Pension Obligations

The City of Sierra Madre is committed to transparency regarding its financial responsibilities, including pension obligations for current and former employees. These obligations are primarily managed through the California Public Employees' Retirement System (CalPERS).

Understanding Pension Obligations

• What Are Pension Obligations?
  Pension obligations represent the City's financial commitments to provide retirement benefits to eligible employees. These commitments are determined by factors such as employee salaries, years of service, and retirement formulas.
• Why Are They Important?
  Managing pension obligations is crucial for the City's financial health and its ability to deliver public services. Proper funding ensures that promised retirement benefits are available to employees upon retirement.

City of Sierra Madre's Pension Management

• CalPERS Membership
  The City participates in CalPERS, a statewide public pension system that administers retirement benefits for public employees. Through this membership, the City contributes to pension funds, and CalPERS manages the investments and disbursements.

• Unfunded Accrued Liability (UAL)
  Unfunded Accrued Liability (UAL) represents the gap between the total pension obligations owed to employees and the assets available in the pension fund. The City has taken proactive steps to reduce its UAL by making additional payments beyond the required minimum contributions.

• UAL for Recent Fiscal Years
• Fiscal Year 2022-2023: The City's total pension liability was approximately $10,678,000, with a funded status of about 75%.
• Fiscal Year 2023-2024: The City made a significant one-time payment to CalPERS, reducing its overall pension payment and liability by more than 40%.

• Avoiding Future Increases
  The City has implemented strategic financial measures to avoid future increases in the UAL, including:
• Advanced Payments: Accelerating payments toward the UAL to reduce interest costs over time.
• Long-Term Planning: Allocating budget resources effectively to ensure sustainability and prevent unexpected spikes in pension-related expenses.

• Funding Status
  The City's pension obligations are evaluated regularly to assess funding levels and ensure sustainability. These efforts help maintain a stable funding ratio to meet future liabilities without jeopardizing the City's fiscal health.

Financial Reports and Transparency

The City provides comprehensive financial reports detailing pension obligations, funding strategies, and related financial data. These reports are accessible to the public and offer insights into the City's fiscal management.

• Annual Financial Reports
  Detailed information on pension obligations and the UAL can be found in the City's Annual Comprehensive Financial Reports (ACFR). These reports include financial statements, notes, and required supplementary information.

• Budget Documents
  The City's budget documents outline planned contributions to pension funds and strategies for managing pension-related expenses, including UAL reduction plans.

Contact Information

For further inquiries regarding the City's pension obligations or UAL strategies, please contact:

City of Sierra Madre Finance Department
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
Phone: (626) 355-7135
Email: [email protected]