects or regulatory authorities regarding SAP’s processing of Personal Data or any Persona l
Data Breach.
4.4.2. If SAP receives a request from a Data Subject in relation to the Personal Data processing hereunder, SAP
will promptly notify Customer (where the Data Subject has provided information to identify the Customer) via
e-mail and shall not respond to such request itself but instead ask the Data Subject to redirect its request to
Customer.
4.4.3. In the event of a dispute with a Data Subject as it relates to SAP’s processing of Personal Data under this
DPA, the Parties shall keep each other informed and, where appropriate, reasonably co-operate with the aim
of resolving the dispute amicably with the Data Subject.
4.4.4. SAP shall provide functionality for production systems that supports Customer's ability to correct, delete or
anonymize Personal Data from a Cloud Service, or restrict its processing in line with Data Protection Law.
Where such functionality is not provided, SAP will correct, delete or anonymize any Personal Data, or restrict
its processing, in accordance with the Customer's instruction and Data Protection Law.
4.5. Personal Data Breach Notification
SAP will notify Customer without undue delay after becoming aware of any Personal Data Breach and provide
reasonable information in its possession to assist Customer to meet Customer’s obligations to report a
Personal Data Breach as required under Data Protection Law. SAP may provide such information in phases
as it becomes available. Such notification shall not be interpreted or construed as an admission of fault or
liability by SAP.
4.6. Data Protection Impact Assessment
If, pursuant to Data Protection Law, Customer (or its Controllers) are required to perform a data protection
impact assessment or prior consultation with a regulator, at Customer’s request, SAP will provide such
documents as are generally available for the Cloud Service (for example, this DPA, the Agreement, Audit
Reports and Certifications). Any additional assistance shall be mutually agreed between the Parties.
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5. DATA EXPORT AND DELETION
5.1. Export and Retrieval by Customer
During the Subscription Term and subject to the Agreement, Customer can access its Personal Data at any
time. Customer may export and retrieve its Personal Data in a standard format. Export and retrieval may be
subject to technical limitations, in which case SAP and Customer will find a reasonable method to allow
Customer access to Personal Data.
5.2. Deletion
Before the Subscription Term expires, Customer may use SAP’s self-service export tools (as available) to
perform a final export of Personal Data from the Cloud Service (which shall constitute a "return" of Personal
Data). At the end of the Subscription Term, Customer hereby instructs SAP to delete the Personal Data
remaining on servers hosting the Cloud Service within a reasonable time period in line with Data P rotection
Law (not to exceed 6 months) unless applicable law requires retention.
6. CERTIFICATIONS AND AUDITS
6.1. Customer Audit
Customer or its independent third party auditor reasonably acceptable to SAP (which shall not include any
third party auditors who are either a competitor of SAP or not suitably qualified or independent) may audit
SAP’s control environment and security practices relevant to Personal Data processed by SAP only if:
a) SAP has not provided sufficient evidence of its compliance with the Technical and Organizational
Measures that protect the production systems of the Cloud Service through providing either: (i) a
certification as to compliance with ISO 27001 or other standards (scope as defined in the certificate); or
(ii) a valid ISAE3402 or ISAE3000 or other SOC1-3 attestation report. Upon Customer’s request audit
reports or ISO certifications are available through the third party auditor or SAP;
b) a Personal Data Breach has occurred;
c) an audit is formally requested by Customer’s data protection authority; or
d) provided under mandatory Data Protection Law conferring Customer a direct audit right and provided that
Customer shall only audit once in any 12 month period unless mandatory Data Protection Law requires
more frequent audits.
6.2. Other Controller Audit
Any other Controller may assume Customer's rights under Section 6.1 only if it applies directly to the Controller
and such audit is permitted and coordinated by Customer. Customer shall use all reasonable means to
combine audits of multiple other Controllers to avoid multiple audits.unless the audit must be undertaken by
the other Controller itself under Data Protection Law. If several Controllers whose Personal Data is processed
by SAP on the basis of the Agreement require an audit, Customer shall use all reasonable means to combine
the audits and to avoid multiple audits.
6.3. Scope of Audit
Customer shall provide at least 60 days advance notice of any audit unless mandatory Data Protection Law
or a competent data protection authority requires shorter notice. The frequency and scope of any audits shall
be mutually agreed between the parties acting reasonably and in good faith. Customer audits shall be limited
in time to a maximum of 3 business days. Beyond such restrictions, the parties will use current certifications
or other audit reports to avoid or minimize repetitive audits. Customer shall provide the results of any audit to
SAP.
6.4. Cost of Audits
Customer shall bear the costs of any audit unless such audit reveals a material breach by SAP of this DPA,
then SAP shall bear its own expenses of an audit. If an audit determines that SAP has breached its obligations
under the DPA, SAP will promptly remedy the breach at its own cost.
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7. SUBPROCESSORS
7.1. Permitted Use
SAP is granted a general authorization to subcontract the processing of Personal Data to Subprocessors,
provided that:
a) SAP or SAP SE on its behalf shall engage Subprocessors under a wr itten (including in electronic form)
contract consistent with the terms of this DPA in relation to the Subprocessor’s processing of Personal
Data. SAP shall be liable for any breaches by the Subprocessor in accordance with the terms of this
Agreement;
b) SAP will evaluate the security, privacy and confidentiality practices of a Subprocessor prior to selection
to establish that it is capable of providing the level of protection of Personal Data required by this DPA;
and
c) SAP’s list of Subprocessors in place on the effective date of the Agreement is published by SAP on My
Trust Center or SAP will make it available to Customer upon request, including the name, address and
role of each Subprocessor SAP uses to provide the Cloud Service.
7.2. New Subprocessors
SAP’s use of Subprocessors is at its discretion, provided that:
a) SAP will inform Customer in advance (by email or by posting on the My Trust Center) of any intended
additions or replacements to the list of Subprocessors including name, address and role of the new
Subprocessor; and
b) Customer may object to such changes as set out in Section 7.3.
7.3. Objections to New Subprocessors
7.3.1. If Customer has a legitimate reason under Data Protection Law to object to the new Subprocessors’
processing of Personal Data, Customer may terminate the Agreement (limited to the Cloud Service for which
the new Subprocessor is intended to be used) on writ ten notice to SAP. Such termination shall take effect at
the time determined by the Customer which shall be no later than 30 days from the date of SAP’s notice to
Customer informing Customer of the new Subprocessor. If Customer does not terminate within this 30 day
period, Customer is deemed to have accepted the new Subprocessor.
7.3.2. Within the 30 day period from the date of SAP’s notice to Customer informing Customer of the new
Subprocessor, Customer may request that the parties discuss in good faith a resolution to the objection. Such
discussions shall not extend the period for termination and do not affect SAP’s right to use the new
Subprocessor(s) after the 30 day period.
7.3.3. Any termination under this Section 7.3 shall be deemed to be without fault by either party and shall be subject
to the terms of the Agreement.
7.4. Emergency Replacement
SAP may replace a Subprocessor without advance notice where the reason for the change is outside of SAP’s
reasonable control and prompt replacement is required for security or other urgent reasons. In this case, SAP
will inform Customer of the replacement Subprocessor as soon as possible following its appointment. Section
7.2 applies accordingly.
8. INTERNATIONAL PROCESSING
8.1. Conditions for International Processing
SAP shall be entitled to process Personal Data, including by using Subprocessors, in accordance with this
DPA outside the country in which the Customer is located as permitted under Data Protection Law.
8.2. Applicability of the Standard Contractual Clauses (2010)
8.2.1. Where, for the period up to and including 26 September 2021, Personal Data of a Controller that is subject to
GDPR is processed in a Third Country, or where Personal Data of a Swiss or United Kingdom based Controller
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or another Controller is processed in a Third Country and such international processing requires an adequacy
means under the laws of the country of the Controller and the required adequacy means can be met by
entering into Standard Contractual Clauses (2010), then:
a) SAP and Customer enter into the Standard Contractual Clauses (2010);
b) Customer joins the Standard Contractual Clauses (2010) entered into by SAP or SAP SE and the
Subprocessor as an independent owner of rights and obligations; or
c) other Controllers whose use of the Cloud Services has been authorized by Customer under the
Agreement may also enter into Standard Contractual Clauses (2010) with SAP or the relevant
Subprocessors in the same manner as Customer in accordance with Section 8.2.1 a) and b) above. In
such case, Customer will enter into the Standard Contractual Cl auses (2010) on behalf of the other
Controllers.
8.2.2. The Standard Contractual Clauses (2010) shall be governed by the law of the country in which the relevant
Controller is established.
8.2.3. Where applicable Data Protection Law adopts the New Standard Contractual Clauses as meeting any required
adequacy means as an alternative or update to the Standard Contractual Clauses (2010) then the New
Standard Contractual Clauses shall apply in accordance with Section 8.3.
8.3. Applicability of New Standard Contractual Clauses
8.3.1. The following shall apply with effect from 27 September 2021 and shall solely apply in respect of New SCC
Relevant Transfers:
8.3.1.1. Where SAP is not located in a Third Country and acts as a data exporter, SAP (or SAP SE on its behalf) has
entered in to the New Standard Contractual Clauses with each Subprocessor as the data importer. Module 3
(Processor to Processor) of the New Standard Contractual Clauses shall apply to such New SCC Relevant
Transfers.
8.3.1.2. Where SAP is located in a Third Country:
SAP and Customer hereby enter into the New Standard Contractual Clauses with Customer as the data
exporter and SAP as the data importer which shall apply as follows:
a) Module 2 (Controller to Processor) shall apply where Customer is a Controller; and
b) Module 3 (Processor to Processor) shall apply where Customer is a Processor. Where Customer acts as
Processor under Module 3 (Processor to Processor) of the New Standard Contractual Clauses, SAP
acknowledges that Customer acts as Processor under the instructions of its Controller(s).
8.3.2. Other Controllers or Processors whose use of the Cloud Services has been authorized by Customer under
the Agreement may also enter into the New Standard Contractual Clauses with SAP in the same manner as
Customer in accordance with Section 8.3.1.28.3.1.2 above. In such case, Customer enters into the New
Standard Contractual Clauses on behalf of the other Controllers or Processors.
8.3.3. With respect to a New SCC Relevant Transfer, on request from a Data Subject to the Customer, Customer
may make a copy of Module 2 or 3 of the New Standard Contractual Clauses entered into between Customer
and SAP (including the relevant Schedules), available to Data Subjects.
8.3.4. The governing law of the New Standard Contractual Clauses shall be the law of Germany.
8.4. Relation of the Standard Contractual Clauses to the Agreement
Nothing in the Agreement shall be construed to prevail over any conflicting clause of the Standard Contractual
Clauses (2010) or the New Standard Contractual Clauses. For the avoidance of doubt, where this DPA further
specifies audit and Subprocessor rules, such specifications also apply in relation to the Standard Contractual
Clauses (2010) and the New Standard Contractual Clauses.
8.5. Third Party Beneficiary Right under the New Standard Contractual Clauses
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8.5.1. Where Customer is located in a Third Country and acting as a data importer under Module 2 or Module 3 of
the New Standard Contractual Clauses and SAP is acting as Customer’s sub-processor under the applicable
Module, the respective data exporter shall have the following third party beneficiary right:
8.5.2. In the event that Customer has factually disappeared, ceased to exist in law or has become insolvent (in all
cases without a successor entity that has assumed the legal obligations of the Customer by contract or by
operation of law), the respective data exporter shall have the right to terminate the affected Cloud Service
solely to the extent that the data exporter’s Personal Data is processed. In such event, the respective data
exporter also instructs SAP to erase or return the Personal Data.
9.DOCUMENTATION; RECORDS OF PROCESSING
9.1. Each party is responsible for its compliance with its documentation requirements, in particular maintaining
records of processing where required under Data Protection Law. Each party shall reasonably assist the other
party in its documentation requirements, including providing the information the other party needs from it in a
manner reasonably requested by the other party (such as using an electronic system), in order to enable the
other party to comply with any obligations relating to maintaining records of processing.
Schedule 1 Description of the Processing
This Schedule 1 applies to describe the Processing of Personal Data for the purposes of the Standard
Contractual Clauses (2010), New Standard Contractual Clauses and applicable Data Protection Law.
1.A. LIST OF PARTIES
1.1. Under the Standard Contractual Clauses (2010)
1.1.1. Data Exporter
The data exporter under the Standard Contractual Clauses (2010) is the Customer who subscribed to a Cloud
Service that allows Authorized Users to enter, amend, use, delete or otherwise process Personal Data. Where
the Customer allows other Controllers to also use the Cloud Service, these other Controllers are also data
exporters.
1.1.2. Data Importer
SAP and its Subprocessors that provide and support the Cloud Service are data importers under the Standard
Contractual Clauses (2010).
1.2. Under the New Standard Contractual Clauses
1.2.1. Module 2: Transfer Controller to Processor
Where SAP is located in a Third Country, Customer is the Controller and SAP is the Processor, then Customer
is the data exporter and SAP is the data importer.
1.2.2. Module 3: Transfer Processor to Processor
Where SAP is located in a Third Country, Customer is a Processor and SAP is a Processor, then Customer
is the data exporter and SAP is the data importer.
2.B. DESCRIPTION OF TRANSFER
2.1. Data Subjects
Unless provided otherwise by the data exporter, transferred Personal Data relates to the following categories
of Data Subjects: employees, contractors, business partners or other individuals having Personal Data stored
in the Cloud Service, transmitted to, made available to, accessed or otherwise processed by the data importer.
2.2. Data Categories
The transferred Personal Data concerns the following categories of data:
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Customer determines the categories of data per Cloud Service subscribed. Customer can configure the data
fields during implementation of the Cloud Service or as otherwise provided by the Cloud Service. The
transferred Personal Data typically relates to the following categories of data: name, phone numbers, e -mail
address, address data, system access / usage / authorization data, company name, contract data, invoice
data, plus any application-specific data that Authorized Users enter into the Cloud Service and may include
bank account data, credit or debit card data.
2.3. Special Data Categories (if agreed)
2.3.1. The transferred Personal Data may comprise special categories of personal data set out in the Agreement
(“Sensitive Data”). SAP has taken Technical and Organizational Measures as set out in Schedule 2 to ensure
a level of security appropriate to protect also Sensitive Data.
2.3.2. The transfer of Sensitive Data may trigger the application of the follo wing additional restrictions or safeguards
if necessary to take into consideration the nature of the data and the risk of varying likelihood and severity for
the rights and freedoms of natural persons (if applicable):
a)training of personnel;
b)encryption of data in transit and at rest;
c)system access logging and general data access logging.
2.3.3. In addition, the Cloud Services provide measures for handling of Sensitive Data as described in the
Documentation.
2.4. Purposes of the data transfer and further processing; Nature of the processing
2.4.1. The transferred Personal Data is subject to the following basic processing activities:
a)use of Personal Data to set up, operate, monitor and provide the Cloud Service (including operational
and technical support);
b)continuous improvement of service features and functionalities provided as part of the Cloud Service
including automation, transaction processing and machine learning;
c)provision of embedded Professional Services;
d)communication to Authorized Users;
e)storage of Personal Data in dedicated data centers (multi-tenant architecture);
f)release, development and upload of any fixes or upgrades to the Cloud Service;
g)back up and restoration of Personal Data stored in the Cloud Service;
h)computer processing of Personal Data, including data transmission, data retrieval, data access ;
i)network access to allow Personal Data transfer;
j)monitoring, troubleshooting and administering the underlying Cloud Service infrastructure and database ;
k)security monitoring, network-based intrusion detection support, penetration testing; and
l)execution of instructions of Customer in accordance with the Agreement.
2.4.2. The purpose of the transfer is to provide and support the Cloud Service. SAP and its Subprocessors may
support the Cloud Service data centers remotely. SAP and its Subprocessors provide support when a
Customer submits a support ticket as further set out in the Agreement.
2.5. Additional description in respect of the New Standard Contractual Clauses:
2.5.1. Applicable Modules of the New Standard Contractual Clauses
a)Module 2: Transfer Controller to Processor
b)Module 3: Transfer Processor to Processor
2.5.2. For transfers to (sub-) processors, also specify subject matter, nature and duration of the processing
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In respect of the New Standard Contractual Clauses, transfers to Subprocessors shall be on the same basis
as set out in the DPA.
2.5.3. The frequency of the transfer (e.g. whether the data is transferred on a one-off or continuous basis).
Transfers shall be made on a continuous basis.
2.5.4. The period for which the personal data will be retained, or, if that is not possible, the criteria used to determine
that period.
Personal Data shall be retained for the duration of the Agreement and subject to Section 5.2 of the DPA.
3.C. COMPETENT SUPERVISORY AUTHORITY
3.1. In respect of the New Standard Contractual Clauses:
3.1.1. Module 2: Transfer Controller to Processor
3.1.2. Module 3: Transfer Processor to Processor
3.2. Where Customer is the data exporter, the supervisory authority shall be the competent supervisory authority
that has supervision over the Customer in accordance with Clause 13 of the New Standard Contractual
Clauses.
Schedule 2 Technical and Organizational Measures
This Schedule 2 applies to describe the applicable technical and organizational measures for the purposes of
the Standard Contractual Clauses (2010), New Standard Contractual Clauses and applicable Data Protection
Law.
SAP will apply and maintain the Technical and Organizational Measures.
To the extent that the provisioning of the Cloud Service comprises New SCC Relevant Transfers, the Technical
and Organizational Measures set out in Schedule 2 describe the measures and safeguards which have been
taken to fully take into consideration the nature of the personal data and the risks involved. If local laws may
affect the compliance with the clauses, this may trigger the application of additional safeguards applied during
transmission and to the processing of the personal data in the country of destination (if applicable: encryption
of data in transit, encryption of data at rest, anonymization, pseudonymization).
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GENERAL TERMS AND CONDITIONS FOR SAP CLOUD SERVICES (for GSA indirect sales)
(“Cloud GTC”)
1.DEFINITIONS
1.1. “Affiliate” means any legal entity in which SAP SE or Customer, directly or indirectly, holds more than (fifty
percent) 50% of the entity’s shares or voting rights or controls or is under common control with that legal entity.
“Control” means the direct or indirect possession of the power to direct or cause the direction of the
management and policies of an entity, whether through ownership, by contract or otherwise. Any legal entity
will be considered an Affiliate as long as that interest is maintained.
1.2. “Agreement” means the agreement as defined in the applicable Cloud Order Form. For clarity, some services
may be performed under a statement of work, which statement of work will be governed by the terms and
conditions of this Agreement.
1.3. “Authorized User” means any individual to whom Customer grants access authorization to use the Cloud
Service that is an employee, agent, contractor or representative of Customer, Customer's Affiliates, or
Customer’s and Customer’s Affiliates’ Business Partners.
1.4. “Business Partner” means a legal entity that requires use of a Cloud Service in connection with Customer’s
and its Affiliates’ internal business operations. These may include customers, distributors, service providers or
suppliers of Customer and its Affiliates.
1.5. “Cloud Order Form” means the “Cloud Order Form for SAP Cloud Services” concluded between SAP and
Reseller that references the Cloud GTC.
1.6. “Cloud Service” means any distinct, hosted, supported and operated on-demand solution provided by SAP to
the Customer on behalf of the Reseller, under the Cloud Order Form.
1.7. “Confidential Information” means all information which the disclosing party protects against unrestricted
disclosure to others that the disclosing party or its representatives designates as confidential, internal or
proprietary at the time of disclosure, or should reasonably be understood to be confidential at the time of
disclosure given the nature of the information and the circumstances surrounding its disclosure .
1.8. “Customer” means the entity or individual that has consented to this Agreement by execution of an agreement
with Reseller that references this Cloud GTC or by any other legally binding method of acceptance of this
Agreement.
1.9. “Customer Data” means any content, materials, data and information that Authorized Users enter into the
production system of a Cloud Service or that Customer derives from its use of and stores in the Cloud Service
(e.g. Customer-specific reports). Customer Data and its derivatives will not include SAP’s Confidential
Information.
1.10. “Documentation” means SAP's then-current technical and functional documentation, relating to the Cloud
Services located at https://help.sap.com or which is made available to Customer as part of the Cloud Service,
including technical and functional specifications as updated from time to time in accordance with the
Agreement.
1.11. “Export Laws” means all applicable import, export control and sanctions laws, including without limitation, the
laws of the United States, the EU, and Germany.
1.12. “Feedback” means input, comments or suggestions regarding SAP’s business and technology direction, and
the possible creation, modification, correction, improvement or enhancement of the Cloud Service.
1.13. “Intellectual Property Rights” means patents of any type, design rights, utility models or other similar
invention rights, copyrights and related rights, trade secret, know-how or confidentiality rights, trademarks,
trade names and service marks and any other intangible property rights, whether registered or unregistered,
including applications (or rights to apply) and registrations for any of the foregoing, in any country, arising under
statutory or common law or by contract and whether or not perfected, now existing or hereafter filed, issued,
or acquired.
1.14. “Reseller” means the entity holding the Multiple Award Schedule contract and identified on the Cloud Order
Form.
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1.15. “Representatives” means a party’s Affiliates, employees, contractors, sub-contractors, legal representatives,
accountants, or other professional advisors.
1.16. “SAP” means the entity identified by the Cloud Order Form as providing the Cloud Service to Customer.
1.17. “SAP Materials” means any materials (including statistical reports) provided, developed or made available by
SAP or via Reseller (independently or with Customer’s or Reseller’s cooperation) in the course of performance
under the Agreement, including in the delivery of any support to Customer. SAP Materials do not include
Customer Data, Customer Confidential Information or the Cloud Service. SAP Materials may also be referred
to in the Agreement as “Cloud Materials”.
1.18. “SAP SE” means SAP SE, the parent company of SAP.
1.19. “Subscription Term” means the initial subscription term and, if applicable, any renewal subscription term of a
Cloud Service identified in the Cloud Order Form.
1.20. “Usage Metric” means the standard of measurement for determining the permitted use for a Cloud Service as
set forth in a Cloud Order Form.
2. USAGE RIGHTS AND RESTRICTIONS
2.1. Grant of Rights
Subject to Reseller’s payment of all fees due to SAP, SAP grants to Customer on behalf of Reseller, a non-
exclusive and non-transferable right to use the Cloud Service (including its implementation and configuration),
SAP Materials and Documentation solely for Customer’s and its Affiliates’ internal business operations.
Customer may use the Cloud Service world-wide, except from countries where such use is prohibited by Export
Laws. Permitted uses and restrictions of the Cloud Service also apply to SAP Materials and Documentation.
2.2. Authorized Users
Customer may permit Authorized Users to use the Cloud Service. Usage is limited to the Usage Metrics and
volumes stated in the Cloud Order Form. Access credentials for the Cloud Service may not be used by more
than one individual, but may be transferred from one individual to another if the original user is no longer
permitted to use the Cloud Service. Customer is responsible for breaches of the Agreement caused by
Authorized Users.
2.3. Verification of Use
Customer will monitor its own use of the Cloud Service and report any use in excess of the Usage Metrics and
volume to Reseller. SAP may monitor use to verify compliance with Usage Metrics, volume and the Agreement.
SAP will be permitted to forward any data regarding use in excess of the Usage Metrics, volume and the
Agreement by Customer to Reseller. Further, such monitoring shall be contingent upon adherence to
Customer’s security requirements, including any requirement for personnel to be cleared prior to accessing
sensitive IT systems or facilities. If Customer’s security requirements are not met, then upon SAP’s request,
Customer will run a self-assessment with tools provided by, and at the direction of SAP to verify Customer’s
compliance with the terms of this Agreement.
2.4. Third Party Web Services
The Cloud Service may include integrations with web services made available by third parties (other than SAP
SE or its Affiliates) that are accessed through the Cloud Service and subject to terms and conditions with those
third parties. These third party web services are not part of the Cloud Service and the Agreement does not
apply to them. SAP is not responsible for the content of these third party web services.
2.5. Mobile Access to Cloud Service
Authorized Users may access certain Cloud Services through mobile applications obtained from third -party
websites such as Android or Apple app store. The use of mobile applications may be governed by the terms
and conditions presented upon download/access to the mobile application and not by the terms of the
Agreement.
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2.6. On-Premise Components
The Cloud Service may include on-premise components that can be downloaded and installed (including
updates) by Customer. The System Availability SLA does not apply to these components. Customer may only
use the on-premise components during the Subscription Term.
3. SAP RESPONSIBILITIES
3.1. Provisioning
SAP provides access to the Cloud Service as described in the Agreement. SAP makes the Cloud Service
available and is responsible for its operation.
3.2. Support
SAP provides support for the Cloud Service as referenced in the Cloud Order Form.
3.3. Security
SAP will implement and maintain appropriate technical and organizational measures to protect the personal
data processed by SAP as part of the Cloud Service as described in the Data Processing Agreement
incorporated in the Cloud Order Form in compliance with applicable data protection law.
3.4. Modifications
3.4.1. Scope
SAP may modify the Cloud Service (including support services, Maintenance Windows and Major Upgrade
Windows), provided that SAP shall not materially degrade the core functionality of the Cloud Service during
the Subscription Term. Any such modifications will not restrict or reduce the capabilities in existence at the
time of execution of this Agreement without written concurrence from the Government Contracting Officer.
3.4.2. Modification Notices
SAP shall provide Customer with reasonable advance notice of modifications to the functionality of the Cloud
Service in accordance with Section 13.4, except for any change to a Maintenance Window or Major Upgrade
Window which shall be in accordance with the Service Level Agreement.
3.4.3. Customer Termination
If the modification materially degrades the Cloud Service and SAP does not provide equivalent functionality,
Customer may terminate the Cloud Order Form for the affected Cloud Service by providing written notice to
SAP and Reseller within 1 month of SAP’s notice. If SAP does not receive timely notice, Customer is deemed
to have accepted the modification.
4. CUSTOMER AND PERSONAL DATA
4.1. Customer Ownership
Customer retains all rights in and related to Customer Data. SAP may use Customer provided trademarks
solely to provide and support the Cloud Service.
4.2. Customer Data
Customer is responsible for Customer Data and entering it into the Cloud Service. Customer grants to SAP
(including SAP SE, its Affiliates and subcontractors) a non -exclusive right to process and use Customer Data
to provide and support the Cloud Service and as set out in the Agreement.
4.3. Personal Data
Customer will collect and maintain all personal data contained in the Customer Data in compliance with
applicable data privacy and protection laws.
4.4. Security
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Customer will maintain reasonable security standards for its Authorized Users’ use of the Cloud Service.
Customer will not conduct or authorize penetration tests of the Cloud Service without advance approval from
SAP.
4.5. Access to Customer Data
4.5.1. During the Subscription Term, Customer can access its Customer Data at any time. Customer may export and
retrieve its Customer Data in a standard format. Export and retrieval may be subject to technical limitations, in
which case SAP and Customer will find a reasonable method to allow Customer access to Customer Data.
4.5.2. Before the Subscription Term expires, Customer may use SAP’s self-service export tools (as available) to
perform a final export of Customer Data from the Cloud Service.
4.5.3. At the end of the Agreement, SAP will delete the Customer Data remaining on servers hosting the Cloud
Service unless applicable law requires retention. Retained data is subject to the confidentiality provisions of
the Agreement.
4.5.4. In the event of third party legal proceedings relating to Customer Data, SAP will cooperate with Customer and
comply with applicable law (both at Customer’s expense) with respect to handling of Customer Data.
5. RESELLER RELATIONSHIP, PRICES AND PAYMENT
5.1. Intentionally left blank
5.2. Intentionally left blank
5.3. Independence of Reseller
Reseller is not an agent of SAP. Reseller is an independent entity with no authority to bind SAP or to make
representations or warranties on SAP’s behalf. SAP will not be liable for reasonably relying on the accuracy
and reliability of written information provided by Reseller. Customer acknowledges and agrees that the Reseller
through which Customer has arranged for the procurement of the Cloud Services is not an agent of SAP.
5.4. No Representations or Warranties
SAP makes no representations or warranties as to Reseller, any authorized distributor or other reseller, or any
other third party, or related to the performance of their products or services, and fully disclaims any such
warranties in accordance with Section 7.
5.5 Payment
Customer shall pay to Reseller on behalf of SAP the fees for the Cloud Service provided hereunder, in the
amount as set forth in the agreement between Reseller and Customer, in accordance with the terms of the
Cloud Order Form.
5.6 Renewal Term
The fees set forth in the Cloud Order Form will be fixed for the committed subscription term. Following the
subscription term of a Cloud Order Form, the subscription may be renewed for one (1) year subscription terms
(each, as applicable, a “Renewal Term”) subject to funding and only for the agreed -upon subscription period
by executing a written order for the Renewal Term. Pricing is established based upon the GSA Schedule Price
List in effect at the time the Renewal Term is entered into. Either party may give the other party written notice
(email acceptable) of non-renewal at least thirty (30) days prior to the end of the relevant subscription ter m.
5.7 Additions to Cloud Order Form
Customer may add additional Authorized Users or other applicable usage metrics during the term of the Cloud
Order Form by executing an addendum or additional schedule with Reseller, as applicable, which shall then
become an integral part of the amended Cloud Order Form. The term of each addendum or schedule shall be
coterminous with the then-current term of the Cloud Order Form irrespective of the effective date of such
addendum and all fees shall be prorated accordingly. Upon renewal of the Cloud Order Form, the term for all
Authorized Users or other fee-based metric added to the Cloud Order Form prior to renewal shall be the same
as specified in the Cloud Order Form.
5.8 Excess Use
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Customer is responsible for monitoring its use of the Service. Customer shall promptly report to SAP any actual
use in excess of the number of Authorized Users (or other applicable usage metric authorized in the Cloud
Order Form). SAP shall be entitled to monitor Customer’s number of Authorize d Users (or other applicable
usage metric authorized in the Cloud Order Form) regarding usage of the Cloud Service to ensure Customer’s
compliance with the Agreement. SAP shall be permitted to forward such data to Reseller. SAP shall invoice
Reseller and Customer shall have the opportunity to execute an agreement with Reseller to pay for any usage
in excess of the usage metrics set forth in the applicable Cloud Order Form. Such fees shall accrue from the
date the excess use began. For the avoidance of doubt, Customer shall not be entitled to claim any reduction
of the fees payable under the Cloud Order Form or reduce the Authorized Users (or other applicable usage
metric) during the term of a Cloud Order Form or renewal.
5.9 No Cancellation
Except as expressly set forth in this Agreement, FAR 52.212-4(l), or the Cloud Order Form, all purchases of
subscriptions hereunder are non-cancelable and all fees incurred prior to the termination date are non-
refundable.
6. TERM AND TERMINATION
6.1 Term
The term of this Agreement begins on the Effective Date set forth in the applicable Cloud Order Form and shall
continue in effect as described in the Cloud Order Form. Termination of individual Cloud Order Forms shall
leave other Cloud Order Forms unaffected.
6.2 Termination
Recourse against the United States for any alleged breach of this Agreement must be made under the terms
of the Federal Tort Claims Act or as a dispute under the contract disputes clause (Contract Disputes Act, 41
U.S.C. Chapter 71) as applicable. SAP shall proceed diligently with performance of this Agreement, pending
final resolution of any request for relief, claim, appeal, or action arising under the Agreement, and comply with
any decision of the Customer. The Agreement shall terminate immediately upon a final judgment obtained
under the Contracts Disputes Act terminating the Agreement for Customer's material breach of any provision
of the Agreement.
SAP may, in its reasonable determination, deactivate Customer’s user name(s) and pass word(s) and/or
temporarily suspend access to the Cloud Service or a portion thereof, if and to the extent SAP can substantiate
that the continued use of the Cloud Service may result in harm to the Cloud Service (including the security of
the systems used to provide the Cloud Service) or other SAP customers, or the rights of third parties, upon
prior written notice to Customer as the circumstances permit.
6.3 Effect of Expiration or Termination
Upon the effective date of termination, Customer’s access to the Cloud Service will be terminated. Customer
shall have the ability to access its Customer Data at any time during the subscription term set forth in the
applicable Order Form, unless earlier terminated pursuant to this Article 6. Customer may export and retrieve
its Customer Data during a subscription term, which will be subject to technical limitations caused by factors
such as (i) the availability of self-service extraction tools compatible with the Cloud Service, (ii) the size of
Customer’s instance of the Cloud Service; and (iii) the frequency and/or timing of the export and retrieval.
6.4 Survival
Articles 5, 8, 9, 10, 11, 12 and 13 shall survive the expiration or termination of this Agreement.
7. WARRANTIES
7.1. Compliance with Law
Each party warrants its current and continuing compliance with all laws and regulations applicable to it in
connection with:
(a) In the case of SAP, the operation of SAP’s business as it relates to the Cloud Service; and
(b) In the case of Customer, Customer Data and Customer’s use of the Cloud Service.
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7.2. Good Industry Practices
SAP warrants that it will provide the Cloud Service:
(a) in substantial conformance with the Documentation; and
(b) with the degree of skill and care reasonably expected from a skilled and experienced global supplier of
services substantially similar to the nature and complexity of the Cloud Service.
7.3. Remedy
7.3.1. Provided Customer (or Reseller on Customer’s behalf) notifies SAP in writing with a specific description of the
Cloud Service’s non-conformance with the warranty in Section 7.2 without undue delay and SAP validates the
existence of such non-conformance, SAP will, at its option and in accordance with Section 7.3.3:
(a) correct or replace the non-conforming Cloud Service, or
(b) if SAP fails to correct the non-conformance after using reasonable commercial efforts, terminate the
access to the non-conforming Cloud Service.
7.3.2. The remedies in Section 7.3.1 do not apply to trivial or non-material cases of non-conformance and are
Customer’s sole and exclusive remedies and SAP’s entire liability for breach of the warranty under Section
7.2. The written notification of any non-conformance by Customer (or Reseller on Customer’s behalf) must
include sufficient detail for SAP to analyze the alleged non-conformance. Customer must provide commercially
reasonable assistance to SAP in analyzing and remediating any non-conformance of the Cloud Service.
7.3.3. SAP will consult with Reseller to define a reasonable amount:
(a) by which Reseller may reduce the subscription fees for the non-conforming Cloud Services, in case
Reseller has not already paid them, or
(b) if Reseller has already paid the subscription fees for the non-conforming Cloud Services, which SAP will
refund to Reseller to reflect the non-conformance (unless such refund is prohibited by Export Laws).
7.3.4. SAP may fulfill its warranty obligations with Customer or Reseller on Customer’s behalf. To the extent that SAP
fulfills its warranty obligations under Section 7.3.3 via Reseller, Customer will not have any claim against SAP
for a breach of the warranty in Section 7.2.
7.4. System Availability
7.4.1. SAP warrants to maintain an average monthly system availability for the production system of the Cloud
Service as defined in the applicable Service Level Agreement or Supplement (“SLA”).
7.4.2. Customer’s sole and exclusive remedy for SAP’s breach of the SLA is the issuance of a credit as described in
the SLA, whereby the service level credit will be calculated based on the non -discounted subscription fee set
out in the order form agreed between SAP and Reseller. Customer must notify Reseller in writing (email
permitted) within 21 business days after each calendar month in which SAP does not meet the SLA, so that
Reseller can follow SAP’s posted credit claim procedure. When the validity of the service credit is confirmed
by SAP in writing (email permitted) to Reseller, SAP will issue the credit to Reseller to forward to Customer.
7.5. Warranty Exclusions
The warranties in Sections 7.2 and 7.4 will not apply if:
(a) the Cloud Service is not used in accordance with the Agreement or Documentation;
(b) any non-conformity is caused by Reseller, Customer, another third party, or by any product, database,
content or service not provided by SAP; or
(c) the Cloud Service was provided for no fee or is a trial license of the Cloud Service.
7.6. Disclaimer
Except as expressly provided in the Agreement, neither SAP nor its subcontractors make any representation
or warranties, express or implied, statutory or otherwise, regarding any matter, including the merchantability,
suitability, originality, or fitness for a particular use or purpose, non-infringement or results to be derived from
the use of or integration with any products or services provided under the Agreement, or that the operation of
any products or services will be secure, uninterrupted or error free. Customer agrees that it is not relying on
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delivery of future functionality, public comments or advertising of SAP or product roadmaps in obtaining
subscriptions for any Cloud Service.
8. THIRD PARTY CLAIMS
8.1. Claims Brought Against Customer
8.1.1. SAP will defend Customer against claims brought against Customer and its Affiliates by any third party alleging
that Customer’s and its Affiliates’ use of the Cloud Service infringes or misappropriates a patent claim,
copyright or trade secret right. SAP will indemnify Customer against all damages finally awarded against
Customer (or the amount of any settlement SAP enters into) with respect to these claims.
8.1.2. SAP’s obligations under Section 8.1 will not apply if the claim results from:
(a) use of the Cloud Service in conjunction with any product or service not provided by SAP;
(b) use of the Cloud Service provided for no fee;
(c) any use of the Cloud Service not permitted under the Agreement.
8.1.3. If a third party makes a claim or in SAP’s reasonable opinion is likely to make such a claim, SAP may at its
sole option and expense:
(a) procure for Customer the right to continue using the Cloud Service under the terms of the Agreement ; or
(b) replace or modify the Cloud Service to be non-infringing without a material decrease in functionality.
If these options are not reasonably available, SAP may terminate Customer’s subscription to the affected Clou d
Service upon written notice.
8.1.4. SAP expressly reserves the right to cease such defense of any claim(s) if the applicable Cloud Service is no
longer alleged to infringe or misappropriate the third party’s rights.
8.2. Customer Responsibilities
Customer shall be responsible for (i) any use of the Cloud Service in violation of any applicable law or
regulation; or (ii) an allegation that the Customer Data or Customer’s use of the Cloud Service in violation of
this Agreement violates, infringes or misappropriates the rights of a third party. The foregoing shall apply
regardless of whether such damage is caused by the conduct of Customer and/or its Authorized Users or by
the conduct of a third party using Customer's access credentials.
8.3. Conditions
The obligations under this Article 8 are conditioned on (a) the Customer timely notifying SAP in writing of any
such claim, provided however that a party’s failure to provide or delay in providing such notice shall not relieve
a party of its obligations under this Article 8 except to the extent such failure or delay prejudices the defense
(b) the party who is obligated hereunder to defend a claim having the right to control the defense of such claim
to the extent permitted by 28 U.S.C. §516; and (c) the party against whom a third party claim is brought
reasonably cooperating in the defense of such claim. Any settlement of any claim shall not include a financial
or specific performance obligation on or admission of liability by the party against whom the clai m is brought,
provided however that SAP may settle any claim on a basis requiring SAP to substitute for the Cloud Service
any alternative substantially equivalent non -infringing services. SAP will have the opportunity to intervene in
any suit or claim filed against the Customer, at its own expense, through counsel of its own choosing. Neither
party shall undertake any action in response to any infringement or misappropriation, or alleged infringement
or misappropriation that is prejudicial to the other party’s rights. Nothing contained herein shall be construed
in derogation of the U.S. Department of Justice’s right to defend any claim or action brought against the U.S.,
pursuant to its jurisdictional statute 28 U.S.C. §516.
8.4. Exclusive Remedy
The provisions of Section 8 state the sole, exclusive, and entire liability of the parties, their Affiliates, Business
Partners and subcontractors to the other party, and is the other party’s sole remedy, with respect to covered
third party claims and to the infringement or misappropriation of third party intellectual property rights.
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9. LIMITATION OF LIABILITY
9.1. No Liability
9.1.1. SAP, its licensors or subcontractors will not be responsible or liable under the Agreement:
(a) if a Cloud Service is not used in accordance with the Documentation;
(b) if the defect or liability is caused by Reseller, Customer or any third party product or service;
(c) if the Cloud Service is used in conjunction with any product or service not provided by SAP;
(d) for any Customer activities not permitted under the Agreement; or
(e) for any claims or damages arising from inherently dangerous use of any of the Cloud Services provided
under or in connection with the Agreement.
9.2. No Cap on Liability
Neither party’s liability is capped for damages resulting from:
(a) the parties’ obligations under Sections 8.1.1 or 8.2 (excluding SAP’s obligation under Section 8.1.1 where
the third party claim(s) relates to Cloud Services not developed by SAP);
(b) death or bodily injury arising from either party’s gross negligence or willful misconduct; and/ or
(c) Customer’s unauthorized use of any Cloud Service or any failure by Customer to pay Reseller any fees
due for the Cloud Services.
9.3. Liability Cap
Except as set forth in Section 9.1, the maximum aggregate liability of either party (or its respective Affiliates or
SAP’s subcontractors) to the other or to any other person or entity for all events (or series of connected ev ents)
arising in any twelve (12)-month period will not exceed the annual subscription fees paid by Customer to
Reseller for the applicable Cloud Service associated with the damages for that twelve (12)-month period. Any
“twelve (12)-month period” commences on the Subscription Term start date or any of its yearly anniversaries.
NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION SHALL BE DEEMED TO IMPAIR
THE U.S. GOVERNMENT’S RIGHT TO RECOVER FOR FRAUD OR CRIMES ARISING OUT OF, OR
RELATED TO, THIS AGREEMENT UNDER ANY FEDERAL FRAUD STATUTE, INCLUDING THE FALSE
CLAIMS ACT, 31 U.S.C. §§ 3729-3733.
9.4. Exclusion of Damages
In no case will:
(a) either party (or its respective Affiliates or SAP’s subcontractors) be liable to the other party for any special,
incidental, consequential, or indirect damages, loss of goodwill or business profits, work stoppage or for
exemplary or punitive damages; and
(b) SAP be liable for any damages caused by any Cloud Service provided for no fee.
9.5. Extension to group members
Any limitations to the liability and obligations of SAP according to th is Section 9 will also apply for the benefit
of SAP SE and any of its Affiliates and their respective licensors.
9.6. SAP will not be obliged to provide an indemnity or damages where Customer has been fully compensated or
indemnified for the same loss or damage under its agreement with Reseller.
10. INTELLECTUAL PROPERTY RIGHTS
10.1. SAP Ownership
10.1.1. Except for any rights expressly granted to Customer under the Agreement, SAP, SAP SE, their Affiliates or
licensors own all Intellectual Property Rights in and any derivative works of:
(a) the Cloud Service;
(b) SAP Materials;
(c) Documentation; and
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(d) any services, design contributions, related knowledge or processes, whether or not developed for
Customer.
Customer shall execute such documentation and take such other steps as is reasonably necessary to secure
SAP’s or SAP SE’s title over such rights.
10.2. Acceptable Use Policy
With respect to the Cloud Service, Customer will not:
(a) copy, translate, disassemble, decompile, make derivative works, or reverse-engineer the Cloud Service
or SAP Materials (or attempt any of the foregoing);
(b) enter, store, or transfer any content or data on or via the Cloud Service that is unlawful or infringes any
Intellectual Property Rights;
(c) circumvent or endanger its operation or security of the Cloud Service; or
(d) remove SAP’s copyright and authorship notices.
11. CONFIDENTIALITY
11.1. Use of Confidential Information
11.1.1. The receiving party shall:
(a) maintain all Confidential Information of the disclosing party in strict confidence, taking steps to protect the
disclosing party’s Confidential Information substantially similar to those steps that the receiving party takes
to protect its own Confidential Information, which shall not be less than a reasonable standard of care;
(b) not disclose or reveal any Confidential Information of the disclosing party to any person other than its
Representatives whose access is necessary to enable it to exercise its rights or perform its rights or
perform its obligations under the Agreement and who are under obligations of confidentiality substantially
similar to those in Section 11;
(c) not use or reproduce any Confidential Information of the disclosing party for any purpose outside the scope
of the Agreement; and
(d) retain any and all confidential, internal, or proprietary notices or legends which appear on the original and
on any reproductions.
11.1.2. Customer shall not disclose any information about the Agreement, its terms and conditions, the pricing or any
other related facts to any third party.
11.1.3. Confidential Information of either party disclosed prior to execution of the Agreement will be subject to Section
11.
11.2. Compelled Disclosure
The receiving party may disclose the disclosing party's Confidential Information to the extent required by law,
regulation, court order or regulatory agency; provided, that the receiving party required to make such a
disclosure uses reasonable efforts to give the disclosing party reasonable prior notice of such required
disclosure (to the extent legally permitted) and provides reasonable assistance in contesting the required
disclosure, at the request and cost of the disclosing party. The receiving party an d its Representatives shall
use commercially reasonable efforts to disclose only that portion of the Confidential Information which is legally
requested to be disclosed and shall request that all Confidential Information that is so disclosed is accorded
confidential treatment. Federal agencies are subject to the Freedom of Information Act, 5 U.S.C. § 552, which
requires that information that does not fall under certain exceptions must be released when requested and,
therefore, some information may be released despite being characterized as “confidential” by the disclosing
party.
11.3. Exceptions
The restrictions on use or disclosure of Confidential Information will not apply to any Confidential Information
that:
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General Terms and Conditions for SAP Cloud Services (for GSA indirect sales) enNA.v.6-2023 Page 10 of 11
(a) is independently developed by the receiving party wi thout reference to the disclosing party’s Confidential
Information;
(b) has become generally known or available to the public through no act or omission by the receiving party;
(c) at the time of disclosure, was known to the receiving party free of confidentiality restrictions;
(d) is lawfully acquired free of restriction by the receiving party from a third party having the right to furnish
such Confidential Information; or
(e) the disclosing party agrees in writing is free of confidentiality restrictions.
11.4. Destruction and Return of Confidential Information
Upon the disclosing party's request, the receiving party shall promptly destroy or return the disclosing party's
Confidential Information, including copies and reproductions of it. The obligation to destroy or return
Confidential Information shall not apply:
(a) if legal proceedings related to the Confidential Information prohibit its return or destruction, until the
proceedings are settled or a final judgment is rendered;
(b) to Confidential Information held in archive or back-up systems under general systems archiving or backup
policies; or
(c) to Confidential Information the receiving party is legally entitled or required to retain.
12. FEEDBACK
Customer may at its sole discretion and option provide SAP with Feedback. In s uch instance, SAP, SAP SE
and its Affiliates may in their sole discretion retain and freely use, incorporate or otherwise exploit such
Feedback without restriction, compensation or attribution to the source of the Feedback .
13. MISCELLANEOUS
13.1. Severability
If any provision of the Agreement is held to be wholly or in part invalid or unenforceable, the invalidity or
unenforceability will not affect the other provisions of the Agreement. No Waiver
A waiver of any breach of the Agreement is not deemed a waiver of any other breach.
13.2. Electronic Signature
Electronic signatures that comply with applicable law are deemed original signatures.
13.3. Trade Compliance
13.3.1. SAP and Customer shall comply with Export Laws in the performance of this Agreement. SAP Confidential
Information is subject to Export Laws. Customer, its Affiliates, and Authorized Users shall not directly or
indirectly export, re-export, release, or transfer Confidential Information in violation of Export Laws. Customer
is solely responsible for compliance with Export Laws related to Customer Data, including obtaining any
required export authorizations for Customer Data. Customer shall not use the Cloud Service from
Crimea/Sevastopol, Cuba, Iran, the People's Republic of Korea (North Korea), the so-called Luhansk Peoples
Republic (LNR) and Donetsk Peoples Republic (DNR) or Syria.
13.3.2. Upon SAP’s request, Customer shall provide information and documents to support obtaining an export
authorization. Upon written notice to Customer SAP may immediately terminate Customer’s subscription to the
affected Cloud Service if:
(a) the competent authority does not grant such export authorization within 18 months; or
(b) Export Laws prohibit SAP from providing the Cloud Service to Customer.
13.4. Notices
All notices will be in writing and given when delivered to the address set forth in a Cloud Order Form. Notices
from SAP to Customer may be in the form of an electronic notice to Customer’s authorized representative or
administrator. SAP may provide notice of modifications to the Cloud Service under Section 3.4.2 via
Documentation, release notes or publication. System notifications and information from SAP relating to the
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 96 Packet Pg. 320 of 321
General Terms and Conditions for SAP Cloud Services (for GSA indirect sales) enNA.v.6-2023 Page 11 of 11
operation, hosting or support of the Cloud Service can also be provided within the Cloud Service, or made
available via the SAP Support Portal.
13.5. Assignment
Customer may not, without SAP’s prior written consent, assign, delegate, pledge or otherwise transfer this
Agreement, or any of its rights or obligations under this Agreement, or any SAP materials or SAP Confidential
Information, to any party, whether voluntarily or by operation of law, including by way of sale of assets, merger
or consolidation. Assignment by SAP is subject to FAR 52.232 -23 “Assignment of Claims” (May 2014) and
FAR subpart 42.12 “Novation and Change-of-Name Agreements.”
13.6. Subcontracting
SAP may subcontract parts of the Cloud Service to third parties. SAP is responsible for breaches of the
Agreement caused by its subcontractors.
13.7. Relationship of the Parties
The parties are independent contractors, and no partnership, franchise, joint venture, agency, fiduciary or
employment relationship between the parties is created by the Agreement.
13.8. Force Majeure
In accordance with GSAR 552.212-4(f), Any delay in performance (other than for the payment of amounts due)
caused by conditions beyond the reasonable control of the performing party is not a breach of the Agreement.
The time for performance will be extended for a period equal to the duration of the conditions p reventing
performance.
13.9. Governing Law
This Agreement and any claims arising out of or relating to this Agreement and its subject matter shall be
governed by and construed under United States Federal law. Venue and statute of limitations shall be
established by applicable Federal law. The United Nations Convention on Contracts for the International Sale
of Goods and any conflicts of law principles and the Uniform Computer Information Transactions Act (where
enacted) will not apply to the Agreement.
13.10. Waiver of Right to Jury Trial
Each party waives any right it may have to a jury trial for any claim or cause of action arising out of or in relation
to the Agreement.
13.11. Entire Agreement
The Agreement constitutes the complete and exclusive statement of the agreement between SAP and
Customer in connection with the parties’ business relationship related to the subject matter of the Agreement.
All previous representations, discussions, and writings (including any confidentiality agreements) are merged
in and superseded by the Agreement and the parties disclaim any reliance on them. The Agreement may be
modified solely in writing signed by both parties, except as permitted under Section 3.4. This Agreement,
however, shall not take precedence over any specific, negotiated terms contained in a Cloud Order Form.
Terms and conditions of any Customer-issued purchase order shall have no force and effect, even if SAP
accepts or does not otherwise reject the purchase order.
Item 3
Attachment A - Contract
with Carahsoft - SAP -
C26195416 for S4 Hana
Item 3: Staff Report Pg. 97 Packet Pg. 321 of 321