FY 2026-27 Proposed Midcycle Budget

OVERVIEW OF LONG-TERM LIABILITIES The City of Oakland (City) has three defined benefit retirement plans:     The City also has programs in place to partially pay health insurance premiums for certain classes of retirees from City employment. City retirees are eligible for retiree health benefits if they meet certain requirements relating to age and service. The retiree health benefits are described in the labor agreements between the City and unions, and in City resolutions. California Public Employees’ Retirement System (CalPERS) Public Safety Retirement Plan; 1. CalPERS Miscellaneous (civilian) Retirement Plan; and 2. Oakland Police and Fire Retirement System (PFRS) 3. Unfunded Pension Liability for CalPERS – Active Retirement Plan The City has active defined benefit pension plans for Safety and Miscellaneous employees through CalPERS. These plans are funded on an actuarial determined basis each year pursuant to CalPERS requirements. The CalPERS Board of Administration has taken several actions in recent years that have impacted both the City’s unfunded liabilities and annual required contributions, which are captured in this two-year budget.   In July 2021, CalPERS reported a preliminary 21.3% net return on investments for FY 2020-21. Since the return exceeded the 7.00% discount rate sufficiently, CalPERS lowered the discount rate from 7.00% to 6.80%. Beginning FY 2023-24, employer contributions are calculated using a 6.80% discount rate.   In November 2021, CalPERS adopted new actuarial assumptions based on the recommendations in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increase, and inflation assumption. These new assumptions impact the required contribution beginning FY 2023-24. The table below shows a summary of the long-term unfunded liabilities for the City.   Unfunded Liability Descriptions $1,924M¹ The City’s California Public Employees’ Retirement System (CalPERS) unfunded balance as of June 30, 2025 (reporting date) is $1,924 million. The Public Safety Plan has a $1B unfunded liability (65.8% funded ratio); the Miscellaneous Plan has a $924M unfunded liability (73.0% funded ratio).  $549M² The City’s Other Post-Employment Benefit programs (OPEB) have an unfunded actuarial liability (UAL) of $549M as of June 30, 2024 (reporting date). $118M³ The City’s closed Police and Fire Retirement System (PFRS) retirement system has an unfunded balance of $118M as of June 30, 2024 (measurement date). The actuarially determined contribution for FY 2024-25 is $34.8M.  $102.1M Negative Funds as of June 30, 2024 – $25.9 million of the negative funds have a repayment plan, $75.2 million are reimbursable funds and $1.0 million are funds with no repayment plan. $69M⁴ The City’s long-term liabilities for accrued vacation and sick leave are $69M as of June 30, 2024. Long-Term Liabilities Long-Term Liabilities F Y 2 0 2 6 - 2 7 P R O P O S E D P O L I C Y B U D G E T F Y 2 0 2 6 - 2 7 P R O P O S E D P O L I C Y B U D G E T 76