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CC - (1) Approval of a Professional Services Agreement with PFM Asset Management, LLC to Establish and Administer a Supplemental Pension Trust and (2) Approval of a Proposed Budget Amendment (Four-Fifths Vote Requirement).
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Meeting Date: March 12, 2018
Contact Person/Dept: Jeff Muir
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: Yes [X] No []
Commission Action Required: Yes [] No [X]
Commission Name:
Public Notification: (E-Mail) Meetings and Agendas - City Council (03/06/17)
Department Approval: Jeff Muir, Chief Financial Officer (03/01/18)
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RECOMMENDATION
Staff recommends the City Council approve a professional services agreement with PFM Asset Management, LLC to establish and administer a supplemental pension trust and approve a related budget amendment (budget amendment requires a 4/5ths vote).
BACKGROUND
The City of Culver City has two pension trusts with the California Public Employees' Retirement System (CalPERS): one to fund public safety employees and one for miscellaneous employees. The trusts are funded by employer and employee contributions and by investment earnings on those contributions. In order to reach necessary funding levels to pay employee pensions, CalPERS establishes a set of actuarial assumptions to achieve those levels.
One of the most critical assumptions in attaining full funding goals is the rate of return on investments in the trusts. CalPERS' current annual rate of return (ROR) assumption is 7.5 percent. Assuming this rate of return is attained, then funding of the pension obligations would be derived 66 percent from investment gains and 34 percent from contributions. If the 7.5 percent rate of return is not realized, then contributions from emplo...
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