City of Arcata Pension Obligations

As part of its overall compensation plan, the City of Arcata (City) provides a defined benefit pension to its employees. This benefit is administered by the California Public Employees Retirement System (CalPERS) and is funded through contributions from the City and its employees, and from investment earnings on those contributions. Volatility in the investment earnings, policy and administrative changes at CalPERS and revisions to actuarial assumptions have decreased the plan’s funded status.  

When a plan's funded status is below 100%, the difference is the unfunded portion of the funding shortfall or Unfunded Accrued Liability (UAL).  The UAL is the difference between the estimated value of benefits earned and expected to be paid to current employees and retirees in the future in today's dollars; and the market value of the investment assets held by CalPERS.

According to the most recent actuarial reports dated 6-30-2023, the City's total UAL is $32.8 million.  

Miscellaneous Plan Annual Valuation Report as of June 30, 2023

Miscellaneous 2nd Tier Plan Annual Valuation Report as of June 30, 2023

Miscellaneous PEPRA Plan Annual Valuation Report as of June 30, 2023

Safety Plan Annual Valuation Report as of June 30, 2023

Steps the City Council has taken to address its UAL include:

  • Establishing a Section 115 Pension Trust with CalPERS and investing $2.5 million
  • Making a $5 million Additional Discretionary Payment in FY 2023-24 to pay down the UAL  
  • Adopting a Pension Funding Policy
  • Issued Pension Obligation Bonds in 2015 to pay off a portion of the UAL
  • Established additional employee cost sharing of up to 3% of pay depending on Labor Bargaining Group