HomeMy WebLinkAbout2026-05-19 Finance Committee Agenda PacketFINANCE COMMITTEE
Special Meeting
Tuesday, May 19, 2026
Community Meeting Room & Hybrid
1:00 PM
Amended Agenda
Agenda Items Reordered, Title Updated
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1 May 19, 2026
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CALL TO ORDER
PUBLIC COMMENT
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speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda.
ACTION ITEMS
2.Accept the Bi-Annual Actuarial Valuation Report of Palo Alto’s Retiree Healthcare and
Other Post Employment Benefits (OPEB) Actuarial Evaluation Bi-Annual Evalution as of
June 30, 2025 and Recommend that the City Council Approve the Annual Actuarially
Determined Contribution for Fiscal Years 2027 and 2028; CEQA Status – Not a
Project Agenda Item Reordered, Late Packet Report Added, Title Updated
1. FY 2027 Budget Wrap-up and recommended FY 2027 Budget including FY 2027 Municipal
Fee Schedule Agenda Item Reordered, Late Packet Report Added, At-Places Supplemental
Report Added
FUTURE MEETINGS AND AGENDAS
Members of the public may not speak to the item(s)
ADJOURNMENT
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California Government Code §84308, commonly referred to as the "Levine Act," prohibits anelected official of a local government agency from participating in a proceeding involving alicense, permit, or other entitlement for use if the official received a campaign contributionexceeding $500 from a party or participant, including their agents, to the proceeding within thelast 12 months. A “license, permit, or other entitlement for use” includes most land use andplanning approvals and the approval of contracts that are not subject to lowest responsible bidprocedures and have a value over $50,000. A “party” is a person who files an application for, oris the subject of, a proceeding involving a license, permit, or other entitlement for use. A“participant” is a person who actively supports or opposes a particular decision in a proceedinginvolving a license, permit, or other entitlement for use, and has a financial interest in thedecision. The Levine Act incorporates the definition of “financial interest” in the Political ReformAct, which encompasses interests in business entities, real property, sources of income, sourcesof gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a“party” or “participant” to a proceeding, and you have made a campaign contribution to aCouncil Member exceeding $500 made within the last 12 months, you must disclose thecampaign contribution before making your comments.
4 May 19, 2026
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Finance Committee
Staff Report
Report Type: ACTION ITEMS
Lead Department: City Clerk
Meeting Date: May 19, 2026
Report #:2605-6339
TITLE
FY 2027 Budget Wrap-up and recommended FY 2027 Budget including FY 2027 Municipal Fee
Schedule
This will be a late packet report published on May 14, 2026.
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Finance Committee
Staff Report
Report Type: ACTION ITEMS
Lead Department: City Clerk
Meeting Date: May 19, 2026
Report #:2605-6340
TITLE
Other Post Employment Benefits (OPEB) Actuarial Evaluation Bi-Annual Report
This will be a late packet report published on May 14, 2026.
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Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: May 19, 2026
Report #:2512-5677
TITLE
FY 2027 Budget Discussion Wrap-up and Recommend City Council Adopt FY 2027 Budget
Including FY 2027 Municipal Fee Schedule
RECOMMENDATION
This memorandum will be used to facilitate the discussion of the Finance Committee
(”Committee”) budget wrap-up for the FY 2027 Operating and Capital Budgets.
1) Staff recommends the Finance Committee:
a. Review and discuss:
i. Additional information provided as requested by the Committee or staff
ii. Summary of current budget adjustments to the Fiscal Year 2027 Proposed Operating
and Capital Budgets and Municipal Fee Schedule as directed by the Committee on May 5
and 6, 2026, and the full Council on May 11, 2026; and
b. Recommend to the City Council:
i. Adoption of the FY 2027 Proposed Operating and Capital Budgets and Municipal Fee
Schedule (Staff Report #:2604-6297)1, amended by the actions outlined in this report in
“Table: Summary of Parking Lot Items for Potential Adjustments to the FY 2027
Proposed Budget,” and as further amended in the wrap-up discussion; and
ii. Approve the FY 2027-2031 Capital Improvement Program, amended by the actions
outlined in this report and as further amended in the wrap-up discussion
EXECUTIVE SUMMARY
This memorandum follows the Committee review of the FY 2027 Proposed Operating and
Capital Budgets and Municipal Fee Schedule and includes additional information and
recommended changes for further review in this Committee wrap-up session, to submit formal
Committee adjustments to the City Council for adoption on June 15, 2026.
1 Finance Committee, May 6, 2026; Agenda Item #4; Staff Report# 2604-6297
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=87994&dbid=0&repo=PaloAlto
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While the Committee's "Parking Lot" items represent valued investments and services,
increased expenditures will have financial impacts in the short and long term. Based upon
Committee Parking Lot items and further financial and operational analysis, the revised Parking
Lot listing is included in this memorandum.
Taking all of this into consideration and based upon the existing recommended adjustments
from the Committee and additional Parking Lot items, the General Fund projected FY 2027
expenditures increase by $0.8 million. Revenues would increase by approximately $0.5 million
in Transient Occupancy Tax (TOT) for infrastructure reflecting a 2.6% increase from the
proposed FY 2027. This additional revenue allows for a reduction to the General Fund Base
Transfer to capital to cover the additional expenditures as directed by the Committee. To
support sustaining Oversized Vehicles (OSV) work through the end of FY 2027, $0.38 million in
additional Measure K revenues would be added to the budget. The reduction in the General
Fund transfer to capital in addition to the additional Measure K use in FY 2027 results in a
balanced budget at $311.8 million for FY 2027.
During this budget wrap-up session, the Committee is requested to provide budget
recommendations to amend the FY 2027 budget. The Committee will direct any remaining
items be moved from the Parking Lot list to the “Committee Budget Adjustments” list for the FY
2027 budget. Several items in the Parking Lot are categorized as placeholders to define the
target totals needed to balance the budget and allow time to constructively develop more
specific recommendations. Should Committee advance these recommendations, on June 15,
Council will review and adopt the FY 2027 Operating and Capital budgets with reductions
inclusive of these placeholder amounts.
Balancing the budget should not be limited to consideration of only FY 2027 but broadly to the
next several years, which is especially difficult with current economic and political
uncertainties. Budget balancing strategies primarily focus upon fulfilling the City vision, Council
priorities, City policies and core services, while non-core services and/or programs are
appropriated if financial resources are available.
BACKGROUND
The FY 2027 Proposed Operating and Capital Budgets were transmitted to the City Council at
the May 4, 2026, meeting. On May 5 and 6, 2026, the Finance Committee spent approximately
16 hours reviewing the budget materials and supplemental memorandums, including the FY
2027 Proposed Operating Budget, Capital Budget, and Municipal Fee Schedule. After reviewing
the $1.0 billion proposed budget—which includes the $311.0 million General Fund and the
$313.7 million capital budget—the Committee created a “Parking Lot” of items as potential
adjustments to be refined by staff and discussed as part of this meeting for recommendation to
the City Council for adoption on June 15, 2026. Staff remain cautious of mixed economic
indicators that suggest potential economic risk and seek to provide a budget that proposes a
measured approach to using one-time funds and limiting ongoing costs to mitigate the
potential for exacerbating future deficits.
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During budget deliberations on May 5 and 6, 2026, the Finance Committee completed a
detailed review of the FY 2027 Proposed Budgets with public comment incorporated for each
service area to provide opportunities for community input in the decision-making process. The
Committee reviewed individual budget sections by department for tentative approval, moved
potential amendments to the Parking Lot, and requested additional information to aid in their
review. Much of the additional information was provided by staff during the hearings as part of
the recap presentations to the Committee. This report provides the status of the Committee’s
review as well as feedback from a check-in with the full City Council on May 11, 2026, that
focused on the Committee’s parking lot items.
The Finance Committee will finalize recommended amendments to the Proposed Operating
and Capital Budgets and Municipal Fee Schedule to be included at the June 15, 2026, City
Council meeting for budget adoption.
ANALYSIS
The Committee Budget Adjustments and Parking Lot items represent Council and Committee’s
budget meetings of May 5, 6, 7 and 12, with focus on nonprofit funding, Oversized Vehicles
(OSV), school crossing guards, track watch and critical capital projects. To facilitate the
Committee budget wrap up session, the items are organized in:
Table 1: Finance Committee Budget Adjustments as of May 6, 2026
Table 2: Parking Lot Items as of May 6, 2026
Table 3: Information Referrals items requested by Finance Committee that were not
addressed on May 5 or May 6 and Staff will work on during FY 2027, subject to Council
approval.
Table 4: Budget Rebalancing and Technical Adjustments (preliminary to date).
Finance Committee Budget Adjustments to date:
As of May 6th, the Finance Committee has taken motions for the following items in Table 1 to be
added in the budget for FY 2027.
Table 1: Finance Committee Budget Adjustments as of May 6, 2026
Finance Committee Adjustments to Budget FY 2027
GF (cost)/source
Potential FY 2028 GF
(cost)/source
JMZ Conservation Costs and explore utilizing
existing conservation programs to fulfill the AZA requirements
to the extent possible | Reduce Hourly Positions
64,000
School Crossing Guards | 50% of Cost - Contingent upon
match from PAUSD (51,250)
Track Watch | 50% of Cost - Contingent upon match
from PAUSD (March - June)(307,715)
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OSV - recommend the City Council approve budget
allocation and consider potential alternative funding methods
for the Geng Road parking site from Sept-June ($200k) and
additional towing capacity to include ($184K) for enforcement
and street sweeping.
(384,000)
Non-Profit Work Plan - Option C (124,000)
Subtotal Costs (Expense)$ (802,965)$ -
Potential Funds Remaining Net (cost) / source $ (802,965)$ -
The result of these actions is the General Fund projected FY 2027 expenditures increase by $0.8
million to $311.8 million. Moreover, the budget stabilization reserve (BSR) is projected to
continue at $53.7 million or 17.2% within the policy range of 15% to 20%, however less than
18.5% target level.
Updates for the Committee since May 6th include the following:
OSV Geng Road Parking Site & Additional Towing Capacity – During the May 6, 2026, Finance
Committee meeting, a $384,000 recommendation was proposed to sustain the Oversized
Vehicle (OSV) program. This total includes $200,000 to bridge a funding gap for Geng Road Safe
Parking, ensuring the site remains operational after its current budget expires in September.
The remaining $184,000 is allocated for Phase 1 maintenance and enforcement, supporting
quarterly storm drain cleaning, specialized enforcement staffing, and targeted towing of non-
compliant vehicles. Collectively, these funds aim to maintain established sanitation standards
and regulatory oversight throughout the upcoming fiscal year. Per the Committee’s suggestion
staff has investigated the availability of funds from the Measure K Housing category to cover
this expense in FY 2027 and have determined that there is sufficient fund balance for the
expenditure in FY 2027.
School Crossing Guards – The Committee also addressed the proposed 10% reduction in school
crossing guard coverage by tentatively approving a $51,250 budget adjustment. The City
Council on May 11th concurred with this recommendation. This allocation restores half of the
funding for the proposed reductions to the program, provided that the Palo Alto Unified School
District (PAUSD) matches the contribution. Committee members emphasized student safety as
a top priority and sought to formalize a cost-sharing partnership with the district. This decision
aims to maintain critical intersection coverage while targeting a collaborative funding
commitment from PAUSD. Based upon this recommendation, as of July 1, 2026, there will be no
reduction in current School Crossing Guard sites. If matching funds are not secured by the end
of the calendar year, the City Council would need to consider alternative funding during the FY
2027 Midyear Budget.
Track Watch – The Committee approved a motion for the rail crossing monitor program by
tentatively approving a $307,715 budget adjustment. The proposed budget included funding
the agreement through February 2027. This budget adjustment allocation specifically extends
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the program through the end of FY 2027, covering the months of March - June 2027. This
$307,715 represents the City’s 50% share of the projected $615,430 total cost for the four-
month extension, provided that the Palo Alto Unified School District (PAUSD) matches the
contribution. The current program, which utilizes Orion Security for 24/7 human monitoring at
all four grade crossings, operates under a 50/50 cost-sharing agreement originally approved in
February 2026 for a total contract value of $1,708,314 ($854,157 per agency). Committee
members emphasized that maintaining these safety measures is a vital priority, seeking to
formalize the collaborative funding commitment from school leadership. If matching funds are
not secured by the end of the calendar year, the City Council would need to consider
alternative funding and appropriation by December 2026 to allow time to fully fund and
implement the contract extension.
Non-Profit Workplan – The Finance Committee made a motion to recommend “Option C”,
recommending a $124,000 budget adjustment. This action provides a direct allocation to:
Magical Bridge ($150,000), California Avenue special events ($40,000), and the United Nations
Association Film Festival ($45,000).
Parking Lot Items to date:
The Parking Lot includes items that required further discussion and staff evaluation. One such
item, which the City Council discussed is that any future grant funding that may be authorized
by the Council in the future should be processed through the Human Services Resource
Allocation Process (HSRAP).
Table 2: Parking Lot Items as of May 6, 2026
Parking Lot Items
Quiet Zones Construction, direct staff to return with revised timing figures. Evaluate funding sources for Grade
separation. (Accelerate funding to FY27-FY28 with Measure K (OOT will return May 19 FC Budget Wrap Up)
Direct staff to add the Chimalus Right of Way (ROW) as a project in CIP. (OOT will return May 19)
Information regarding the marginal benefit of restoring Office of Transportation staffing to work on critical City
priorities. (OOT will return FC May 19)
Consider lateral hiring bonuses in the Police Department as part of the FY 27 budget process (PD will return May 19)
Non-Profit – Council to approve finance committee recommendation that any additional grant funding that may be
authorized by the Council be processed through HSRAP.
Balancing strategy will prioritize reduction to CIP
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Additional updates for the Committee since May 6th include the following:
Quiet Zones Construction – During budget deliberations on May 5, May 6, and May 11, 2026,
the Finance Committee and the City Council prioritized the expedited implementation of Quiet
Zones at all four rail crossings, with a specific focus on Churchill Avenue. To advance this
initiative, the Committee directed the use of Measure K funds starting in Fiscal Year 2027 for
design, with construction scheduled for 2028. The details of the advancing of funds are shown
below.
The change in use of Measure K reduced the City of Palo Alto Local contribution to the Final
Design funding in FY 2028 to the Grade Separation Projects at Churchill Avenue, Meadow Drive,
and Charleson Road. This funding had previously been allocated to serve as the local match for
future grant opportunities, including the 2016 Santa Clara County Measure B Grade Separation
Program funds and potential federal or state grant funding. This may need to be reconsidered
during the FY 2028 budget development.
Chimalus Right of Way (ROW) – The Finance Committee requested that the Office of
Transportation (OOT) investigate how to include the Chimalus Right-of-Way as a new project
within the Capital Improvement Program. Following an evaluation by the OOT, staff is
recommending that it be added to the CIP as a FY 2028 project with an initial allocation of
$600,000 to include project management and planning. Funding for the planning work would
come from Measure B Funds for Local Streets and Roads. The first phase of work will support
the City's ability to secure grants for the project such as the Caltrans Sustainable Transportation
Planning Grant Program and TDA Article 3 funds, which specifically support bicycle and
pedestrian infrastructure.
OOT Staffing – The Finance Committee requested that the Office of Transportation (OOT)
evaluate its staffing and present the marginal benefit of position adds. Upon review, OOT
recommends converting an existing limited 0.50 full-time equivalent Assistant Engineer position
designed to support OSV engineering work into a permanent, full-time benefited role. This
conversion requires an annual budget of approximately $190,000 for salary and benefits, with
the incremental cost in FY 2027 covered by Measure B funding. 1.0 FTE Assistant Engineer
would be added to the Table of Organization. The full-time Assistant Engineer would continue
to provide essential technical engineering support and field verification for the design and
installation of signage and striping required to implement the Oversized Vehicle Program. In
addition to these regulatory tasks, the position would support the design of bicycle, pedestrian
and street safety projects including a performance goal to daylight 200 intersections during
fiscal year 2027. By formalizing this role, the City increases its technical capacity to deliver high-
priority transportation safety projects while utilizing regional funds to manage the increased
workload associated with both safe parking oversight and citywide visibility improvements.
Police Lateral Hiring Bonus – The Committee requested additional information regarding the
police lateral hiring bonus incentive program, placing the item in the budget parking lot for
further review during the May 19th wrap-up session. On May 11th, the City Council was briefed
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on this recommendation to evaluate recruitment tools designed to fill sworn officer vacancies.
Previously during Committee budget hearings, the Department reported seven sworn vacancies
but the number is nine as of this writing. The City initiated a $25,000 hiring bonus for lateral
officers in FY 2018, with three bonuses accepted in 2019. Current tools supporting lateral
recruitment include service credit toward higher vacation accrual rates, accelerated eligibility
for career incentive pay, and an employee referral incentive program. Potential options for
consideration include a modest hiring incentive for successful completion of probation,
relocation expense reimbursements, vacation leave bank incentives, and deferred
compensation contributions. These recruitment expenses could be absorbed through Police
Department salary savings without requiring new General Fund appropriations.
Table 3 includes items requested by the Committee that were not addressed on May 5 or May
6 and staff will work on during FY 2027, subject to Committee recommendation and Council
approval.
Table 3: Information Referrals items requested by Finance Committee
Finance Committee Recommendation for Council Referrals
1)Referral to staff to return with a summary of the City’s AI strategy.
2)Referral to staff to return with a consultant best practices narrative, including impacts to date as part of
Council Priority Workplan for the item
3)Referral to staff to present Palo Alto Golf Course P&L in a more complete way and evaluate golf fees,
including senior resident rates
4)Referral to staff to explore increase in proportion of outdoor recreation programs located at Cubberley.
5)Cubberley - Evaluate acceleration of certain capital repair needs for Cubberley including potentially utilities
infrastructure.
6)Referral to staff to bring back refine overtime budgeting for the Police Dept during the FY 28 budget process.
Staff also reflected this in the response to the recent City Auditor’s report on public safety overtime.
7)Referral to staff to evaluate potential efficiency opportunities in Fire Dept during the FY 28 budget process.
Proposed Amendments to the FY27 Municipal Fee Schedule
On May 6, the Committee reviewed the proposed amendments to the FY27 municipal fee
schedule and approved the recommendation to Council. This will be incorporated into the final
Committee recommendation to Council on June 15.
Budget Rebalancing and Technical Adjustments
The Committee‘s recommendations for budget adjustments (Table 1 above) would require
budget rebalancing in order to avoid impacting the Budget Stabilization Reserve (BSR). Staff
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further reviewed the CIP, revenue forecasts, and technical adjustments in order to propose an
option to rebalance the General Fund. This budget balancing is shown for Committee
consideration, noting that these technical adjustments will be finalized along with the Council
budget adoption resolution on June 15th. This incorporates the Table 1 Committee budget
adjustments, increases TOT revenues, includes technical adjustments and does not further
reduce CIP nor BSR. An At Places Memo will be provided on May 19 that details the budget
adjustments and technical adjustments (to date) for all funds. Below is a summary of General
Fund budget adjustments for consideration:
Table 4: Budget Rebalancing and Technical Adjustments (as of May 19, 2026)
Finance Committee Adjustments to Budget
FY 2027
GF (cost)/source
Potential FY 2028 GF
(cost)/source
JMZ Conservation Costs and explore utilizing
existing conservation programs to fulfill the AZA requirements
to the extent possible | Reduce Hourly Positions
64,000
School Crossing Guards | 50% of Cost - Contingent upon
match from PAUSD
(51,250)
Track Watch | 50% of Cost - Contingent upon match
from PAUSD (March - June)
(307,715)
OSV - recommend the City Council approve budget
allocation and consider potential alternative funding methods
for the Geng Road parking site from Sept-June ($200k) and
additional towing capacity to include ($184K) for enforcement
and street sweeping.
(384,000)
Non-Profit Work Plan - Option C (124,000)
Subtotal Costs (Expense)/Source $ (802,965)$ -
Measure K funding – OSV 384,000
TOT Revenue – increase projection 542,000
TOT Infrastructure Transfer to CIP – increase (542,000)
General Fund Base Transfer to CIP – decrease 218,347
Technical Adjustments (aggregated)200,618
Potential Funds Remaining Net (cost) / source $ -$ -
Additional Clarifications and/or Consideration:
Employee Childcare Pilot Program – On May 6, Committee recommended this be continued in
the Long Range Financial Forecast and it was conveyed to Council on May 11.
CIP – KPI – Committee requested additional CIP KPI which were presented on May 6 and to
Council on May11 and will be summarized in the FY27 adopted budget CIP transmittal.
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PG-21000 Heritage Parks CIP - The Finance Committee provided direction during its May 5 and
6, 2026 meetings to prioritize evaluating and utilizing the remaining funding in PG-21000
Heritage Parks Site Amenities Replacement for Heritage Park drainage improvements related to
Roth Building water intrusion.
Document Transfer Tax (DTT) – Future revenue projections could be affected by the passage of
the Local Taxpayer Protection Act to Save Proposition 13 (aka “Save Prop 13”), a state initiative
that recently qualified for the November 2026 ballot. In pertinent part, the initiative would
amend the State Constitution to repeal local real estate transfer taxes adopted by charter cities
and render any previously adopted transfer tax null and void as of December 31, 2028.
If approved, the initiative would void Palo Alto’s locally adopted real property transfer
tax (PAMC Chapter 2.34) and would reduce the amount of transfer tax collected from $3.30 per
$1,000 to $1.10 per $1,000 (split evenly between the City and the County). Beginning in
calendar year 2029, the initiative would reduce projected revenues by $8 million per year, with
lost revenues increasing to $10.2 million per year by FY 2036. The City would be prohibited
from adopting a local real property transfer tax to replace the lost revenue.
Administrative Assistant to the City Council – On May 11, 2026, it was noted that the pilot part-
time administrative assistant to the City Council would end December 2026 before the FY27
Mid-Year Budget Review in February 2027. The Finance Committee may consider increasing
the City Council contingency carryforward from FY26 to FY27. That would require $45,000 total
carryforward (from FY26 to FY27) to fund the pilot position from July 2026 through March
2027. These additional costs ($15,000 over prior estimates) should be considered in the context
of the remaining available Council Contingent funds.
Tree Trimming and Canopy – The proposed budget for FY27 includes cuts in funding and staffing
for all aspects of the City’s Urban Forestry operations. Proposed reductions were strategically
spread across all aspects of the Urban Forestry budget with the goal of minimizing the long-
term impact to the City’s urban canopy. Urban Forestry Staffing is being reduced by two
positions for a 12.5% reduction in staffing. Funding for the Street Tree Maintenance Contract
(West Coast Arborist) is being reduced by $50,000 for a 3.5% reduction. The Urban and
Community Forestry Services Contract (Canopy) is being reduced by $43,550 for a 10.5%
reduction. When proposing potential Canopy contract reductions, Staff focused on protecting
contract scope for Basic Service items and focused proposed cuts to Urban Forest Master Plan
implementation items, as they would have fewer long-term impacts to the City’s urban forest.
Staff met with Canopy on May 14th to clarify that if City Council approves reductions to the
budget for the Canopy contract, final decisions on specific reductions to the contract scope of
work can be made collaboratively between Staff and Canopy after the budget is finalized.
Irrigation at Foothill – Of approximately 15 acres of irrigated turf throughout Foothills Nature
Preserve, staff plans to focus irrigation reductions primarily on the 8-acre lawn in Las Trampas
Valley and surrounding lawn areas by the Interpretive Center that serve mostly aesthetic and
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passive recreational functions. Irrigation frequency on irrigated turf at the Preserve is currently
twice per week from Mid-May through Mid-November. While staff are finalizing the details, the
tentative plan is to maintain the existing two days per week schedule and reduce run times by
10-15%. As a result, turf may have some dry spots but is not anticipated to experience
substantial decline or loss of functionality.
As a long term measure, the city is in the process of identifying areas of non-functional
(aesthetic) turf to remove and replace with water-wise landscaping, as it has previously done in
2021 where it eliminated 2.25 acres of Last Trampas Valley lawn and replaced with California-
native drought-tolerant plantings through partnership with Grass Roots Ecology. Staff will
explore future opportunities to remove additional non-functional turf at Foothills Nature
Preserve and intends to work with stakeholders on specific project details prior to
implementing the work.
Additionally, staff will monitor Boronda Lake fill frequency and overall water use more closely
as a water management best practice and does not intend to intentionally maintain lake water
levels at a lower level as a water conservation measure.
Stormwater Management Oversight Committee Review of the FY 2026 Stormwater
Management Fund Budget (Attachment B)
The Stormwater Management Oversight Committee met on April 13, 2026 to discuss the Fiscal
Year 2027 proposed Stormwater Management Fund budget and compared it with the
provisions of the Stormwater Management Fee approved by Palo Alto property owners in 2017.
The Committee concurred that funding generated by the Storm Water Management Fee will be
applied solely to fund the capital improvement projects, green stormwater infrastructure
projects, innovative stormwater projects, enhanced maintenance of storm drain system, and
stormwater quality protection programs specified for implementation in the ballot measure in
Fiscal Year 2027. The Committee submitted a letter (Attachment C) for the Finance Committee
and City Council.
Planning and Transportation Commission Review of the New Projects in the 2026-2030
At the time of the preparation of this memo, the Planning and Transportation Commission
(PTC) had not yet reviewed the new projects in the 2027-2031 Capital Improvement Program
for each of the projects’ compliance with the City’s 2030 Comprehensive Plan. The PTC is
expected to review the 2027-2031 Capital Improvement Program at its May 27, 2026 meeting,
and upon their review will send a Letter of Conformance to the City Council. This letter will be
attached to the item regarding the FY 2027 Operating and Capital Budgets on June 15, 2026.
FISCAL/RESOURCE IMPACT
Fiscal impact will depend upon Committee adjustments to the FY 2027 budget and subject to
final Council adoption of the budget scheduled for June 15, 2026. Balanced budget strategies
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consider fulfilling the City vision, Council priorities, City policies, and City core services,
balancing non-core services and programs within limited financial resources.
STAKEHOLDER ENGAGEMENT
Community members have been encouraged to participate in the FY 2026 budget process and
provide input for the City Council to consider regarding priorities and service needs as part of
the public budget meetings held in May.
ENVIRONMENTAL REVIEW
This activity is not a project under the California Environmental Quality Act (CEQA) as defined in
CEQA Guidelines, section 15378, because discussion of the budget is a government funding
mechanism or fiscal activity which does not involve any commitment to any specific project
which may result in a potentially significant physical impact on the environment. CEQA
Guidelines section 15378(b)(4).
ATTACHMENTS
Attachment A: Finance Committee FY 2027 Proposed Budget Review Actions and Materials
Attachment B: Stormwater Management Oversight Review of the FY 2027 Capital Budget
APPROVED BY:
Lauren Lai, Administrative Services Director
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Attachment A
Summary of Finance Committee Review of FY 2027 Proposed Budget
(Actions & References)
Attachment B - 1
Action Minutes to the Finance Committee Hearings can be found on the City’s webpage here:
https://www.paloalto.gov/Departments/City-Clerk/City-Council-Standing-Committees/Finance-
Committee. In addition, throughout the Finance Committee Budget Hearings, various memoranda were
distributed “At Places” in order to respond to inquiries made by the Committee or provide additional
pertinent information at staff’s behest. In addition, summary presentations were given at each hearing
providing high-level overviews of each item. Specific meetings and reference links to materials are
outlined below.
May 4, 2026 City Council Meeting
Action Minutes:
•https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=18710&c
ompileOutputType=1
Presentations:
•FY 2027 Proposed Budget Overview:
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=a760a3d3-1400-45f3-
92c1-32e078bdd810
•Video: https://youtube.com/watch?v=vM0GY2Rdnow?feature=share
May 5, 2026 Finance Committee
Action Minutes:
•https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=18569&c
ompileOutputType=1
Presentations:
•FY 2027 Proposed Operating and Capital Budgets: 75af5a3b-12e2-402d-aa23-b70c583c3515.pdf
-OneMeeting
•Video: https://youtube.No/watch?v=a2TkKDhnK5Y?feature=share
May 6, 2026 Finance Committee
Action Minutes:
•https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=18575&c
ompileOutputType=1
Presentations:
•FY 2027 Proposed Operating and Capital Budgets Continuation: 8cb228a8-37a1-4ed6-96fa-
f69133eb9846.pdf - OneMeeting
•Video: https://youtube.com/watch?v=jfYssT7v5bM?feature=share
Item 1
Attachment A - Finance
Committee FY 2027
Proposed Budget Review
Actions and Materials
Item 1: Staff Report Pg. 12 Packet Pg. 18 of 73
Attachment A
Summary of Finance Committee Review of FY 2027 Proposed Budget
(Actions & References)
Attachment B - 2
List of Supplemental Information provided during Budget Deliberations
During the Finance Committee hearings and the City Council update, staff provided additional
information to Committee members to assist in the review of the Fiscal Year 2026 Proposed Budget.
Below is a list of links to those memoranda:
•May 5: At Places Memo: Capital Reappropriations, staffing & vacancies, and contract spend
Item 1
Attachment A - Finance
Committee FY 2027
Proposed Budget Review
Actions and Materials
Item 1: Staff Report Pg. 13 Packet Pg. 19 of 73
Storm Water Management Oversight Committee
MEMORANDUM
Date: April 13, 2026
To: Honorable Finance Committee of the Palo Alto City Council
From: Members of the Storm Water Management Oversight Committee
Subject: Review of the Proposed Fiscal Year 2027 Stormwater Management Fund Budget
As directed by the City Council, the Committee met to discuss the Fiscal Year 2027 proposed
Stormwater Management Fund budget on Monday, April 13, 2026. Prior to the meeting, Public Works
staff provided informational materials about the approved 2017 ballot measure and the proposed budget
for the Committee’s review. During the meeting, staff presented information and answered questions
from the Committee members.
We have reviewed the proposed budget for Fiscal Year 2027 and compared it with the provisions of the
Storm Water Management Fee approved by Palo Alto property owners in 2017. We find that the attached
spreadsheet describing the proposed budget for Fiscal Year 2027 fairly describes the relationship
between the budget and the ballot measure. Staff and the Committee concur that funding generated by
the Storm Water Management Fee will be applied solely to fund the capital improvement projects, green
stormwater infrastructure projects, innovative stormwater projects, enhanced maintenance of storm drain
system, and storm water quality protection programs specified for implementation in the ballot measure
in Fiscal Year 2027. The committee is aware that staff continues to evaluate funding and cost projections
for future projects included on the ballot measure. Because funds available for green stormwater
infrastructure and innovative projects are not being utilized fully, the Committee supports efforts by staff
to continue to identify and promote new projects that meet the goals associated with the ballot measure,
such as the proposed Green Stormwater Infrastructure capital improvement project.
Attachment: Fiscal Year 2027 Proposed Budget
Attachment BItem 1
Attachment B - Stormwater
Management Oversight
Review of the FY 2027
Capital Budget
Item 1: Staff Report Pg. 14 Packet Pg. 20 of 73
Attachment BItem 1
Attachment B - Stormwater
Management Oversight
Review of the FY 2027
Capital Budget
Item 1: Staff Report Pg. 15 Packet Pg. 21 of 73
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: May 19, 2026
Report #:2512-5689
TITLE
Accept the Bi-Annual Actuarial Valuation Report of Palo Alto's Retiree Healthcare and Other
Post-Employment Benefits (OPEB) as of June 30, 2025 and Recommend that the City Council
Approve Annual Actuarially Determined Contribution for Fiscal Years 2027 and 2028; CEQA
Status – Not a Project
RECOMMENDATION
Staff recommends that the Finance Committee:
1. Review and accept the June 30, 2025 actuarial valuation of Palo Alto's Retiree
Healthcare Plan (Attachment B); and
2. Recommend funding the annual Actuarially Determine Contribution (ADC) for Fiscal Year
2027 and 2028
EXECUTIVE SUMMARY
The June 30, 2025 actuarial valuation updates the City’s Other Post Employment Benefits
(OPEB) liabilities, funded status, and Actuarially Determined Contributions (ADCs) for FY
2026/27 and FY 2027/28. Under the baseline 6.25% valuation discount rate, the total ADC is
$18.8 million for FY 2027. Consistent with City Council direction through the Retiree Benefits
Funding Policy1, staff uses a more conservative 5.75% discount rate and an accelerated
amortization with 11 remaining years as of June 30, 2025. On that basis, the adjusted FY 2027
ADC is $26.1 million.
As of June 30, 2025, the City’s actuarial accrued liability for OPEB is $325.2 million, assets are
$201.1 million, and the resulting unfunded actuarial accrued liability (UAAL) is $124.1 million,
for a funded ratio of 62%.
1City Council, June 7, 2022; SR # 14502;
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=64042&dbid=0&repo=PaloAlto&searchid=ee592823
-f85b-480c-a259-248cd01a3b75
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BACKGROUND
The City of Palo Alto offers its employees and retirees a Retiree Healthcare benefit plan which is
managed and administered by the California Public Employees' Retirement System (CalPERS), a
State of California Retiree Healthcare Trust program. Bi-annually staff contracts with an actuary
firm that provides an actuarial report detailing the latest status of the City of Palo Alto's Retiree
Healthcare plans for employees and retirees. The actuarial report is used to calculate the
annual ADC and pre-funding to the trust based on baseline assumptions and Council policy. In
addition, updates on the rate of return, funding status, and changes to the trust based on
various impacts are detailed in the report. This valuation details impacts by Fund and
Department, which inform the development of the annual budget. The FY 2027 Proposed
Operating Budget incorporated the June 30, 2025 valuation. This staff report transmits the full
valuation. This staff report transmits the full valuation in accordance with GASB Statement No.
75, which requires a biennial measurement of the City’s retiree healthcare liability.
There are four groups of benefits within the CalPERS Retiree Healthcare benefit plans.
Attachment A outlines the different benefits levels by Group. These benefit levels are
negotiated and approved as part of the employee contracts. Employees and retirees have an
open enrollment window in October each year in which they can make changes to their
healthcare plans that take effect in January of the following year.
CALPERS Projected Contribution Levels
The actuary report has two components to the annual billing of the employer portion of retiree
healthcare contributions that comprise the Actuarial Determined Contribution (ADC), (1) the
Normal Cost (NC), and (2) the Unfunded Actuarial Accrued Liability (UAAL).
NC: This reflects a rate of contribution for the plan of retirement healthcare benefits
provided to current employees based on the current set of assumptions.
Employer Amortization of UAAL: This is an annual payment calculated to pay down an
agency's unfunded accrued liability. If every assumption in the actuarial valuation was
accurate, an organization would eliminate its unfunded pension liability if it made these
payments annually for 30 years. The City Council approved a closed period to amortize
the entire net pension liability over a specific timeframe. The total liability will vary from
one year to the next because of assumption changes and actuarial experience that is
different from anticipated, such as actual investment returns that do not meet
expectations.
As established by the City Council, the City's California Employers’ Retiree Benefit Trust (CERBT)
Fund is invested in a Strategy 1 asset allocation at a 6.25% discount rate. With the adoption of
the Retiree Benefits Funding Policy, directed staff to calculate additional discretionary
payments ("prefunding") equivalent to a 5.75% discount rate and transmit amounts above
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payments at a 6.25% discount rate to the CERBT Fund. The City's CERBT Fund was established in
May 2008 at a level of $33 million and it has grown to $220.0 million as of March 31, 2026.
Consistent with prior City Council policy, this valuation displays both the baseline ADC at the
actuarial 6.25% discount rate and an Adjusted ADC reflecting the City policy funding at a 5.75%
discount rate with shortened amortization.
ANALYSIS
Summary of Actuarial Valuation as of June 30, 2025
Staff contracted with Foster and Foster Actuary Consultants for this retiree healthcare actuarial
report (Attachment B) to determine the City's retiree healthcare liability and the ADC for Fiscal
Years 2027 and 2028. The actuarial analysis is based on current employees' accrued benefit,
and retired employees as of June 30, 2025.
The updated valuation includes several changes that impact the CERBT fund status. The primary
drivers of change are healthcare and economic fluctuations. This valuation also reflects the
impacts of inflation levels, active employee salary growth and investment returns.
Table 1: Key Actuarial Results
Measure
Prior Valuation
(June 30, 2023)
Current Valuation
(June 30, 2025)
ADC (6.25%, baseline)FY 2025: $16.4M
FY 2026: $16.9M
FY 2027: $18.8M
FY 2028: $19.3M
Adjusted ADC
(5.75%, City Policy)
FY 2025: $19.4M*
FY 2026: $22.6M
FY 2027: $26.1M
FY 2028: $26.8M
Implied Subsidy FY 2025: $3.0M*
FY 2026: $2.8M
FY 2027: $3.2M
FY 2028: $3.1M
Unfunded Actuarial Accrued Liability
(UAAL)
$120.5M $124.1M
Funded Ratio 56.4%61.8%
*The City Council adopted a phased approach to smooth the financial impact of the increase in
FY 2025, using an adjusted ADC of $19.4M and Implied Subsidy of $3.0 million.
Projected Unfunded Actuarial Accrued Liability
This actuarial valuation includes the plan's funded status. As of June 30, 2025, the CERBT Trust
is funded at 61.8%, up 600 basis points from 56.4% in the June 30, 2023 actuarial valuation. As
of June 30, 2025, the Unfunded Actuarial Accrued Liability (UAAL) was $124.1 million for all
funds and $80.6 million for the General Fund. Beginning with the June 30, 2013 valuations, the
City aligned its actuarial analysis to align with GASB's rules regarding the "implied subsidy"
(GASB Statement No. 75 or GASB 75). The calculation of implied subsidy requires an agency to
recognize that it pays the same medical premiums for active employees as those that are
retired. The implied subsidy identifies and accounts for the agency paying the same blended
premium for both active employees and retirees, even though the medical cost for active
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employees is lower than retirees. Palo Alto had 974 active employees and 1,050 retirees as of
June 30, 2025.
Discount Rate Assumptions
The City Council has taken steps to ensure long-term liability assumptions and costs for OPEB
are being proactively addressed, including the adoption of a Retiree Benefit Funding Policy that
invests at an estimated discount rate for OPEB of 6.25% and transmits additional contributions
to prefund OPEB obligations at the equivalent of a 5.75% discount rate. Through FY 2026, a
total of $23.2 million in additional contributions are expected. One of the most significant
variables impacting the ADC is investment returns. Chart 1 below presents historical returns
since FY 2009.
Chart #1: Historical Returns of the OPEB Trust
(Market Value of Plan Assets and Expected Return)
Sensitivity Analysis: Discount Rate and Amortization Period
CalPERS recognizes the varying assumptions that may impact a plan's unfunded actuarial
accrued liability and therefore a retiree healthcare plan's funding status, especially the
implications of a lower discount rate and a reduced amortization period. Therefore, in addition
to the actuarial assumptions used to develop this annual evaluation, the report includes a
sensitivity analysis of the retiree healthcare plan. That analysis can be found on page 43 of the
report, in the table titled “Discount Rate Sensitivity”, and on pages 44 and 45 in the tables titled
“Amortization Period Sensitivity”. The Council has adopted a Pension Funding Policy seeking to
reach a 90% funded level by 2036, so there are 11 remaining years to meet that goal. As of the
June 30, 2025 valuation including the Council policy directed assumptions (5.75% discount rate
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and shortened amortization period), the City is on track to meet the goal of reaching 90%
funded level by 2036.
FISCAL/RESOURCE IMPACT
The recommendation in this report does not require additional appropriation beyond amounts
already assumed in the FY 2027 Proposed Operating Budget and is in alignment with the City
Council Retiree Benefit Funding Policy. Based on this policy, the adjusted ADC, calculated using
a 5.75% discount rate and accelerated amortization, is programmed in the FY 2027 Proposed
Operating Budget. The FY 2027 Proposed Budget includes an ADC of $26.1 million, an increase
of $3.5 million from FY 2026 Adopted levels of $22.6 million. The FY 2028 ADC in this valuation
is $26.8 million, which is recommended to be included in the FY 2028 Long Range Financial
Forecast and development of the FY 2028 budget.
STAKEHOLDER ENGAGEMENT
The transmittal of the OPEB actuarial valuation report serves as the starting point for the
Finance Committee’s review of the fiscal outlook for the City’s OPEB liabilities and
recommendation on the appropriate contribution to the FY 2027 Actuarially Determined
Contribution and prefunding levels. This item and the Finance Committee’s recommendation
will be transmitted to the City Council as part of the adoption of the FY 2027 Budget.
ENVIRONMENTAL REVIEW
Committee action on this item is not a project as defined by CEQA because accepting and
approving an annual actuarially determined contribution is a fiscal activity which does not
involve any commitment to any specific project which may result in a potentially significant
physical impact on the environment. CEQA Guidelines section 15378(b)(4).
ATTACHMENTS
Attachment A: Benefit Groups in CalPERS Retiree Healthcare Benefit Plans
Attachment B: June 30, 2025 OPEB Actuarial Valuation
APPROVED BY:
Lauren Lai, Administrative Services Director
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Attachment A: 4 Benefit Groups in the CalPERS Retiree Healthcare benefit plans
City of Palo Alto Retiree Healthcare Benefit Plans and Tiers
nd most expensive
medical plan
nd most expensive
medical plan
nd
most expensive medical
plan
(All active Group 3 IAFF &
FCA elected into Group 4)
(All active Group 3 POA & PMA
elected into Group 4)
Item 2
Attachment A - Benefit
Groups in CalPERS Retiree
Healthcare Benefit Plans
Item 2: Staff Report Pg. 6 Packet Pg. 27 of 73
CITY OF PALO ALTO
RETIREE HEALTHCARE PLAN
June 30, 2025 Actuarial Valuation
Contributions for 2026/27 & 2027/28
Drew Ballard, FSA, EA, MAAA
Braeleen Ballard, FSA, EA, MAAA
Joseph Herm
Foster & Foster, Inc.
March 11, 2026
CONTENTS
L:\PaloAltoCity\OPEB\2025_Val\Reports\F&F_PaloAltoCity_26-03-11_OPEB_6-30-25_Funding_Report.docx
Topic Page
Benefit Summary 1
Implicit Subsidy 7
Participant Statistics 9
Actuarial Assumptions Highlights 15
Actuarial Methods 20
Assets 21
Results 23
Results – Details 35
Sensitivity Analysis 43
Actuarial Certification 49
Exhibits 50
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 7 Packet Pg. 28 of 73
March 11, 2026 1
BENEFIT SUMMARY
Eligibility Retire directly from the City under CalPERS (age 501 and 5 years
of CalPERS service or disability)
Medical
Provider
CalPERS health plans (PEMHCA)
CalPERS administrative fees paid by City
Retiree Medical
Benefit for
Current
Retirees:
Hired < 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
&
Did Not Elect
into Group 4
GROUP 1 Retirees: Retired < 1/1/07 (3/1/09 for PAPOA)
Benefit = Full premium up to family coverage
GROUP 2 Retirees: Retired after GROUP 1 and before
5/1/11 (12/1/11 IAFF/FCA, 6/1/12 PMA, 4/1/15 POA)
Benefit = Same as above but premium limited to 2nd most
expensive Basic (non-Medicare) medical plan in PEMHCA
Region 1 (PERS Platinum in 2025 and Anthem Traditional in
2026)
GROUP 3 Retirees: Retired after GROUP 2
Benefit = same amount as active employees, which may change
from time to time and in the future as bargaining agreements
change (see next section for cap amounts)
1 Age 52 for Miscellaneous New Hires under PEPRA
March 11, 2026 2
BENEFIT SUMMARY
Retiree Medical
Benefit for
Current
Actives:
Hired < 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
&
Did Not Elect
into Group 4
GROUP 3 Future Retirees: Currently active and did not elect into
Group 4
No active Group 3 POA, PMA, IAFF or FCA
Only remaining Group 3 actives in MGMT, SEIU, UMPAPA
(36 active members)
Benefit = up to full premium, but limited to flat dollar caps same
as active contribution
SEIU
Mgmt/UMPAPA/
Other Groups
2025 2026 2025 & 2026
Single $ 943 $ 943 $ 943
2-Party 1,885 1,885 1,885
Family 2,444 2,444 2,444
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 8 Packet Pg. 29 of 73
March 11, 2026 3
BENEFIT SUMMARY
Retiree Medical
Benefit for
those:
Hired ≥ 1/1/04
(1/1/05 SEIU,
1/1/06 PAPOA)
&
Employees
Hired Before
These Dates
Electing into
Group 42
GROUP 4 Future Retirees: Government Code §22893 “Vesting
Schedule” (based on all CalPERS Service)3:
Years of Service % Years of Service %
< 10 0% 13 65%
10 50% 14 70%
11 55% ↓ ↓
12 60% >20 100%
100% vesting for disability retirements
Vesting applies to 100/90 formula amounts, which are the
maximum amounts payable by the City (retirees pay any difference
between these amounts and actual premiums):
2025 2026
Single $ 1,060 $ 1,084
2-Party 2,039 2,057
Family 2,551 2,638
If have 20 years City service do not need to retire directly from
City
2 All currently active POA/PMA, IAFF/FCA are Group 4. Some Mgmt/Conf and some SEIU remained in Group 3, and some
elected into Group 4.
3 Minimum 5 years City Service.
March 11, 2026 4
BENEFIT SUMMARY
Dental, Vision
& Medicare
Part B
None
Surviving
Spouse Benefit
100% of retiree benefit continues to surviving spouse if retiree
elects CalPERS pension survivor allowance
Waived Re-
election
Waived retirees/beneficiaries may re-elect coverage at a future
date
Summary of
Changes Since
the Prior
Valuation
None
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 9 Packet Pg. 30 of 73
March 11, 2026 5
BENEFIT SUMMARY
Pay-As-You-
Go ($000s)
Fiscal
Year Cash
Implicit
Subsidy Total
2024/25 $ 13,163 $ 2,745 $ 15,908
2023/24 11,800 3,073 14,873
2022/23 11,269 3,025 14,294
2021/22 10,880 2,619 13,499
2020/21 10,631 2,346 12,977
2019/20 10,344 2,384 12,728
2018/19 9,960 2,197 12,157
2017/18 9,660 2,444 12,104
2016/17 9,713 2,203 11,916
2015/16 9,681 1,960 11,641
2014/15 8,995 1,916 10,911
2013/14 7,317 - 7,317
2012/13 8,766 - 8,766
2011/12 8,165 - 8,165
March 11, 2026 6
BENEFIT SUMMARY
Monthly Benefit Cap Amounts
2025 2026
Group Single 2-Party Family Single 2-Party Family
Group 14 $1,500.40 $3,000.80 $3,901.04 $1,670.14 $3,340.28 $4,342.36
Group 2 1,476.10 2,952.20 3,837.86 1,612.08 3,224.16 4,191.41
Group 3 SEIU 943.00 1,885.00 2,444.00 943.00 1,885.00 2,444.00
Group 3 Others5 943.00 1,885.00 2,444.00 943.00 1,885.00 2,444.00
Group 4 (100% vest) 1,060.00 2,039.00 2,551.00 1,084.00 2,057.00 2,638.00
% Decrease from Group 1 (assumes Group 1 is in most expensive plan)
Group 2 2% 2% 2% 3% 3% 3%
Group 3 SEIU 37% 37% 37% 44% 44% 44%
Group 3 Others 37% 37% 37% 44% 44% 44%
Group 4 29% 32% 35% 35% 38% 39%
4 No cap for Group 1. Amount shown is most expensive Non-Medicare Region 1 premium.
5 UMPAPA, Mgmt, IAFF, FCA, PMA, and PAPOA.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 10 Packet Pg. 31 of 73
March 11, 2026 7
IMPLICIT SUBSIDY
For PEMHCA, employer cost for allowing retirees to participate at active rates.
Kaiser 2026 Region 1 plan:
The City included the implicit subsidy beginning with the June 30, 2013 valuation.
25 30 35 40 45 50 55 60 64
Premium 1,169 1,169 1,169 1,169 1,169 1,169 1,169 1,169 1,169
Male Cost by Age 449 494 576 676 804 989 1,238 1,546 1,829
Female Cost by Age 713 895 979 1,000 1,056 1,184 1,349 1,556 1,767
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$C
o
s
t
/
P
r
e
m
i
u
m
Age
Kaiser 2026 -Single Coverage
March 11, 2026 8
IMPLICIT SUBSIDY
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Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 11 Packet Pg. 32 of 73
March 11, 2026 9
PARTICIPANT STATISTICS
Participant Statistics
6 Excludes all waived retirees, regardless of age, except as noted.
7 Excludes all waived retirees over 65; includes 38 waived under 65 retirees.
6/30/17 6/30/19 6/30/21 6/30/23 6/30/25
Actives
Count 967 930 874 902 974
Average Age 45.6 44.8 45.0 44.6 44.4
Average City Service 10.9 10.8 11.2 10.4 9.7
Average PERS Service 11.9 11.7 12.1 11.4 10.8
Average Salary $90,739 $110,969 $120,207 $134,338 $153,088
Total Salary (000’s) 87,745 103,201 105,061 121,173 149,108
Retirees:
Count6 9597 974 1,009 1,031 1,050
Average Age 68.9 70.0 70.9 71.5 72.1
Average RetirementAge
o Service 57.7 58.0 58.2 58.2 58.3
o Disability 45.9 46.1 46.3 45.8 45.7
March 11, 2026 10
PARTICIPANT STATISTICS
Historical Active and Retiree Counts8
8 Retiree count is subscribers: retirees and surviving spouses
6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 6/30/25
Active 955 923 948 955 967 930 874 902 974
Retired 710 860 968 1,007 959 974 1,009 1,031 1,050
43%48% 50% 51% 50%51%54%53%52%
57%52% 50% 49% 50%49%46%47%48%
-
500
1,000
1,500
2,000
2,500
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 12 Packet Pg. 33 of 73
March 11, 2026 11
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2025
9 Based on June 30, 2025 PERSable pay rate.
10 Excludes retirees who have waived coverage, regardless of age.
Group 1 Group 2 Group 3 Group 4 Total
Actives
Count n/a n/a 36 938 974
Average Age n/a n/a 56.1 43.9 44.4
Average Entry Age n/a n/a 30.2 34.9 34.7
Average City Service n/a n/a 25.9 9.1 9.7
Average PERS Service n/a n/a 25.9 10.2 10.8
Average Salary n/a n/a $ 142,757 $ 153,484 $ 153,088
Total Salary (000’s)9 n/a n/a 5,139 143,968 149,108
Benefitting Retirees10:
Count 353 273 178 246 1,050
Average Age 80.7 72.7 67.3 62.5 72.1
Avg Service Ret Age 57.0 57.8 59.4 59.3 58.3
Avg Disability Ret Age 44.1 46.9 52.2 46.9 45.7
March 11, 2026 12
PARTICIPANT STATISTICS
Participant Statistics
June 30, 2023
11 Actual June 30, 2023 PERSable pay rate.
12 Excludes retirees who have waived coverage, regardless of age.
Group 1 Group 2 Group 3 Group 4 Total
Actives
Count n/a n/a 57 845 902
Average Age n/a n/a 55.8 43.9 44.6
Average Entry Age n/a n/a 31.5 34.4 34.2
Average City Service n/a n/a 24.3 9.5 10.4
Average PERS Service n/a n/a 24.4 10.5 11.4
Average Salary n/a n/a $134,880 $134,302 $134,338
Total Salary (000’s)11 n/a n/a 7,688 113,485 121,173
Benefitting Retirees12:
Count 396 280 165 190 1,031
Average Age 79.3 70.7 65.7 61.5 71.5
Avg Service Ret Age 57.3 57.8 59.1 59.0 58.2
Avg Disability Ret Age 44.7 46.9 51.2 48.1 45.8
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 13 Packet Pg. 34 of 73
March 11, 2026 13
PARTICIPANT STATISTICS
Data Reconciliation13
6/30/2023 to 6/30/2025
Actives Retirees Disabled Benefic. Total
June 30, 2023 902 805 141 85 1,933
New Hires/Rehires 220 - - - 220
Disabled (8) - 8 - -
Terminated (74) - - - (74)
Died with Beneficiary - (7) (1) 8 -
Died, no Beneficiary - (29) (11) (8) (48)
Retired/covered (61) 61 - - -
Retired/waived (5) - - - (5)
Waived Retiree - (4) (3) (2) (9)
Adjustment/Other - 3 2 2 7
June 30, 2025 974 829 136 85 2,024
13 Excludes retirees who have waived coverage.
March 11, 2026 14
PARTICIPANT STATISTICS
This page intentionally blank
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 14 Packet Pg. 35 of 73
March 11, 2026 15
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2023 Valuation June 30, 2025 Valuation
Valuation
Date
June 30, 2023
ADC for Fiscal Years
2024/25 & 2025/26
(end of year)
1 year lag
June 30, 2025
ADC for Fiscal Years
2026/27 & 2027/28
(end of year)
1 year lag
Funding
Policy
Full Pre-funding through
CalPERS trust (CERBT)
Strategy #1
City may contribute additional
amounts based on lower
discount rate
Same
Discount Rate 6.25%, net of expenses based on
CERBT Strategy #1
Same
General
Inflation
2.50%Same
March 11, 2026 16
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2023 Valuation June 30, 2025 Valuation
Payroll
Increases
Aggregate Increases: 2.75%
Merit Increases: CalPERS 2000-
2019 Experience Study
Aggregate Increases: 2.75%
Merit Increases: CalPERS
2000-2023 Experience Study
Increase to
Group 3 Flat
Dollar Caps
½ of Medical Trend, not less
than assumed inflation (2.50%)
Same
Medical
Trend
Non-Medicare: 8.50% for 2025,
decreasing to an ultimate rate of
3.45% in 2076
Medicare: 7.50% (non-Kaiser)
and 6.25% (Kaiser) for 2025,
decreasing to an ultimate rate of
3.45% in 2076
Same
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 15 Packet Pg. 36 of 73
March 11, 2026 17
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2023 Valuation June 30, 2025 Valuation
Participation
at Retirement
Group 3: 98%
Group 4: if eligible for City
contribution: 95%; if not: 0%
Based on Plan experience
Same
Retirement,
Mortality,
Termination,
Disability
CalPERS 2000-2019 Experience
Study
Society of Actuaries mortality
improvement scale MP-21
CalPERS 2000-2023
Experience Study
Society of Actuaries mortality
improvement scale MP-21
Implicit
Subsidy
Included
Due to age-risk adjusted federal
subsidies, no age-based claims
costs were included for
Medicare Advantage plans
Same
March 11, 2026 18
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
June 30, 2023 Valuation June 30, 2025 Valuation
Basis for
Assumptions
(6/30/25
Valuation)
No experience study performed for this Plan
CalPERS experience study covering 2000 to 2023 experience was
used
Mortality improvement is a Society of Actuaries table
Inflation based on our estimate for the Plan’s long time horizon
Capital market assumptions based on 2021 Foster & Foster
stochastic analysis, taking into account capital market assumptions
of investment advisory firms
Medical trends were based on expectations over the short term
blended into long term medical trends developed using the Society
of Actuaries Getzen Model of Long-Run Medical Cost Trends
Age-based claims costs are based on tables published by the Society
of Actuaries and demographic data for the CalPERS health plans
provided by CalPERS
Medical coverage and participation based in part on Plan experience
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 16 Packet Pg. 37 of 73
March 11, 2026 19
ACTUARIAL ASSUMPTIONS HIGHLIGHTS
Discount Rate
Future expected returns
Stochastic simulations of geometric average returns over 20 years – 5,000 trials
2.50% inflation assumption
Projections based on 8 independent Investment Advisors 2021 10-year Capital Market
Assumptions and where available, investment advisors long-term trends
Confidence levels:
Strategy 1 Strategy 2 Strategy 3
50% Confidence Level 6.25% 5.75% 5.25%
55% Confidence Level 6.00% 5.50% 5.00%
60% Confidence Level 5.75% 5.25% 4.75%
Expected returns, 50th percentile:
Strategy 1 Strategy 2 Strategy 3
Expected Real Rate of Return14 3.90% 3.39% 2.92%
Inflation Assumption 2.50% 2.50% 2.50%
Investment Expenses (0.05%) (0.05%) (0.05%)
Nominal Rate of Return 6.35% 5.84% 5.37%
Rounded to nearest 0.25% 6.25% 5.75% 5.25%
City currently in Strategy 1: Recommend 6.25% discount rate
14 Includes investment expenses
March 11, 2026 20
ACTUARIAL METHODS
Method June 30, 2023 Valuation June 30, 2025 Valuation
Cost Method Entry Age Normal Level %
of Pay
Same
Unfunded Liability
Amortization
20 years closed period
Level % of pay (2.75%
annual escalation)
Sensitivity analysis:
18 years
18 years closed period
Level % of pay (2.75%
annual escalation)
Sensitivity analysis:
16 years
Actuarial Asset Value Market Value of Assets Same
Future New Entrants Closed group – no new participants
Implicit Subsidy Implicit subsidy valued
Plan Continuance For purposes of financial projections, the plan and benefits
are assumed to continue unchanged. The calculation of this
obligation does not imply that there is any legal liability to
provide or continue providing the benefits valued.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 17 Packet Pg. 38 of 73
March 11, 2026 21
ASSETS
Market Value of Plan Assets (MVA)
Invested in CERBT Strategy 1 Fund
(Amounts in 000’s)
2021/22 2022/23 2023/24 2024/25
MVA (Beg. of Year)$164,170 $144,745 $156,061 $175,207
Contributions 2,904 2,032 1,928 4,282
Benefit Payments - - - -
Admin. Expenses (80) (72) (80) (60)
Net Investment Return (22,249) 9,356 17,299 21,684
MVA (End of Year)144,745 156,061 175,207 201,112
Approx. Annual Return (13.5)% 6.4% 11.0% 12.3%
March 11, 2026 22
ASSETS
Historical Returns
08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25
Market Value -22.5 15.1% 24.4% 0.1% 11.2% 18.2% -0.2% 1.1% 10.4% 7.8% 6.3% 3.6% 27.5% -13.5 6.4% 11.0% 12.3%
Expected Return 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.61% 7.25% 7.25% 6.75% 6.75% 6.75% 6.75% 6.25% 6.25% 6.25% 6.25%
(25%)
(20%)
(15%)
(10%)
(5%)
0%
5%
10%
15%
20%
25%
30%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 18 Packet Pg. 39 of 73
March 11, 2026 23
RESULTS
Actuarial Obligations
(Amounts in 000’s)
Valuation Date 6/30/2023 6/30/2025
Discount Rate 6.25% 6.25%
Present Value of Benefits PVB
Actives future retirees $154 864 $180 922
Retirees 192,253 232,197
Total 347 117 413 119
Actuarial Accrued Liabilit AAL
Actives future retirees 84 319 93 000
Retirees 192,253 232,197
Total 276 572 325 197
Market Value of Assets (MVA)156,061 201,112
Unfunded AAL UAAL 120 511 124 085
Funded Ratio 56% 62%
Normal Cost15 7 614 9 260
Pa -As-You-Go Cost Cash 12 827 15 466
Pa -As-You-Go Cost IS 2 745 3 163
15 Includes Administration fees.
March 11, 2026 24
RESULTS
Historical Funded Status
(Amounts in 000’s)
24% 27%
29%
33%37%
49%
67%56%
62%
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
1/1/11 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 6/30/25
Retiree pay-go Retiree AAL less pay-go Active AAL AVA MVA
X% FundedRatio
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 19 Packet Pg. 40 of 73
March 11, 2026 25
RESULTS
Actuarial Gain/Loss
(Amounts in $000’s)
AAL Assets UAAL
Actual 6/30/23 $276,572 $156,061 $120,511
Expected 6/30/25 295,578 172,984 122,594
Ex erience (Gains)/Losses
Premiums/Caps different than expected 26,748 26,748
Demographic & other 3,977 3,977
Assum tion Chan es increasin /(decreasin ) AAL
Medical Plan election percentages changed (90) (90)
Updated CalPERS decrement assumptions (1,016) (1,016)
Contribution and Benefit Payment Gain 9,499 (9,499)
Investment Gain 18,629 (18,629)
Total UAAL (Gain)/Loss 29,619 28,128 1,491
Actual 6/30/25 325,197 201,112 124,085
March 11, 2026 26
RESULTS
Actuarially Determined Contribution (ADC)
(Amounts in 000’s)
6/30/23 Valuation 6/30/25 Valuation
2024/25 2025/26 2026/27 2027/28
Discount Rate 6.25% 6.25%
ADC - $
Normal Cost $ 7,489 $ 7,674 $9,110 $9,352
Administrative Expenses16 125 133 151 158
UAAL Amortization 8,802 9,044 9,492 9,753
Total 16,416 16,851 18,752 19,263
Projected Payroll 127,929 131,447 157,422 161,751
ADC – Percent of Pay
Normal Cost 5.9% 5.8% 5.8% 5.8%
Administrative Expenses 0.1% 0.1% 0.1% 0.1%
UAAL Amortization 6.9% 6.9% 6.0% 6.0%
Total 12.8% 12.8% 11.9% 11.9%
16 Includes PEMHCA and CERBT administration fees.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 20 Packet Pg. 41 of 73
March 11, 2026 27
RESULTS
Actuarially Determined Contribution (ADC) Payment to Trust
(Amounts in 000’s)
6/30/25 Valuation
2026/27 2027/28
Discount Rate 6.25%
ADC - $
Normal cost $9,110 $9,352
Administrative expenses17 151 158
UAAL amortization 9,492 9,753
Total 18,752 19,263
Less: Implicit subsidy benefit payments 3,163 3,110
Remaining ADC 15,589 16,153
Less: Estimated cash benefit payments 15,466 16,202
Total Trust contribution
(If negative, indicates a reimbursement for City
out-of-pocket payments may be requested.)
123 (49)
17 Includes PEMHCA and CERBT administration fees.
March 11, 2026 28
RESULTS
Historical Recommended Funding Contributions
(Amounts in 000’s)
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 21 Packet Pg. 42 of 73
March 11, 2026 29
RESULTS
Amortization Bases & Payments
(Amounts in 000’s)
6/30/23 Valuation 6/30/25 Valuation
6/30/24 6/30/25 6/30/26 6/30/27
Discount Rate 6.25% 6.25%
Payment Escalator 2.75% 2.75%
UAAL Balance $ 122,790 $ 121,662 $ 122,796 $ 120,979
Amortization Payment 8,802 9,044 9,492 9,753
Amortization Period
(years)20 19 18 17
March 11, 2026 30
RESULTS
10 Year Contribution Projection
(Amounts in 000’s)
FYE ADC18
Contribution
Payroll
ADC
% of
Pay
Fund
%
Cash
Benefit
Payment
Implicit
Subsidy
BP
Trust
Pre-
Funding Total
UAAL
Beg. Of
FY
2027 $18,752 $15,466 $3,163 $123 $18,752 $157,422 11.9% $122,796 63%
2028 19,263 16,202 3,110 (49) 19,263 161,751 11.9% 120,979 65%
2029 19,808 17,066 3,218 (476) 19,808 166,199 11.9% 118,787 67%
2030 20,343 17,938 3,390 (985) 20,343 170,769 11.9% 116,190 69%
2031 20,900 18,684 3,429 (1,213) 20,900 175,466 11.9% 113,155 70%
2032 21,467 19,425 3,553 (1,511) 21,467 180,291 11.9% 109,648 72%
2033 22,057 20,068 3,621 (1,632) 22,057 185,249 11.9% 105,630 74%
2034 22,623 20,688 3,590 (1,655) 22,623 190,343 11.9% 101,062 76%
2035 23,232 21,407 3,628 (1,803) 23,232 195,578 11.9% 95,901 77%
2036 23,842 22,169 3,783 (2,110) 23,842 200,956 11.9% 90,103 79%
18 Actuarially Determined Contribution
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 22 Packet Pg. 43 of 73
March 11, 2026 31
RESULTS
-$20
-$10
$0
$10
$20
$30
$40
$
M
i
l
l
i
o
n
s
Net Trust Payment/Reimbursement Benefit Payments Total ADC
ADC, Benefitand Trust Payment/Reimbursement Projection
(6.25% Discount Rate, 18 years level % of pay amortization)
March 11, 2026 32
RESULTS
0%
20%
40%
60%
80%
100%
120%
$0
$20
$40
$60
$80
$100
$120
$140
Fu
n
d
e
d
R
a
t
i
o
UA
A
L
(
$
M
i
l
l
i
o
n
s
)
UAAL Funded Ratio
UAAL and Funded Ratio Projection
(6.25% Discount Rate, 18 years amortization)
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 23 Packet Pg. 44 of 73
March 11, 2026 33
RESULTS
% of Total Actuarial Accrued Liability for Actives and Retirees
Miscellaneous
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 6/30/25
Actives Retirees
March 11, 2026 34
RESULTS
% of Total Actuarial Accrued Liability for Actives and Retirees
Safety
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 6/30/25
Actives Retirees
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 24 Packet Pg. 45 of 73
March 11, 2026 35
RESULTS - DETAILS
Actuarial Obligations by Pre/Post 65 Benefits
June 30, 2025
(Amounts in 000’s)
Benefits
Paid
Before
Age 65
Benefits
Paid On
or After
Age 65 Total
Present Value of Benefits
Actives (future retirees)$84,792 $96,131 $180,922
Retirees 53,045 179,153 232,197
Total 137,837 275,284 413,119
Actuarial Accrued Liability
Actives (future retirees)41,029 51,972 93,000
Retirees 53,045 179,153 232,197
Total 94,074 231,125 325,197
Normal Cost 2026/2719 4,386 4,873 9,260
19 Includes Administration fees.
March 11, 2026 36
RESULTS - DETAILS
Actuarial Obligations by Group
June 30, 2025
(Amounts in 000’s)
Group 1 Group 2 Group 3 Group 4 Total
Present Value of Benefits
Actives (future retirees)$ - $ - $8,692 $172,230 $180,922
Retirees 49,937 60,320 41,342 80,598 232,197
Total 49,937 60,320 50,034 252,828 413,119
Actuarial Accrued
Liability
Actives (future retirees)- - 7,534 85,466 93,000
Retirees 49,937 60,320 41,342 80,598 232,197
Total 49,937 60,320 48,876 166,064 325,197
Normal Cost 2026/2720 n/a n/a 226 9,034 9,260
NC as % of Payroll n/a n/a 4.7% 5.9% 5.9%
Active Count n/a n/a 36 938 974
Projected Payroll n/a n/a 4,787 152,634 157,422
20 Includes Administration fees.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 25 Packet Pg. 46 of 73
March 11, 2026 37
RESULTS - DETAILS
Actuarial Obligations by Cash/Implicit Subsidy
June 30, 2025
(Amounts in 000’s)
Cash
Subsidy
Implicit
Subsidy Total
Present Value of Benefits
Actives (future retirees)$161,377 $19,546 $180,922
Retirees 197,984 34,213 232,197
Total 359,361 53,759 413,119
Actuarial Accrued Liability
Actives (future retirees)82,437 10,563 93,000
Retirees 197,984 34,213 232,197
Total 280,421 44,776 325,197
Normal Cost 2026/2721 8,325 934 9,260
Pay-As-You-Go Cost 2026/27 15,466 3,163 18,628
21 Includes Administration fees.
March 11, 2026 38
RESULTS - DETAILS
Actuarial Obligations by Misc/Safety
June 30, 2025
(Amounts in 000’s)
Misc Safety Total
Present Value of Benefits
Actives (future retirees)$130,006 $50,917 $180,922
Retirees 142,593 89,604 232,197
Total 272,599 140,521 413,119
Actuarial Accrued Liability
Actives (future retirees)69,268 23,732 93,000
Retirees 142,593 89,604 232,197
Total 211,861 113,336 325,197
Normal Cost 2026/2722 6,681 2,579 9,260
Pay-As-You-Go Cost 2026/27 12,192 6,436 18,628
22 Includes Administration fees.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 26 Packet Pg. 47 of 73
March 11, 2026 39
RESULTS - DETAILS
Actuarial Obligations by Bargaining Unit
June 30, 2025
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
PVB
Actives $1,529 $24,319 $38,933 $19,775 $3,188 $83,849 $9,328 $180,922
Retirees 2,933 42,974 63,749 33,137 2,896 75,689 10,817 232,197
Total 4,462 67,293 102,682 52,912 6,084 159,538 20,145 413,119
AAL
Actives 1,242 10,573 21,028 7,747 2,539 43,738 6,133 93,000
Retirees 2,933 42,974 63,749 33,137 2,896 75,689 10,817 232,197
Total 4,175 53,547 84,777 40,884 5,435 119,427 16,950 325,197
MVA23 2,582 33,115 52,429 25,284 3,361 73,857 10,482 201,112
UAAL 1,593 20,432 32,348 15,600 2,074 45,570 6,468 124,085
NC 26/2724 55 1,171 2,080 1,125 136 4,260 434 9,260
Pay-Go 229 3,277 5,329 2,090 231 6,625 847 18,628
23 Allocated in proportion to the Actuarial Accrued Liability.
24 Includes Administration fees.
March 11, 2026 40
RESULTS - DETAILS
Actuarially Determined Contribution by Bargaining Unit
2026/27 Fiscal Year
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
ADC - $
Normal Cost $53 $1,147 $2,041 $1,106 $134 $4,204 $426 $9,110
Admin. Expenses 2 25 39 19 3 56 8 151
UAAL Amort 120 1,548 2,453 1,198 160 3,518 494 9,492
ADC 175 2,719 4,532 2,323 297 7,778 928 18,752
Projected Payroll 934 13,419 44,161 12,917 2,367 73,257 10,365 157,422
ADC - %
Normal Cost 5.6% 8.5% 4.6% 8.6% 5.7% 5.7% 4.1% 5.8%
Admin. Expenses 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
UAAL Amort 12.9% 11.5% 5.6% 9.3% 6.8% 4.8% 4.8% 6.0%
ADC 18.7% 20.3% 10.3% 18.0% 12.5% 10.6% 9.0% 11.9%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 27 Packet Pg. 48 of 73
March 11, 2026 41
RESULTS - DETAILS
Actuarially Determined Contribution by Bargaining Unit
2027/28 Fiscal Year
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
ADC - $
Normal Cost $54 $1,177 $2,095 $1,135 $137 $4,316 $437 $9,352
Admin. Expenses 2 26 41 20 3 59 8 158
UAAL Amort 124 1,591 2,520 1,231 165 3,615 508 9,753
ADC 180 2,794 4,656 2,386 305 7,990 953 19,263
Projected Payroll 960 13,788 45,376 13,272 2,432 75,271 10,650 161,751
ADC - %
Normal Cost 5.6% 8.5% 4.6% 8.6% 5.6% 5.7% 4.1% 5.8%
Admin. Expenses 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
UAAL Amort 12.9% 11.5% 5.6% 9.3% 6.8% 4.8% 4.8% 6.0%
ADC 18.7% 20.3% 10.3% 18.0% 12.5% 10.6% 8.9% 11.9%
March 11, 2026 42
RESULTS - DETAILS
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Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 28 Packet Pg. 49 of 73
March 11, 2026 43
SENSITIVITY ANALYSIS
Discount Rate Sensitivity
(Amounts in 000’s)
CERBT Strategy
#1 (Current) #2 #3
Discount Rate 6.25% 5.75% 5.25%
Present Value of Benefits $413,119 $447,440 $486,698
Funded Status 6/30/23
Actuarial Accrued Liability 325,197 344,709 366,190
Assets 201,112 201,112 201,112
Unfunded AAL 124,085 143,597 165,078
Funded Ratio 61.8% 58.3% 54.9%
ADC 2026/27
Normal Cost $9,110 $10,192 $11,430
Administrative Expenses 151 151 151
UAAL Amortization25 9,492 10,600 11,738
Total 18,752 20,943 23,318
ADC % of Payroll 11.9% 13.3% 14.8%
25 UAAL amortized over 18 years for all scenarios.
March 11, 2026 44
SENSITIVITY ANALYSIS
Amortization Period Sensitivity
Discount Rate – 6.25%, Level % of Pay with 2.75% Payment Escalation
(Amounts in 000’s)
Amortization Period
Current
18 Years 16 Years
Funded Status 6/30/25
Actuarial Accrued Liability $325,197 $325,197
Assets 201,112 201,112
Unfunded AAL 124,085 124,085
Total Projected Payroll 2026/27 157,422 157,422
ADC 2026/27
Normal Cost 9,110 9,110
Administrative Expenses 151 151
UAAL Amortization 9,492 10,359
Total 18,752 19,620
ADC % of Payroll 11.9% 12.5%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 29 Packet Pg. 50 of 73
March 11, 2026 45
SENSITIVITY ANALYSIS
Amortization Period Sensitivity
Discount Rate – 5.75%, Level % of Pay with 2.75% Payment Escalation
(Amounts in 000’s)
Amortization Period
Current
18 Years 16 Years
Funded Status 6/30/25
Actuarial Accrued Liability $344,709 $344,709
Assets 201,112 201,112
Unfunded AAL 143,597 143,597
Total Projected Payroll 2026/27 157,422 157,422
ADC 2026/27
Normal Cost 10,192 10,192
Administrative Expenses 151 151
UAAL Amortization 10,600 11,613
Total 20,943 21,957
ADC % of Payroll 13.3% 13.9%
March 11, 2026 46
SENSITIVITY ANALYSIS
Actuarial Obligations by Bargaining Unit – 5.75%
June 30, 2025
(Amounts in 000’s)
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
PVB
Actives $1,663 $27,613 $43,459 $22,394 $3,465 $94,310 $10,298 $203,201
Retirees 3,094 45,259 66,816 35,157 3,085 79,413 11,415 244,239
Total 4,757 72,872 110,275 57,551 6,550 173,723 21,713 447,440
AAL
Actives 1,331 11,433 22,693 8,392 2,720 47,289 6,613 100,470
Retirees 3,094 45,259 66,816 35,157 3,085 79,413 11,415 244,239
Total 4,425 56,692 89,509 43,549 5,805 126,702 18,028 344,709
MVA26 2,582 33,076 52,222 25,408 3,387 73,921 10,518 201,112
UAAL 1,843 23,616 37,287 18,141 2,418 52,781 7,510 143,597
NC 26/2727 61 1,312 2,311 1,254 153 4,769 482 10,342
Pay-Go 229 3,277 5,329 2,090 231 6,625 847 18,628
26 Allocated in proportion to the Actuarial Accrued Liability.
27 Includes Administration fees.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 30 Packet Pg. 51 of 73
March 11, 2026 47
SENSITIVITY ANALYSIS
10 Year Contribution Projection – 5.75%
11 Year Amortization
(Amounts in 000’s)
FYE ADC28
Contribution
Payroll
ADC
% of
Pay
Fund
%
Cash
Benefit
Payment
Implicit
Subsidy
BP
Trust
Pre-
Funding Total
UAAL
Beg. Of
FY
2027 $26,131 $15,466 $3,163 $7,502 $26,131 $157,422 16.6% $142,810 60%
2028 26,805 16,202 3,110 7,493 26,805 161,751 16.6% 135,233 63%
2029 27,565 17,066 3,218 7,281 27,565 166,199 16.6% 126,786 67%
2030 28,318 17,938 3,390 6,990 28,318 170,769 16.6% 117,407 70%
2031 29,101 18,684 3,429 6,988 29,101 175,466 16.6% 107,031 73%
2032 29,900 19,425 3,553 6,922 29,900 180,291 16.6% 95,587 77%
2033 30,728 20,068 3,621 7,039 30,728 185,249 16.6% 83,001 81%
2034 31,536 20,688 3,590 7,258 31,536 190,343 16.6% 69,194 84%
2035 32,395 21,407 3,628 7,360 32,395 195,578 16.6% 54,083 88%
2036 33,261 22,169 3,783 7,309 33,261 200,956 16.6% 37,577 92%
28 Actuarially Determined Contribution
March 11, 2026 48
SENSITIVITY ANALYSIS
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Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 31 Packet Pg. 52 of 73
March 11, 2026 49
ACTUARIAL CERTIFICATION
This report presents the City of Palo Alto Retiree Healthcare Plan (“Plan”) June 30, 2025 actuarial valuation. The
purpose of this valuation is to:
Determine the June 30, 2025 Benefit Obligations,
Determine the Plan’s June 30, 2025 Funded Status, and
Calculate the 2026/27 and 2027/28 Actuarially Determined Contributions.
The report provides information intended for funding the City’s Plan, but may not be appropriate for other purposes.
Future actuarial measurements may differ significantly from the current measurements presented in this report due to
such factors as: plan experience differing from that anticipated by the assumptions; changes in assumptions; changes
expected as part of the natural progression of the plan; and changes in plan provisions or applicable law. Actuarial models
necessarily rely on the use of estimates and are sensitive to changes. Small variations in estimates may lead to significant
changes in actuarial measurements. Due to the limited scope of this assignment, we did not perform an analysis of the
potential range of such measurements.
The valuation is based on Plan provisions, participant data, and asset information provided by the City as summarized in
this report, which we relied on and did not audit. We reviewed the participant data for reasonableness.
To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted
actuarial principles and practices. As members of the American Academy of Actuaries meeting the Academy
Qualification Standards, we certify the actuarial results and opinions herein.
Respectfully submitted,
Drew Ballard, FSA, MAAA, EA Foster & Foster, Inc. Braeleen Ballard, FSA, MAAA, EA
Foster & Foster, Inc.
March 11, 2026 50
EXHIBITS
Topic Page
Premiums E- 1
Data Summary E- 5
Additional Actuarial Assumptions E-23
Results by Fund E-31
Results by GF Department E-33
Definitions E-35
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 32 Packet Pg. 53 of 73
March 11, 2026 E-1
PREMIUMS
2025 PEMHCA Monthly Premiums
Region 1
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Anthem Select $1,256.65 $2,513.30 $3,267.29 $487.56 $975.12 $1,462.68
Anthem Traditional 1,500.40 3,000.80 3,901.04 487.56 975.12 1,462.68
Blue Shield Access+ 1,170.17 2,340.34 3,042.44 448.28 896.56 1,344.84
Blue Shield Trio 1,134.79 2,269.58 2,950.45 448.28 896.56 1,344.84
Kaiser 1,112.90 2,225.80 2,893.54 n/a n/a n/a
Kaiser Senior Advantage n/a n/a n/a 343.08 686.16 1,029.24
Kaiser SA Summit n/a n/a n/a 408.31 816.62 1,224.93
UnitedHealthcare Alliance 1,184.58 2,369.16 3,079.91 n/a n/a n/a
UnitedHealthcare Harmony 1,005.02 2,010.04 2,613.05 n/a n/a n/a
UnitedHealthcare Group n/a n/a n/a 442.25 884.50 1,326.75
Western Health Advantage 914.27 1,828.54 2,377.10 n/a n/a n/a
PERS Platinum 1,476.10 2,952.20 3,837.86 584.70 1,169.40 1,754.10
PERS Gold 1,013.70 2,027.40 2,635.62 546.13 1,092.26 1,638.39
PORAC 975.00 2,218.00 2,777.00 507.00 1,123.00 1,521.00
March 11, 2026 E-2
PREMIUMS
2026 PEMHCA Monthly Premiums
Region 1
Non-Medicare Eligible Medicare Eligible
Medical Plan Single 2-Party Family Single 2-Party Family
Anthem Select $1,336.29 $2,672.58 $3,474.35 $571.70 $1,143.40 $1,715.10
Anthem Traditional 1,612.08 3,224.16 4,191.41 571.70 1,143.40 1,715.10
Blue Shield Access+ 1,301.95 2,603.90 3,385.07 539.43 1,078.80 1,618.29
Blue Shield Trio 1,166.58 2,333.16 3,033.11 539.43 1,078.80 1,618.29
Kaiser 1,168.86 2,337.72 3,039.04 n/a n/a n/a
Kaiser Senior Advantage n/a n/a n/a 356.83 713.66 1,070.49
Kaiser SA Summit n/a n/a n/a 426.31 852.62 1,278.93
UnitedHealthcare Alliance 1,290.06 2,580.12 3,354.16 n/a n/a n/a
UnitedHealthcare Harmony 1,133.09 2,266.18 2,946.03 n/a n/a n/a
UnitedHealthcare Group n/a n/a n/a 481.29 962.58 1,443.87
Western Health Advantage 969.58 1,939.16 2,520.91 n/a n/a n/a
PERS Platinum 1,670.14 3,340.28 4,342.36 665.50 1,331.00 1,996.50
PERS Gold 1,120.58 2,241.16 2,913.51 597.57 1,195.14 1,792.71
PORAC 1,063.00 2,418.00 3,027.00 597.00 1,322.00 1,791.00
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 33 Packet Pg. 54 of 73
March 11, 2026 E-3
PREMIUMS
PEMHCA Monthly Premium Increases/(Decreases)
Region 1
Non-Medicare Eligible Medicare Eligible
Medical Plan 2025 2026 2025 2026
Anthem Select 10.3% 6.3% 20.1% 17.3%
Anthem Traditional 12.0% 7.4% 20.1% 17.3%
Blue Shield Access+ 8.7% 11.3% 14.2% 20.3%
Blue Shield Trio 19.9% 2.8% 14.2% 20.3%
Kaiser 9.0% 5.0% n/a n/a
Kaiser Senior Advantage n/a n/a 5.6% 4.0%
Kaiser SA Summit n/a n/a 5.6% 4.4%
UnitedHealthcare Alliance 8.6% 8.9% n/a n/a
UnitedHealthcare Harmony 7.2% 12.7% n/a n/a
UnitedHealthcare Group n/a n/a 29.4% 8.8%
Western Health Advantage 13.3% 6.0% n/a n/a
PERS Platinum 12.3% 13.1% 30.5% 13.8%
PERS Gold 10.8% 10.5% 34.3% 9.4%
PORAC 4.7% 9.0% 9.0% 17.8%
March 11, 2026 E-4
PREMIUMS
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Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 34 Packet Pg. 55 of 73
March 11, 2026 E-5
DATA SUMMARY
Participant Statistics by Bargaining Unit
June 30, 2025
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
Actives
Count 4 87 226 68 8 538 43 974
Avg Age 50.0 39.0 46.0 38.6 49.4 44.7 50.2 44.4
Avg City Svc 24.4 9.6 9.9 8.4 22.0 9.1 14.8 9.7
Avg PERS Svc 24.4 10.4 12.1 9.1 22.4 9.8 17.0 10.8
Avg Salary $221,156 $146,096 $185,085 $179,933 $280,303 $128,974 $228,314 $153,088
Total Salary29 $885 $12,710 $41,829 $12,235 $2,242 $69,388 $9,818 $149,108
Retirees30:
Count 8 145 320 97 7 435 38 1,050
Avg Age 66.3 71.7 73.9 65.4 56.0 73.4 63.9 72.1
Avg Service
Ret Age 55.8 54.6 58.2 52.3 51.9 59.9 58.6 58.3
Avg Disab Ret
Age 50.1 48.9 49.4 42.0 n/a 46.5 n/a 45.7
29 Amount in 000’s. Based on June 30, 2025 PERSable pay rate.
30 Excludes retirees who have waived coverage.
March 11, 2026 E-6
DATA SUMMARY
Participant Statistics by Bargaining Unit
June 30, 2023
FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total
Actives
Count 4 84 202 66 7 494 45 902
Avg Age 48.0 39.1 46.9 38.9 48.9 44.8 50.5 44.6
Avg City Svc 22.4 9.8 10.7 9.2 23.4 9.7 16.4 10.4
Avg PERS Svc 22.4 10.3 12.4 10.2 24.2 10.4 17.6 11.4
Avg Salary $190,356 $122,075 $159,976 $160,358 $254,449 $114,477 $198,351 $134,338
Total Salary31 $761 $10,254 $32,315 $10,584 $1,781 $56,552 $8,926 $121,173
Retirees32:
Count 8 147 313 96 6 432 29 1,031
Avg Age 64.3 71.4 73.0 66.4 53.2 72.6 62.9 71.5
Avg Service
Ret Age 55.8 54.7 58.1 52.5 50.4 59.7 58.2 58.2
Avg Disab Ret
Age 50.1 48.8 50.5 41.8 n/a 46.7 n/a 45.8
31 Amount in 000’s. Based on June 30, 2023 PERSable pay rate.
32 Excludes retirees who have waived coverage.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 35 Packet Pg. 56 of 73
March 11, 2026 E-7
DATA SUMMARY
Participant Statistics by CalPERS Pension Category
June 30, 2025
33 Based on June 30, 2025 PERSable payrate.
34 Excludes retirees who have waived coverage.
Miscellaneous Police Fire Total
Actives
Count 802 77 95 974
Average Age 45.3 40.0 40.0 44.4
Average City Service 9.5 10.1 10.8 9.7
Average PERS Service 10.7 10.7 11.4 10.8
Average Salary $148,524 $195,926 $156,897 $153,088
Total Salary (000’s)33 $119,116 $15,086 $14,905 $149,108
Retirees34:
Count 771 116 163 1,050
Average Age 73.2 65.5 71.4 72.1
Avg Service Ret Age 59.3 52.3 54.6 58.3
Avg Disability Ret Age 46.6 42.1 49.0 45.7
March 11, 2026 E-8
DATA SUMMARY
Participant Statistics by CalPERS Pension Category
June 30, 2023
35 Based on June 30, 2023 PERSable payrate.
36 Excludes retirees who have waived coverage.
Miscellaneous Police Fire Total
Actives
Count 738 72 92 902
Average Age 45.6 40.3 39.9 44.6
Average City Service 10.3 10.8 10.8 10.4
Average PERS Service 11.3 11.8 11.2 11.4
Average Salary $130,866 $173,099 $131,856 $134,338
Total Salary (000’s)35 $96,579 $12,463 $12,131 $121,173
Retirees36:
Count 751 113 167 1,031
Average Age 72.4 65.9 71.2 71.5
Avg Service Ret Age 59.2 52.2 54.7 58.2
Avg Disability Ret Age 47.1 41.9 48.9 45.8
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 36 Packet Pg. 57 of 73
March 11, 2026 E-9
DATA SUMMARY
Medical Plan Participation – June 30, 2025
All Retirees
Medical Plan Actives Under 65 65 or Older Total
Miscellaneous/Sa et M S M S M S M S
Anthem Select 2% 1% 3% - 1% - 1% -
Anthem Traditional 1% 1% 2% 4% 6% 5% 5% 4%
Blue Shield Access+ 12% 4% 11% 3% 3% 2% 4% 2%
Blue Shiel Trio - 1% 1% 1% - - - -
Kaiser 67% 46% 47% 27% 28% 21% 32% 24%
Kaiser Summit - - - 1% 3% 1% 3% 1%
UnitedHealthcare 3% - - - 16% 9% 13% 5%
UnitedHealthcare Harmony 1% - - - - - - -
Western Health Advanta e - 1% - - - - - -
PERS Gol 6% 5% 6% - 1% - 2% -
PERS Platinum 8% 1% 30% 12% 41% 40% 39% 30%
PORAC - 40% - 52% 1% 22% 1% 34%
Total 100% 100% 100% 100% 100% 100% 100% 100%
March 11, 2026 E-10
DATA SUMMARY
Medical Plan Participation – June 30, 2023
All Retirees
Medical Plan Actives Under 65 65 or Older Total
Miscellaneous/Sa et M S M S M S M S
Anthem Select 2% 2% 3% - 1% - 1% -
Anthem Traditional 3% 1% 5% 4% 6% 5% 6% 5%
Blue Shield Access+ 10% 3% 7% 3% 1% 1% 3% 2%
Blue Shiel Trio - - - 1% - - - -
Health Net SmartCare - - 1% - - - - -
Kaiser 68% 50% 43% 26% 29% 21% 32% 23%
Kaiser Summit - - - - 2% - 2% -
UnitedHealthcare -- 1% 1% 17% 10% 13% 7%
UnitedHealthcare Ed e -- - - - - - -
Western Health Advanta e - 1% - - - - - -
PERS Gol 7% 4% 4% - 1% - 1% -
PERS Platinum 10% 2% 35% 16% 42% 47% 41% 34%
PORAC - 37% 1% 49% 1% 16% 1% 29%
Total 100% 100% 100% 100% 100% 100% 100% 100%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 37 Packet Pg. 58 of 73
March 11, 2026 E-11
DATA SUMMARY
Active Medical Coverage – Miscellaneous
Medical Plan Single 2-Party Family Waived Total
Anthem Select 5 1 5 - 11
Anthem Traditional 3 - 2 - 5
Blue Shield Access+ 23 20 42 - 85
Blue Shield Trio - - 1 - 1
Kaiser 179 99 193 - 471
UnitedHealthcare Alliance 10 3 6 - 19
UnitedHealthcare Harmony 5 2 2 - 9
Western Health Advantage - - 1 - 1
PERS Gold 20 7 16 - 43
PERS Platinum 23 10 21 - 54
PORAC 1 -- - 1
Waived - - - 102 102
Total 269 142 289 102 802
% as of June 30, 2025 33% 18% 36% 13% 100%
% as of June 30, 2023 31% 18% 40% 11% 100%
March 11, 2026 E-12
DATA SUMMARY
Active Medical Coverage – Safety
Medical Plan Single 2-Party Family Waived Total
Anthem Select 1 - 1 - 2
Anthem Traditional 1 - - - 1
Blue Shield Access+ 1 - 5 - 6
Blue Shield Trio - - 1 - 1
Kaiser 21 9 46 - 76
UnitedHealthcare Alliance - - -- -
UnitedHealthcare Harmony - - -- -
Western Health Advantage - - 1 - 1
PERS Gold 5 1 2 - 8
PERS Platinum - - 2 - 2
PORAC 17 12 37 - 66
Waived - - - 9 9
Total 46 22 95 9 172
% as of June 30, 2025 27% 13% 55% 5% 100%
% as of June 30, 2023 24% 14% 55% 7% 100%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 38 Packet Pg. 59 of 73
March 11, 2026 E-13
DATA SUMMARY
Retiree Medical Coverage - Miscellaneous
Medical Plan
Single 2-Party Family Total
<65 65+ <65 65+ <65 65+
Anthem Select 2 4 2 1 - 2 11
Anthem Traditional 3 16 - 16 - 2 37
Blue Shield Access+ 4 4 10 12 4 - 34
Blue Shield Trio - - - - 1 - 1
Kaiser 21 91 39 78 14 5 248
Kaiser Summit - 12 - 6 - 1 19
UnitedHealthcare Alliance - 63 - 35 - - 98
UnitedHealthcare Harmony - - - - - - 0
Western Health Advantage - - - - - - 0
PERS Gold 2 2 4 3 4 1 16
PERS Platinum 17 126 26 122 5 5 301
PORAC - 3 - 2 - 1 6
Total 49 321 81 275 28 17 771
% as of June 30, 2025 6% 42% 10% 36% 4% 2% 100%
% as of June 30, 2023 8% 42% 12% 33% 3% 2% 100%
March 11, 2026 E-14
DATA SUMMARY
Retiree Medical Coverage - Safety
Medical Plan
Single 2-Party Family Total
<65 65+ <65 65+ <65 65+
Anthem Select - - - - - - 0
Anthem Traditional 1 - 1 5 2 3 12
Blue Shield Access+ 1 1 1 2 1 - 6
Blue Shield Trio - - - - 1 - 1
Kaiser 5 13 11 23 13 1 66
Kaiser Summit - 1 1 1 - - 3
UnitedHealthcare Alliance - 8 - 6 - 1 15
UnitedHealthcare Harmony - - - - - - 0
Western Health Advantage - - - - - - 0
PERS Gold - - - - - - 0
PERS Platinum 4 36 4 31 5 2 82
PORAC 11 8 13 26 33 3 94
Total 22 67 31 94 55 10 279
% as of June 30, 2025 8% 24% 11% 34% 20% 3% 100%
% as of June 30, 2023 10% 24% 13% 32% 19% 3% 100%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 39 Packet Pg. 60 of 73
March 11, 2026 E-15
DATA SUMMARY
Retirees Medical Coverage by Age – Miscellaneous
Age Single 2-Party Family Total
Under 50 - - - -
50-54 2 5 4 11
55-59 11 15 10 36
60-64 36 61 14 111
65-69 54 78 9 141
70-74 74 69 6 149
75-79 71 63 - 134
80-84 70 45 2 117
85 & Over 52 20 - 72
Total 370 356 45 771
Average Age 75.6 71.9 63.7 73.2
March 11, 2026 E-16
DATA SUMMARY
Retirees Medical Coverage by Age – Police
Age Single 2-Party Family Total
Under 50 3 2 10 15
50-54 - 1 7 8
55-59 3 - 6 9
60-64 6 8 6 20
65-69 6 14 4 24
70-74 8 5 2 15
75-79 4 9 - 13
80-84 3 3 - 6
85 & Over 3 3 - 6
Total 36 45 35 116
Average Age 68.7 70.6 55.7 65.5
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 40 Packet Pg. 61 of 73
March 11, 2026 E-17
DATA SUMMARY
Retirees Medical Coverage by Age – Fire
Age Single 2-Party Family Total
Under 50 - - 1 1
50-54 - 2 5 7
55-59 6 6 10 22
60-64 4 12 10 26
65-69 4 20 4 28
70-74 3 9 - 12
75-79 5 15 - 20
80-84 14 7 - 21
85 & Over 17 9 - 26
Total 53 80 30 163
Average Age 77.7 71.9 59.1 71.4
March 11, 2026 E-18
DATA SUMMARY
Retirees Medical Coverage by Age – Total
Age Single 2-Party Family Total
Under 50 3 2 11 16
50-54 2 8 16 26
55-59 20 21 26 67
60-64 46 81 30 157
65-69 64 112 17 193
70-74 85 83 8 176
75-79 80 87 - 167
80-84 87 55 2 144
85 & Over 72 32 - 104
Total 459 481 110 1,050
Average Age 75.3 71.7 59.9 72.1
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 41 Packet Pg. 62 of 73
March 11, 2026 E-19
DATA SUMMARY
Actives by Age and Service – Miscellaneous
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 8 7 - - - - - 15
25-29 12 41 2 - - - - 55
30-34 18 55 41 2 - - - 116
35-39 7 41 41 15 - - - 104
40-44 6 35 22 24 11 2 - 100
45-49 7 29 28 20 24 20 6 134
50-54 7 14 15 13 11 21 12 93
55-59 4 14 13 14 16 12 17 90
60-64 1 13 9 8 14 3 19 67
≥ 65 2 5 1 5 7 2 6 28
Total 72 254 172 101 83 60 60 802
March 11, 2026 E-20
DATA SUMMARY
Actives by Age and Service – Police
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 - - - - - - - -
25-29 - 10 2 - - - - 12
30-34 - 6 8 1 - - - 15
35-39 2 4 5 1 - - - 12
40-44 1 2 1 4 5 - - 13
45-49 - 1 1 6 3 3 2 16
50-54 - 1 - - - 1 3 5
55-59 - - - - 1 1 - 2
60-64 - - - - - 1 - 1
≥ 65 - - 1 - - - - 1
Total 3 24 18 12 9 6 5 77
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 42 Packet Pg. 63 of 73
March 11, 2026 E-21
DATA SUMMARY
Actives by Age and Service – Fire
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 - 3 - - - - - 3
25-29 - 13 2 - - - - 15
30-34 - 14 6 - - - - 20
35-39 - 3 3 3 3 - - 12
40-44 - 1 2 5 2 2 - 12
45-49 1 1 1 3 4 3 - 13
50-54 - - 1 2 1 3 6 13
55-59 - - - - - 3 3 6
60-64 - - - - 1 - - 1
≥ 65 - - - - - - - -
Total 1 35 15 13 11 11 9 95
March 11, 2026 E-22
DATA SUMMARY
Actives by Age and Service – Total
City Service
Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total
< 25 8 10 - - - - - 18
25-29 12 64 6 - - - - 82
30-34 18 75 55 3 - - - 151
35-39 9 48 49 19 3 - - 128
40-44 7 38 25 33 18 4 - 125
45-49 8 31 30 29 31 26 8 163
50-54 7 15 16 15 12 25 21 111
55-59 4 14 13 14 17 16 20 98
60-64 1 13 9 8 15 4 19 69
≥ 65 2 5 2 5 7 2 6 29
Total 76 313 205 126 103 77 74 974
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 43 Packet Pg. 64 of 73
March 11, 2026 E-23
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Retirement CalPERS 2000-2019
Experience Study- Expected
retirement age for each tier
Misc Fire & Police
Tier 1 2.7%@55 3%@50
Tier 2 2%@60 3%@55
PEPRA 2.5%@67 2.7%@57
CalPERS 2000-2023
Experience Study - Expected
retirement age for each tier
Misc Fire & Police
Tier 1 2.7%@55 3%@50
Tier 2 2%@60 3%@55
PEPRA 2.5%@67 2.7%@57
Spousal
Coverage at
Retirement
70% of covered retirees are
assumed to cover spouses
Based on Plan experience
Same
Waived Retiree
Re-election
0%Same
March 11, 2026 E-24
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Medical Trend Increase from Prior Year
Pre-
Medicare
Post-
Medicare
Other
Post-
Medicare
Year Kaiser
2023 Actual Premiums
2024 Actual Premiums
2025 8.50% 7.50% 6.25%
2026 7.90% 6.90% 5.65%
2027 7.35% 6.50% 5.45%
2028 6.75% 6.10% 5.25%
2029 6.20% 5.70% 5.05%
2030 5.60% 5.25% 4.85%
2031 5.05% 4.85% 4.65%
2032-38 4.45% 4.45% 4.45%
2039-40 4.35% 4.35% 4.35%
2041 4.30% 4.30% 4.30%
↓ ↓ ↓ ↓
2076+ 3.45% 3.45% 3.45%
Increase from Prior Year
Pre-
Medicare
Post-
Medicare
Other
Post-
Medicare
Year Kaiser
2023 n/a
2024 n/a
2025 Actual Premiums
2026 Actual Premiums
2027 7.35% 6.50% 5.45%
2028 6.75% 6.10% 5.25%
2029 6.20% 5.70% 5.05%
2030 5.60% 5.25% 4.85%
2031 5.05% 4.85% 4.65%
2032-38 4.45% 4.45% 4.45%
2039-40 4.35% 4.35% 4.35%
2041 4.30% 4.30% 4.30%
↓ ↓ ↓ ↓
2076+ 3.45% 3.45% 3.45%
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 44 Packet Pg. 65 of 73
March 11, 2026 E-25
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Medical Plan at
Retirement &
Retirees Attaining
age 65
Miscellaneous:<65 65+
Anthem Traditional 10% 5%
Blue Shield Access+ 5% 0%
Kaiser 45% 30%
PERS Gold 5% 0%
PERS Platinum 35% 45%
UnitedHealthcare 0% 20%
Safety:<65 65+
Anthem Traditional 5% 5%
Blue Shield Access+ 5% 0%
Kaiser 30% 25%
PERS Gold 0% 0%
PERS Platinum 15% 45%
PORAC 45% 15%
UnitedHealthcare 0% 10%
Based on Plan experience
Miscellaneous:<65 65+
Anthem Traditional 5% 5%
Blue Shield Access+ 10% 0%
Kaiser 50% 30%
PERS Gold 5% 0%
PERS Platinum 30% 45%
UnitedHealthcare 0% 20%
Safety:<65 65+
Anthem Traditional 5% 5%
Blue Shield Access+ 5% 0%
Kaiser 30% 25%
PERS Gold 0% 0%
PERS Platinum 10% 40%
PORAC 50% 20%
UnitedHealthcare 0% 10%
Based on Plan experience
March 11, 2026 E-26
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Family Coverage
at Retirement
(for future
retirees)
Misc: 15% until age 65
5% age 65-75
Safety: 50% until age 65
5% age 65-80
Based on Plan experience
Same
Spouse Age Actives – Males 3 years older
than females
Retirees – Males 3 years
older than females if spouse
birth date not available
Same
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 45 Packet Pg. 66 of 73
March 11, 2026 E-27
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Medicare
Eligibility
Actives and retirees hired
before 4/1/86:
Miscellaneous – 80%
Safety – 90%
Actives and retirees hired on
or after 4/1/86: 100%
Retirees before 65 with
unknown hire date: 90%
Everyone eligible for
Medicare will elect Part B
coverage
Same
Future New
Participants
None – Closed Group Same
Retirees Missing
Fund
No retirees missing Fund
information.
Same
March 11, 2026 E-28
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Retirees Missing
Department
Assumed to have the same
department as the prior
valuation
Liability for retirees assumed
to be 75% GF allocated
proportionately across all
Departments
Same
Actuarial Models Our valuation was performed using and relying on ProVal, an
actuarial model leased from Wintech. Our use of ProVal is
consistent with its intended purpose. We have reviewed and
understand ProVal and its operation, sensitivities and
dependencies.
Data Quality Our valuation used census data provided by the City and
CalPERS OPEB data extract. We reviewed the data for
reasonableness and resolved any questions with the City. We
believe the resulting data can be relied on for all purposes of this
valuation without limitation.
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 46 Packet Pg. 67 of 73
March 11, 2026 E-29
ADDITIONAL ACTUARIAL ASSUMPTIONS
June 30, 2023 Valuation June 30, 2025 Valuation
Sample Medical
Claims Costs
2026
Sample estimated monthly claims costs:
Region 1 – Non-Medicare Eligible
Kaiser PERS Platinum PORAC
Age M F M F M F
55 $1,238 $1,349 $1,618 $1,760 $1,390 $1,516
60 1,546 1,556 2,013 2,026 1,739 1,751
65 1,904 1,826 2,474 2,373 2,146 2,057
70 2,280 2,134 2,957 2,770 2,574 2,408
75 2,675 2,463 3,465 3,193 3,023 2,782
80 3,080 2,812 3,986 3,641 3,483 3,178
85 3,451 3,152 4,463 4,079 3,905 3,565
Region 1 – Medicare Eligible
Kaiser PERS Platinum PORAC
Age M F M F M F
65 n/a n/a $608 $582 $545 $523
70 n/a n/a 658 630 591 565
75 n/a n/a 701 672 629 604
80 n/a n/a 723 698 649 627
85 n/a n/a 715 696 642 625
March 11, 2026 E-30
ADDITIONAL ACTUARIAL ASSUMPTIONS
This page intentionally blank
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 47 Packet Pg. 68 of 73
March 11, 2026 E-31
RESULTS BY FUND
Actuarial Obligations – June 30, 2025 – 6.25% Discount Rate
(Amounts in 000’s)
FUND AAL Assets37 UAAL
Airport $ 550 $ 340 $ 210
CIP 5,784 3,577 2,207
Elec38 35,297 21,830 13,467
Gas38 14,517 8,978 5,539
GF 211,171 130,594 80,577
ISF – Technology 8,111 5,016 3,095
ISF – Vehicle 2,668 1,650 1,018
ISF – Printing & Mailing 159 99 60
ISF – Workers Comp 137 85 52
PARKING 945 584 361
Refuse 6,135 3,793 2,342
Storm Drain 2,770 1,714 1,056
Water38 12,505 7,732 4,773
WWC38 5,302 3,279 2,023
WWT 19,146 11,841 7,305
Total 325,197 201,112 124,085
37 Assets allocated in proportion to AAL.
38 AAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s AAL
March 11, 2026 E-32
RESULTS BY FUND
Actuarially Determined Contribution (ADC) – 6.25% Discount Rate
(Amounts in 000’s)
FUND 2026/27 2027/28
Airport $ 70 $ 72
CIP 502 515
Elec 1,993 2,048
Gas 858 882
GF 11,906 12,229
ISF – Technology 511 525
ISF – Vehicle 146 150
ISF – Printing & Mailing 8 8
ISF – Workers Comp 18 18
PARKING 97 100
Refuse 284 292
Storm Drain 172 177
Water 732 752
WWC 356 366
WWT 1,099 1,129
Total 18,752 19,263
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 48 Packet Pg. 69 of 73
March 11, 2026 E-33
RESULTS BY GF DEPARTMENT
Actuarial Obligations – June 30, 2025 – 6.25% Discount Rate
(Amounts in 000’s)
GF Department AAL Assets39 UAAL
ASD $ 10,845 $ 6,707 $ 4,138
ATT 2,647 1,637 1,010
AUD 149 93 56
CLK 806 499 307
COU 1,439 890 549
CSD 19,288 11,929 7,360
DSD 8,311 5,139 3,171
FIR 59,859 37,017 22,842
HRD 2,825 1,747 1,078
LIB 7,448 4,606 2,842
MGR 2,925 1,809 1,116
PLA 8,325 5,148 3,176
POL 67,043 41,461 25,582
PWD 19,261 11,912 7,350
Total 211,171 130,594 80,577
39 Assets allocated in proportion to AAL.
March 11, 2026 E-34
RESULTS BY GF DEPARTMENT
Actuarially Determined Contribution (ADC) – 6.25% Discount Rate
(Amounts in 000’s)
GF Department 2026/27 2027/28
ASD $ 664 $ 682
ATT 154 158
AUD 4 4
CLK 45 46
COU 68 70
CSD 1,184 1,216
DSD 656 673
FIR 2,936 3,016
HRD 182 187
LIB 644 661
MGR 224 230
PLA 490 504
POL 3,657 3,757
PWD 998 1,025
Total 11,906 12,229
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 49 Packet Pg. 70 of 73
March 11, 2026 E-35
DEFINITIONS
Present Value of Benefits
March 11, 2026 E-36
DEFINITIONS
Actuarially
Determined
Contribution
(ADC)
Contribution for the current period including:
Normal Cost
Administrative expenses
Amortization of:
Initial Unfunded AAL
AAL for plan, assumption, and method changes
Experience gains/losses (difference between expected and actual)
Contribution gains/losses (difference between ADC and actual)
Item 2
Attachment B - June 30,
2025 OPEB Actuarial
Valuation
Item 2: Staff Report Pg. 50 Packet Pg. 71 of 73
Finance Committee
At-Places Supplemental Report
From: Lauren Lai, Chief Financial Officer/ASD Director
Meeting Date: May 19, 2026
Item Number: 1
Report #:2605-6396
TITLE
At Places Supplemental Report: FY 2027 Budget Wrap-up and recommended FY 2027 Budget
including FY 2027 Municipal Fee Schedule
RECOMMENDATION
In previous meetings on May 5 and May 6, Committee recommended to Council certain budget
adjustments for the FY 2027 Proposed Budget. This table includes those adjustments and also
reflects the fiscal impact of the Committee’s “Parking Lot” items.
BACKGROUND
Staff would like to provide the Finance Committee (Committee) with additional information for
the May 19th FY 2027 Budget Hearing meeting. This material includes the Finance Committee
recommendations and technical adjustments to date.
Technical Adjustments
Given the complexity, volume and timing of the proposed budget, subsequent to publication,
staff have found technical adjustments necessary to ensure accuracy in the adopted budget. A
list is provided to Committee on May 19 (Attachment A) and the final listing will accompany the
budget adoption for Council on June 15.
Supplemental Attachment A shows the preliminary budget adjustments to the FY 2027 Proposed
Budget for Committee recommendations and technical adjustments.
ATTACHMENTS
Supplemental Attachment A: Preliminary Technical Adjustments
APPROVED BY:
Lauren Lai, Chief Financial Officer/Administrative Services Director
Item 1
Item 1 At-Places
Supplemental Report
Item 1: Staff Report Pg. 1 Packet Pg. 72 of 73
FY 2026 - 2027 Proposed Budget
Preliminary - Budget Adjustments Technical Adjustments
Type Dept Description
FY 2027
GF Revenue
FY 2027
GF Expense
GF
FT FTE
FY 2027
NON-GF Revenue
FY 2027
NON-GF Expense
Non-
GF
FT FTE
Non-
GF
PT FTE
FC CSD JMZ Conservation Costs and explore utilizing existing conservation
programs to fulfill the AZA requirements to the extent possible |
- (64,000) - - - - -
FC POL School Crossing Guards | 50% of Cost - Contigent upon match from
PAUSD
- 51,250 - - - - -
FC POL Track Watch | 50% of Cost - Contigent upon match from PAUSD
(March - June)
- 307,715 - - - - -
FC CMO OSV - Geng Road parking site from Sept-June ($200k) and additional
towing capacity to include ($184K) for enforcement and street
- 384,000 - - - - -
FC NON Non-Profit Work Plan - Option C - direct allocation - 124,000 - - - - -
FC CIP Quiet Zones - Move design to FY27 & construction to FY28 - 1,000,000 - 1,000,000 1,000,000 - -
FC CIP Chimalus Bikeway - New CIP with $0.6M in FY28 (Measure B LSR
funding)
FC Measure K funding for Quiet Zones (1,000,000)
FC Measure K funding for OSV (384,000)
FC CIP General Fund - Transfer to CIP (reduction)(402,464) (402,085) - - -
A2P ASD TOT Revenue - 2.6% increase from FY26 revised revenue forecast
and offset with Transfer to Infrastructure
542,000 542,000 - 542,000 - - -
A2P ASD Pension UAL technical adjustment associated with Section 115 ADP -
with confirmation from CalPERS actuary (favorable)
- (499,658) - - (401,000) - -
A2P CIP CIP TR-26000 Embarcardo Improvements - include second year of
funding (Ref FY26 CMR#2604-6269)
- - - 260,000 260,000 - -
A2P CIP Annual CIP Adjustment to Art in Public Spaces AC-86017 - - - - (5,100) - -
A2P CIP Foothills Rebuild (Fire Mitigation, Utility Fund) EL-21001,
appropriation needed to complete by December 2026
- - - - 1,750,000 - -
A2P OOT 1.00 FTE Planner - OOT Position #7544 (technical adjustment) - 72,156 0.40 - 108,234 0.60 -
A2P PDS 1.00 FTE Planner - Planner Position #790 (technical adjustment)- 183,545 1.00 - - - -
A2P PDS REC Exchange Rebate Program to offset permit fees for building code
inspections limited by State Caps
225,000 - - 275,000
A2P PWD Fuel Contract Reduction - budget true-up - - - - (225,000) - -
A2P PWD General Fund FTE Allocation for Tree Program - technical adj.- 4,077 0.03 - (4,077) (0.03) -
A2P PWD Wastewater Collection Fund (#527) true up allocated charges
(appropriation) to Wastewater Treatment Fund (#526)
- - - - 2,814,640 - -
A2P PWD/UTL Street Cut appropriation to offset the associated General Fund
revenue. (paid by project applicants)
- - - - 200,000 - -
A2P UTL City utility costs (water) - technical adjustment - 119,000 - (2,000) - - -
A2P UTL Electric rate true-up (1) FY27 rate of 4.5% (instead of 6%) for the
Utilities Charges for Services and (2) General Fund Utility Costs to
include PSB Facility.
- 141,379 - (195,584) (178,455) - -
A2P UTL Equity Transfer - true-up (140,000) (140,000)
A2P UTL General Fund (UUT) Utility Users Tax - City Utility - true-up with new
FY27 rate forecast
(340,000) - - - - - -
A2P UTL General Fund (UUT) Utility Users Tax - Cable Franchise - true-up,
assumes 4% growth based upon historical trends
292,000 - - - - - -
A2P UTL Hourly staff to promote customers' uses on alternative resources
2508-5090 (Management Specialist - 6 Month)
- - - - 100,000 - 0.48
A2P UTL SCAP (Duplicate entries, previously discussed with FC May 5)- - - - (14,503,759) - -
Total 579,000$ 579,000$ 1.43 1,202,331$ (8,949,517)$ 0.57 0.48
Item 1
Supplemental Attachment A -
Preliminary Technical Adjustments
Item 1: Staff Report Pg. 2 Packet Pg. 73 of 73